Washington Post 2006 Annual Report Download - page 46

Item 6. Selected Financial Data.
See the information for the years 2002 through 2006 contained in the table titled ""Ten-Year Summary of Selected
Historical Financial Data'' which is included in this Annual Report on Form 10-K and listed in the index to financial information
on page 35 hereof (with only the information for such years to be deemed filed as part of this Annual Report on
Form 10-K).
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations.
See the information contained under the heading ""Management's Discussion and Analysis of Results of Operations and
Financial Condition'' which is included in this Annual Report on Form 10-K and listed in the index to financial information on
page 35 hereof.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The Company is exposed to market risk in the normal course of its business due primarily to its ownership of marketable
equity securities, which are subject to equity price risk; to its borrowing and cash-management activities, which are subject
to interest rate risk; and to its foreign business operations, which are subject to foreign exchange rate risk. Neither the
Company nor any of its subsidiaries is a party to any derivative financial instruments.
Equity Price Risk
The Company has common stock investments in several publicly traded companies (as discussed in Note C to the
Company's Consolidated Financial Statements) that are subject to market price volatility. The fair value of these common
stock investments totaled $354,728,000 at December 31, 2006.
The following table presents the hypothetical change in the aggregate fair value of the Company's common stock
investments in publicly traded companies assuming hypothetical stock price fluctuations of plus or minus 10%, 20% and
30% in the market price of each stock included therein:
Value of Common Stock Investments Value of Common Stock Investments
Assuming Indicated Decrease in Assuming Indicated Increase in
Each Stock's Price Each Stock's Price
¿30% ¿20% ¿10% °10% °20% °30%
$248,310,000 $283,782,000 $319,255,000 $390,201,000 $425,674,000 $461,146,000
During the 32 quarters since the end of the Company's 1998 fiscal year, market price movements caused the aggregate
fair value of the Company's common stock investments in publicly traded companies to change by approximately 20% in
one quarter, 15% in eight quarters and by 10% or less in each of the other 23 quarters.
Interest Rate Risk
The Company has historically satisfied some of its financing requirements through the issuance of short-term commercial
paper. Conversely, when cash generation exceeds its current need for cash the Company may pay down its commercial
paper borrowings and invest some or all of the surplus in commercial paper issued by third parties. The Company was
generally investing excess cash during 2006 and did not have any commercial paper borrowings outstanding at either
January 1, 2006 or December 31, 2006. The largest amount of commercial paper borrowing that the Company had
outstanding at any time during 2006 was $5,000,000.
The Company's long-term debt consists of $400,000,000 principal amount of 5.5% unsecured notes due February 15,
2009 (the ""Notes''). At December 31, 2006, the aggregate fair value of the Notes, based upon quoted market prices,
was $398,440,000. An increase in the market rate of interest applicable to the Notes would not increase the Company's
interest expense with respect to the Notes since the rate of interest the Company is required to pay on the Notes is fixed,
but such an increase in rates would affect the fair value of the Notes. Assuming, hypothetically, that the market interest rate
applicable to the Notes was 100 basis points higher than the Notes' stated interest rate of 5.5%, the fair value of the
Notes at December 31, 2006, would have been approximately $392,175,000. Conversely, if the market interest rate
applicable to the Notes was 100 basis points lower than the Notes' stated interest rate, the fair value of the Notes at such
date would then have been approximately $407,970,000.
30 THE WASHINGTON POST COMPANY