Washington Post 2008 Annual Report Download - page 74

determinable, the product or service has been delivered and
collectability is reasonably assured. The Company considers the
terms of each arrangement to determine the appropriate accounting
treatment.
Education revenues: Tuition revenue is recognized ratably over the
period of instruction as services are delivered to students, net of any
refunds, corporate discounts, scholarships and employee tuition
discounts. At Kaplan’s test prep division, estimates of average
student course length are developed for each course, and these
estimates are evaluated on an ongoing basis and adjusted as
necessary. Online access revenue is recognized ratably over the
period of access. Course material revenue is recognized over the
same period as the tuition or online access, if related, or when the
products are delivered, if not related. Other revenues, such as
student support services, are recognized when the services are
provided.
Cable revenues: Cable revenues are primarily derived from
subscriber fees for video, high-speed Internet and phone services
and from advertising. Cable subscriber revenue is recognized
monthly as services are delivered. Advertising revenue is recognized
when the commercials or programs are aired.
Newspaper and magazine publishing and television broadcasting:
Revenue from media advertising is recognized, net of agency
commissions, when the underlying advertisement is published or
broadcast. Revenues from newspaper and magazine subscriptions
and retail sales are recognized upon the later of delivery or cover
date, with adequate provision made for anticipated sales returns.
Sales returns: Consistent with industry practice, certain of the
Company’s products, such as newspapers, magazines and books,
are sold with the right of return. The Company records, as a
reduction of revenue, the estimated impact of such returns. The
Company bases its estimates for sales returns on historical
experience and has not experienced significant fluctuations between
estimated and actual return activity.
Deferred revenue: Amounts received from customers in advance of
revenue recognition are deferred as liabilities. Deferred revenue to
be earned after one year is included in other liabilities in the
Company’s consolidated financial statements.
Leases – The Company leases substantially all of its educational
facilities and enters into various other lease agreements in
conducting its business. At the inception of each lease, the
Company evaluates the lease agreement to determine whether the
lease is an operating or capital lease. Additionally, many of the
Company’s lease agreements contain renewal options, tenant
improvement allowances, rent holidays, and/or rent escalation
clauses. When such items are included in a lease agreement, the
Company records a deferred rent asset or liability in the
consolidated financial statements and records these items in rent
expense evenly over the terms of the lease.
The Company is also required to make additional payments under
operating lease terms for taxes, insurance, and other operating
expenses incurred during the operating lease period; such items are
expensed as incurred. Rental deposits are also included as other
assets in the consolidated financial statements for lease agreements
that require payments in advance or deposits held for security that
are refundable, less any damages, at the end of the respective
lease.
Pensions and Other Postretirement Benefits — The Company
maintains various pension and incentive savings plans and
contributes to several multi-employer plans on behalf of certain
union-represented employee groups. Substantially all of the
Company’s employees are covered by these plans. The Company
also provides healthcare and life insurance benefits to certain retired
employees. These employees become eligible for benefits after
meeting age and service requirements.
The Company accounts for pension and other postretirement
benefits in accordance with Statement of Financial Accounting
Standards (“SFAS”) No. 158, “Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans—an amendment of
Financial Accounting Standards Board (“FASB”) Statements No. 87,
88, 106 and 132(R)” (“SFAS 158”). SFAS 158 requires an
employer to recognize the overfunded or underfunded status of a
defined benefit postretirement plan (other than a multi-employer
plan) as an asset or liability in its statement of financial position and
to recognize changes in that funded status in the fiscal year in
which the changes occur through comprehensive income. The
Company measures changes in the funded status of both its plans
using actuarial models in accordance with SFAS No. 87,
“Employers’ Accounting for Pension Plans” (“SFAS 87”), and
SFAS No. 106, “Employers’ Accounting for Postretirement Benefits
Other Than Pensions” (“SFAS 106”). The Company uses a
measurement date of December 31 for its pension and other
postretirement benefit plans.
Note K provides detailed information on the Company’s pension
and other postretirement plans.
Self-Insurance — The Company uses a combination of insurance
and self-insurance for a number of risks, including claims related to
employee healthcare and dental care, disability benefits, workers’
compensation, general liability, property damage and business
interruption. Liabilities associated with these plans are estimated
based on, among other things, the Company’s historical claims
experience, severity factors and other actuarial assumptions. The
expected loss accruals are based on estimates, and while the
Company believes the amounts accrued are adequate, the ultimate
loss may differ from the amounts provided.
Income Taxes — The Company accounts for income taxes under
the asset and liability method, which requires the recognition of
deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial
statements. Under this method, deferred tax assets and liabilities are
determined based on the differences between the financial
statements and tax basis of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to
reverse. The effect of a change in tax rates on deferred tax assets
and liabilities is recognized in income in the period that includes the
enactment date.
The Company records net deferred tax assets to the extent that it
believes these assets will more likely than not be realized. In making
62 THE WASHINGTON POST COMPANY