Washington Post 2006 Annual Report Download - page 74

company should recognize, measure, present and disclose in its During 2006 and 2005, the Company had average borrowings
financial statements uncertain tax positions that the company has outstanding of approximately $418.7 million and $442.0 million,
taken or expects to take on a tax return. The Company expects that respectively, at average annual interest rates of approximately
the adoption of FIN 48 during the first quarter of 2007 will not have 5.5% and 5.4%, respectively. The Company incurred net interest
a material impact on the Company's financial position or results of costs on its borrowings of $14.9 million and $23.4 million during
operations. 2006 and 2005, respectively. No interest expense was capital-
ized in 2006 or 2005.
E. DEBT At December 31, 2006 and January 1, 2006, the fair value of the
Long-term debt consists of the following (in millions): Company's 5.5% unsecured notes, based on quoted market
prices, totaled $398.4 million and $404.1 million, respectively,
December 31, January 1,
compared with the carrying amount of $399.4 million and
2006 2006
$399.2 million, respectively.
5.5% unsecured notes due
February 15, 2009ÏÏÏÏÏÏÏÏÏÏÏÏÏ $399.4 $399.2 The carrying value of the Company's other unsecured debt at
4.0% notes due 2006ÏÏÏÏÏÏÏÏÏÏÏÏ Ì14.4 December 31, 2006 approximates fair value.
Other indebtednessÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7.8 14.8
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 407.2 428.4 F. REDEEMABLE PREFERRED STOCK
Less current portion ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (5.6) (24.8)
In connection with the acquisition of a cable television system in
Total long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $401.6 $403.6
1996, the Company issued 11,947 shares of its Series A Preferred
During 2003, notes of 16.7 million were issued to FTC employees Stock. On February 23, 2000, the Company issued an additional
who were former FTC shareholders in connection with the acquisi- 1,275 shares related to this transaction. From 1998 to 2006,
tion. In 2004, 50% of the balance on the notes was paid, and the 1,102 shares of Series A Preferred Stock were redeemed at the
remaining balance outstanding was paid in August 2006. request of Series A Preferred Stockholders.
Interest on the 5.5% unsecured notes is payable semi-annually on The Series A Preferred Stock has a par value of $1.00 per share
February 15 and August 15. and a liquidation preference of $1,000 per share; it is redeemable
by the Company at any time on or after October 1, 2015 at a
On August 8, 2006, the Company entered into a new $500 million redemption price of $1,000 per share. In addition, the holders of
5-year revolving credit agreement (the ""2006 Credit Agree- such stock have a right to require the Company to purchase their
ment'') with a group of banks. That facility replaced the Compa- shares at the redemption price during an annual 60-day election
ny's $250 million 364-day revolving credit agreement dated as of period; the first such period began on February 23, 2001. Divi-
August 10, 2005 (the ""2005 Credit Agreement'') and its dends on the Series A Preferred Stock are payable four times a year
$350 million 5-year revolving credit agreement dated as of at the annual rate of $80.00 per share and in preference to any
August 14, 2002 (the ""2002 Credit Agreement''). dividends on the Company's common stock. The Series A Preferred
Except for the length and the amount of the commitments, the terms Stock is not convertible into any other security of the Company, and
of the 2006 Credit Agreement are substantially the same as the the holders thereof have no voting rights except with respect to any
terms of the 2005 Credit Agreement. The Company is required to proposed changes in the preferences and special rights of such
pay a facility fee at an annual rate, which depends on the stock.
Company's long-term debt ratings, of between 0.04% and 0.10%
G. CAPITAL STOCK, STOCK AWARDS AND STOCK
of the amount of the facility. Any borrowings are made on an
OPTIONS
unsecured basis and bear interest, at the Company's option, at
Citibank's base rate or at a rate based on LIBOR plus an applicable Adoption of SFAS 123R. In the first quarter of 2006, the
margin that also depends on the Company's long-term debt ratings. Company adopted Statement of Financial Accounting Standards
The 2006 Credit Agreement will expire on August 8, 2011, unless No. 123R (SFAS 123R), ""Share-Based Payment.'' SFAS 123R
the Company and the banks agree prior to the second anniversary requires companies to record the cost of employee services in
date to extend the term (which extensions cannot exceed an exchange for stock options based on the grant-date fair value of
aggregate of two years). Any outstanding borrowings must be the awards. SFAS 123R did not have any impact on the Company's
repaid on or prior to the final termination date. The 2006 Credit results of operations for Company stock options as the Company
Agreement supports the issuance of the Company's commercial adopted the fair-value-based method of accounting for Company
paper, but the Company may also draw on the facility for general stock options in 2002. However, the adoption of SFAS 123R
corporate purposes. The 2006 Credit Agreement contains terms required the Company to change its accounting for Kaplan equity
and conditions, including remedies in the event of a default by the awards from the intrinsic value method to the fair-value-based
Company, typical of facilities of this type and, among other things, method of accounting. This change in accounting results in the
requires the Company to maintain at least $1 billion of consolidated acceleration of expense recognition for Kaplan equity awards. As a
shareholders' equity. No borrowings are currently outstanding result, for the year ended December 31, 2006, the Company
under the 2006 Credit Agreement. reported a $5.1 million after-tax charge for the cumulative effect of
58 THE WASHINGTON POST COMPANY