Washington Post 2011 Annual Report Download - page 101

Statements are based on this organizational structure and information
reviewed by the Company’s management to evaluate the business
segment results. The Company has eight reportable segments: KHE,
KTP, Kaplan International, Kaplan Ventures, cable television,
newspaper publishing, television broadcasting and other businesses.
The Company evaluates segment performance based on operating
income before amortization of intangible assets. The accounting
policies at the segments are the same as described in Note 2. In
computing income from operations by segment, the effects of equity
in earnings (losses) of affiliates, interest income, interest expense,
other non-operating income and expense items and income taxes
are not included. Intersegment sales are not material.
Identifiable assets by segment are those assets used in the
Company’s operations in each business segment. Investments in
marketable equity securities are discussed in Note 4.
Education. 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. KTP includes Kaplan’s
standardized test preparation and tutoring offerings, as well as the
professional domestic training business, 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 2011, Kaplan made several changes to its
operating and reporting structure. Kaplan’s domestic professional
training business was moved from KTP to KHE and Kaplan
Continuing Education moved from Kaplan Ventures to KHE. These
businesses were integrated with Kaplan University to become part
of the Kaplan University School of Professional and Continuing
Education. Also, Kaplan sold KCS in October 2011, KVE in July
2011, and Education Connection in April 2010; therefore the
education division’s operating results exclude these businesses.
Segment operating results of the education division for fiscal years
ended 2011, 2010 and 2009 have been restated to reflect these
changes. Kaplan Ventures sold one small business in February
2012 and is exploring other alternatives with respect to the
remaining Kaplan Ventures businesses, including possible sales.
In light of recent revenue declines and other business challenges,
Kaplan has formulated and implemented restructuring plans at its
various businesses that have resulted in significant costs in the past
three years, with the objective of establishing lower cost levels in
future periods. Across all Kaplan businesses, severance and
restructuring costs of $29.2 million, $27.5 million and $33.2
million were recorded in 2011, 2010 and 2009, respectively.
Restructuring and severance related expenses of $13.2 million and
$9.3 million were recorded in 2011 and 2010, respectively, at
KHE associated with workforce reductions.
In the first quarter of 2010, the Company discontinued certain
offerings of the K12 business; $7.8 million in severance and other
closure costs were recorded in the first half of 2010 in connection
with this plan. In the fourth quarter of 2010, KTP began
implementing a plan to reorganize its business consistent with the
migration of students to Kaplan’s online and hybrid test preparation
offerings, reducing the number of leased test preparation centers;
$10.4 million in costs were incurred, mostly comprised of charges
related to early lease termination and property, plant and
equipment write-downs. In 2011, implementation of the plan was
completed and $12.5 million in additional restructuring and
severance costs were incurred.
In March 2009, the Company approved a plan to close its Score
tutoring centers. The Company recorded charges of $24.9 million in
asset write-downs, lease terminations, severance and accelerated
depreciation of fixed assets in the first half of 2009. In addition,
restructuring-related expenses of $8.3 million were recorded in 2009
at Kaplan’s professional domestic training business (part of KHE).
Cable Television. Cable television operations consist of cable
systems offering video, Internet, phone and other services to
subscribers in midwestern, western and southern states. The principal
source of revenue is monthly subscription fees charged for services.
Newspaper Publishing. Newspaper publishing includes the
publication of newspapers in the Washington, DC, area and
Everett, WA; newsprint warehousing; and the Company’s digital
media publishing businesses (primarily washingtonpost.com and
Slate). Revenues from newspaper publishing operations are derived
from advertising and, to a lesser extent, from circulation.
Television Broadcasting. Television broadcasting operations are
conducted through six VHF television stations serving the Detroit,
Houston, Miami, San Antonio, Orlando and Jacksonville television
markets. All stations are network-affiliated (except for WJXT in
Jacksonville), with revenues derived primarily from sales of
advertising time.
Other Businesses. Other businesses include the operating results of
Avenue100 Media Solutions and other small businesses.
Corporate Office. Corporate office includes the expenses of the
Company’s corporate office and the pension credit previously
reported in the magazine publishing division. Newsweek
employees were participants in The Washington Post Company
Retirement Plan, and the Company had historically been allocated 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.
Geographical Information. The Company’s non-U.S. revenues in
2011, 2010 and 2009 totaled approximately $628 million,
$540 million and $505 million, respectively, from Kaplan’s
operations outside the U.S. The Company’s long-lived assets in
non-U.S. countries (excluding goodwill and other intangible assets),
totaled approximately $74 million at December 31, 2011, and
$57 million at January 2, 2011.
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