Washington Post 2015 Annual Report Download - page 93

entirety based on the lowest level of input that is significant to the fair value measure. The Company’s
assessment of the significance of a particular input to the fair value measurements requires judgment and may
affect the valuation of the assets and liabilities being measured and their placement within the fair value
hierarchy.
For assets that are measured using quoted prices in active markets, the total fair value is the published market
price per unit multiplied by the number of units held, without consideration of transaction costs. Assets and
liabilities that are measured using significant other observable inputs are primarily valued by reference to quoted
prices of similar assets or liabilities in active markets, adjusted for any terms specific to that asset or liability.
The Company measures certain assets – including goodwill; intangible assets; property, plant and equipment;
cost and equity-method investments – at fair value on a nonrecurring basis when they are deemed to be impaired.
The fair value of these assets is determined with valuation techniques using the best information available and
may include quoted market prices, market comparables and discounted cash flow models.
Fair Value of Financial Instruments. The carrying amounts reported in the Company’s Consolidated
Financial Statements for cash and cash equivalents, restricted cash, accounts receivable, accounts payable and
accrued liabilities, the current portion of deferred revenue and the current portion of debt approximate fair value
because of the short-term nature of these financial instruments. The fair value of long-term debt is determined
based on a number of observable inputs, including the current market activity of the Company’s publicly traded
notes, trends in investor demands and market values of comparable publicly traded debt. The fair value of the
interest rate hedge is determined based on a number of observable inputs, including time to maturity and market
interest rates.
Inventories and Contracts in Progress. Inventories and contracts in progress are stated at the lower of cost or
net realizable values and are based on the first-in, first-out (FIFO) method. Inventory costs include direct
material, direct and indirect labor, and applicable manufacturing overhead. The Company allocates
manufacturing overhead based on normal production capacity and recognizes unabsorbed manufacturing costs in
earnings. The provision for excess and obsolete inventory is based on management’s evaluation of inventories on
hand relative to historical usage, estimated future usage, and technological developments.
Property, Plant and Equipment. Property, plant and equipment is recorded at cost and includes interest
capitalized in connection with major long-term construction projects. Replacements and major improvements are
capitalized; maintenance and repairs are expensed as incurred. Depreciation is calculated using the straight-line
method over the estimated useful lives of the property, plant and equipment: 3 to 20 years for machinery and
equipment; 20 to 50 years for buildings. The costs of leasehold improvements are amortized over the lesser of
their useful lives or the terms of the respective leases.
Evaluation of Long-Lived Assets. The recoverability of long-lived assets and finite-lived intangible assets is
assessed whenever adverse events or changes in circumstances indicate that recorded values may not be
recoverable. A long-lived asset is considered to not be recoverable when the undiscounted estimated future cash
flows are less than the asset’s recorded value. An impairment charge is measured based on estimated fair market
value, determined primarily using estimated future cash flows on a discounted basis. Losses on long-lived assets
to be disposed of are determined in a similar manner, but the fair market value would be reduced for estimated
costs to dispose.
Goodwill and Other Intangible Assets. Goodwill is the excess of purchase price over the fair value of
identified net assets of businesses acquired. The Company’s intangible assets with an indefinite life are
principally from trade names and trademarks, licenses and accreditation. Amortized intangible assets are
primarily student and customer relationships and trade names and trademarks, with amortization periods up to 10
years.
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