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Discontinued Operations
3 Months Ended
Oct. 02, 2011
Discontinued Operations 
Discontinued Operations

Note 2: Discontinued Operations

On August 18, 2011, Kaplan entered into an agreement to sell Kaplan Compliance Solutions. Under the terms of the asset purchase agreement, the buyer will receive Kaplan Compliance Solutions' net working capital, tangible and intangible assets, and assume certain liabilities. The transaction closed in October 2011. The resulting gain at closing is not expected to be material to the financial position of the Company. The assets and liabilities of Kaplan Compliance Solutions have been classified on the Company's condensed consolidated balance sheet as assets and liabilities of discontinued operations as of October 2, 2011. The Company did not reclassify its condensed consolidated balance sheet as of January 2, 2011 to reflect the discontinued operations.

In July 2011, Kaplan completed the sale of Kaplan Virtual Education. Under the terms of the asset purchase agreement, the buyer received Kaplan Virtual Education's intellectual property, education programs and selected other long-lived assets. The Company recorded an after-tax loss on the transaction of $1.2 million, which is included in "Loss from discontinued operations, net of tax" in the Company's condensed consolidated statement of operations for the third quarter and first nine months of 2011.

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 Compliance Solutions, Kaplan Virtual Education, Education Connection and the magazine publishing division for the third quarter and first nine months of 2011 and 2010, where applicable, are included in the Company's condensed consolidated statements of operations 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 $25.8 million, respectively, for the third quarter and nine months of 2010 has been excluded from the reclassification of Newsweek results to discontinued operations. In the third quarter and first nine months of 2010, Newsweek recorded $0.8 million and $4.7 million, respectively, in accelerated depreciation and property, plant and equipment write-downs.

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

   Thirteen Weeks Ended Thirty-Nine Weeks Ended
   October 2, October 3, October 2, October 3,
   2011 2010 2011 2010
Operating revenues $ 3,814 $ 34,688 $ 34,548 $ 125,167
Operating costs and expenses   (5,940)   (53,986)   (42,044)   (167,246)
Loss from discontinued operations   (2,126)   (19,298)   (7,496)   (42,079)
Benefit from income taxes   (783)   (6,169)   (2,883)   (15,769)
Net loss from discontinued operations   (1,343)   (13,129)   (4,613)   (26,310)
Gain (loss) on sale of discontinued operations   516   (10,293)   516   (11,656)
Provision for income taxes on sale of discontinued             
 operations   1,683   1,169   1,683   4,969
Loss from discontinued operations, net of tax $ (2,510) $ (24,591) $ (5,780) $ (42,935)

The following table summarizes the 2011 quarterly operating results of the Company for the quarters ended April 3 and July 3, following the reclassification of the operations discussed above as discontinued operations (in thousands, except per share amounts):

   First Quarter Second Quarter
Operating revenues      
 Education $ 626,631 $ 624,844
 Advertising   177,384   193,352
 Circulation and subscriber   214,523   216,607
 Other   31,076   34,337
     1,049,614   1,069,140
Operating costs and expenses      
 Operating   481,313   506,049
 Selling, general and administrative   443,876   411,610
 Depreciation of property, plant and equipment   63,021   63,690
 Amortization of intangible assets   6,164   6,779
     994,374   988,128
Operating income   55,240   81,012
Other income (expense)      
 Equity in earnings of affiliates   3,737   3,138
 Interest income   982   997
 Interest expense   (7,961)   (7,960)
 Other, net   (24,032)   (2,591)
Income from continuing operations before income taxes   27,966   74,596
Provision for income taxes   10,400   27,500
Income from continuing operations   17,566   47,096
Loss from discontinued operations, net of tax   (1,937)   (1,333)
Net income   15,629   45,763
Net (income) loss attributable to noncontrolling interests   (14)   40
Net income attributable to The Washington Post Company   15,615   45,803
Redeemable preferred stock dividends   (461)   (230)
Net income attributable to The Washington Post Company common stockholders $ 15,154 $ 45,573
        
Amounts attributable to The Washington Post Company common stockholders:      
Income from continuing operations $ 17,091 $ 46,906
Loss from discontinued operations, net of tax   (1,937)   (1,333)
Net income attributable to the Washington Post Company common stockholders $ 15,154 $ 45,573
        
Per share information attributable to The Washington Post Company common       
 stockholders:      
Basic income per common share from continuing operations $ 2.11 $ 5.91
Basic loss per common share from discontinued operations   (0.24)   (0.17)
Basic net income per common share $ 1.87 $ 5.74
        
Diluted income per common share from continuing operations $ 2.11 $ 5.91
Diluted loss per common share from discontinued operations   (0.24)   (0.17)
Diluted net income per common share $ 1.87 $ 5.74

The following table summarizes the 2010 quarterly operating results of the Company for the quarters ended April 4, 2010, July 4, 2010, October 3, 2010, and January 2, 2011, following the reclassification of the operations discussed above as discontinued operations (in thousands, except per share amounts):

    First Quarter Second Quarter Third Quarter Fourth Quarter
Operating revenues            
 Education $ 694,078 $ 739,129 $ 737,131 $ 691,941
 Advertising   184,182   207,241   200,532   241,650
 Circulation and subscriber   213,454   215,995   213,377   214,464
 Other   33,013   31,253   32,495   34,106
      1,124,727   1,193,618   1,183,535   1,182,161
Operating costs and expenses            
 Operating   471,542   477,248   479,526   503,260
 Selling, general and administrative   478,908   480,412   471,897   457,737
 Depreciation of property, plant and equipment   61,307   60,872   60,752   63,699
 Amortization of intangible assets   6,403   7,492   6,409   6,438
 Impairment of goodwill and other intangible assets   ―   ―   27,477   ―
      1,018,160   1,026,024   1,046,061   1,031,134
Operating income   106,567   167,594   137,474   151,027
Other income (expense)            
 Equity in earnings (losses) of affiliates   (8,109)   2,027   2,140   (191)
 Interest income   326   599   600   1,051
 Interest expense   (7,579)   (7,598)   (7,633)   (7,693)
 Other, net   (3,321)   (3,807)   12,486   2,157
Income from continuing operations before income taxes   87,884   158,815   145,067   146,351
Provision for income taxes   33,700   56,700   59,400   68,200
Income from continuing operations   54,184   102,115   85,667   78,151
(Loss) income from discontinued operations, net of tax   (8,356)   (9,988)   (24,591)   838
Net income   45,828   92,127   61,076   78,989
Net (income) loss attributable to noncontrolling interests   12   8   76   (2)
Net income attributable to The Washington Post Company   45,840   92,135   61,152   78,987
Redeemable preferred stock dividends   (461)   (231)   (230)   ―
Net income attributable to The Washington Post Company common             
 Stockholders $ 45,379 $ 91,904 $ 60,922 $ 78,987
               
Amounts attributable to The Washington Post Company            
 common stockholders:            
Income from continuing operations $ 53,735 $ 101,892 $ 85,513 $ 78,149
(Loss) income from discontinued operations, net of tax   (8,356)   (9,988)   (24,591)   838
Net income attributable to the Washington Post             
 Company common stockholders $ 45,379 $ 91,904 $ 60,922 $ 78,987
               
Per share information attributable to The Washington Post             
 Company common stockholders:            
Basic income per common share from continuing operations $ 5.81 $ 11.08 $ 9.61 $ 9.32
Basic (loss) income per common share from discontinued operations   (0.90)   (1.08)   (2.76)   0.10
Basic net income per common share $ 4.91 $ 10.00 $ 6.85 $ 9.42
               
Diluted income per common share from continuing operations $ 5.81 $ 11.08 $ 9.60 $ 9.32
Diluted (loss) income per common share from discontinued operations   (0.90)   (1.08)   (2.76)   0.10
Diluted net income per common share $ 4.91 $ 10.00 $ 6.84 $ 9.42

The following table summarizes the operating results of the Company for fiscal year 2010 and 2009, following the reclassification of operations discussed above as discontinued operations (in thousands, except per share amounts):

   Fiscal Year Ended
   January 2, January 3,
   2011 2010
Operating revenues      
 Education $ 2,862,279 $ 2,576,162
 Advertising   833,605   778,158
 Circulation and subscriber   857,290   845,848
 Other   130,867   125,872
     4,684,041   4,326,040
Operating costs and expenses      
 Operating   1,931,576   1,879,214
 Selling, general and administrative   1,888,954   1,831,716
 Depreciation of property, plant and equipment   246,630   290,609
 Amortization of intangible assets   26,742   25,610
 Impairment of goodwill and other long-lived assets   27,477   8,492
     4,121,379   4,035,641
Operating income   562,662   290,399
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   538,117   245,207
Provision for income taxes   218,000   89,000
Income from continuing operations   320,117   156,207
Loss from discontinued operations, net of tax   (42,097)   (65,007)
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 $ 319,289 $ 156,853
Loss from discontinued operations, net of tax   (42,097)   (65,007)
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 $ 35.77 $ 16.70
Basic loss per common share from discontinued operations   (4.71)   (6.92)
Basic net income per common share $ 31.06 $ 9.78
        
Diluted income per common share from continuing operations $ 35.75 $ 16.70
Diluted loss per common share from discontinued operations   (4.71)   (6.92)
Diluted net income per common share $ 31.04 $ 9.78