Washington Post 2014 Annual Report Download - page 101

17. LEASES AND OTHER COMMITMENTS
The Company leases real property under operating agreements.
Many of the leases contain renewal options and escalation clauses
that require payments of additional rent to the extent of increases in
the related operating costs.
At December 31, 2014, future minimum rental payments under
noncancelable operating leases approximate the following:
(in thousands)
2015 ...................................... $122,527
2016 ...................................... 115,772
2017 ...................................... 101,638
2018 ...................................... 83,628
2019 ...................................... 66,966
Thereafter ................................... 347,329
$837,860
Includes a Kaplan lease signed January 31, 2015 with a total
obligation of $16.5 million.
Minimum payments have not been reduced by minimum sublease
rentals of $94.2 million due in the future under noncancelable
subleases, including $61.5 million related to a Kaplan sublease
signed February 5, 2015.
Rent expense under operating leases, including a portion reported
in discontinued operations, was approximately $105.5 million,
$118.5 million and $127.2 million in 2014, 2013 and 2012,
respectively. Sublease income was approximately $5.4 million,
$5.4 million and $4.4 million in 2014, 2013 and 2012,
respectively.
The Company’s broadcast subsidiaries are parties to certain agree-
ments that commit them to purchase programming to be produced
in future years. At December 31, 2014, such commitments
amounted to approximately $21.0 million. If such programs are not
produced, the Company’s commitment would expire without obliga-
tion.
18. CONTINGENCIES
Litigation and Legal Matters.The Company and its subsidiaries are
subject to complaints and administrative proceedings and are
defendants in various civil lawsuits that have arisen in the ordinary
course of their businesses, including contract disputes; actions alleg-
ing negligence, libel, invasion of privacy; trademark, copyright and
patent infringement; U.S. False Claims Act (False Claims Act) viola-
tions; violations of applicable wage and hour laws; and statutory or
common law claims involving current and former students and
employees. Although the outcomes of the legal claims and proceed-
ings against the Company cannot be predicted with certainty,
based on currently available information, management believes that
there are no existing claims or proceedings that are likely to have a
material effect on the Company’s business, financial condition,
results of operations or cash flows. Also, based on currently avail-
able information, management is of the opinion that the exposure to
future material losses from existing legal proceedings is not reason-
ably possible, or that future material losses in excess of the amounts
accrued are not reasonably possible.
On February 6, 2008, a purported class-action lawsuit was filed in
the U.S. District Court for the Central District of California by pur-
chasers of BAR/BRI bar review courses, from July 2006 onward,
alleging antitrust claims against Kaplan and West Publishing Corpo-
ration, BAR/BRI’s former owner. On April 10, 2008, the court
granted defendants’ motion to dismiss, a decision that was reversed
by the Ninth Circuit Court of Appeals on November 7, 2011. The
Ninth Circuit also referred the matter to a mediator for the purpose
of exploring a settlement. In the fourth quarter of 2012, the parties
reached a comprehensive agreement to settle the matter. The settle-
ment was approved by the District Court in September 2013 and
will be administered following the resolution of appeals relating to
attorney fees.
On or about January 17, 2008, an Assistant U.S. Attorney in the
Civil Division of the U.S. Attorney’s Office for the Eastern District of
Pennsylvania contacted KHE’s Broomall campus and made inquiries
about the Surgical Technology program, including the program’s
eligibility for Title IV U.S. Federal financial aid, the program’s stu-
dent loan defaults, licensing and accreditation. Kaplan responded
to the information requests and fully cooperated with the inquiry.
The ED also conducted a program review at the Broomall campus,
and Kaplan likewise cooperated with the program review. On
July 22, 2011, the U.S. Attorney’s Office for the Eastern District of
Pennsylvania announced that it had entered into a comprehensive
settlement agreement with Kaplan that resolved the U.S. Attorney’s
inquiry, provided for the conclusion of the ED’s program review and
also settled a previously sealed U.S. Federal False Claims Act (False
Claims Act) complaint that had been filed by a former employee of
the CHI-Broomall campus. The total amount of all required payments
by Broomall under the agreements was $1.6 million. Pursuant to the
comprehensive settlement agreement, the U.S. Attorney inquiry has
been closed, the False Claims Act complaint (United States of Amer-
ica ex rel. David Goodstein v. Kaplan, Inc. et al.) was dismissed
with prejudice and the ED will issue a final program review determi-
nation. At this time, Kaplan cannot predict the contents of the pend-
ing final program review determination or the ultimate impact the
proceedings may have on the Broomall campus or the KHE business
generally.
During 2014, certain Kaplan subsidiaries were subject to two other
unsealed cases filed by former employees that include, among other
allegations, claims under the False Claims Act relating to eligibility
for Title IV funding. The U.S. Government declined to intervene in all
cases, and, as previously reported, court decisions either dismissed
the cases in their entirety or narrowed the scope of their allegations.
The two cases are captioned: United States of America ex rel.
Carlos Urquilla-Diaz et al.v. Kaplan University et al. (unsealed
March 25, 2008) and United States of America ex rel. Charles
Jajdelski v. Kaplan Higher Education Corp. et al. (unsealed Jan-
uary 6, 2009).
On August 17, 2011, the U.S. District Court for the Southern Dis-
trict of Florida issued a series of rulings in the Diaz case, which
included three separate complaints: Diaz, Wilcox and Gillespie.
The court dismissed the Wilcox complaint in its entirety; dismissed
all False Claims Act allegations in the Diaz complaint, leaving only
an individual employment claim; and dismissed in part the Gillespie
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