Washington Post 2011 Annual Report Download - page 86

7. ACQUISITIONS AND DISPOSITIONS
The Company completed business acquisitions totaling approximately
$136.5 million, $14.1 million and $26.1 million, in 2011, 2010
and 2009, respectively. The assets and liabilities of the companies
acquired have been recorded at their estimated fair values at the date
of acquisition.
During 2011, the Company completed five business acquisitions totaling
approximately $136.5 million, including assumed debt of $5.5 million
and other assumed liabilities. Kaplan acquired three businesses in its
Kaplan International division, one business in its KHE division, and one
business in its Kaplan Ventures division. These included the May 2011
acquisitions of Franklyn Scholar and Carrick Education Group, leading
national providers of vocational training and higher education in
Australia, and the June 2011 acquisition of Structuralia, a provider of
e-learning for the engineering and infrastructure sector in Spain. The
purchase price allocations mostly comprised goodwill, other intangible
assets, and property, plant and equipment.
Kaplan completed the sales of KVE in July 2011 and KCS in
October 2011, which were part of Kaplan Ventures and KHE,
respectively. In April 2010, Kaplan completed the sale of Education
Connection, which was part of Kaplan Ventures. Consequently, the
Company’s income from continuing operations excludes results from
these businesses, which have been reclassified to discontinued
operations (see Note 3).
During 2010, the Company acquired six businesses for $14.1
million. Kaplan acquired two small businesses in its KTP division,
one small business in its Ventures division and one small business in
its International division. The Company made two small acquisitions
in its cable television and other businesses divisions. The purchase
price allocations for these acquisitions mostly comprised goodwill
and other intangible assets.
In September 2010, the Company completed the sale of
Newsweek. In December 2009, the Company completed the sale
of Newsweek’s Budget Travel. Consequently, the Company’s
income from continuing operations excludes magazine publishing
division results, which have been reclassified to discontinued
operations (see Note 3).
During 2009, the Company acquired three businesses for $26.1
million. Kaplan acquired one business in each of its International
and KTP divisions, and the newspaper publishing division acquired
a small local publication. The purchase price allocations for these
acquisitions mostly comprised goodwill and other intangible assets.
Also in 2009, the Company recorded $3.2 million of additional
purchase consideration in connection with the achievement of
certain operating results by a company acquired in 2007 and
allocated the additional purchase consideration to goodwill.
8. GOODWILL AND OTHER INTANGIBLE ASSETS
The education division made several changes to its operating and
reporting structure in the first quarter of 2011 and 2010, changing
the composition of the reporting units within KTP, Kaplan Ventures
and KHE (see Note 18). The changes resulted in the reassignment
of the assets and liabilities to the reporting units affected. The
goodwill was allocated to the reporting units affected using the
relative fair value approach.
As a result of continued challenges in the lead generation industry,
in both the third quarters of 2011 and 2010, the Company
performed interim reviews of the carrying value of goodwill and
other intangible asset at its online lead generation business, which
is included within the other businesses segment. The business failed
the step one goodwill impairment tests and the Company performed
a step two analysis, resulting in an $11.9 million and a $27.5
million goodwill and other intangible assets impairment charge in
the third quarters of 2011 and 2010, respectively. The Company
estimated the fair value utilizing a discounted cash flow model.
The education division reorganized its operations in the third quarter
of 2009 into the following four operating segments for the purpose
of making operating decisions and assessing performance: KHE,
KTP, Kaplan International and Kaplan Ventures. The reorganization
changed the composition of the reporting units within the education
division and resulted in the reassignment of the assets and liabilities.
The goodwill was allocated to the reporting units using the relative
fair value approach. As a result of the reassignment and allocation,
the Company performed an interim review of the carrying value of
goodwill at the education division for possible impairment on both a
prereorganization and postreorganization basis. No impairment of
goodwill was indicated at the prereorganization reporting units. On
a postreorganization basis, the Company failed the step one
goodwill impairment test at Kaplan EduNeering and KCS and
performed a step two analysis. The Company recorded a goodwill
and other long-lived asset impairment charge of $25.4 million
related to these two reporting units in 2009. The fair value of
Kaplan EduNeering was determined utilizing a discounted cash
flow model; the fair value of KCS was determined using a cost
approach. Of the $25.4 million goodwill and other long-lived asset
impairment charge, $16.9 million related to KCS and is included in
“Loss from discontinued operation, net of tax” in the Company’s
Consolidated Statements of Operations.
Amortization of intangible assets is estimated to be approximately
$15 million in 2012, $12 million in 2013, $9 million in 2014,
$8 million in 2015, $5 million in 2016 and $6 million thereafter.
74 THE WASHINGTON POST COMPANY