Washington Post 2015 Annual Report Download - page 96

its plans using the projected unit credit method and several actuarial assumptions, the most significant of which
are the discount rate, the expected return on plan assets and rate of compensation increase. The Company uses a
measurement date of December 31 for its pension and other postretirement benefit plans.
Self-Insurance. The Company uses a combination of insurance and self-insurance for a number of risks,
including claims related to employee health care and dental care, disability benefits, workers’ compensation,
general liability, property damage and business interruption. Liabilities associated with these plans are estimated
based on, among other things, the Company’s historical claims experience, severity factors and other actuarial
assumptions. The expected loss accruals are based on estimates, and, while the Company believes that the
amounts accrued are adequate, the ultimate loss may differ from the amounts provided.
Income Taxes. The Company accounts for income taxes under the asset and liability method, which requires
the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have
been included in the financial statements. Under this method, deferred tax assets and liabilities are determined
based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on
deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
The Company records net deferred tax assets to the extent that it believes these assets will more likely than not be
realized. In making such determination, the Company considers all available positive and negative evidence,
including future reversals of existing taxable temporary differences, projected future taxable income, tax
planning strategies and recent financial operations; this evaluation is made on an ongoing basis. In the event the
Company were to determine that it was able to realize net deferred income tax assets in the future in excess of
their net recorded amount, the Company would record an adjustment to the valuation allowance, which would
reduce the provision for income taxes.
The Company recognizes a tax benefit from an uncertain tax position when it is more likely than not that the
position will be sustained upon examination, including resolutions of any related appeals or litigation processes,
based on the technical merits. The Company records a liability for the difference between the benefit recognized
and measured for financial statement purposes and the tax position taken or expected to be taken on the
Company’s tax return. Changes in the estimate are recorded in the period in which such determination is made.
Foreign Currency Translation. Income and expense accounts of the Company’s non-United States operations
where the local currency is the functional currency are translated into United States (U.S.) dollars using the
current rate method, whereby operating results are converted at the average rate of exchange for the period, and
assets and liabilities are converted at the closing rates on the period end date. Gains and losses on translation of
these accounts are accumulated and reported as a separate component of equity and other comprehensive income.
Gains and losses on foreign currency transactions, including foreign currency denominated intercompany loans
on entities with a functional currency in U.S. dollars, are recognized in the Consolidated Statements of
Operations.
Equity-Based Compensation. The Company measures compensation expense for awards settled in shares
based on the grant date fair value of the award. The Company measures compensation expense for awards settled
in cash, or that may be settled in cash, based on the fair value at each reporting date. The Company recognizes
the expense over the requisite service period, which is generally the vesting period of the award.
Earnings Per Share. Basic earnings per share is calculated under the two-class method. The Company treats
restricted stock as a participating security due to its nonforfeitable right to dividends. Under the two-class
method, the Company allocates to the participating securities their portion of dividends declared and
undistributed earnings to the extent the participating securities may share in the earnings as if all earnings for the
period had been distributed. Basic earnings per share is calculated by dividing the income available to common
stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings
81 GRAHAM HOLDINGS COMPANY