Washington Post 2006 Annual Report Download - page 60

average interest rate of 5.4%; at January 2, 2005, the Company had acquired El Tiempo Latino, a leading Spanish-language weekly
$484.1 million in borrowings outstanding at an average interest rate of newspaper in the greater Washington area. Most of the purchase
5.1%. price for the 2004 acquisitions was allocated to goodwill and other
intangibles.
Income Taxes. The effective tax rate was 37.1% for 2005 and
38.7% for 2004. The 2005 effective tax rate benefited from lower Capital Expenditures. During 2006, the Company's capital
taxes provided on foreign earnings and an increase in foreign tax expenditures totaled $284.0 million; about $13.6 million is related
credits. to rebuilding efforts on the Gulf Coast of Mississippi due to
Hurricane Katrina. The Company's capital expenditures for 2006,
FINANCIAL CONDITION: CAPITAL RESOURCES AND 2005 and 2004 are disclosed in Note N to the Consolidated
LIQUIDITY Financial Statements. The Company estimates that its capital
expenditures will be in the range of $260 million to $285 million in
Acquisitions and Dispositions. During 2006, Kaplan
2007.
acquired 11 businesses in its test preparation, professional and
higher education divisions for a total of $143.4 million, financed Investments in Marketable Equity Securities. At Decem-
with cash. The largest of these included Tribeca Learning Limited, a ber 31, 2006, the fair value of the Company's investments in
leading provider of education to the Australian financial services marketable equity securities was $354.7 million, which includes
sector; SpellRead, originator of SpellRead Phonological Auditory $325.8 million in Berkshire Hathaway Inc. Class A and B common
Training, a reading intervention program for struggling students; stock and $28.9 million of various common stocks of publicly traded
Aspect Education Limited, a major provider of English-language companies with education concentrations.
instruction with schools located in the U.K., Ireland, Australia, New
At December 31, 2006 and January 1, 2006, the gross unrealized
Zealand, Canada and the U.S.; and PMBR, a nationwide provider
gain related to the Company's Berkshire stock investment totaled
of test preparation for the Multistate Bar Exam. Most of the
$140.9 million and $77.4 million, respectively. The Company
purchase price for the 2006 acquisitions was allocated on a
presently intends to hold the Berkshire common stock investment long
preliminary basis to goodwill and other intangibles.
term, thus the investment has been classified as a non-current asset
In the fourth quarter of 2006, the Company recorded a $43.2 mil- in the Consolidated Balance Sheets. The gross unrealized gain
lion pre-tax gain on the sale of BrassRing, in which the Company related to the Company's other marketable security investments
held a 49% interest. Also in the fourth quarter of 2006, the totaled $0.1 million and $18.3 million at December 31, 2006 and
Company recorded a $1.5 million loss on the sale of PostNews- January 1, 2006, respectively.
week Tech Media, which was part of the Company's magazine
Common Stock Repurchases and Dividend Rate. During
publishing segment.
2006, the Company repurchased 77,300 shares of its Class B
In February 2007, Kaplan announced an agreement to acquire common stock at a cost of $56.6 million; in 2005 and 2004, there
EduNeering Holdings, Inc., a provider of knowledge management were no share repurchases. At December 31, 2006, the Company
solutions for organizations in the pharmaceutical, medical device, had authorization from the Board of Directors to purchase up to
healthcare, energy and manufacturing sectors. Headquartered in 465,500 shares of Class B common stock. The annual dividend
Princeton, N.J., EduNeering will become part of Kaplan Profession- rate for 2007 was increased to $8.20 per share, from $7.80 per
al. The acquisition is expected to close in March 2007. share in 2006 and from $7.40 per share in 2005.
During 2005, Kaplan acquired 10 businesses in its higher educa- Liquidity. At December 31, 2006, the Company had
tion, professional and test preparation divisions for a total of $348.1 million in cash and cash equivalents, compared to
$140.1 million, financed with cash and $3.0 million in debt. The $215.9 million at January 1, 2006. As of December 31, 2006
largest of these included BISYS Education Services, a provider of and January 1, 2006, the Company had commercial paper and
licensing education and compliance solutions for financial service money market investments of $142.9 million and $59.2 million,
institutions and professionals; The Kidum Group, the leading provid- respectively, that are classified as ""Cash and cash equivalents'' in
er of test preparation services in Israel; and Asia Pacific Manage- the Company's Consolidated Balance Sheet.
ment Institute, a private education provider for undergraduate and
At December 31, 2006, the Company had $407.2 million in total
postgraduate students in Asia. In January 2005, the Company
debt outstanding, which comprised $399.4 million of 5.5%
completed the acquisition of Slate, the online magazine, which is
unsecured notes due February 15, 2009, and $7.8 million in other
included as part of the Company's newspaper publishing division.
debt. The unsecured notes require semi-annual interest payments of
Most of the purchase price for the 2005 acquisitions was allocated
$11.0 million, payable on February 15 and August 15.
to goodwill and other intangibles, and property, plant and
equipment. During 2006, the Company's borrowings, net of repayments,
decreased by $21.2 million, and the Company's commercial paper
During 2004, Kaplan acquired eight businesses in its higher educa-
and money market investments increased by $83.7 million; this
tion and professional divisions for a total of $59.6 million, financed
activity is primarily due to cash flow from operations.
with cash and $8.7 million of debt. In addition, the cable division
completed two small transactions. In May 2004, the Company
44 THE WASHINGTON POST COMPANY