Washington Post 2004 Annual Report Download - page 51

In addition, the cable division acquired three additional systems in 2.2% with various maturities through the first quarter of 2005. In
2003 for $2.8 million. Most of the purchase price for these addition, the Company had outstanding $398.9 million of 5.5%,
acquisitions was allocated to franchise agreements, an indefinite- 10-year unsecured notes due February 2009. These notes require
lived intangible asset. semiannual interest payments of $11.0 million payable on Februa-
ry 15 and August 15. The Company also had $35.0 million in other
On January 1, 2003, the Company sold its 50% interest in the debt.
International Herald Tribune for $65 million and the Company
recorded an after-tax non-operating gain of $32.3 million During 2004, the Company's borrowings, net of repayments,
($3.38 per share) in the first quarter of 2003. decreased by $147.0 million, with the decrease primarily due to
cash flow from operations. While the Company paid down
During 2002, Kaplan acquired several businesses in its higher $157.4 million in commercial paper borrowings and other debt
education and test preparation divisions for approximately during 2004, the Company also partially financed several acquisi-
$42.2 million. In November 2002, the Company completed a tions during this period.
cable system exchange transaction with Time Warner Cable which
consisted of the exchange by the Company of its cable system in During the third quarter of 2004, the Company replaced its expiring
Akron, Ohio serving about 15,500 subscribers, and $5.2 million to $250 million 364-day revolving credit facility with a new $250 mil-
Time Warner Cable, for cable systems serving about 20,300 lion revolving credit facility on essentially the same terms. The new
subscribers in Kansas. The non-cash, non-operating gain resulting facility expires in August 2005. The Company's five-year $350 mil-
from the exchange transaction increased net income by $16.7 mil- lion revolving credit facility, which expires in August 2007, remains
lion, or $1.75 per share. in effect. These revolving credit facility agreements support the
issuance of the Company's short-term commercial paper and pro-
Capital Expenditures. During 2004, the Company's capital vide for general corporate purposes.
expenditures totaled $204.6 million. The Company's capital
expenditures for 2004, 2003 and 2002 are disclosed in Note N During 2004 and 2003, the Company had average borrowings
to the Consolidated Financial Statements. The Company estimates outstanding of approximately $516.0 million and $605.7 million,
that its capital expenditures will be in the range of $250 million to respectively, at average annual interest rates of approximately
$275 million in 2005. 4.8% and 4.2%, respectively. The Company incurred net interest
costs on its borrowings of $26.4 million and $26.9 million during
Investments in Marketable Equity Securities. At January 2, 2004 and 2003, respectively.
2005, the fair value of the Company's investments in marketable equity
securities was $409.7 million, which includes $260.4 million in Berkshire At January 2, 2005, the Company had working capital of
Hathaway Inc. Class A and B common stock and $149.3 million of $66.2 million and at December 28, 2003, the Company had a
various common stocks of publicly traded companies with education and working capital deficit of $184.7 million. The improvement in
e-commerce business concentrations. working capital in 2004 is due primarily to short-term debt repay-
ments and an increase in investments in marketable securities that
At January 2, 2005, the gross unrealized gain related to the are classified as current assets. The Company maintains working
Company's Berkshire Hathaway Inc. stock investment totaled capital levels consistent with its underlying business requirements
$75.5 million; the gross unrealized gain on this investment was and consistently generates cash from operations in excess of
$60.4 million at December 28, 2003. The Company presently required interest or principal payments. The Company has classified
intends to hold the Berkshire Hathaway stock long term. The gross all of its commercial paper borrowing obligations as a current
unrealized gain related to the Company's other marketable security liability at January 2, 2005 and December 28, 2003, as the
investments at January 2, 2005 totaled $48.3 million. Company intends to pay down commercial paper borrowings from
Common Stock Repurchases and Dividend Rate. During operating cash flow. However, the Company continues to maintain
2004, there were no share repurchases. During 2003 and 2002, the ability to refinance such obligations on a long-term basis through
the Company repurchased 910 shares and 1,229 shares, respec- new debt issuance and/or its revolving credit facility agreements.
tively, of its Class B common stock at a cost of $0.7 million and The Company's net cash provided by operating activities, as
$0.8 million, respectively. At January 2, 2005, the Company had reported in the Company's Consolidated Statements of Cash Flows,
authorization from the Board of Directors to purchase up to was $561.7 million in 2004, as compared to $337.7 million in
542,800 shares of Class B common stock. The annual dividend 2003. The increase is primarily due to the Company's significant
rate for 2005 was increased to $7.40 per share, from $7.00 per increase in operating income in 2004 and significant payments for
share in 2004, and from $5.80 per share in 2003. Kaplan stock options in 2003, offset by an increase in the compa-
Liquidity. At January 2, 2005, the Company had $119.4 million ny's income tax payments in 2004.
in cash and cash equivalents, compared to $116.6 million at The Company expects to fund its estimated capital needs primarily
December 28, 2003. through internally generated funds and, to a lesser extent, commer-
At January 2, 2005, the Company had $50.2 million in commercial cial paper borrowings. In management's opinion, the Company will
paper borrowing outstanding at an average interest rate of have ample liquidity to meet its various cash needs in 2005.
2004 FORM 10-K 35