Washington Post 2006 Annual Report Download - page 82

A summary of non-operating income (expense) for the years hurricane Gulf Coast subscribers. As of December 31, 2005, the
ended December 31, 2006, January 1, 2006, and January 2, Company had recorded a $5.0 million receivable for recovery of a
2005, follows (in millions): portion of cable hurricane losses through December 31, 2005
under the Company's property and business interruption insurance
2006 2005 2004 program; this recovery was recorded as a reduction of cable
division expense in the fourth quarter of 2005. An additional
Gain on sale of affiliateÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 43.2 $Ì $Ì $10.4 million in hurricane-related insurance recoveries was record-
Gain on sales of marketable securitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 33.8 12.7 Ì
Foreign currency gains (losses), net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11.9 (8.1) 5.5 ed during the second quarter of 2006 as a reduction of expense in
Impairment write-downs on investments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (15.1) (1.5) (0.7) connection with a final settlement on cable division Hurricane Katrina
Gain on sale of non-operating land ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì5.1 Ì
Gain on sale or exchange of cable system businesses ÌÌ0.5 insurance claims. Cable division results in 2006 continued to include
Other (losses) gains ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (0.3) 0.8 2.8 the impact of subscriber losses and expenses as a result of Hurri-
TotalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 73.5 $ 9.0 $ 8.1
cane Katrina. The Company estimates that lost revenue for 2006
was approximately $12.4 million; variable cost savings offset a
M. CONTINGENCIES AND LOSSES
portion of the lost revenue impact on the cable division's operating
The Company and its subsidiaries are parties to various civil lawsuits income. The Company also incurred an estimated $5.4 million in
that have arisen in the ordinary course of their businesses, including incremental cleanup and repair expense in 2006.
actions for libel and invasion of privacy, and violations of applica-
ble wage and hour laws. Management does not believe that any N. BUSINESS SEGMENTS
litigation pending against the Company will have a material adverse
Through its subsidiary Kaplan, Inc., the Company provides educa-
effect on its business or financial condition.
tional services for individuals, schools and businesses. The Compa-
In the fourth quarter of 2006, the Company recorded a charge of ny also operates principally in four areas of the media business:
$13.0 million related to an agreement to settle an antitrust lawsuit at newspaper publishing, television broadcasting, magazine publish-
Kaplan. ing and cable television.
The Company's education division derives a portion of its net Education products and services are provided through the Compa-
revenues from financial aid received by its students under Title IV ny's wholly-owned subsidiary, Kaplan, Inc. Kaplan's businesses
Programs administered by the U.S. Department of Education pursu- include supplemental education services, which is made up of
ant to the Federal Higher Education Act of 1965 (HEA), as Kaplan Test Prep and Admissions, providing test preparation ser-
amended. In order to participate in Title IV Programs, the Company vices for college and graduate school entrance exams; Kaplan
must comply with complex standards set forth in the HEA and the Professional, providing education and career services to business
regulations promulgated thereunder (the Regulations). The failure people and other professionals; and Score!, offering multi-media
to comply with the requirements of HEA or the Regulations could learning and private tutoring to children and educational resources
result in the restriction or loss of the ability to participate in Title IV to parents. Kaplan's businesses also provide higher education
Programs and subject the Company to financial penalties. For the services, which include all of Kaplan's post-secondary education
years ended December 31, 2006, January 1, 2006 and businesses, including the fixed-facility colleges that offer bachelor's
January 2, 2005, approximately $580.0 million, $505.0 million degree, associate's degree and diploma programs primarily in the
and $430.0 million, respectively, of the Company's education fields of healthcare, business and information technology; and
division revenue was derived from financial aid received by students online post-secondary and career programs (various distance-
under Title IV Programs. Management believes that the Company's learning businesses). For segment reporting purposes, the educa-
education division schools that participate in Title IV Programs are in tion division has two primary segments, supplemental education and
material compliance with standards set forth in the HEA and the higher education. Kaplan corporate overhead and ""Other'' is also
Regulations. included; ""Other'' includes Kaplan stock compensation expense
and amortization of certain intangibles. In the fourth quarter of
Operating results for the Company in 2005 included the impact of
2006, Kaplan recorded a $6.1 million revenue decrease at the test
charges and lost revenues associated with Katrina and other hurri-
preparation division related to timing of courses and estimates of
canes. Most of the impact was at the cable division, but the
average course length.
television broadcasting and education divisions were also adversely
impacted. About 94,000 of the cable division's pre-hurricane Newspaper publishing includes the publication of newspapers in the
subscribers were located on the Gulf Coast of Mississippi, including Washington, D.C. area and Everett, Washington; newsprint ware-
Gulfport, Biloxi, Pascagoula and other neighboring communities housing and recycling facilities; and the Company's electronic
where storm damage from Hurricane Katrina was significant. media publishing business (primarily washingtonpost.com).
Through the end of 2005, the cable division recorded $9.6 million
The magazine publishing division consists of the publication of a
in property, plant and equipment losses; incurred an estimated
weekly news magazine, Newsweek, which has one domestic and
$9.4 million in incremental cleanup, repair and other expenses in
three English-language international editions (and, in conjunction
connection with the hurricane; and experienced an estimated
with others, publishes eight foreign-language editions around the
$9.7 million reduction in operating income from subscriber losses
world) and the publication of Arthur Frommer's Budget Travel. The
and the granting of a 30-day service credit to all of its 94,000 pre-
66 THE WASHINGTON POST COMPANY