Washington Post 2013 Annual Report Download - page 88

the consolidated U.S. Federal tax return filing considered the only major
tax jurisdiction. The statute of limitations has expired on all consolidated
U.S. Federal corporate income tax returns filed through 2009, and the
Internal Revenue Service is not currently examining any of the post-2009
returns filed by the Company.
The Company endeavors to comply with tax laws and regulations
where it does business, but cannot guarantee that, if challenged, the
Company’s interpretation of all relevant tax laws and regulations will
prevail and that all tax benefits recorded in the financial statements will
ultimately be recognized in full. The Company has taken reasonable
efforts to address uncertain tax positions and has determined that there
are no material transactions and no material tax positions taken by the
Company that would fail to meet the more-likely-than-not threshold for
recognizing transactions or tax positions in the financial statements.
Accordingly, the Company has not recorded a reserve for uncertain
tax positions in the financial statements, and the Company does not
expect any significant tax increase or decrease to occur within the next
12 months with respect to any transactions or tax positions taken and
reflected in the financial statements. In making these determinations, the
Company presumes that taxing authorities pursuing examinations of the
Company’s compliance with tax law filing requirements will have full
knowledge of all relevant information, and, if necessary, the Company
will pursue resolution of disputed tax positions by appeals or litigation.
10. DEBT
The Company’s borrowings consist of the following:
As of December 31
(in thousands) 2013 2012
7.25% unsecured notes due
February 1, 2019 ............... $397,893 $ 397,479
USD Revolving credit borrowing ....... —240,121
AUD Revolving credit borrowing ....... 44,625 51,915
Other indebtedness ................ 8,258 7,196
Total Debt ....................... 450,776 696,711
Less: current portion ................ (3,168) (243,327)
Total Long-Term Debt ............... $447,608 $ 453,384
The Company did not borrow funds under its USD revolving credit facility
in 2013. On December 20, 2012, the Company borrowed $240
million under its revolving credit facility at an interest rate of 1.5107%;
this was fully repaid on January 11, 2013. The Company’s other
indebtedness at December 31, 2013, is at interest rates of 0% to 6%
and matures between 2014 and 2017.
In January 2009, the Company issued $400 million in unsecured ten-
year fixed-rate notes due February 1, 2019 (the Notes). The Notes
have a coupon rate of 7.25% per annum, payable semiannually on
February 1 and August 1. Under the terms of the Notes, unless the
Company has exercised its right to redeem the Notes, the Company
is required to offer to repurchase the Notes in cash at 101% of the
principal amount, plus accrued and unpaid interest, upon the occurr-
ence of both a Change of Control and Below Investment Grade Rating
Events as described in the Prospectus Supplement of January 27, 2009.
On June 17, 2011, the Company entered into a credit
agreement (the Credit Agreement) providing for a U.S. $450
million, AUD 50 million four-year revolving credit facility (the
Facility) with each of the lenders party thereto, JPMorgan Chase
Bank,N.A.asAdministrativeAgent,andJ.P.MorganAustralia
Limited as Australian Sub-Agent. The Facility consists of two
tranches: (a) U.S. $450 million and (b) AUD 50 million (subject,
at the Company’s option, to conversion of the unused Australian
dollar commitments into U.S. dollar commitments at a specified
exchange rate). The Credit Agreement provides for an option to
increase the total U.S. dollar commitments up to an aggregate
amount of U.S. $700 million. The Company is required to pay a
facility fee on a quarterly basis, based on the Company’s long-
term debt ratings, of between 0.08% and 0.20% of the amount
of the Facility. Any borrowings are made on an unsecured basis
and bear interest at (a) for U.S. dollar borrowings, at the
Company’s option, either (i) a fluctuating interest rate equal to the
highest of JPMorgan’s prime rate, 0.5% above the Federal funds
rate or the one-month eurodollar rate plus 1%, or (ii) the
eurodollar rate for the applicable interest period; or (b) for
Australian dollar borrowings, the bank bill rate, in each case plus
an applicable margin that depends on the Company’s long-term
debt ratings. The Facility will expire on June 17, 2015, unless
the Company and the banks agree to extend the term. Any
outstanding borrowings must be repaid on or prior to the final
termination date. The 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 $1.5 billion of
consolidated stockholders’ equity.
On September 7, 2011, the Company borrowed AUD 50 million
under its revolving credit facility. On the same date, the Company
entered into interest rate swap agreements with a total notional value of
AUD 50 million and a maturity date of March 7, 2015. These interest
rate swap agreements will pay the Company variable interest on the
AUD 50 million notional amount at the three-month bank bill rate, and
the Company will pay the counterparties a fixed rate of 4.5275%.
These interest rate swap agreements were entered into to convert the
variable rate Australian dollar borrowing under the revolving credit
facility into a fixed rate borrowing. Based on the terms of the interest
rate swap agreements and the underlying borrowing, these interest rate
swap agreements were determined to be effective and thus qualify as a
cash flow hedge. As such, any changes in the fair value of these interest
rate swaps are recorded in other comprehensive income on the
accompanying condensed consolidated balance sheets until earnings
are affected by the variability of cash flows.
During 2013 and 2012, the Company had average borrowings
outstanding of approximately $471.4 million and $483.3 million,
respectively, at average annual interest rates of approximately
6.7%. The Company incurred net interest expense of $33.8 million,
$32.6 million and $29.1 million during 2013, 2012 and 2011,
respectively. At December 31, 2013 and 2012, the fair value of
the Company’s 7.25% unsecured notes, based on quoted market
prices, totaled $475.2 million and $481.4 million, respectively,
compared with the carrying amount of $397.9 million and $397.5
million. The carrying value of the Company’s other unsecured debt
at December 31, 2013, approximates fair value.
70 GRAHAM HOLDINGS COMPANY