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C. DISCONTINUED OPERATIONS
On September 30, 2010, the Company completed the sale of
Newsweek magazine. Under the terms of the asset purchase
agreement, the buyer assumed Newsweek’s subscription
obligations and received Newsweek’s intellectual property, target
working capital and selected equipment used in the business. The
Company retained the pension assets and liabilities and certain
employee obligations, including severance, and other liabilities
arising prior to the sale. The Company recorded an after-tax loss on
the transaction of $11.5 million, which is included in “Loss from
discontinued operations, net of tax” in the Company’s Consolidated
Statement of Operations for fiscal year 2010.
The results of operations of the magazine publishing division for
fiscal years 2010, 2009 and 2008 are included in the Company’s
Consolidated Statements of Operations as “Loss from discontinued
operations, net of tax.” All corresponding prior period operating
results presented in the Company’s Consolidated Financial
Statements and the accompanying notes have been reclassified to
reflect the discontinued operations presented. The Company did not
reclassify its Consolidated Balance Sheet as of January 3, 2010 to
reflect the discontinued operations. The Company also did not
reclassify its Consolidated Statements of Cash Flows to reflect the
discontinued operations.
Newsweek employees were participants in The Washington Post
Company Retirement Plan, and the Company had historically
allocated Newsweek a net pension credit for segment reporting
purposes. Since the associated pension assets and liabilities were
retained by the Company, the associated credit has been excluded
from the reclassification of Newsweek results to discontinued
operations. Pension cost arising from early retirement programs at
Newsweek, however, is included in discontinued operations (see
Note M).
In fiscal year 2010, Newsweek recorded $4.7 million in
accelerated depreciation and property, plant and equipment write-
downs in anticipation of the sale.
The summarized loss from discontinued operations, net of tax, for
the years ended January 2, 2011, January 3, 2010 and
December 28, 2008 follows:
(in thousands) 2010 2009 2008
Operating revenues ........ $ 93,481 $183,215 $249,865
Operating costs and
expenses .............. 121,092 247,102 307,577
Loss from discontinued
operations ............. (27,611) (63,887) (57,712)
Benefit from income taxes .... (10,269) (18,800) (27,200)
Net loss from discontinued
operations ............. (17,342) (45,087) (30,512)
Loss on sale of
discontinued operations .... (10,293) ——
Provision for income taxes on
sale of discontinued
operations ............. 1,169 ——
Loss from discontinued
operations, net of tax ...... $ (28,804) $ (45,087) $ (30,512)
D. ACCOUNTS RECEIVABLE, ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES
Accounts receivable at January 2, 2011 and January 3, 2010
consist of the following:
(in thousands) 2010 2009
Trade accounts receivable, less estimated
returns, doubtful accounts and allowances
of $70,181 and $106,781 .......... $379,480 $415,688
Other accounts receivable .............. 17,544 14,981
$397,024 $430,669
Accounts payable and accrued liabilities at January 2, 2011 and
January 3, 2010 consist of the following:
(in thousands) 2010 2009
Accounts payable and accrued liabilities . . . $430,119 $376,784
Accrued compensation and related benefits . 196,069 178,694
$626,188 $555,478
Cash overdrafts of $26.2 million and $30.4 million are included in
accounts payable and accrued liabilities at January 2, 2011 and
January 3, 2010, respectively.
The changes in allowance for doubtful accounts and returns and
allowance for advertising rate adjustments and discounts during
2010, 2009 and 2008 were as follows:
(in thousands)
Balance at
Beginning
of Period
Additions –
Charged to
Costs and
Expenses Deductions
Balance
at
End of
Period
Year Ended January 2, 2011
Allowance for
doubtful accounts
and returns ...... $ 98,286 $137,888 $(169,167) $ 67,007
Allowance for
advertising rate
adjustments and
discounts ........ 8,495 12,216 (17,537) 3,174
$106,781 $150,104 $(186,704)$ 70,181
Year Ended January 3, 2010
Allowance for doubtful
accounts and
returns .......... $ 95,425 $168,455 $(165,594) $ 98,286
Allowance for
advertising rate
adjustments and
discounts ........ 9,228 24,208 (24,941) 8,495
$104,653 $192,663 $(190,535) $106,781
Year Ended December 28, 2008
Allowance for doubtful
accounts and
returns .......... $ 77,585 $155,288 $(137,448) $ 95,425
Allowance for
advertising rate
adjustments and
discounts ........ 4,318 30,751 (25,841) 9,228
$ 81,903 $186,039 $(163,289) $104,653
2010 FORM 10-K 71