Washington Post 2010 Annual Report Download - page 85

where it does not have significant influence over the operations
and management of the investee. Investments are recorded at the
lower of cost or fair value as estimated by management. Charges
recorded to write down cost method investments to their estimated
fair value and gross realized gains or losses upon the sale of cost
method investments are included in other (expense) income, net, in
the Company’s Consolidated Financial Statements. Fair value
estimates are based on a review of the investees’ product
development activities, historical financial results and projected
discounted cash flows.
Revenue Recognition—Revenue is recognized when persuasive
evidence of an arrangement exists, the fees are fixed or
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 Preparation and International divisions,
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.
During the fourth quarter of 2010, Kaplan Higher Education (KHE)
phased in a new program, the Kaplan Commitment. Under this
program, new students of Kaplan University, Kaplan College and
other KHE schools enroll in classes for several weeks and assess
whether their educational experience meets their needs and
expectations before incurring any significant financial obligation.
Kaplan also conducts academic assessments to help determine
whether students are likely to be successful in their chosen course of
study. Students who choose to withdraw from the program during
this time frame (“risk-free period”) and students who do not pass the
academic evaluation do not have to pay for the coursework. In
general, the risk-free period is approximately four weeks for diploma
programs and five weeks for associate’s and bachelor’s degrees.
The Company does not recognize revenues related to coursework
until the students complete the risk-free period, meet the academic
requirements and decide to continue with their studies, at which
time the fees become fixed and determinable.
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 publishing and television broadcasting revenues:
Media advertising revenues are recognized, net of agency
commissions, when the underlying advertisement is published or
broadcast. Revenues from newspaper subscriptions and retail sales
are recognized upon the later of delivery or publication date, with
adequate provision made for anticipated sales returns.
Sales returns: Consistent with industry practice, certain of the
Company’s products, such as newspapers, 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 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 multiemployer 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
health care and life insurance benefits to certain retired employees.
These employees become eligible for benefits after meeting age
and service requirements.
The Company recognizes the overfunded or underfunded status of a
defined benefit postretirement plan (other than a multiemployer plan)
as an asset or liability in its statement of financial position and
recognizes 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 its plans using the
projected unit credit method and several actuarial assumptions, the
most significant of which are the discount rate, the long-term rate of
asset return and rate of compensation increase. The Company uses
a measurement date of December 31 for its pension and other
postretirement benefit plans.
Self-Insurance—The Company uses a combination of insurance
and self-insurance for a number of risks, including claims related to
employee health care and dental care, disability benefits, workers’
compensation, general liability, property damage and business
2010 FORM 10-K 69