Washington Post 2009 Annual Report Download - page 79

option to increase its investment in Kaplan China to an 85%
majority interest. The transaction was completed in November
2008, and Kaplan China’s results from the transaction date forward
have been included in the Company’s consolidated financial
statements. The purchase price allocations for these acquisitions
mostly comprised goodwill and other intangible assets.
Also in 2008, the cable television division acquired subscribers
primarily in the Mississippi area for $15.3 million. The purchase
price allocations for these transactions mostly comprised intangible
assets and property, plant and equipment.
In connection with a 2008 acquisition, additional purchase
consideration of approximately $1.5 million was contingent on the
achievement of certain future operating results and was not included
in the Company’s purchase accounting as of December 28, 2008.
During 2008, the Company recorded $15.1 million of additional
purchase consideration in connection with the achievement of
certain operating results by a company acquired in 2007 and
allocated the additional purchase consideration to goodwill.
During 2007, the Company acquired 11 businesses within its
education, newspaper and other businesses and corporate office
segments for a total of $292.0 million, financed with cash and
$2.0 million in debt. Kaplan acquired 9 businesses in its
International, Test Preparation and Ventures divisions, of which
the largest two were Kaplan Ventures’ acquisition of EduNeering
Holdings, Inc., a Princeton, NJ-based provider of knowledge
management solutions for organizations in the pharmaceutical,
medical device, health care, energy and manufacturing sectors;
and Kaplan International’s acquisition of the education division of
Financial Services Institute of Australasia. In October 2007, the
Company acquired the outstanding stock of Avenue100 Media
Solutions (formerly CourseAdvisor, Inc.), a premier online lead
generation provider, headquartered in Wakefield, MA. Through its
search engine marketing expertise and proprietary technology
platform, Avenue100 generates student leads for the postsecondary
education market. Avenue100 operates as an independent
subsidiary of the Company. The purchase price allocations for these
acquisitions mostly comprised goodwill and other intangible assets.
Also in 2007, the cable television division acquired subscribers in
the Boise, ID, area for $4.3 million. Most of the purchase price for
this transaction was allocated to indefinite-lived intangible assets
and property, plant and equipment.
In connection with certain 2007 acquisitions, additional purchase
consideration of approximately $22 million was contingent on the
achievement of certain future operating results; such amounts were
largely funded in escrow in 2007 and were not included in the
Company’s purchase accounting as of December 30, 2007. In
July 2007, the television broadcasting division entered into a
transaction to sell and lease back its current Miami television station
facility; a $9.5 million gain was recorded as a reduction to
expense in the third quarter. An additional $1.9 million deferred
gain was amortized over the leaseback period. The television
broadcasting division purchased land and built a new Miami
television station facility that was completed in 2009.
G. GOODWILL AND OTHER INTANGIBLE ASSETS
The education division reorganized its operations in the third quarter
of 2009 into the following four operating segments for the purpose
of making operating decisions and assessing performance: Higher
Education, Test Preparation, Kaplan International and Kaplan
Ventures (see Note Q). The reorganization changed the
composition of the reporting units within the education division
and resulted in the reassignment of the assets and liabilities. The
goodwill was allocated to the reporting units using the relative fair
value approach. As a result of the reassignment and allocation, the
Company performed an interim review of the carrying value of
goodwill at the education division for possible impairment on both a
prereorganization and postreorganization basis. No impairment of
goodwill was indicated at the prereorganization reporting units. On
a postreorganization basis, the Company failed the step one
goodwill impairment test at two reporting units (Kaplan EduNeering
and Kaplan Compliance Solutions) within the Kaplan Ventures
operating segment and performed a step two analysis. The
Company recorded a goodwill and other long-lived asset
impairment charge of $25.4 million related to these two reporting
units. The fair value of Kaplan EduNeering was determined utilizing
a discounted cash flow model; the fair value of Kaplan Compliance
Solutions was determined using a cost approach.
In 2008, the Company recorded goodwill and other intangible
asset impairment charges of $135.4 million. As a result of the
challenging advertising environment at the Company’s community
newspapers and The Herald, which are part of the newspaper
publishing segment, the Company performed an interim review of
the carrying value of goodwill and recorded a $59.7 million
goodwill impairment charge. The Company estimated the fair value
utilizing a discounted cash flow model. As part of the Company’s
annual impairment review, a $69.7 million goodwill and other
intangible assets impairment charge was recorded at the
Company’s online lead generation business within the other
businesses and corporate office segment, due to lower than
expected revenue and operating income growth since its
acquisition. The Company estimated the fair value utilizing a
discounted cash flow model. The Company also recorded a
goodwill impairment charge of $6.1 million in the newspaper
publishing segment as part of its annual impairment review. The
Company estimated the fair value utilizing a market approach.
Also in the fourth quarter of 2008, the Company recorded a
$28.4 million amortized intangible asset in connection with a non-
competition and nonsolicitation agreement entered into between the
Company and the former Kaplan chief executive officer, who
resigned in November 2008. This asset is being amortized over
three years.
The Company amortizes the recorded values of its amortized
intangible assets over their estimated useful lives. Amortization of
intangible assets was $26.6 million in 2009 and is estimated to be
approximately $24.6 million in 2010, $20.7 million in 2011,
$9.2 million in 2012, $4.9 million in 2013, $3.2 million in 2014
and $8.7 million thereafter.
2009 FORM 10-K 65