Business Segments

6 Months Ended

Jul. 03, 2011

Business Segments

Business Segments

Note 12: Business Segments

Through its subsidiary Kaplan, Inc., the Company provides educational services for individuals, schools and businesses. The Company also operates principally in three areas of the media business: cable television, newspaper publishing and television broadcasting.

In the first quarter of 2011, Kaplan made several changes to its operating and reporting structure. Kaplan's domestic professional training business was moved from Test Preparation to Kaplan Higher Education and Kaplan Continuing Education moved from Kaplan Ventures to Kaplan Higher Education. These businesses were integrated with Kaplan University to become part of the Kaplan University School of Continuing and Professional Education. Also, Kaplan sold Kaplan Virtual Education in July 2011 and Education Connection in April 2010; therefore, the education division's operating results exclude these businesses. Segment operating results of the education division have been restated to reflect these changes.

Cable television operations consist of cable systems offering video, Internet, phone and other services to subscribers in midwestern, western and southern states. The principal source of revenue is monthly subscription fees charged for services.

Newspaper publishing includes the publication of newspapers in the Washington, DC, area and Everett, WA; newsprint warehousing; and the Company's electronic media publishing business (primarily washingtonpost.com and Slate). Revenues from newspaper publishing operations are derived from advertising and, to a lesser extent, from circulation.

Television broadcasting operations are conducted through six VHF television stations serving the Detroit, Houston, Miami, San Antonio, Orlando and Jacksonville television markets. All stations are network-affiliated (except for WJXT in Jacksonville), with revenues derived primarily from sales of advertising time.

Other businesses include the operating results of Avenue100 Media Solutions and other small businesses.

Corporate office includes the expenses of the Company's corporate office and the pension credit previously reported in the magazine publishing division.

Due to the sale of Newsweek, the magazine publishing division is no longer included as a separate segment as its results have been reclassified to discontinued operations. Newsweek employees were participants in The Washington Post Company Retirement Plan, and the Company had historically allocated a net pension credit for segment reporting purposes. Since the associated pension assets and liabilities were retained by the Company, the associated credit has been excluded from the reclassification of Newsweek results to discontinued operations. Pension cost arising from early retirement programs at Newsweek, however, is included in discontinued operations.

In computing income from operations by segment, the effects of equity in losses of affiliates, interest income, interest expense, other non-operating income and expense items and income taxes are not included.

The following table summarizes quarterly financial information related to each of the Company's business segments for 2011 (in thousands):

	First Quarter			Second Quarter
2011 Quarterly Operating Results
Operating revenues
Education	$	630,027		$	628,701
Cable television		190,280			191,231
Newspaper publishing		154,997			162,772
Television broadcasting		72,183			84,940
Other businesses		6,662			6,095
Corporate office		—			—
Intersegment elimination		(1,139	)		(742	)
	$	1,053,010		$	1,072,997
Income (loss) from operations
Education	$	18,512		$	20,462
Cable television		37,707			40,425
Newspaper publishing		(12,827	)		(2,918	)
Television broadcasting		19,591			32,571
Other businesses		(5,039	)		(5,014	)
Corporate office		(2,928	)		(4,433	)
	$	55,016		$	81,093
Equity in earnings of affiliates		3,737			3,138
Interest expense, net		(6,979	)		(6,963	)
Other, net		(24,032	)		(2,591	)
Income from continuing operations before income taxes	$	27,742		$	74,677
Depreciation of property, plant and equipment
Education	$	21,209		$	22,517
Cable television		31,786			31,533
Newspaper publishing		6,900			6,540
Television broadcasting		3,110			3,134
Other businesses		81			84
Corporate office		144			100
	$	63,230		$	63,908
Amortization of intangible assets
Education	$	4,925		$	5,547
Cable television		73			66
Newspaper publishing		290			289
Television broadcasting		—			—
Other businesses		933			934
Corporate office		—			—
	$	6,221		$	6,836
Net pension (expense) credit
Education	$	(1,552	)	$	(1,652	)
Cable television		(518	)		(497	)
Newspaper publishing		(6,705	)		(5,288	)
Television broadcasting		(646	)		(335	)
Other businesses		(17	)		(17	)
Corporate office		9,297			9,247
	$	(141	)	$	1,458

The following table summarizes quarterly financial information related to each of the Company's business segments for 2010 (in thousands):

	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
2010 Quarterly Operating Results
Operating revenues
Education	$	698,336		$	742,921		$	741,156		$	695,619
Cable television		189,358			190,558			188,694			191,274
Newspaper publishing		155,771			172,730			163,447			188,425
Television broadcasting		73,482			82,592			83,178			102,912
Other businesses		14,134			10,693			13,098			8,470
Corporate office		—			—			—			—
Intersegment elimination		(2,096	)		(2,084	)		(2,013	)		(861	)
	$	1,128,985		$	1,197,410		$	1,187,560		$	1,185,839
Income (loss) from operations
Education	$	61,444		$	112,391		$	106,439		$	66,077
Cable television		42,536			43,790			40,264			37,355
Newspaper publishing		(13,752	)		(14,300	)		(1,715	)		19,941
Television broadcasting		20,911			29,806			25,283			45,348
Other businesses		(833	)		(2,885	)		(28,459	)		(2,789	)
Corporate		(3,707	)		(1,904	)		(3,898	)		(15,063	)
	$	106,599		$	166,898		$	137,914		$	150,869
Equity in losses of affiliates		(8,109	)		2,027			2,140			(191	)
Interest expense, net		(7,253	)		(6,999	)		(7,033	)		(6,642	)
Other, net		(3,321	)		(3,807	)		12,486			2,157
Income from continuing operations before income taxes	$	87,916		$	158,119		$	145,507		$	146,193
Depreciation of property, plant and equipment
Education	$	18,608		$	19,020		$	18,950		$	21,420
Cable television		31,626			30,722			31,174			31,312
Newspaper publishing		7,884			7,818			7,416			7,223
Television broadcasting		3,137			3,260			3,182			3,141
Other businesses		59			62			72			77
Corporate office		144			142			145			728
	$	61,458		$	61,024		$	60,939		$	63, 901
Amortization of intangible assets
Education	$	5,220		$	6,300		$	4,943		$	5,171
Cable television		76			75			74			102
Newspaper publishing		282			389			262			290
Television broadcasting		—			—			—			—
Other businesses		882			785			1,187			932
Corporate office		—			—			—			—
	$	6,460		$	7,549		$	6,466		$	6,495
Impairment of goodwill and other long-lived assets
Education	$	—		$	—		$	—		$	—
Cable television		—			—			—			—
Newspaper publishing		—			—			—			—
Television broadcasting		—			—			—			—
Other businesses		—			—			27,477			—
Corporate office		—			—			—			—
	$	—		$	—		$	27,477		$	—
Net pension credit (expense)
Education	$	(1,349	)	$	(1,526	)	$	(1,434	)	$	(1,398	)
Cable television		(468	)		(475	)		(488	)		(488	)
Newspaper publishing		(5,560	)		(23,192	)		(8,088	)		(5,447	)
Television broadcasting		(262	)		(295	)		(278	)		(278	)
Other businesses		(15	)		(18	)		(15	)		(17	)
Corporate office		8,089			8,570			8,571			9,369
	$	435		$	(16,936	)	$	(1,732	)	$	1,741

The following table summarizes financial information related to each of the Company's business segments for the six months ended 2011 and 2010, as well as for the fiscal years 2010 and 2009 (in thousands):

	Six Month Period						Fiscal Year Ended
	2011			2010			2010			2009
Operating revenues
Education	$	1,258,728		$	1,441,257		$	2,878,032		$	2,595,802
Cable television		381,511			379,916			759,884			750,409
Newspaper publishing		317,769			328,501			680,373			679,282
Television broadcasting		157,123			156,074			342,164			272,651
Other businesses		12,757			24,827			46,395			53,921
Corporate office		—			—			—			—
Intersegment elimination		(1,881	)		(4,180	)		(7,054	)		(6,385	)
	$	2,126,007		$	2,326,395		$	4,699,794		$	4,345,680
Income (loss) from operations
Education	$	38,974		$	173,835		$	346,351		$	209,184
Cable television		78,132			86,326			163,945			169,051
Newspaper publishing		(15,745	)		(28,052	)		(9,826	)		(163,549	)
Television broadcasting		52,162			50,717			121,348			70,506
Other businesses		(10,053	)		(3,718	)		(34,966	)		(61	)
Corporate office		(7,361	)		(5,611	)		(24,572	)		(12,829	)
	$	136,109		$	273,497		$	562,280		$	272,302
Equity in earnings (losses) of affiliates		6,875			(6,082	)		(4,133	)		(29,421	)
Interest expense, net		(13,942	)		(14,252	)		(27,927	)		(28,968	)
Other, net		(26,623	)		(7,128	)		7,515			13,197
Income from continuing operations before income taxes	$	102,419		$	246,035		$	537,735		$	227,110
Depreciation of property, plant and equipment
Education	$	43,726		$	37,628		$	77,998		$	81,015
Cable television		63,319			62,348			124,834			124,207
Newspaper publishing		13,440			15,702			30,341			72,870
Television broadcasting		6,244			6,397			12,720			12,299
Other businesses		165			121			270			151
Corporate office		244			286			1,159			679
	$	127,138		$	122,482		$	247,322		$	291,221
Amortization of intangible assets
Education	$	10,472		$	11,520		$	21,634		$	21,875
Cable television		139			151			327			310
Newspaper publishing		579			671			1,223			1,010
Television broadcasting		—			—			—			—
Other businesses		1,867			1,667			3,786			3,099
Corporate office		—			—			—			—
	$	13,057		$	14,009		$	26,970		$	26,294
Impairment of goodwill and other long-lived assets
Education	$	—		$	—		$	—		$	25,387
Cable television		—			—			—			—
Newspaper publishing		—			—			—			—
Television broadcasting		—			—			—			—
Other businesses		—			—			27,477			—
Corporate office		—			—			—			—
	$	—		$	—		$	27,477		$	25,387
Net pension credit (expense)
Education	$	(3,204	)	$	(2,875	)	$	(5,707	)	$	(5,414	)
Cable television		(1,015	)		(943	)		(1,919	)		(1,851	)
Newspaper publishing		(11,993	)		(28,752	)		(42,287	)		(75,925	)
Television broadcasting		(981	)		(557	)		(1,113	)		(418	)
Other businesses		(34	)		(33	)		(65	)		(82	)
Corporate office		18,544			16,659			34,599			33,836
	$	1,317		$	(16,501	)	$	(16,492	)	$	(49,854	)

Asset information for the Company's business segments are as follows (in thousands):

	As of
	July 3, 2011		January 2, 2011		January 3, 2010
Identifiable assets
Education	$	2,061,646	$	2,197,277	$	2,188,328
Cable television		1,139,612		1,141,427		1,164,209
Newspaper publishing		174,621		206,305		207,234
Television broadcasting		431,627		436,289		433,705
Other businesses		27,009		30,038		54,418
Corporate office		886,772		774,484		729,706
	$	4,721,287	$	4,785,820	$	4,777,600
Investments in marketable equity securities		325,805		340,910		353,884
Investments in affiliates		32,687		31,637		54,722
Assets of discontinued operations		12,715		—		—
Total assets	$	5,092,494	$	5,158,367	$	5,186,206

The following table summarizes 2011 quarterly financial information related to the operating segments of the Company's education division (in thousands):

	First Quarter			Second Quarter
2011 Quarterly Operating Results
Operating revenues
Higher education	$	390,279		$	362,169
Test preparation		73,365			83,197
Kaplan international		148,687			166,071
Kaplan ventures		18,365			17,418
Kaplan corporate and other		1,117			1,065
Intersegment elimination		(1,786	)		(1,219	)
	$	630,027		$	628,701
Income (loss) from operations
Higher education	$	50,483		$	45,295
Test preparation		(12,676	)		(11,597	)
Kaplan international		547			10,207
Kaplan ventures		(3,068	)		(4,290	)
Kaplan corporate and other		(16,543	)		(19,171	)
Intersegment elimination		(231	)		18
	$	18,512		$	20,462
Depreciation of property, plant and equipment
Higher education	$	11,450		$	12,115
Test preparation		4,449			3,796
Kaplan international		3,430			4,713
Kaplan ventures		1,049			1,028
Kaplan corporate and other		831			865
	$	21,209		$	22,517
Amortization of intangible assets		4,925			5,547
Kaplan stock-based incentive compensation (credit) expense		(825	)		483

The following table summarizes quarterly financial information related to the operating segments within the Company's education division for 2010 (in thousands):

	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
2010 Quarterly Operating Results
Operating revenues
Higher education	$	478,751		$	507,448		$	495,595		$	438,997
Test preparation		73,815			85,238			80,236			75,590
Kaplan international		133,985			137,389			151,208			163,342
Kaplan ventures		14,123			13,423			14,065			17,685
Kaplan corporate and other		1,291			1,283			1,375			1,588
Intersegment elimination		(3,629	)		(1,860	)		(1,323	)		(1,583	)
	$	698,336		$	742,921		$	741,156		$	695,619
Income (loss) from operations
Higher education	$	91,604		$	127,067		$	117,508		$	70,547
Test preparation		(11,770	)		(327	)		(1,625	)		(18,861	)
Kaplan international		4,527			12,945			14,904			23,776
Kaplan ventures		(3,981	)		(4,949	)		(5,076	)		(3,484	)
Kaplan corporate and other		(18,945	)		(22,054	)		(19,302	)		(5,919	)
Intersegment elimination		9			(291	)		30			18
	$	61,444		$	112,391		$	106,439		$	66,077
Depreciation of property, plant and equipment
Higher education	$	10,499		$	10,611		$	10,834		$	11,160
Test preparation		3,129			3,360			3,025			4,581
Kaplan international		2,955			3,000			3,054			3,830
Kaplan ventures		1,032			1,009			985			1,083
Kaplan corporate and other		993			1,040			1,052			766
	$	18,608		$	19,020		$	18,950		$	21,420
Amortization of intangible assets	$	5,220		$	6,300		$	4,943		$	5,171
Kaplan stock-based incentive compensation expense (credit)	$	535		$	552		$	(2,397	)	$	131

The following table summarizes financial information related to the operating segments of the Company's education division segments for the six months ended 2011 and 2010, as well as for the fiscal years 2010 and 2009 (in thousands):

	Six Month Period						Fiscal Year Ended
	2011			2010			2010			2009
Operating revenues
Higher education	$	752,448		$	986,199		$	1,920,791		$	1,672,916
Test preparation1		156,562			159,053			314,879			336,788
Kaplan international		314,758			271,374			585,924			537,238
Kaplan ventures		35,783			27,546			59,296			57,210
Kaplan corporate and other		2,182			2,574			5,537			2,436
Intersegment elimination		(3,005	)		(5,489	)		(8,395	)		(10,786	)
	$	1,258,728		$	1,441,257		$	2,878,032		$	2,595,802
Income (loss) from operations
Higher education	$	95,778		$	218,671		$	406,726		$	283,839
Test preparation1		(24,273	)		(12,097	)		(32,583	)		(18,029	)
Kaplan international		10,754			17,472			56,152			53,772
Kaplan ventures		(7,358	)		(8,930	)		(17,490	)		(9,286	)
Kaplan corporate and other		(35,714	)		(40,999	)		(66,220	)		(101,422	)
Intersegment elimination		(213	)		(282	)		(234	)		310
	$	38,974		$	173,835		$	346,351		$	209,184
Depreciation of property, plant and equipment
Higher education	$	23,565		$	21,110		$	43,104		$	43,425
Test preparation		8,245			6,489			14,095			17,941
Kaplan international		8,143			5,955			12,839			11,438
Kaplan ventures		2,077			2,041			4,109			3,911
Kaplan corporate and other		1,696			2,033			3,851			4,300
	$	43,726		$	37,628		$	77,998		$	81,015
Amortization of intangible assets	$	10,472		$	11,520		$	21,634		$	21,875
Impairment of goodwill and other long-lived assets	$	—		$	—		$	—		$	25,387
Kaplan stock-based incentive compensation (credit) expense	$	(342	)	$	1,087		$	(1,179	)	$	933

1. Test Preparation amounts include revenues and operating losses from Score as follows (in thousands):

	Fiscal Year Ended
	2010		2009
Revenues	$	—	$	8,557
Operating losses	$	—	$	(36,787	)

Identifiable assets for the Company's education division consist of the following (in thousands):

	As of
	June 30, 2011		December 31, 2010		December 31, 2009
Identifiable assets
Higher education	$	731,825	$	1,093,614	$	1,069,965
Test preparation		330,464		290,367		285,673
Kaplan international		861,489		675,122		671,249
Kaplan ventures		117,542		118,461		88,291
Kaplan corporate and other		20,326		19,713		73,150
	$	2,061,646	$	2,197,277	$	2,188,328