Washington Post 2013 Annual Report Download - page 82

income statement or in a footnote, significant amounts reclassified
out of accumulated other comprehensive income by the respective
line items of net income only if the amount reclassified is required by
GAAP to be reclassified to net income in its entirety in the same
reporting period. For other amounts that are not required under
GAAP to be reclassified in their entirety to net income, an entity is
required to cross-reference to other disclosures required under GAAP
that provide details about those amounts. This amendment is
effective for interim and fiscal years beginning after December 15,
2012. The adoption of the amendment in the first quarter of 2013
is reflected in the Company’s Notes to Consolidated Financial
Statements.
3. DISCONTINUED OPERATIONS
On October 1, 2013, the Company completed the sale of most of
its newspaper publishing businesses. The publishing businesses sold
include The Washington Post, Express, The Gazette Newspapers,
Southern Maryland Newspapers, Greater Washington Publishing,
Fairfax County Times and El Tiempo Latino and related websites
(Publishing Subsidiaries). Slate magazine, TheRoot.com and Foreign
Policy were not part of the transaction and remain with the Company,
as do the Trove and SocialCode businesses, the Company’s interest
in Classified Ventures and certain real estate assets, including the
headquarters building in downtown Washington, DC.
The Company sold all of the issued and outstanding equity
securities of the Publishing Subsidiaries for $250 million, subject to
customary adjustments for cash, debt and working capital at
closing. A pre-tax gain of $157.5 million was recorded on the
sale (after-tax gain of $100.0 million). This gain amount includes
net curtailment and settlement gains from the Company’s pension
and postretirement plans of $56.6 million. The net loss from
discontinued operations also included early retirement program
expense of $22.7 million and $8.5 million in 2013 and 2012,
respectively, and stock compensation expense of $20.7 million in
2013 as a result of modifications to restricted stock awards and
stock options.
In March 2013, the Company sold The Herald. Kaplan sold
Kidum in August 2012, EduNeering in April 2012 and Kaplan
Learning Technologies (KLT) in February 2012. In addition, the
Company divested its interest in Avenue100 Media Solutions in July
2012.
The sale of The Herald resulted in a pre-tax loss of $0.1 million that
was recorded in the first quarter of 2013.
The sale of KLT resulted in a pre-tax loss of $3.1 million, which
was recorded in the first quarter of 2012. The sale of EduNeering
resulted in a pre-tax gain of $29.5 million, which was recorded in
the second quarter of 2012. The sale of Kidum resulted in a pre-tax
gain of $3.6 million, which was recorded in the third quarter of
2012.
In connection with each of the sales of the Company’s stock in
EduNeering and KLT, in the first quarter of 2012, the Company
recorded $23.2 million of income tax benefits related to the excess
of the outside stock tax basis over the net book value of the net
assets disposed.
In connection with the disposal of Avenue100 Media Solutions,
Inc., the Company recorded a pre-tax loss of $5.7 million in the
third quarter of 2012. An income tax benefit of $44.5 million
was also recorded in the third quarter of 2012 as the Company
determined that Avenue100 Media Solutions, Inc. had no value.
The income tax benefit was due to the Company’s tax basis in
the stock of Avenue100 exceeding its net book value as a result
of goodwill and other intangible asset impairment charges
recorded in prior years, for which no tax benefit was previously
recorded.
In October 2011, Kaplan completed the sale of Kaplan Compliance
Solutions (KCS) and recorded an after-tax gain on the transaction of
$1.5 million. In July 2011, Kaplan completed the sale of Kaplan
Virtual Education (KVE) and recorded an after-tax loss on the
transaction of $1.2 million.
The results of operations of the Publishing Subsidiaries, The Herald,
Kidum, Avenue100, Kaplan EduNeering, KLT, KCS and KVE for
2013, 2012 and 2011, where applicable, are included in the
Company’s Consolidated Statements of Operations as Income (Loss)
from Discontinued Operations, Net of Tax. All corresponding prior
period operating results presented in the Company’s Consolidated
Financial Statements and the accompanying notes have been
reclassified to reflect the discontinued operations presented. The
Company did not reclassify its Consolidated Statements of Cash
Flows or prior year Consolidated Balance Sheet to reflect the
discontinued operations.
The summarized income (loss) from discontinued operations, net of
tax, is presented below:
Year Ended December 31
(in thousands) 2013 2012 2011
Operating revenues ......... $ 382,705 $ 597,425 $ 723,605
Operating costs and expenses . .
(465,605) (639,315) (769,129)
Loss from discontinued
operations .............. (82,900) (41,890) (45,524)
Benefit from income taxes ..... (29,059) (13,668) (10,934)
Net Loss from Discontinued
Operations ............. (53,841) (28,222) (34,590)
Gain on sales and disposition
of discontinued operations . . 157,449 23,759 2,975
Provision (benefit) for income
taxes on sales and disposition
of discontinued operations . . 57,489 (64,591) 2,616
Income (Loss) from Discontinued
Operations, Net of Tax ..... $ 46,119 $ 60,128 $ (34,231)
4. INVESTMENTS
Investments in Marketable Equity Securities. Investments in
marketable equity securities consist of the following:
As of December 31
(in thousands) 2013 2012
Total cost .......................... $197,718 $195,832
Net unrealized gains ................. 289,438 184,255
Total Fair Value ..................... $487,156 $380,087
64 GRAHAM HOLDINGS COMPANY