Washington Post 2011 Annual Report Download - page 84

present on the face of the financial statements reclassification
adjustments for items that are reclassified from other comprehensive
income to net income in the statement(s) where the components of
net income and the components of other comprehensive income are
presented. The amendment does not affect how earnings per share
is calculated or presented. This amendment is effective for interim
and fiscal years beginning after December 15, 2011 and must be
applied retrospectively. In December 2011, the FASB deferred the
requirements related to the presentation of reclassification
adjustments until further deliberations have taken place. Entities
should continue to report reclassifications out of accumulated other
comprehensive income consistent with the presentation requirements
in effect prior to the issuance of the June 2011 amended standard.
The amended standard will not impact the Company’s financial
position or results of operations.
In September 2011, the FASB issued new guidance that amends
the current goodwill impairment testing process. The new guidance
permits an entity to first assess qualitative factors to determine
whether it is more likely than not that the fair value of a reporting
unit is less than its carrying amount as a basis for determining
whether it is necessary to perform the two-step goodwill impairment
test. Previous guidance required an entity to test goodwill for
impairment, on at least an annual basis, by comparing the fair
value of a reporting unit with its carrying amount, including
goodwill. The new guidance is effective for goodwill and interim
impairment tests performed for fiscal years beginning after
December 15, 2011. Early adoption is permitted if an entity’s
financial statements for the most recent period have not yet been
issued. The Company early adopted this guidance at the beginning
of the fourth quarter of 2011.
3. DISCONTINUED OPERATIONS
In October 2011, Kaplan completed the sale of Kaplan
Compliance Solutions (KCS). Under the terms of the asset purchase
agreement, the buyer received KCS’ net working capital, tangible
and intangible assets and assumed certain liabilities. The Company
recorded an after-tax gain on the transaction of $1.5 million, which
is included in loss from discontinued operations, net of tax in the
Company’s Consolidated Statement of Operations for fiscal year
2011. In July 2011, Kaplan completed the sale of Kaplan Virtual
Education (KVE). Under the terms of the asset purchase agreement,
the buyer received KVE’s intellectual property, education programs
and selected other long-lived assets. The Company recorded an
after-tax loss on the transaction of $1.2 million, which is included in
loss from discontinued operations, net of tax in the Company’s
Consolidated Statement of Operations for fiscal year 2011.
In April 2010, Kaplan completed the sale of Education Connection
and in September 2010, the Company completed the sale of
Newsweek magazine. The results of operations of KCS, KVE,
Education Connection and the magazine publishing division for
fiscal years 2011, 2010 and 2009, where applicable, 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
Statements of Cash Flows or prior year Consolidated Balance Sheet
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 credits of $25.8 million
and $34.6 million, respectively, for fiscal years 2010 and 2009
have 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 13). 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 December 31, 2011, January 2, 2011 and
January 3, 2010 follows:
(in thousands) 2011 2010 2009
Operating revenues ......... $34,769 $133,013 $243,691
Operating costs and
expenses ............... 42,133 176,454 340,098
Loss from discontinued
operations ............... (7,364) (43,441) (96,407)
Benefit from income taxes ..... (2,834) (16,369) (31,400)
Net loss from discontinued
operations ............... (4,530) (27,072) (65,007)
Gain (loss) on sale of
discontinued operations ..... 2,975 (9,156) —
Provision for income taxes on
sale of discontinued
operations ............... 2,616 5,869 —
Loss from discontinued
operations, net of tax ....... $ (4,171) $ (42,097) $ (65,007)
4. INVESTMENTS
Investments in Marketable Equity Securities. Investments in
marketable equity securities at December 31, 2011, and
January 2, 2011 consist of the following:
(in thousands) 2011 2010
Total cost .......................... $169,271 $223,064
Net unrealized gains ................. 133,930 117,846
Total fair value ...................... $303,201 $340,910
At December 31, 2011, and January 2, 2011, the Company
owned 2,214 shares of Berkshire Hathaway Inc. (“Berkshire”)
Class A common stock and 424,250 shares of Berkshire Class B
common stock, respectively. The Company’s ownership of Berkshire
accounted for $286.4 million, or 94%, and $300.7 million, or
88%, of the total fair value of the Company’s investments in
marketable equity securities at December 31, 2011 and January 2,
2011, respectively.
Berkshire is a holding company owning subsidiaries engaged in a
number of diverse business activities, the most significant of which
consists of property and casualty insurance businesses conducted
on both a direct and reinsurance basis. Berkshire also owns
72 THE WASHINGTON POST COMPANY