Note 2: Discontinued Operations

On May 16, 2011, Kaplan entered into an agreement to sell Kaplan Virtual Education. Under the terms of the asset purchase agreement, the buyer will receive Kaplan Virtual Education's intellectual property, education programs and selected other long-lived assets. The transaction closed in July 2011. The resulting gain or loss at closing is not expected to be material to the financial position of the Company. The assets and liabilities of Kaplan Virtual Education have been classified on the Company's condensed balance sheet as assets and liabilities of discontinued operations as of July 3, 2011. The Company did not reclassify its condensed consolidated balance sheet as of January 2, 2011 to reflect the discontinued operations.

In April 2010, Kaplan completed the sale of Education Connection and in September 2010, the Company completed the sale of Newsweek magazine. The results of operations of Kaplan Virtual Education, Education Connection and the magazine publishing division for the second quarter and first six months of 2011 and 2010, where applicable, are included in the Company's condensed consolidated statements of income as "Loss from discontinued operations, net of tax." All corresponding prior period operating results presented in the Company's condensed consolidated financial statements and the accompanying notes have been reclassified to reflect the discontinued operations presented. The Company did not reclassify its condensed consolidated statements of cash flows to reflect the discontinued operations.

Newsweek employees were participants in The Washington Post Company Retirement Plan, and the Company had historically allocated Newsweek a net pension credit for segment reporting purposes. Since the associated pension assets and liabilities were retained by the Company, the associated credit of $8.8 million and $17.1 million, respectively, for the second quarter and six months of 2010 has been excluded from the reclassification of Newsweek results to discontinued operations. In the second quarter of 2010, Newsweek recorded $3.9 million in accelerated depreciation and property, plant and equipment write-downs.

The summarized loss from discontinued operations, net of tax, for the first half of 2011 and 2010 is presented below (in thousands):


	Second Quarter Period						Six Month Period
	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010
Operating revenues	$	12,879		$	40,256		$	23,481		$	82,429
Operating costs and expenses		(15,093	)		(48,285	)		(28,708	)		(104,546	)

Loss from discontinued operations		(2,214	)		(8,029	)		(5,227	)		(22,117	)
Benefit from income taxes		(800	)		(3,600	)		(2,000	)		(9,300	)

Net loss from discontinued operations		(1,414	)		(4,429	)		(3,227	)		(12,817	)
Loss on sale of discontinued operations		—			(1,363	)		—			(1,363	)
Provision for income taxes on sale of discontinued operations		—			3,800			—			3,800

Loss from discontinued operations, net of tax	$	(1,414	)	$	(9,592	)	$	(3,227	)	$	(17,980	)

The following table summarizes the quarterly operating results of the Company for 2010 and the first quarter of 2011, following the reclassification of the operations discussed above as discontinued operations (in thousands):


	Thirteen Weeks Ended
	April 3, 2011			January 2, 2011			October 3, 2010			July 4, 2010			April 4, 2010
Operating revenues
Education	$	630,027		$	695,619		$	741,156		$	742,921		$	698,336
Advertising		177,384			241,650			200,532			207,241			184,182
Circulation and subscriber		214,523			214,464			213,377			215,995			213,454
Other		31,076			34,106			32,495			31,253			33,013

		1,053,010			1,185,839			1,187,560			1,197,410			1,128,985


Operating costs and expenses
Operating		475,285			496,694			473,328			471,525			465,372
Selling, general and administrative		453,258			467,880			481,436			490,414			489,096
Depreciation of property, plant and equipment		63,230			63,901			60,939			61,024			61,458
Amortization of intangible assets		6,221			6,495			6,466			7,549			6,460
Impairment of goodwill and other long-lived assets		—			—			27,477			—			—

		997,994			1,034,970			1,049,646			1,030,512			1,022,386

Operating income		55,016			150,869			137,914			166,898			106,599
Other income (expense)
Equity in earnings (losses) of affiliates		3,737			(191	)		2,140			2,027			(8,109	)
Interest income		982			1,051			600			599			326
Interest expense		(7,961	)		(7,693	)		(7,633	)		(7,598	)		(7,579	)
Other, net		(24,032	)		2,157			12,486			(3,807	)		(3,321	)

Income from continuing operations before income taxes		27,742			146,193			145,507			158,119			87,916
Provision for income taxes		10,300			68,100			59,600			56,400			33,700

Income from continuing operations		17,442			78,093			85,907			101,719			54,216
(Loss) gain from discontinued operations, net of tax		(1,813	)		896			(24,831	)		(9,592	)		(8,388	)

Net income		15,629			78,989			61,076			92,127			45,828
Net (income) loss attributable to noncontrolling interests		(14	)		(2	)		76			8			12

Net income attributable to The Washington Post Company		15,615			78,987			61,152			92,135			45,840
Redeemable preferred stock dividends		(461	)		—			(230	)		(231	)		(461	)

Net income attributable to The Washington Post Company common stockholders	$	15,154		$	78,987		$	60,922		$	91,904		$	45,379


Amounts attributable to The Washington Post Company common stockholders:
Income from continuing operations	$	16,967		$	78,091		$	85,753		$	101,496		$	53,767
(Loss) gain from discontinued operations, net of tax		(1,813	)		896			(24,831	)		(9,592	)		(8,388	)

Net income attributable to the Washington Post Company common stockholders	$	15,154		$	78,987		$	60,922		$	91,904		$	45,379


Per share information attributable to The Washington Post Company common stockholders:
Basic income per common share from continuing operations	$	2.09		$	9.31		$	9.64		$	11.04		$	5.82
Basic (loss) income per common share from discontinued operations		(0.22	)		0.11			(2.79	)		(1.04	)		(0.91	)

Basic net income per common share	$	1.87		$	9.42		$	6.85		$	10.00		$	4.91


Diluted income per common share from continuing operations	$	2.09		$	9.31		$	9.63		$	11.04		$	5.82
Diluted (loss) income per common share from discontinued operations		(0.22	)		0.11			(2.79	)		(1.04	)		(0.91	)


Diluted net income per common share	$	1.87		$	9.42		$	6.84		$	10.00		$	4.91

The following table summarizes the operating results of the Company for fiscal year 2010 and 2009, following the reclassification of Kaplan Virtual Education and Education Connection as discontinued operations (in thousands):


	Fiscal Year Ended
	January 2, 2011			January 3, 2010
Operating revenues
Education	$	2,878,032		$	2,595,802
Advertising		833,605			778,158
Circulation and subscriber		857,290			845,848
Other		130,867			125,872

		4,699,794			4,345,680


Operating costs and expenses
Operating		1,906,919			1,852,166
Selling, general and administrative		1,928,826			1,878,310
Depreciation of property, plant and equipment		247,322			291,221
Amortization of intangible assets		26,970			26,294
Impairment of goodwill and other long-lived assets		27,477			25,387

		4,137,514			4,073,378

Operating income		562,280			272,302
Other income (expense)
Equity in losses of affiliates		(4,133	)		(29,421	)
Interest income		2,576			2,597
Interest expense		(30,503	)		(31,565	)
Other, net		7,515			13,197

Income from continuing operations before income taxes		537,735			227,110
Provision for income taxes		217,800			81,800

Income from continuing operations		319,935			145,310
Loss from discontinued operations, net of tax		(41,915	)		(54,110	)

Net income		278,020			91,200
Net loss attributable to noncontrolling interests		94			1,574

Net income attributable to The Washington Post Company		278,114			92,774
Redeemable preferred stock dividends		(922	)		(928	)

Net income attributable to The Washington Post Company common stockholders	$	277,192		$	91,846


Amounts attributable to The Washington Post Company common stockholders:
Income from continuing operations	$	319,107		$	145,956
Loss from discontinued operations, net of tax		(41,915	)		(54,110	)

Net income attributable to The Washington Post Company common stockholders	$	277,192		$	91,846


Per share information attributable to The Washington Post Company common stockholders:
Basic income per common share from continuing operations	$	35.76		$	15.54
Basic loss per common share from discontinued operations		(4.70	)		(5.76	)

Basic net income per common share	$	31.06		$	9.78

Diluted income per common share from continuing operations	$	35.74		$	15.54
Diluted loss per common share from discontinued operations		(4.70	)		(5.76	)

Diluted net income per common share	$	31.04		$	9.78