Washington Post 2004 Annual Report Download - page 69

acquisitions was allocated to franchise agreements, an indefinite- The Company's goodwill and other intangible assets as of
lived intangible asset. January 2, 2005 and December 28, 2003 were as follows (in
thousands):
On January 1, 2003, the Company sold its 50 percent interest in
Accumulated
the International Herald Tribune for $65 million and the Company
Gross Amortization Net
recorded an after-tax non-operating gain of $32.3 million
($3.38 per share) in the first quarter of 2003. 2004:
Goodwill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,321,542 $298,402 $1,023,140
During 2002, Kaplan acquired several businesses in its higher Indefinite-lived intangible
assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 656,998 163,806 493,192
education and test preparation divisions for approximately Amortized intangible assets 20,021 12,142 7,879
$42.2 million. In November 2002, the Company completed a $1,998,561 $474,350 $1,524,211
cable system exchange transaction with Time Warner Cable which
2003:
consisted of the exchange by the Company of its cable system in Goodwill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1,264,096 $ 298,402 $ 965,694
Akron, Ohio serving about 15,500 subscribers, and $5.2 million to Indefinite-lived intangible assetsÏÏ 650,462 163,806 486,656
Amortized intangible assets ÏÏÏÏÏÏ 8,034 2,808 5,226
Time Warner Cable, for cable systems serving about 20,300
$ 1,922,592 $ 465,016 $ 1,457,576
subscribers in Kansas. The Kansas systems acquired in the exchange
transaction were recorded at their estimated fair value, as deter- Activity related to the Company's goodwill and intangible assets
mined based on an appraisal completed by an independent third- during 2004 was as follows (in thousands):
party firm. The non-cash, non-operating gain resulting from the
Newspaper Television Magazine Cable
exchange transaction increased net income by $16.7 million, or Publishing Broadcasting Publishing Television Education Total
$1.75 per share.
Goodwill, Net
The results of operations for each of the businesses acquired are
Beginning of year ÏÏÏ $ 71,277 $203,165 $69,556 $ 85,666 $536,030 $ 965,694
Acquisitions ÏÏÏÏÏÏÏÏ 1,493 44,143 45,636
included in the Consolidated Statements of Income from their
Foreign currency
exchange rate ÏÏÏÏ 11,810 11,810
respective dates of acquisition. Pro forma results of operations for
End of year ÏÏÏÏÏÏÏÏ $ 72,770 $203,165 $69,556 $ 85,666 $591,983 $1,023,140
2004, 2003 and 2002, assuming the acquisitions and exchanges
IndeÑnite-Lived
occurred at the beginning of 2002, are not materially different from
Intangible Assets,
Net
reported results of operations.
Beginning of year ÏÏÏ $484,556 $ 2,100 $ 486,656
Acquisitions ÏÏÏÏÏÏÏÏ 1,774 4,762 6,536
K. GOODWILL AND OTHER INTANGIBLE ASSETS End of year ÏÏÏÏÏÏÏÏ $486,330 $ 6,862 $ 493,192
Amortized
The Company adopted Statement of Financial Accounting Standards
Intangible Assets,
Net
No. 142 (SFAS 142), ""Goodwill and Other Intangible Assets''
Beginning of year ÏÏÏ $ 30 $ 1,081 $ 4,115 $ 5,226
effective on the first day of its 2002 fiscal year. As a result of the
Acquisitions ÏÏÏÏÏÏÏÏ 107 2,045 9,845 11,997
Foreign currency
adoption of SFAS 142, the Company ceased most of the periodic
exchange rate ÏÏÏÏ (10) (10)
AmortizationÏÏÏÏÏÏÏÏ (19) (652) (8,663) (9,334)
charges previously recorded from the amortization of goodwill and
End of year ÏÏÏÏÏÏÏÏ $ 118 $ 2,474 $ 5,287 $ 7,879
other intangibles.
Activity related to the Company's goodwill and intangible assets
As required under SFAS 142, the Company completed its transition- during 2003 was as follows (in thousands):
al impairment review of indefinite-lived intangible assets and good-
will. The expected future cash flows for PostNewsweek Tech Media Newspaper Television Magazine Cable
Publishing Broadcasting Publishing Television Education Total
(part of the magazine publishing segment), on a discounted basis,
did not support the net carrying value of the related goodwill.
Goodwill, Net
Beginning of year ÏÏÏ $72,738 $203,165 $ 69,556 $ 85,666 $339,736 $770,861
Accordingly, an after-tax goodwill impairment loss of $12.1 million,
Acquisitions ÏÏÏÏÏÏÏÏ 184,075 184,075
or $1.27 per share, was recorded. The loss is included in the
Disposition ÏÏÏÏÏÏÏÏÏ (1,461) (1,461)
Foreign currency
Company's 2002 fiscal year results as a cumulative effect of
exchange rate ÏÏÏÏ 12,219 12,219
change in accounting principle. End of year ÏÏÏÏÏÏÏÏ $71,277 $203,165 $ 69,556 $ 85,666 $536,030 $965,694
IndeÑnite-Lived
The Company's intangible assets with an indefinite life are principal-
Intangible Assets,
Net
ly from franchise agreements at its cable division, as the Company
Beginning of year ÏÏÏ $482,419 $482,419
expects its cable franchise agreements to provide the Company
Acquisitions ÏÏÏÏÏÏÏÏ 2,137 $ 2,100 4,237
End of year ÏÏÏÏÏÏÏÏ $484,556 $ 2,100 $486,656
with substantial benefit for a period that extends beyond the
Amortized
foreseeable horizon, and the Company's cable division historically
Intangible Assets,
has obtained renewals and extensions of such agreements for
Net
Beginning of year ÏÏÏ $ 45 $ 1,232 $ 876 $ 2,153
nominal costs and without any material modifications to the agree-
Acquisitions ÏÏÏÏÏÏÏÏ 4,463 4,463
AmortizationÏÏÏÏÏÏÏÏ (15) (151) (1,270) (1,436)
ments. Amortized intangible assets are primarily non-compete
Foreign currency
agreements, with amortization periods up to five years. Amortiza-
exchange rate ÏÏÏÏ 46 46
End of year ÏÏÏÏÏÏÏÏ $ 30 $ 1,081 $ 4,115 $ 5,226
tion expense was $9.3 million in 2004 and is estimated to be
approximately $6 million in each of the next five years.
2004 FORM 10-K 53