Washington Post 2008 Annual Report Download - page 72

THE WASHINGTON POST COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. ORGANIZATION AND NATURE OF OPERATIONS
The Washington Post Company, Inc. (the “Company”) is a
diversified education and media company. The Company’s Kaplan
subsidiary provides a wide variety of educational services, both
domestically and outside the United States. The Company’s media
operations consist of the ownership and operation of cable
television systems, newspaper publishing (principally The
Washington Post), television broadcasting (through the ownership
and operation of six television broadcast stations), and magazine
publishing (principally Newsweek).
Education—Kaplan, Inc. provides an extensive range of
educational services for children, students and professionals.
Kaplan’s various businesses comprise three categories: higher
education, test prep, and professional.
Media—The Company’s diversified media operations consist of
cable television operations; newspaper publishing; television
broadcasting; and magazine publishing.
Cable television operations: Cable ONE provides cable services
that include basic video, digital video, cable modem and telephone
service in the midwestern, western and southern states of the United
States.
Newspaper publishing: Washington Post Media publishes The
Washington Post (“The Post”), which is the largest and most widely
circulated morning daily and Sunday newspaper, primarily
distributed by home delivery in the Washington, DC, metropolitan
area (including large portions of Maryland and northern Virginia).
Washington Post Media also produces washingtonpost.com, an
Internet site that features news and information products as well as
the full editorial content of The Washington Post. Through the
Company’s other newspaper publishing businesses, the Company
also publishes other weekly publications and tabloids distributed
nationally and within the Washington, DC, metropolitan area and
produces other websites and online magazines.
Television broadcasting: The Company owns six VHF television
stations located in Houston, TX; Detroit, MI; Miami, FL; Orlando, FL;
San Antonio, TX; and Jacksonville, FL. Other than the Company’s
Jacksonville station, WJXT, the Company’s television stations are
affiliated with one of the major national networks.
Magazine publishing: Newsweek, Inc. publishes Newsweek, a
weekly newsmagazine published both domestically and
internationally, as well as Arthur Frommer’s Budget Travel. The
magazine publishing division also includes certain online media
publishing businesses (newsweek.com and budgettravel.com).
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year — The Company reports on a 52 to 53-week fiscal
year ending on the Sunday nearest December 31. The fiscal years
2008, 2007 and 2006, which ended on December 28, 2008,
December 30, 2007, and December 31, 2006, respectively,
included 52 weeks. With the exception of the newspaper
publishing operations and corporate office, subsidiaries of the
Company report on a calendar-year basis.
Basis of Presentation and Principles of Consolidation — The
accompanying consolidated financial statements have been
prepared in accordance with generally accepted accounting
principles (“GAAP”) in the United States and include the assets,
liabilities, results of operations and cash flows of the Company and
its majority-owned and controlled subsidiaries. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
Reclassifications — Certain amounts in previously issued financial
statements have been reclassified to conform with the 2008
presentation.
Use of Estimates — The preparation of financial statements in
conformity with GAAP requires management to make estimates and
judgments that affect the amounts reported in the financial
statements. On an ongoing basis, the Company evaluates its
estimates and assumptions. Actual results could differ from these
estimates.
Business Combinations — The purchase price of an acquisition is
allocated to the assets acquired, including intangible assets, and
liabilities assumed, based on their respective fair values at the
acquisition date. The excess of the cost of an acquired entity over
the net of the amounts assigned to the assets acquired and liabilities
assumed is recognized as goodwill. The net assets and results of
operations of an acquired entity are included in the Company’s
consolidated financial statements from the acquisition date.
Cash and Cash Equivalents — Cash and cash equivalents consist
of cash on hand and short-term investments with original maturities
of three months or less.
Concentration of Credit Risk — Cash and cash equivalents are
maintained with several financial institutions domestically and
internationally. Deposits held with banks may exceed the amount of
insurance provided on such deposits. Generally, these deposits may
be redeemed upon demand and are maintained with financial
institutions with investment grade credit ratings. The Company
routinely assesses the financial strength of significant customers and
this assessment, combined with the large number and geographical
diversity of its customers, limits the Company’s concentration of risk
with respect to trade accounts receivable.
Allowance for Doubtful Accounts — Accounts receivable have
been reduced by an allowance for amounts that may be
uncollectible in the future. This estimated allowance is based
primarily on the aging category, historical trends and management’s
evaluation of the financial condition of the customer. Accounts
receivable also have been reduced by an estimate of advertising
rate adjustments and discounts, based on estimates of advertising
volumes for contract customers who are eligible for advertising rate
adjustments and discounts.
Investments in Marketable Equity Securities — The Company’s
investments in marketable equity securities are classified as
60 THE WASHINGTON POST COMPANY