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In December 2005, the compensation committee awarded to a reporting unit's estimated fair value. If these estimates or related
senior manager Kaplan shares equal in value to $4.8 million, with assumptions change in the future, the Company may be required to
the number of shares determined by the January 2006 valuation. In record an impairment charge. At December 31, 2006, the Compa-
2006, based on a $1,833 per share value, 2,619 shares were ny has $1,789.8 million in goodwill and other intangibles, net.
issued. In December 2006, the compensation committee awarded
OTHER
to a senior manager Kaplan shares equal in value to $4.6 million,
with the number of shares determined by the January 2007 valua- New Accounting Pronouncements. In June 2006, FASB
tion. In 2007, based on the $2,115 per share value, 2,175 shares Interpretation No. 48 (FIN 48), ""Accounting for Uncertainty in
will be issued. Income Taxes Ì an Interpretation of FASB Statement No. 109,''
was issued. FIN 48 prescribes a comprehensive model of how a
Excluding Kaplan stock compensation expense of $8.2 million
company should recognize, measure, present and disclose in its
recorded as a result of the change in accounting under SFAS 123R,
financial statements uncertain tax positions that the company has
Kaplan recorded stock compensation expense of $27.7 million for
taken or expects to take on a tax return. The Company is required to
2006, compared to $3.0 million for 2005 and $32.5 million for
implement FIN 48 in the first quarter of 2007. The Company has
2004. In 2006, 2005 and 2004, total payouts were $31.1 mil-
determined that there are no material transactions or material tax
lion, $35.2 million and $10.3 million, respectively. At Decem-
positions taken by the Company that would fail to meet the more
ber 31, 2006, the Company's accrual balance related to Kaplan
likely than not threshold established by FIN 48 for recognizing
stock-based compensation totaled $68.0 million. If Kaplan's profits
transactions or tax positions in financial statements. In making this
increase and the value of education companies increases in 2007,
determination, the Company presumes that all matters will be
there will be significant Kaplan stock-based compensation in 2007.
examined with full knowledge of all relevant information by appro-
Note G to the Consolidated Financial Statements provides addition- priate taxing authorities and that the Company will pursue, if
al details surrounding Kaplan stock compensation. necessary, resolution by related appeals or litigation. The Company
has accrued a tax liability for certain tax positions reflected in the
Goodwill and Other Intangibles. The Company reviews
financial statements where it is uncertain the full tax benefit associat-
goodwill and indefinite-lived intangibles at least annually for impair-
ed with the tax positions will ultimately be recognized. The amount
ment, generally utilizing a discounted cash flow model. In the third
of tax liability accrued for these uncertain tax positions is not
quarter of 2006, as a result of a challenging advertising environ-
material to the Company's financial position or results of operations,
ment, the Company completed a review of the carrying value of
and the Company expects that the adoption of FIN 48 during the
goodwill at PostNewsweek Tech Media and recorded an impair-
first quarter of 2007 will not have a material impact on the
ment charge of $9.9 million to write-down PostNewsweek Tech
Company's financial position or results of operations.
Media's goodwill to its estimated fair value utilizing a discounted
cash flow model. In the case of the Company's cable systems, both The Company's adoption of SFAS 123R and SFAS 158 is discussed
a discounted cash flow model and a market approach employing in Critical Accounting Policies and Estimates above. Also, Note G to
comparable sales analysis are considered. In reviewing the carry- the Consolidated Financial Statements provides additional details on
ing value of goodwill and indefinite-lived intangible assets at the the adoption of SFAS 123R, and Note H provides additional details
cable division, the Company aggregates its cable systems on a on the adoption of SFAS 158.
regional basis. The Company must make assumptions regarding
estimated future cash flows and market values to determine a
2006 FORM 10-K 47