Washington Post 2007 Annual Report Download - page 66

During 2006, Kaplan acquired 11 businesses in its test prep,
professional and higher education divisions for a total of
$143.4 million, financed with cash. The largest of these
included Tribeca Learning Limited, a leading provider of
education to the Australian financial services sector;
SpellRead, originator of SpellRead Phonological Auditory
Training, a reading intervention program for struggling
students; Aspect Education Limited, a major provider of
English-language instruction with schools located in the U.K.,
Ireland, Australia, New Zealand, Canada and the U.S.; and
PMBR, a nationwide provider of test preparation for the Multistate
Bar Exam. Most of the purchase price for the 2006 acquisitions
was allocated to goodwill and other intangibles.
In the fourth quarter of 2006, the Company recorded a
$43.2 million pre-tax gain on the sale of BrassRing, in which
theCompanyhelda49%interest.Alsointhefourthquarterof
2006, the Company recorded a $1.5 million loss on the sale of
PostNewsweek Tech Media, which was part of the Company’s
magazine publishing segment.
During 2005, Kaplan acquired 10 businesses in its higher
education, professional and test prep divisions for a total of
$140.1 million, financed with cash and $3.0 million in debt.
The largest of these included BISYS Education Services, a
provider of licensing education and compliance solutions for
financial service institutions and professionals; The Kidum
Group, the leading provider of test preparation services in
Israel; and Asia Pacific Management Institute, a private
education provider for undergraduate and postgraduate
students in Asia. In January 2005, the Company completed the
acquisition of Slate, the online magazine, which is included as
part of the Company’s newspaper publishing division. Most of the
purchase price for the 2005 acquisitions was allocated to
goodwill and other intangibles, and property, plant and
equipment.
Capital Expenditures. During 2007, the Company’s capital
expenditures totaled $290.0 million. The Company’s capital
expenditures for 2007, 2006 and 2005 are disclosed in
Note O to the Consolidated Financial Statements. The
Company estimates that its capital expenditures will be in the
range of $350 million to $375 million in 2008, with the
increases due primarily to a new television station facility under
construction in Miami and a headquarters office relocation at
Newsweek.
Investments in Marketable Equity Securities. At December 30,
2007, the fair value of the Company’s investments in marketable
equity securities was $469.5 million, which includes
$417.8 million in Berkshire Hathaway Inc. Class A and B
common stock and $51.7 million in the common stock of a
publicly traded education company.
At December 30, 2007 and December 31, 2006, the gross
unrealized gain related to the Company’s Berkshire stock
investment totaled $232.9 million and $140.9 million,
respectively. The Company presently intends to hold the
Berkshire common stock investment long term, thus the
investment has been classified as a non-current asset in the
Consolidated Balance Sheets. The gross unrealized gain
related to the Company’s other marketable equity security
investments totaled $23.0 million and $0.1 million at
December 30, 2007 and December 31, 2006, respectively.
In January and February 2008, the Company purchased
approximately $60 million in the common stock of Corinthian
Colleges, Inc., a publicly traded education company.
Common Stock Repurchases and Dividend Rate. During 2007
and 2006, the Company repurchased 54,506 shares and
77,300 shares, respectively, of its Class B common stock at a
cost of $42.0 million and $56.6 million, respectively. In 2005,
there were no share repurchases. At December 30, 2007, the
Company had authorization from the Board of Directors to
purchase up to 410,994 shares of Class B common stock. The
annual dividend rate for 2008 was increased to $8.60 per
share, from $8.20 per share in 2007 and from $7.80 per
share in 2006.
Liquidity. At December 30, 2007, the Company had
$321.5 million in cash and cash equivalents, compared to
$348.1 million at December 31, 2006. As of December 30,
2007 and December 31, 2006, the Company had commercial
paper and money market investments of $5.1 million and
$142.9 million, respectively, that are classified as “Cash and
cash equivalents” in the Company’s Consolidated Balance
Sheets.
At December 30, 2007, the Company had $84.8 million in
commercial paper borrowing outstanding at an average interest
rate of 4.5% with various maturities through the first quarter of
2008. In addition, the Company had outstanding $399.7 million
of 5.5% unsecured notes due February 15, 2009 and
$5.6 million in other debt. The unsecured notes require semi-
annual interest payments of $11.0 million, payable on February
15 and August 15.
During 2007, the Company’s borrowings, net of repayments,
increased by $82.9 million, and the Company’s commercial
paper and money market investments decreased by
$137.8 million.
During 2006, the Company replaced its expiring $250 million
364-day revolving credit facility and its 5-year $350 million
revolving credit facility with a new $500 million 5-year
revolvingcreditfacilityonessentiallythesameterms.Thenew
facility expires in August 2011. This revolving credit facility
agreement supports the issuance of the Company’s short-term
commercial paper and provides for general corporate purposes.
As previously noted, the Company has $399.7 million in
unsecured notes that mature on February 15, 2009. As of
December 30, 2007, the Company had sufficient cash and
marketable equity securities that could be used to pay off this
debt at maturity. In addition, the Company could refinance some
or all of this debt by issuing commercial paper under its
$500 million commercial paper program or by borrowing
money in the capital markets.
50 THE WASHINGTON POST COMPANY