Washington Post 2012 Annual Report Download - page 85

estimated future cash flows, discount rates, long-term growth rates
and market values to determine each reporting unit’s and indefinite-
lived intangible asset’s estimated fair value. If these estimates or
related assumptions change in the future, the Company may be
required to record impairment charges.
Investments in Affiliates. The Company uses the equity method of
accounting for its investments in and earnings or losses of affiliates
that it does not control, but over which it exerts significant influence.
The Company considers whether the fair values of any of its equity
method investments have declined below their carrying value
whenever adverse events or changes in circumstances indicate
that recorded values may not be recoverable. If the Company
considered any such decline to be other than temporary (based
on various factors, including historical financial results, product
development activities and the overall health of the affiliate’s
industry), a write-down would be recorded to estimated fair value.
Cost Method Investments. The Company uses the cost method
of accounting for its minority investments in nonpublic companies
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 (KTP) 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.
Kaplan Higher Education (KHE), through the Kaplan Commitment
program, provides first-time students with a risk-free trial period.
Under the program, KHE monitors academic progress and conducts
assessments to help determine whether students are likely to be
successful in their chosen course of study. Students who withdraw or
are subject to dismissal during the risk-free trial period do not incur
any significant financial obligation. 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 television revenues. Cable television 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 noncurrent 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 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
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