Washington Post 2007 Annual Report Download - page 91

Company to financial penalties. For the years ended
December 30, 2007, December 31, 2006 and January 1,
2006, approximately $745.0 million, $580.0 million and
$505.0 million, respectively, of the Company’s education
division revenue was derived from financial aid received by
students under Title IV programs. Management believes that the
Company’s education division schools that participate in Title IV
programs are in material compliance with standards set forth in
the HEA and the Regulations.
Operating results for the Company in 2005 included the
impact of charges and lost revenues associated with
Hurricane Katrina and other hurricanes. Most of the impact
was at the cable division, but the television broadcasting and
education divisions were also adversely impacted. About
94,000 of the cable division’s pre-hurricane subscribers
were located on the Gulf Coast of Mississippi, including
Gulfport, Biloxi, Pascagoula and other neighboring
communities where storm damage from Hurricane Katrina
was significant. Through the end of 2005, the cable
division recorded $9.6 million in property, plant and
equipment losses; incurred an estimated $9.4 million in
incremental cleanup, repair and other expenses in
connection with the hurricane; and experienced an
estimated $9.7 million reduction in operating income from
subscriber losses and the granting of a 30-day service credit
to all of its 94,000 pre-hurricane Gulf Coast subscribers. As of
December 31, 2005, the Company had recorded a
$5.0 million receivable for recovery of a portion of cable
hurricane losses through December 31, 2005 under the
Company’s property and business interruption insurance
program; this recovery was recorded as a reduction of
cabledivisionexpenseinthefourthquarterof2005.An
additional $10.4 million in hurricane-related insurance
recoveries was recorded during the second quarter of 2006
as a reduction of expense in connection with a final settlement
on cable division Hurricane Katrina insurance claims. Cable
division results in 2006 continued to include the impact of
subscriber losses and expenses as a result of Hurricane
Katrina. The Company estimates that lost revenue for 2006
was approximately $12.4 million; variable cost savings offset
a portion of the lost revenue impact on the cable division’s
operating income. The Company also incurred an estimated
$5.4 million in incremental cleanup and repair expense in
2006.
N. SUBSEQUENT EVENTS
In January 2008, the Company announced a Voluntary Retirement
Incentive Program, which is being offered to certain Newsweek
employees. The program includes enhanced retirement benefits
and should be completed by the end of the first quarter; it will be
funded primarily from the assets of the Company’s pension plans.
In February 2008, the Company announced that a Voluntary
Retirement Incentive Program will be offered in 2008 to some
employees of The Washington Post newspaper and the
Company’s corporate office. The cost of the program will be
funded primarily from the assets of the Company’s pension plans.
In February 2008, the Company announced that The Post will
close its College Park, MD, printing plant in early 2010, after
two presses are moved to The Post’s Springfield, VA, plant.
In January and February 2008, the Company purchased
approximately $60 million in the common stock of Corinthian
Colleges, Inc.
O. BUSINESS SEGMENTS
Through its subsidiary Kaplan, Inc., the Company provides
educational services for individuals, schools and businesses.
The Company also operates principally in four areas of the
media business: newspaper publishing, television broadcasting,
magazine publishing and cable television.
Education products and services are provided through the
Company’s subsidiary Kaplan, Inc. Kaplan’s businesses
include higher education services, which includes Kaplan’s
domestic and international post-secondary education
businesses, including fixed-facility colleges that offer bachelor
degree, associate degree and diploma programs primarily in
the fields of healthcare, business and information technology;
and online post-secondary and career programs. Kaplan’s
businesses also include domestic and international test
preparation, which includes Kaplan’s standardized test prep
and English-language course offerings, as well as K12 and
Score!, which offer multimedia learning and private tutoring
to children and educational resources to parents. Kaplan’s
businesses also include Kaplan professional, which provides
education and career services to business people and other
professionals domestically and internationally. For segment
reporting purposes, the education division now has three
primary segments, as compared to two primary segments in
2006. The education division’s primary segments are higher
education, test prep and professional. Kaplan “Corporate
Overhead and Other” is also included; “Other” includes
Kaplan stock compensation expense and amortization of
certain intangibles.
In the fourth quarter of 2007, Kaplan management announced
plans to restructure the Score! business. In order to implement a
revised business model, 75 Score! centers have been closed.
After closings and consolidations, Score! has 80 centers that
focus on providing computer-assisted instruction and small-
group tutoring. The restructuring plan includes relocating
certain management and terminating certain employees from
closed centers. The Company incurred approximately
$11.2 million in expenses in the fourth quarter of 2007
related to lease obligations, severance and accelerated
depreciation of fixed assets in connection with the Score!
restructuring. Also in the fourth quarter of 2007, Kaplan
management announced plans to restructure Kaplan
Professional (U.S.). In connection with this restructuring,
product changes are being implemented and certain
operations are in the process of being decentralized, in
addition to employee terminations. A charge of $6.0 million
was recorded in the fourth quarter of 2007 related to the write-
off of an integrated software product under development and
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