Washington Post 2010 Annual Report Download - page 72

The gross unrealized (loss) gain related to the Company’s investment
in Corinthian Colleges, Inc. totaled $(25.5) million and $40.6
million at January 2, 2011, and January 3, 2010, respectively. At
January 2, 2011, the investment has been in an unrealized loss
position for under six months. The Company evaluated this
investment for other-than-temporary impairment based on various
factors, including the duration and severity of the unrealized loss,
the reason for the decline in value and the potential recovery
period, and the Company’s ability and intent to hold the investment
and concluded that the unrealized loss is not other-than-temporary
as of January 2, 2011. The Company will continue to monitor this
investment in the future for a possible write-down charge to the
Company’s Consolidated Statement of Operations.
Common Stock Repurchases and Dividend Rate. During 2010,
2009 and 2008, the Company purchased a total of 1,057,940,
145,040 and 167,642 shares, respectively, of its Class B
common stock at a cost of approximately $404.8 million, $61.0
million and $99.0 million, respectively. In September 2010, the
Board of Directors increased the authorization to repurchase a total
of 750,000 shares of Class B common stock. The Company did
not announce a ceiling price or a time limit for the purchases. The
authorization included 16,312 shares that remained under the
previous authorization. At January 2, 2011, the Company had
authorization from the Board of Directors to purchase up to
431,995 shares of Class B common stock. The annual dividend
rate for 2011 was increased to $9.40 per share, from $9.00 per
share in 2010 and from $8.60 per share in 2009.
Liquidity. During 2010, the Company’s borrowings, net of
repayments, increased by $0.4 million, and the Company’s cash
and cash equivalents decreased by $4.8 million.
At January 2, 2011, the Company had $437.7 million in cash and
cash equivalents, compared to $442.6 million at January 3, 2010.
As of January 2, 2011, and January 3, 2010, the Company had
money market investments of $308.9 million and $327.8 million,
respectively, that are classified as cash and cash equivalents in the
Company’s Consolidated Financial Statements.
At January 2, 2011 and January 3, 2010, the Company had
borrowings outstanding of $399.7 million and $399.3 million,
respectively. The Company’s borrowings are mostly from $400.0
million of 7.25% unsecured notes due February 1, 2019; the
interest is payable semiannually on February 1 and August 1. There
were no commercial paper borrowings outstanding at January 2,
2011 or January 3, 2010.
The Company has a $500 million revolving credit facility that
expires in August 2011, which supports the issuance of the
Company’s short-term commercial paper and provides for general
corporate purposes. The Company did not borrow funds under its
commercial paper program or its revolving credit facility in 2010.
The Company expects to replace the revolving credit facility with a
new revolving credit facility in 2011.
In August 2010, Standard & Poor’s revised the Company’s long-
term outlook to negative from stable; the Company’s “A” long-term
corporate credit and senior unsecured ratings and “A-1” short-term
commercial rating remained unchanged. Moody’s lowered the
Company’s long-term rating in October 2010 to “A2” from “A1,”
confirmed the “Prime-1” commercial paper rating and changed the
ratings outlook to negative. The Company’s current credit ratings
are as follows:
Moody’s Standard & Poor’s
Long-term ........................... A2 A
Short-term ........................... Prime-1 A-1
During 2010 and 2009, the Company had average borrowings
outstanding of approximately $399.5 million and $426.7 million,
respectively, at average annual interest rates of approximately 7.2%
and 6.9%, respectively. The Company incurred net interest expense
of $27.9 million and $29.0 million, respectively, during 2010 and
2009.
At January 2, 2011, and January 3, 2010, the Company had
working capital of $353.6 million and $398.5 million,
respectively. The Company maintains working capital levels
consistent with its underlying business requirements and consistently
generates cash from operations in excess of required interest or
principal payments.
The Company’s net cash provided by operating activities, as
reported in the Company’s Consolidated Statements of Cash Flows,
was $693.7 million in 2010, compared to $651.4 million in
2009.
The Company expects to fund its estimated capital needs primarily
through existing cash balances and internally generated funds and,
to a lesser extent, through commercial paper borrowings. In
management’s opinion, the Company will have ample liquidity to
meet its various cash needs in 2011.
The following reflects a summary of the Company’s contractual
obligations as of January 2, 2011:
(in
thousands) 2011 2012 2013 2014 2015 Thereafter Total
Debt and
interest . . . . . . . $ 32,000 $ 29,000 $ 29,000 $ 29,000 $ 29,000 $501,500 $ 649,500
Programming
purchase
commit-
ments(1) . . . . . . . 202,723 167,933 136,559 75,656 3,240 — 586,111
Operating
leases . . . . . . . . 129,958 116,644 98,768 82,966 65,585 274,504 768,425
Other purchase
obligations(2) . . . 183,344 74,839 40,585 11,104 3,661 1,971 315,504
Long-term
liabilities(3) . . . . 5,692 6,035 6,341 6,606 6,802 62,489 93,965
Total . . . . . . . . $553,717 $394,451 $311,253 $205,332 $108,288 $840,464 $2,413,505
(1) Includes commitments for the Company’s television broadcasting and cable
television businesses that are reflected in the Company’s Consolidated
Financial Statements and commitments to purchase programming to be
produced in future years.
(2) Includes purchase obligations related to newsprint contracts, printing
contracts, employment agreements, circulation distribution agreements, capital
projects and other legally binding commitments. Other purchase orders made
in the ordinary course of business are excluded from the table above. Any
amounts for which the Company is liable under purchase orders are reflected
in the Company’s Consolidated Balance Sheets as accounts payable and
accrued liabilities.
(3) Primarily made up of postretirement benefit obligations other than pensions.
The Company has other long-term liabilities excluded from the table above,
including obligations for deferred compensation, long-term incentive plans
and long-term deferred revenue.
56 THE WASHINGTON POST COMPANY