Washington Post 2000 Annual Report Download - page 20

The Washington Post Company 45
Minimum payments have not been reduced by minimum sublease
rentals of $3,250,000 due in the future under noncancelable subleases.
Rent expense under operating leases included in operating costs
and expenses was approximately $49,700,000, $33,600,000, and
$31,800,000 in 2000, 1999, and 1998, respectively. Sublease income
was approximately $1,150,000, $433,000, and $500,000 in 2000,
1999, and 1998, respectively.
The Company’s broadcast subsidiaries are parties to certain
agreements that commit them to purchase programming to be pro-
duced in future years. At December 31, 2000, such commitments
amounted to approximately $62,800,000. If such programs are not
produced, the Company’s commitment would expire without obligation.
IJ IACQUISITIONS AND DISPOSITIONS
Acquisitions. The Company completed acquisitions totaling approxi-
mately $212,300,000 in 2000 (including assumed debt and related
acquisition costs), $90,500,000 in 1999, and $320,600,000 in 1998.
All of these acquisitions were accounted for using the purchase
method, and accordingly, the assets and liabilities of the companies
acquired have been recorded at their estimated fair values at the
date of acquisition.
On August 2, 2000, the Company acquired Quest Education
Corporation (Quest) for approximately $177,700,000, including
assumed debt. The acquisition of Quest was completed through an all
cash tender offer in which the company purchased substantially all
of the outstanding stock of Quest for $18.35 per share. The acquisi-
tion was financed through the issuance of additional borrowings. Quest
is a provider of post-secondary education, currently serving nearly
13,000 students in 34 schools located in 13 states. Quest’s schools
offer Bachelor’s degrees, Associate’s degrees, and diploma programs
designed to provide students with the knowledge and skills necessary
to qualify them for entry-level employment, primarily in the fields of
healthcare, business, information technology, fashion, and design.
In addition, the Company acquired two cable systems serving
approximately 8,500 subscribers in Nebraska (in June 2000) and
Mississippi (in August 2000) for approximately $16,200,000, as well
as various other smaller businesses throughout 2000 for $18,400,000
(principally consisting of educational services companies).
During 1999, the Company acquired cable systems serving
10,300 subscribers in North Dakota, Oklahoma, and Arizona (April
and August 1999 for $18,300,000); two Certified Financial Analyst
test preparation companies (November and December 1999 for
$16,000,000), and a travel guide magazine (in December 1999 for
$10,200,000). In addition, the Company acquired various other
smaller businesses throughout 1999 for $46,000,000 (principally
consisting of educational services companies).
Acquisitions in 1998 included an educational services company
that provides English-language study programs (in January 1998 for
$16,100,000); a 36,000-subscriber cable system serving Anniston,
Alabama (in June 1998 for $66,500,000); cable systems serving
72,000 subscribers in Mississippi, Louisiana, Texas, and Oklahoma
(in July 1998 for $130,100,000); and a publisher and provider of
licensing training for securities, insurance, and real estate profession-
als (in July 1998 for $35,200,000). In addition, the Company acquired
various other smaller businesses throughout 1998 for $72,700,000
(principally consisting of educational and career service companies
and small cable systems).
The results of operations for each of the businesses acquired are
included in the Consolidated Statements of Income from their respec-
tive dates of acquisition. Pro forma results of operations for 2000,
1999, and 1998, assuming the acquisitions occurred at the beginning
of 1998, are not materially different from reported results of operations.
Dispositions. In June 1999, the Company sold the assets of Legi-Slate,
Inc., its online services subsidiary that covered Federal legislation and
regulation. No significant gain or loss was realized as a result of the sale.
In March 1998, Cowles Media Company (“Cowles”) and
McClatchy Newspapers, Inc. (“McClatchy”) completed a series of
transactions resulting in the merger of Cowles and McClatchy. In the
merger, each share of Cowles common stock was converted (based
upon elections of Cowles stockholders) into shares of McClatchy stock
or a combination of cash and McClatchy stock. As of the date of the
Cowles and McClatchy merger transaction, a wholly-owned subsidiary
of the Company owned 3,893,796 shares (equal to about 28 percent)
of the outstanding common stock of Cowles, most of which was
acquired in 1985. As a result of the transaction, the Company’s sub-
sidiary received $330,500,000 in cash from McClatchy and
730,525 shares of McClatchy Class A common stock. The market
value of the McClatchy stock received approximated $21,600,000. The
gain resulting from this transaction, which is included in 1998 “Other
(expense) income, net” in the Consolidated Statements of Income,
increased net income by approximately $162,800,000 and basic and
diluted earnings per share by $16.14 and $16.07, respectively.
In July 1998, the Company completed the sale of 14 small cable
systems in Texas, Missouri, and Kansas serving approximately 29,000
subscribers for approximately $41,900,000. The gain resulting from
this transaction, which is included in 1998 “Other (expense) income,
net” in the Consolidated Statements of Income, increased net income
by approximately $17,300,000 and basic and diluted earnings per
share by $1.71.