Washington Post 2001 Annual Report Download - page 19

THE WASHINGTON POST COMPANY
The provision for income taxes exceeds the amount of income tax
determined by applying the U.S. Federal statutory rate of 35 percent
to income before taxes as a result of the following:
(in thousands) 2001 2000 1999
U.S. Federal statutory taxes $ 135,639 $ 80,455 $ 131,385
State and local taxes,
net of U.S. Federal
income tax benefit ....... 13,832 6,449 15,185
Amortization of goodwill
not deductible for
income tax purposes..... 6,988 5,011 4,178
Other, net ................... 1,441 1,485 (1,148)
Provision for income taxes... $ 157,900 $ 93,400 $ 149,600
Deferred income taxes at December 30, 2001 and December 31, 2000
consist of the following:
(in thousands) 2001 2000
Accrued postretirement benefits........... $ 56,955 $ 55,280
Other benefit obligations .................. 73,080 60,676
Accounts receivable ....................... 15,949 17,296
State income tax loss carryforwards ...... 17,218 12,013
Other ...................................... 14,886 20,693
Deferred tax asset......................... 178,088 165,958
Property, plant, and equipment............ 110,763 84,164
Prepaid pension cost ...................... 181,434 152,609
Affiliate operations......................... (1,195) 18,365
Unrealized gain on available-
for-sale securities ....................... 15,475 8,476
Goodwill and other intangibles ............ 93,286 18,277
Other ...................................... 274 1,798
Deferred tax liability ....................... 400,037 283,689
Deferred income taxes .................... $221,949 $ 117,731
EDEBT
At December 30, 2001, the Company had $933,078,000 in total debt
outstanding, which comprised $533,896,000 of commercial paper
borrowings, $398,142,000 of 5.5 percent unsecured notes due
February 15, 2009, and $1,040,000 in other debt. At December 30,
2001, the Company has classified $483,896,000 of its commercial
paper borrowings as “Long-Term Debt” in its Consolidated Balance
Sheets as the Company has the ability and intent to finance such
borrowings on a long-term basis under its credit agreements.
Interest on the 5.5 percent unsecured notes is payable semi-annu-
ally on February 15 and August 15.
At December 30, 2001 and December 31, 2000, the average inter-
est rate on the Company’s outstanding commercial paper borrow-
ings was 2.0 percent and 6.6 percent, respectively. The Company’s
commercial paper borrowings are supported by a five-year
$500,000,000 revolving credit facility and a one-year $250,000,000
revolving credit facility, which expire in March 2003 and September
2002, respectively.
Under the terms of the $500,000,000 revolving credit facility, inter-
est on borrowings is at floating rates, and the Company is required
to pay an annual facility fee of 0.055 percent and 0.15 percent on
the unused and used portions of the facility, respectively. Under the
terms of the $250,000,000 revolving credit facility, interest on bor-
rowings is at floating rates, and the Company is required to pay a
variable facility fee of 0.05 percent and 0.20 percent per annum on
the unused and used portions of the facility, respectively. Both revolv-
ing credit facilities contain certain covenants, including a financial
covenant that the Company maintain at least $850,000,000 of con-
solidated shareholders’ equity.
The Company incurred interest costs on its borrowing of $47,473,000
and $53,764,000 during 2001 and 2000, respectively. No interest
expense was capitalized in 2001 or 2000.
At December 30, 2001 and December 31, 2000, the fair value of
the Company’s 5.5 percent unsecured notes, based on quoted
market prices, totaled $387,720,000 and $376,200,000, respec-
tively, compared with the carrying amount of $398,142,000 and
$397,881,000, respectively.
The carrying value of the Company’s commercial paper borrowings
at December 30, 2001 and December 31, 2000 approximates fair
value.
F REDEEMABLE PREFERRED STOCK
In connection with the acquisition of a cable television system in
1996, the Company issued 11,947 shares of its Series A Preferred
Stock. On February 23, 2000, the Company issued an additional
1,275 shares related to this transaction. From 1998 to 2001, 90
shares of Series A Preferred Stock were redeemed at the request
of a Series A Preferred Stockholder.
The Series APreferred Stock has a par value of $1.00 per share and
a liquidation preference of $1,000 per share; it is redeemable by the
Company at any time on or after October 1, 2015 at a redemption
price of $1,000 per share. In addition, the holders of such stock have
a right to require the Company to purchase their shares at the
redemption price during an annual 60-day election period; the first
such period began on February 23, 2001. Dividends on the Series
A Preferred Stock are payable four times a year at the annual rate
of $80.00 per share and in preference to any dividends on the
Company’s common stock. The Series A Preferred Stock is not con-
vertible into any other security of the Company, and the holders