Washington Post 2010 Annual Report Download - page 88

E. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at January 2, 2011 and January 3,
2010 consist of the following:
(in thousands) 2010 2009
Land ........................ $ 41,145 $ 47,700
Buildings .................... 350,051 375,728
Machinery, equipment and
fixtures .................... 2,401,128 2,428,595
Leasehold improvements ......... 308,863 290,951
Construction in progress ......... 91,330 51,022
3,192,517 3,193,996
Less accumulated depreciation ..... (1,991,791) (1,954,304)
$ 1,200,726 $ 1,239,692
Depreciation expense was $247.8 million, $291.7 million and
$263.6 million in 2010, 2009 and 2008, respectively. Total
interest capitalized during 2008 was $0.5 million and was related
to the construction of a qualified asset. No interest expense was
capitalized in 2010 and 2009.
F. INVESTMENTS
Investments in Marketable Equity Securities. Investments in
marketable equity securities at January 2, 2011 and January 3,
2010 consist of the following:
(in thousands) 2010 2009
Total cost ...................... $223,064 $223,064
Net unrealized gains .............. 117,846 130,820
$340,910 $353,884
At January 2, 2011 and January 3, 2010, the Company owned
2,214 shares of Berkshire Hathaway Inc. (“Berkshire”) Class A
common stock and 424,250 shares of Berkshire Class B common
stock, respectively. The Company’s ownership of Berkshire
accounted for $300.7 million, or 88%, and $247.5 million, or
70%, of the total fair value of the Company’s investments in
marketable equity securities at January 2, 2011 and January 3,
2010, respectively.
Berkshire is a holding company owning subsidiaries engaged in a
number of diverse business activities, the most significant of which
consists of property and casualty insurance businesses conducted on
both a direct and reinsurance basis. Berkshire also owns approx-
imately 21% of the common stock of the Company. The chairman,
chief executive officer and largest shareholder of Berkshire,
Mr. Warren Buffett, is a member of the Company’s Board of
Directors. The Washington Post Company recently announced his
retirement from its Board of Directors, upon the expiration of his
current term in May 2011. The Company’s investment in Berkshire
common stock is less than 1% of the consolidated equity of Berkshire.
At January 2, 2011 and January 3, 2010, the gross unrealized gain
related to the Company’s Berkshire stock investment totaled $143.4
million and $90.2 million, respectively. There were no new
purchases or sales of Berkshire common stock in 2010. During
2009, the Company invested $10.8 million in the Class B common
stock of Berkshire.
As of January 2, 2011, the Company has a $25.5 million
unrealized loss on its investment in Corinthian Colleges, Inc., a
publicly traded company. 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 ability and intent to hold
the investment and concluded that the unrealized loss is not other-
than-temporary as of January 2, 2011. If any impairment is
considered other-than-temporary, the investment will be written down
to its fair value with a corresponding charge to the Consolidated
Statement of Operations.
There were no new investments in marketable equity securities in
2010. During 2009 and 2008, the Company invested $10.8
million and $65.8 million in marketable equity securities,
respectively. There were no sales of marketable equity securities
during 2010 and 2009. During 2008, proceeds from the sales of
marketable equity securities were $114.4 million and net realized
gains on such sales were $47.3 million.
Investments in Affiliates. At the end of 2010, the Company’s
investments in affiliates include a 49% interest in the common stock
of Bowater Mersey Paper Company Limited, which owns and
operates a newsprint mill in Nova Scotia. The Company also holds
a 16.5% interest in Classified Ventures, LLC, which owns and
operates several leading businesses in the online classified
advertising space, and other investments.
During 2009 and 2008, the Company recorded $29.0 million
and $6.8 million of impairment charges at the Company’s affiliates,
respectively. The 2009 charges primarily relate to an impairment
charge recorded on the Company’s interest in Bowater Mersey
Paper Company as a result of the challenging economic
environment for newsprint producers. In the second quarter of
2008, the Company recorded $6.8 million in impairment charges
at two of the Company’s other affiliates.
G. ACQUISITIONS AND DISPOSITIONS
The Company completed business acquisitions totaling approx-
imately $14.1 million in 2010, $26.1 million in 2009 and
$123.5 million in 2008. The assets and liabilities of the companies
acquired have been recorded at their estimated fair values at the
date of acquisition; the purchase price allocations mostly comprised
goodwill and other intangible assets, and property, plant and
equipment.
During 2010, the Company acquired six businesses for $14.1
million. Kaplan acquired two small businesses in its Test Preparation
division, one small business in its Ventures division and one small
business in its International division. The company made two small
acquisitions in its Cable and Other Businesses divisions. The
purchase price allocations for these acquisitions mostly comprised
goodwill and other intangible assets.
On September 30, 2010, the Company completed the sale of
Newsweek. In December 2009, the Company completed the sale
of Newsweek’s Budget Travel. Consequently, the Company’s
income from continuing operations excludes magazine publishing
division results, which have been reclassified to discontinued
operations (see Note C).
72 THE WASHINGTON POST COMPANY