Washington Post 2006 Annual Report Download - page 56

mated subscriber counts as of December 31, 2005. For all other buyouts at the corporate office, increased technology costs and
regions, there is an increase in RGUs due to continued growth in high- other compensation related expenses.
speed data subscribers, oÅset by a decline in basic video and digital Equity in Earnings (Losses) of Affiliates. The Company's
video subscriber categories primarily as a result of the $3 monthly basic equity in earnings of affiliates for 2006 was $0.8 million, compared
rate increase implemented in February 2006. The cable division began to losses of $0.9 million in 2005. The Company's affiliate invest-
oÅering telephone services on a very limited basis in the second quarter ments at the end of 2006 consisted primarily of a 49% interest in
of 2006; as of December 31, 2006, telephone services are being Bowater Mersey Paper Company Limited. In November 2006, the
oÅered to about half of homes passed. A summary of RGUs broken Company sold its 49% interest in BrassRing and recorded a pre-tax
down by Gulf Coast and all other regions is as follows: non-operating gain of $43.2 million in the fourth quarter of 2006.
Cable Television Division December 31, December 31, Non-Operating Items. The Company recorded other non-
Subscribers 2006 2005*
operating income, net, of $73.5 million in 2006, compared to
$9.0 million in 2005. The 2006 non-operating income, net, com-
Gulf Coast Region
prises a $43.2 million gain from the sale of the Company's interest
Basic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 84,531 72,770
in BrassRing, $33.8 million in gains related to the sales of market-
Digital ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 31,686 27,501
High-speed data ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 36,335 24,049 able securities and $11.9 million in foreign currency gains, offset by
TelephonyÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì a $14.2 million write-down of a marketable equity security and
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 152,552 124,320 other non-operating items. The 2005 non-operating income com-
prises $17.8 million in gains related to the sales of non-operating
All Other Regions
land and marketable securities, offset by $8.1 million in foreign
Basic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 609,019 616,408
currency losses and other non-operating items.
Digital ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 182,187 186,900
High-speed data ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 252,675 210,012 A summary of non-operating income (expense) for the years
TelephonyÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,925 Ì ended December 31, 2006 and January 1, 2006 follows (in
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,046,806 1,013,320 millions):
Total
2006 2005
Basic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 693,550 689,178
Digital ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 213,873 214,401
Gain on sale of aÇliate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 43.2 $Ì
High-speed data ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 289,010 234,061
Gain on sales of marketable securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 33.8 12.7
TelephonyÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,925 Ì
Foreign currency gains (losses), net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11.9 (8.1)
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,199,358 1,137,640 Impairment write-downs on investments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (15.1) (1.5)
Gain on sales of non-operating land ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì5.1
*Gulf Coast region subscriber figures as of December 31, 2005 Other (losses) gains ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (0.3) 0.8
are estimated and reflect a 21,400, 7,700 and 3,100 decline,
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 73.5 $ 9.0
respectively, in estimated basic, digital and high-speed data sub-
scribers due to Hurricane Katrina. The Company incurred net interest expense of $14.9 million in
RGUs include about 6,500 subscribers who receive free basic 2006, compared to $23.4 million in 2005. The decline in net
video service, primarily local governments, schools and other orga- interest expense is primarily due to increases in interest income in
nizations as required by various franchise agreements. 2006. At December 31, 2006, the Company had $407.2 million
in borrowings outstanding at an average interest rate of 5.5%; at
Below are details of cable division capital expenditures for 2006 January 1, 2006, the Company had $428.4 million in borrowings
and 2005, in the NCTA Standard Reporting Categories (in outstanding at an average interest rate of 5.4%.
millions):
Income Taxes. The effective tax rate was 36.5% for 2006 and
2006 2005 37.1% for 2005. The decline in the 2006 effective tax rate is
primarily due to lower state taxes. A significant portion of the lower
Customer premise equipment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 49.7 $ 30.0
state taxes in 2006 is not expected to recur in 2007. Accordingly,
CommercialÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.1 0.2
the Company expects an effective tax rate in 2007 of
Scaleable infrastructureÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 24.4 8.1
approximately 38.25% due to higher state taxes, offset in part by
Line extensions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 19.4 14.6
Upgrade/rebuild ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9.5 13.1 lower taxes provided with respect to increased earnings of foreign
Support capital ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 39.4 45.3 subsidiaries.
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 142.5 $ 111.3 Cumulative Effect of Change in Accounting Principle. In
the first quarter of 2006, the Company adopted SFAS 123R, which
Corporate Office. The corporate office operating expenses requires companies to record the cost of employee services in
increased to $42.5 million in 2006, from $32.6 million in 2005. exchange for stock options based on the grant-date fair value of
The increase is due to $3.8 million in pre-tax charges recorded in the awards. SFAS 123R did not have any impact on the Company's
the second quarter of 2006 associated with early retirement plan
40 THE WASHINGTON POST COMPANY