Washington Post 2010 Annual Report Download - page 103

regulations. KHE has responded to ACCSC’s request and at this
time cannot predict if ACCSC will request additional information or
take additional action. ACCSC accredits 32 Kaplan campuses.
Q. FAIR VALUE MEASUREMENTS
Fair value measurements are determined based on the assumptions
that a market participant would use in pricing an asset or liability
based on a three-tiered hierarchy that draws a distinction between
market participant assumptions based on (i) observable inputs, such
as quoted prices in active markets (Level 1); (ii) inputs other than
quoted prices in active markets that are observable either directly
or indirectly (Level 2) and (iii) unobservable inputs that require the
Company to use present value and other valuation techniques
in the determination of fair value (Level 3). Financial assets and
liabilities are classified in their entirety based on the lowest level of
input that is significant to the fair value measure. The Company’s
assessment of the significance of a particular input to the fair value
measurements requires judgment and may affect the valuation of the
assets and liabilities being measured and their placement within the
fair value hierarchy.
The Company’s financial assets and liabilities measured at fair
value on a recurring basis were as follows:
(in millions) Fair Value Level 1 Level 2
At January 2, 2011:
Assets:
Money market investments(1) .... $308.9 $ — $308.9
Marketable equity securities(2) ... 340.9 340.9 —
Other current investments(3) ..... 32.8 11.8 21.0
Total financial assets .......... $682.6 $352.7 $329.9
Liabilities:
Deferred compensation plan
liabilities(4) ................ $ 69.2 $ — $ 69.2
7.25% unsecured notes(5) ....... 457.2 — 457.2
Total financial liabilities ........ $526.4 $ — $526.4
At January 3, 2010:
Assets:
Money market investments(1) ..... $327.8 $ — $327.8
Marketable equity securities(2) .... 353.9 353.9 —
Other current investments(3) ...... 31.1 30.4 0.7
Total financial assets .......... $712.8 $384.3 $328.5
Liabilities:
Deferred compensation plan
liabilities(4) ................ $ 66.6 $ — $ 66.6
7.25% unsecured notes(5) ....... 443.1 — 443.1
Total financial liabilities ........ $509.7 $ — $509.7
(1) The Company’s money market investments are included in cash and cash
equivalents.
(2) The Company’s investments in marketable equity securities are classified as
available-for-sale.
(3) Includes U.S. Government Securities, corporate bonds, mutual funds and time
deposits (with original maturities greater than 90 days, but less than one year).
(4) Includes The Washington Post Company Deferred Compensation Plan and
supplemental savings plan benefits under The Washington Post Company
Supplemental Executive Retirement Plan, which are included in accrued
compensation and related benefits.
(5) See Note J for the carrying amount of these notes.
For assets that are measured using quoted prices in active markets,
the total fair value is the published market price per unit multiplied
by the number of units held without consideration of transaction
costs. Assets and liabilities that are measured using significant other
observable inputs are primarily valued by reference to quoted prices
of similar assets or liabilities in active markets, adjusted for any
terms specific to that asset or liability.
R. BUSINESS SEGMENTS
Through its subsidiary Kaplan, Inc., the Company provides
educational services for individuals, schools and businesses. The
Company also operates principally in three areas of the media
business: cable television, newspaper publishing and television
broadcasting.
Education products and services are provided by Kaplan, Inc. KHE
includes Kaplan’s postsecondary education businesses, made up of
fixed-facility colleges as well as online postsecondary and career
programs. Test Preparation includes Kaplan’s standardized test
preparation and tutoring offerings, as well as the professional
domestic training business, K12 and other businesses. Kaplan
International includes professional training and postsecondary
education businesses outside the United States, as well as English-
language programs. Kaplan Ventures is made up of a number of
businesses in various states of development that are managed
separately from the other education businesses.
In the first quarter of 2010, Kaplan made several minor changes to
its operating and reporting structure: Kaplan Compliance Solutions
was moved from Kaplan Ventures to Test Preparation; Kaplan
Continuing Education was moved from Test Preparation to Kaplan
Ventures; and Colloquy (a business that provides online services to
non-profit higher education institutions) was moved from KHE to
Kaplan Ventures. Segment operating results of the education
division for fiscal years ended 2009 and 2008 have been restated
to reflect these changes. Kaplan’s organizational structure is based
on a number of factors that management uses to evaluate, view and
run its business operations, which include, but are not limited to,
customers, the nature of products and services and use of resources.
The business segments disclosed in the Consolidated Financial
Statements are based on this organizational structure and
information reviewed by the Company’s management to evaluate
the business segment results.
In 2010, the Company discontinued certain offerings of the K12
business and recorded $7.8 million in related closure costs. In the
fourth quarter of 2009, a $4.6 million charge was recorded for
product development and other write-downs at the K12 business.
Also in 2010, Kaplan Test Preparation announced a plan to
reorganize its business consistent with the migration of students to
Kaplan’s online and hybrid test preparation offerings. In conjunction
with this plan, Kaplan Test Preparation began to reduce the number
of leased test preparation centers and incurred $10.4 million in
costs, mostly comprised of charges related to early lease termination
and property, plant and equipment write-downs. The plan is
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