Washington Post 2006 Annual Report Download - page 61

During the third quarter of 2006, the Company replaced its expiring (3) Primarily made up of postretirement benefit obligations other
$250 million 364-day revolving credit facility and its 5-year than pensions. The Company has other long-term liabilities
$350 million revolving credit facility with a new $500 million 5-year excluded from the table above, including obligations for
revolving credit facility on essentially the same terms. The new deferred compensation, long-term incentive plans and long-
facility expires in August 2011. This revolving credit facility term deferred revenue.
agreement supports the issuance of the Company's short-term
Other Commercial Commitments
commercial paper and provides for general corporate purposes. (in thousands)
During 2006 and 2005, the Company had average borrowings Line of
outstanding of approximately $418.7 million and $442.0 million, Fiscal Year Credit
respectively, at average annual interest rates of approximately 2007 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ Ì
5.5% and 5.4%, respectively. The Company incurred net interest 2008 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì
costs on its borrowings of $14.9 million and $23.4 million during 2009 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì
2006 and 2005, respectively. 2010 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì
2011 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 500,000
At December 31, 2006 and January 1, 2006, the Company had
Thereafter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì
working capital of $131.6 million and $123.6 million, respectively.
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 500,000
The Company maintains working capital levels consistent with its
underlying business requirements and consistently generates cash Other. The Company does not have any off-balance-sheet
from operations in excess of required interest or principal payments. arrangements or financing activities with special-purpose entities
(SPEs). Transactions with related parties, as discussed in Note C to
The Company's net cash provided by operating activities, as
the Consolidated Financial Statements, are in the ordinary course of
reported in the Company's Consolidated Statements of Cash Flows,
business and are conducted on an arm's-length basis.
was $594.8 million in 2006, compared to $522.8 million in 2005.
The Company expects to fund its estimated capital needs primarily CRITICAL ACCOUNTING POLICIES AND ESTIMATES
through existing cash balances and internally generated funds. In
The preparation of financial statements in conformity with generally
management's opinion, the Company will have ample liquidity to
accepted accounting principles requires management to make esti-
meet its various cash needs in 2007.
mates and assumptions that affect the amounts reported in the
The following reflects a summary of the Company's contractual financial statements. In preparing these financial statements, man-
obligations and commercial commitments as of December 31, agement has made its best estimates and judgments of certain
2006: amounts included in the financial statements. Actual results will
inevitably differ to some extent from these estimates.
Contractual Obligations
(in thousands) The following are accounting policies that management believes are
the most important to the Company's portrayal of the Company's
2007 2008 2009 2010 2011 Thereafter Total
financial condition and results and require management's most
Debt and interest ÏÏ $ 27,622 $ 23,387 $411,184 $ Ì $ Ì $ Ì $ 462,193
Programming
difficult, subjective or complex judgments.
purchase
commitments(1)ÏÏ 147,777 128,325 101,327 78,548 70,300 143,965 670,242
Revenue Recognition and Trade Accounts Receivable,
Operating leases ÏÏ 109,343 98,345 86,879 75,370 59,309 197,403 626,649
Less Estimated Returns, Doubtful Accounts and
Other purchase
obligations(2) ÏÏÏ 289,931 116,967 80,699 11,570 6,858 1,133 507,158
Allowances. The Company's revenue recognition policies are
Long-term
described in Note A to the Consolidated Financial Statements.
liabilities(3) ÏÏÏÏÏ 5,776 6,139 6,552 7,036 7,432 62,636 95,571
Education revenue is recognized ratably over the period during
Total ÏÏÏÏÏÏÏÏÏÏÏÏ $580,449 $373,163 $686,641 $172,524 $143,899 $405,137 $2,361,813
which educational services are delivered. At Kaplan's test prepara-
tion division, estimates of average student course length are devel-
(1) Includes commitments for the Company's television broadcast-
oped for each course, along with estimates for the anticipated level
ing and cable television businesses that are reflected in the
of student drops and refunds from test performance guarantees,
Company's Consolidated Balance Sheets and commitments to
and these estimates are evaluated on an ongoing basis and
purchase programming to be produced in future years.
adjusted as necessary. In the fourth quarter of 2006, Kaplan
(2) Includes purchase obligations related to newsprint contracts, recorded a $6.1 million revenue decrease at the test preparation
printing contracts, employment agreements, circulation distri- division related to course timing and estimates of average course
bution agreements, capital projects and other legally binding length. As Kaplan's businesses and related course offerings have
commitments. Other purchase orders made in the ordinary expanded, including distance-learning businesses and contracts
course of business are excluded from the table above. Any with school districts as part of its K12 business, the complexity and
amounts for which the Company is liable under purchase significance of management estimates have increased. Revenues
orders are reflected in the Company's Consolidated Balance from magazine retail sales are recognized on the later of delivery
Sheets as ""Accounts payable and accrued liabilities.'' or the cover date, with adequate provision made for anticipated
2006 FORM 10-K 45