Washington Post 2007 Annual Report Download - page 78

B. ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE AND
ACCRUED LIABILITIES
Accounts receivable at December 30, 2007 and December 31,
2006 consist of the following (in thousands):
2007 2006
Trade accounts receivable, less
estimated returns, doubtful accounts
and allowances of $81,903 and
$86,227 . . ................ $458,594 $400,380
Other accounts receivable . . ....... 22,149 23,023
$480,743 $423,403
Accounts payable and accrued liabilities at December 30, 2007
and December 31, 2006 consist of the following (in thousands):
2007 2006
Accounts payable and accrued
expenses . . ................ $339,443 $331,783
Accrued compensation and related
benefits . . . ................ 219,332 179,991
Due to affiliates (newsprint). . ....... 5,969 6,042
$564,744 $517,816
Cash overdrafts of $35.0 million and $38.1 million are included
in accounts payable and accrued expenses at December 30,
2007 and December 31, 2006, respectively.
C. INVESTMENTS
Investments in Marketable Equity Securities. Investments in
marketable equity securities at December 30, 2007 and
December 31, 2006 consist of the following (in thousands):
2007 2006
Total cost . . . ................ $213,561 $213,705
Net unrealized gains . ........... 255,898 141,023
Total fair value ................ $469,459 $354,728
At December 30, 2007 and December 31, 2006, the Company’s
ownership of 2,634 shares of Berkshire Hathaway Inc.
(“Berkshire”) Class A common stock and 9,845 shares of
Berkshire Class B common stock accounted for $417.8 million
or 89% and $325.8 million or 92%, respectively, of the total fair
value of the Company’s investments in marketable equity securities.
Berkshire is a holding company owning subsidiaries engaged
in a number of diverse business activities, the most significant
of which consists of property and casualty insurance businesses
conducted on both a direct and reinsurance basis. Berkshire also
owns approximately 18% of the common stock of the Company.
The chairman, chief executive officer and largest shareholder
of Berkshire, Mr. Warren Buffett, is a member of the Company’s
Board of Directors. Neither Berkshire nor Mr. Buffett participated
in the Company’s evaluation, approval or execution of its
decision to invest in Berkshire common stock. The Company’s
investment in Berkshire common stock is less than 1% of the
consolidated equity of Berkshire. 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.
During 2006, the Company made $42.9 million in investments in
marketable equity securities. There were no investments in
marketable equity securities in 2007 and 2005. During 2007,
2006 and 2005, proceeds from the sales of marketable equity
securities were $0.5 million, $82.9 million and $64.8 million,
respectively, and net realized gains on such sales were
$0.4 million, $33.8 million and $12.7 million, respectively.
During 2006, the Company recorded a write-down on a
marketable equity security of $14.2 million.
Investments in Affiliates. At the end of 2007, the Company’s
investments in affiliates consisted of a 49% interest in the common
stock of Bowater Mersey Paper Company Limited, which owns and
operates a newsprint mill in Nova Scotia, and other investments.
On November 13, 2006, the Company sold its 49% interest in
BrassRing and recorded a $43.2 million pre-tax gain that is
included in “Other income (expense), net” in the Consolidated
Statements of Income.
Cash and Cash Equivalents. As of December 30, 2007 and
December 31, 2006, the Company had $5.1 million and
$142.9 million in commercial paper and money market investments
that were classified as “Cash and cash equivalents” in the Company’s
Consolidated Balance Sheets.
D. ACQUISITIONS AND DISPOSITIONS
The Company completed business acquisitions totaling
approximately $296.3 million in 2007, $143.4 million in
2006 and $156.1 million in 2005. The assets and liabilities
of the companies acquired have been recorded at their
estimated fair values at the date of acquisition; the purchase
price allocations mostly comprised goodwill and other
intangibles, and property, plant and equipment.
During 2007, the Company acquired 11 businesses within its
Kaplan, Newspaper, and Other Businesses and Corporate
Office segments for a total cost of $292.0 million, financed
with cash and $2.0 million in debt. Kaplan acquired 9
businesses in its higher education, test prep and professional
divisions, of which the largest two were Kaplan professional’s
acquisitions of EduNeering Holdings, Inc., a Princeton,
NJ-based provider of knowledge management solutions for
organizations in the pharmaceutical, medical device,
healthcare, energy and manufacturing sectors; and the
education division of Financial Services Institute of
Australasia. In October 2007, the Company acquired the
outstanding stock of CourseAdvisor, Inc., a premier online
lead generation provider, headquartered in Wakefield, MA.
Through its search engine marketing expertise and proprietary
technology platform, CourseAdvisor generates student leads for
the post-secondary education market. CourseAdvisor operates
as an independent subsidiary of the Company. Most of the
62 THE WASHINGTON POST COMPANY