Washington Post 2007 Annual Report Download - page 82

undistributed earnings, of approximately $10.9 million and
$8.0 million would have been recorded at December 30,
2007 and December 31, 2006, respectively.
The Company has approximately $35 million of U.S. Federal
income tax loss carryforwards obtained as a result of recent
stock acquisitions. These U.S. Federal income tax loss
carryfowards are expected to be fully utilized; during
2008 through 2013, approximately $5 million a year will
be utilized, and during 2014 through 2025, the balance
will be utilized.
The Company has approximately $217 million of state income
tax loss carryforwards that are expected to be fully utilized.
However, if unutilized, state income tax loss carryforwards will
start to expire approximately as follows (in millions):
2008 . ............................... $ 2.1
2009 . ............................... 10.3
2010 . ............................... 2.3
2011 . ............................... 11.7
2012 . ............................... 6.5
2013 to 2025 . . . ....................... 184.1
Total . . ............................... $217.0
The Company has approximately $6 million of foreign income tax
loss carryforwards as a result of recent stock acquisitions. These
foreign income tax loss carryforwards are expected to be fully
utilized within the next five years.
The Company files income tax returns in the U.S. and various state
and foreign jurisdictions, with the U.S. Federal considered the
only major tax jurisdiction. In January 2007, the Internal Revenue
Service (IRS) completed their examinations of the Company’s
consolidated federal corporate income tax returns through 2004.
In June 2006, The Financial Accounting Standards Board
(“FASB”) issued FASB Interpretation No. 48 (FIN 48),
“Accounting for Uncertainty in Income Taxes — an
Interpretation of FASB Statement No. 109.” FIN 48 prescribes
a comprehensive model of how a company should recognize,
measure, present and disclose in its financial statements uncertain
tax positions that a company has taken or expects to take on a tax
return. The Company implemented FIN 48 in the first quarter of
2007, and there was no impact on the Company’s financial
position or results of operations as a result of the implementation.
The Company has determined that there are no material
transactions or material tax positions taken by the Company
that would fail to meet the more likely than not threshold
established by FIN 48 for recognizing transactions or tax
positions in the financial statements. In making this
determination, the Company presumes that all matters will be
examined with full knowledge of all relevant information by
appropriate taxing authorities and that the Company will
pursue, if necessary, resolution by related appeals or litigation.
The Company has accrued a tax liability for various tax positions
reflected in the financial statements where it is uncertain whether
the tax benefit associated with the tax positions will ultimately be
recognized in full. The amount of, and changes to, this accrued
tax liability are not material to the Company’s financial position or
results of operations, and the Company does not expect the total
amount of this accrued tax liability or the gross amount of any
unrecognized tax benefits to significantly increase or decrease
within the next 12 months.
G. DEBT
Long-term debt consists of the following (in millions):
December 30,
2007 December 31, 2006
Commercial paper borrowings . . . $84.8 $—
5.5% unsecured notes due
February 15, 2009 . ....... 399.7 399.4
Other indebtedness . . . ....... 5.6 7.8
Total . . . ................ 490.1 407.2
Less current portion . . . ....... (89.6) (5.6)
Total long-term debt . . . ....... $400.5 $401.6
At December 30, 2007, the average interest rate on the
Company’s outstanding commercial paper borrowings was
4.5%. The Company’s other indebtedness at December 30,
2007 and December 31, 2006 is at interest rates of 5% to
8% and matures from 2008 to 2010. Interest on the 5.5%
unsecured notes is payable semi-annually on February 15 and
August 15.
The Company entered a $500 million 5-year revolving credit
agreement with a group of banks on August 8, 2006 (the “2006
Credit Agreement”). This agreement supports the issuance of the
Company’s commercial paper, but the Company may also draw
on the facility for general corporate purposes. The 2006 Credit
Agreement will expire on August 8, 2011, unless the Company
and the banks agree prior to the second anniversary date to
extend the term (which extensions cannot exceed an aggregate of
two years). The Company has not borrowed any money under this
agreement. Any borrowings that are outstanding under the 2006
Credit Agreement would have to be repaid on or prior to the final
termination date.
Under the terms of the 2006 Credit Agreement, the Company is
required to pay a facility fee at an annual rate of between 0.04%
and 0.10% of the amount of the facility, depending on the
Company’s long-term debt ratings. Any borrowings are made
on an 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 margin that also depends on the
Company’s long-term debt ratings. The 2006 Credit
Agreement contains terms and conditions, including remedies
in the event of a default by the Company, typical of facilities of
this type and, among other things, requires the Company to
maintain at least $1 billion of consolidated shareholders’ equity.
During 2007 and 2006, the Company had average borrowings
outstanding of approximately $412.1 million and $418.7 million,
respectively, at average annual interest rates of approximately
5.5%. The Company incurred net interest costs on its borrowings of
66 THE WASHINGTON POST COMPANY