Washington Post 2004 Annual Report Download - page 66

diÅerence between the exercise price and the then fair value. The fair in 2007, and 2,798 will become exercisable in 2008. Information related
value of Kaplan's common stock is determined by the Company's to stock options outstanding at January 2, 2005, is as follows:
compensation committee of the Board of Directors. In January 2005, the Weighted
committee set the fair value price at $2,080 per share. Average
Number Remaining Number
Range of Outstanding Contractual Exercisable
In September 2003, the committee set the fair value price of Kaplan
Exercise Prices at 1/2/05 Life (yrs.) at 1/2/05
common stock at $1,625 per share, and announced an offer
$ 190 31,341 3.0 31,341
totaling $138 million for approximately 55% of the stock options
375 500 4.6 400
outstanding at Kaplan. The Company's offer included a 10% 526 19,172 6.0 12,098
premium over the then current valuation price of Kaplan common 652 3,000 6.0 1,200
861 487 6.0 97
stock of $1,625 per share. As a result of this offer, 100% of the
1,625 13,500 7.0 2,700
eligible stock options were tendered. The Company paid out
$118.7 million in the fourth quarter of 2003, and $10.3 million in Average Number of Shares Outstanding. Basic earnings
2004, with the remainder of the payouts, related to 6,131 ten- per share are based on the weighted average number of shares of
dered stock options, to be made at the time of their scheduled common stock outstanding during each year. Diluted earnings per
vesting from 2005 to 2008 if the option holder is still employed at common share are based upon the weighted average number of
Kaplan. Additionally, stock compensation expense will be recorded shares of common stock outstanding each year, adjusted for the
on these remaining exercised stock options over the remaining dilutive effect of shares issuable under outstanding stock options.
vesting periods of 2005 to 2008. A small number of key Kaplan Basic and diluted weighted average share information for 2004,
executives continue to hold the remaining 68,000 of outstanding 2003 and 2002 is as follows:
Kaplan stock options, with roughly half of these options expiring in
Basic Dilutive Diluted
2007 and half expiring in 2011. In January 2005, 15,353 Kaplan
Weighted EÅect of Weighted
stock options were exercised, and 10,582 Kaplan stock options Average Stock Average
were awarded at an option price of $2,080. Shares Options Shares
For 2004, 2003, and 2002, the Company recorded expense of 2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9,563,314 28,311 9,591,625
$32.5 million, $119.1 million, and $34.5 million, respectively, 2003 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9,530,209 24,454 9,554,663
2002 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9,503,983 18,671 9,522,654
related to this plan. In 2004, 2003, and 2002 payouts from option
exercises totaled $10.3 million, $119.6 million and $1.5 million, The 2004, 2003 and 2002 diluted earnings per share amounts
respectively. At December 31, 2004, the Company's stock-based exclude the effects of 4,000, 16,750, and 11,500 stock options
compensation accrual balance totaled $96.2 million. outstanding, respectively, as their inclusion would be antidilutive.
Changes in Kaplan stock options outstanding for the years ended H. PENSIONS AND OTHER POSTRETIREMENT PLANS
January 2, 2005, December 28, 2003, and December 29, 2002,
were as follows: The Company maintains various pension and incentive savings plans
and contributes to several multi-employer plans on behalf of certain
2004 2003 2002
union-represented employee groups. Substantially all of the Compa-
Number Average Number Average Number Average
of Option of Option of Option ny's employees are covered by these plans.
Shares Price Shares Price Shares Price
The Company also provides health care and life insurance benefits
Beginning of Year ÏÏÏÏ 68,000 $596.17 147,463 $ 311.24 142,578 $296.69 to certain retired employees. These employees become eligible for
Granted ÏÏÏÏÏÏÏÏÏ ÌÌ16,037 1,546.23 6,475 652.00
ExercisedÏÏÏÏÏÏÏÏÏ ÌÌ(94,652) 303.66 (540) 375.00 benefits after meeting age and service requirements.
Forfeited ÏÏÏÏÏÏÏÏÏ ÌÌ(848) 382.12 (1,050) 403.76
The Company uses a measurement date of December 31 for its
End of yearÏÏÏÏÏÏÏÏÏ 68,000 $596.17 68,000 $ 596.17 147,463 $311.24
pension and other postretirement benefit plans.
Of the shares covered by options outstanding at the end of 2004, In 2004, 2003, and 2002, the Company offered several early
47,836 are now exercisable, 7,034 will become exercisable in 2005, retirement programs to certain groups of employees at The Wash-
6,935 will become exercisable in 2006, 3,397 will become exercisable ington Post newspaper, Newsweek and the corporate office, the
effects of which are included below. Effective June 1, 2003, the
retirement pension program for certain employees at The Washing-
ton Post newspaper and the corporate office was amended and
provides for increased annuity payments for vested employees
retiring after this date. This plan amendment resulted in a reduction
in the pension credit of approximately $5.1 million and $2.6 million
for the years ended January 2, 2005 and December 28, 2003,
respectively.
The following table sets forth obligation, asset and funding informa-
tion for the Company's defined benefit pension and postretirement
50 THE WASHINGTON POST COMPANY