Washington Post 2008 Annual Report Download - page 82

The Company has determined that there are no material
transactions or material tax positions taken by the Company that
would fail to meet the more-likely-than-not threshold established by
FIN 48 for recognizing transactions or tax positions in the financial
statements. In making this determination, the Company presumes
that all matters will be examined with full knowledge of all relevant
information by appropriate taxing authorities and that the Company
will pursue, if necessary, resolution by related appeals or litigation.
The Company has accrued a tax liability for various tax positions
reflected in the consolidated financial statements where it is
uncertain whether the tax benefit associated with the tax positions
will ultimately be recognized in full. The amount of, and changes to,
this accrued tax liability are not material to the Company’s financial
position or results of operations, and the Company does not expect
the total amount of this accrued tax liability or the gross amount of
any unrecognized tax benefits to significantly increase or decrease
within the next 12 months.
H. DEBT
Long-term debt consists of the following:
(in millions) December 28, 2008 December 30, 2007
Commercial paper borrowings . . . $ 150.0 $ 84.8
5.5% unsecured notes due
February 15, 2009 .......... 399.9 399.7
Other indebtedness ............ 3.9 5.6
Total ...................... 553.8 490.1
Less current portion ............ (153.8) (89.6)
Total long-term debt ........... $ 400.0 $400.5
At December 28, 2008, the average interest rate on the
Company’s outstanding commercial paper borrowings was 0.2%.
The Company’s other indebtedness at December 28, 2008 and
December 30, 2007 is at interest rates of 5% to 8% and matures in
2009. The final interest payment on the 5.5% unsecured notes was
made in February 2009.
On January 30, 2009, the Company completed the issuance of
$400.0 million, 7.25% unsecured notes due February 1, 2019.
The Company is required to make semi-annual interest payments
related to these notes on February 1 and August 1, beginning
August 1, 2009. The Company used the net proceeds
(approximately $395.9 million) resulting from the issuance of its
7.25%, 10-year notes and other cash to repay $400.0 million of
notes that matured on February 15, 2009.
The Company entered a $500 million 5-year revolving credit
agreement with a group of banks on August 8, 2006 (the “2006
Credit Agreement”). This agreement supports the issuance of the
Company’s commercial paper, but the Company may also draw on
the facility for general corporate purposes. The 2006 Credit
Agreement will expire on August 8, 2011. The Company has not
borrowed any money under this agreement. Any borrowings that
are outstanding under the 2006 Credit Agreement would have to
be repaid on or prior to the final termination date.
Under the terms of the 2006 Credit Agreement, the Company is
required to pay a facility fee at an annual rate of between 0.04%
and 0.10% of the amount of the facility, depending on the
Company’s long-term debt ratings. Any borrowings are made on an
unsecured basis and bear interest, at the Company’s option, at
Citibank’s base rate or at a rate based on LIBOR plus an applicable
margin that also depends on the Company’s long-term debt ratings.
The 2006 Credit Agreement contains terms and conditions,
including remedies in the event of a default by the Company,
typical of facilities of this type and, among other things, requires the
Company to maintain at least $1 billion of consolidated
shareholders’ equity.
During 2008 and 2007, the Company had average borrowings
outstanding of approximately $492.3 million and $412.1 million,
at average annual interest rates of approximately 4.9% and 5.5%,
respectively. The Company incurred net interest costs on its
borrowings of $19.0 million and $12.7 million during 2008 and
2007, respectively. Total capitalized interest expense during 2008
was $0.5 million and was related to the construction of a qualified
asset. No interest expense was capitalized in 2007 or 2006.
At December 28, 2008 and December 30, 2007, the fair value of
the Company’s 5.5% unsecured notes, based on quoted market
prices, totaled $397.8 million and $400.8 million, respectively,
compared with the carrying amount of $399.9 million and
$399.7 million, respectively. The carrying value of the Company’s
other unsecured debt at December 28, 2008 approximates fair
value.
I. REDEEMABLE PREFERRED STOCK
In connection with the acquisition of a cable television system in
1996, the Company issued 11,947 shares of its Series A preferred
stock. On February 23, 2000, the Company issued an additional
1,275 shares related to this transaction. From 1998 to 2008,
1,396 shares of Series A preferred stock were redeemed at the
request of Series A preferred stockholders.
The Series A preferred stock has a par value of $1.00 per share
and a liquidation preference of $1,000 per share; it is redeemable
by the Company at any time on or after October 1, 2015 at a
redemption price of $1,000 per share. In addition, the holders of
such stock have a right to require the Company to purchase their
shares at the redemption price during an annual 60-day election
period; the first such period began on February 23, 2001.
Dividends on the Series A preferred stock are payable four times a
year at the annual rate of $80.00 per share and in preference to
any dividends on the Company’s common stock. The Series A
preferred stock is not convertible into any other security of the
Company, and the holders thereof have no voting rights except with
respect to any proposed changes in the preferences and special
rights of such stock.
70 THE WASHINGTON POST COMPANY