Washington Post 2001 Annual Report Download - page 21

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THE WASHINGTON POST COMPANY
Had the fair values of options granted after 1995 been recognized
as compensation expense, net income would have been reduced by
$3.6 million ($0.38 per share, basic and diluted), $3.8 million ($0.40
per share, basic and diluted), and $1.9 million ($0.19 per share, basic
and diluted) in 2001, 2000, and 1999, respectively.
The Company also maintains a stock option plan at its Kaplan sub-
sidiary that provides for the issuance of stock options representing
10.6 percent of Kaplan, Inc. common stock to certain members of
Kaplan’s management. Under the provisions of this plan, options are
issued with an exercise price equal to the estimated fair value of
Kaplan’s common stock. Options vest ratably over five years from
issuance, and upon exercise, an option holder has the right to require
the Company to repurchase the Kaplan stock at the stock’s then fair
value. The fair value of Kaplan’s common stock is determined by the
Company’s compensation committee. At December 30, 2001,
options representing 10.0 percent of Kaplan’s common stock were
issued and outstanding. For 2001, 2000, and 1999, the Company
recorded expense of $25,302,000, $6,000,000, and $7,250,000,
respectively, related to this plan. In 2001, payouts from option exer-
cises totaled $2.1 million. At December 30, 2001, the Company’s
stock-based compensation accrual balance totaled $41.4 million.
Average Number of Shares Outstanding. Basic earnings per share are
based on the weighted average number of shares of common stock
outstanding during each year. Diluted earnings per common share are
based upon the weighted average number of shares of common stock
outstanding each year, adjusted for the dilutive effect of shares
issuable under outstanding stock options. Basic and diluted weighted
average share information for 2001, 2000, and 1999 is as follows:
Basic Dilutive Diluted
Weighted Effect of Weighted
Average Stock Average
Shares Options Shares
2001........................ 9,486,386 13,173 9,499,559
2000........................ 9,445,466 14,362 9,459,828
1999........................ 10,060,578 21,206 10,081,784
HPENSIONS AND OTHER POSTRETIREMENT PLANS
The Company maintains various pension and incentive savings
plans and contributes to several multi-employer plans on behalf of
certain union-represented employee groups. Substantially all of the
Company’s employees are covered by these plans.
The Company also provides healthcare and life insurance benefits
to certain retired employees. These employees become eligible for
benefits after meeting age and service requirements.
The following table sets forth obligation, asset, and funding infor-
mation for the Company’s defined benefit pension and postretire-
ment plans at December 30, 2001 and December 31, 2000:
Pension Plans Postretirement Plans
(in thousands) 2001 2000 2001 2000
Change in benefit obligation
Benefit obligation at
beginning of year $ 391,166 $ 344,611 $ 93,243 $ 86,938
Service cost 15,393 14,566 3,707 3,496
Interest cost 27,526 24,962 6,811 6,338
Amendments 5,182 29,442 — 1,968
Actuarial loss (gain) 22,334 (5,091) 6,519 (1,199)
Benefits paid (30,584) (17,324) (4,888) (4,298)
Benefit obligation at end
of year $ 431,017 $ 391,166 $ 105,392 $ 93,243
Change in plan assets
Fair value of assets at
beginning of year $1,314,885 $ 1,119,916 — —
Actual return on plan
assets 143,253 212,293 — —
Employer contributions — — $ 4,888 $ 4,298
Benefits paid (30,584) (17,324) (4,888) (4,298)
Fair value of assets at
end of year $1,427,554 $1,314,885 $ — $ —
Funded status $ 996,537 $ 923,719 $ (105,392) $ (93,243)
Unrecognized transition
asset (8,852) (15,354) — —
Unrecognized prior
service cost 16,949 17,230 (501) (663)
Unrecognized actuarial gain (556,946) (551,511) (24,931) (34,858)
Net prepaid (accrued) cost $ 447,688 $ 374,084 $(130,824) $ (128,764)
The total (income) cost arising from the Company’s defined benefit
pension and postretirement plans for the years ended December 30,
2001, December 31, 2000, and January 2, 2000 consists of the fol-
lowing components:
Pension Plans Postretirement Plans
(in thousands) 2001 2000 1999 2001 2000 1999
Service cost $ 15,393 $ 14,566 $ 14,756 $ 3,707 $3,496 $ 3,585
Interest cost 27,526 24,962 23,584 6,811 6,338 6,039
Expected return
on assets (97,567) (85,522) (92,566) — — —
Amortization of
transition asset (6,502) (7,585) (7,665) — — —
Amortization of prior
service cost 2,122 2,091 2,110 (162) (162) (162)
Recognized
actuarial gain (17,917) (13,824) (24,635) (3,408) (2,870) (2,886)
Net periodic
(benefit) cost
for the year (76,945) (65,312) (84,416) 6,948 6,802 6,576
Early retirement
programs expense 3,344 29,049 2,733 — 1,968 —
Total (benefit) cost
for the year $ (73,601) $ (36,263) $(81,683) $ 6,948 $8,770 $6,576