Washington Post 2009 Annual Report Download - page 62

to the consolidated financial statements. The Company estimates
that its capital expenditures will be in the range of $280 million to
$320 million in 2010.
Investments in Marketable Equity Securities. At January 3, 2010,
the fair value of the Company’s investments in marketable equity
securities was $353.9 million, which includes $247.5 million in
Berkshire Hathaway Inc. Class A and B common stock and $106.4
million in the common stock of a publicly traded education company.
At January 3, 2010, and December 28, 2008, the gross
unrealized gain related to the Company’s Berkshire stock invest-
ment totaled $90.2 million and $72.4 million, respectively. During
2009, the Company invested $10.8 million in the Class B common
stock of Berkshire. During 2008, the Company sold 420 and
5,975 shares of Berkshire Class A and Class B common stock,
respectively. Total proceeds from the sale were $64.4 million, and
the net realized gains were $26.0 million. The gross unrealized
gain related to the Company’s other marketable equity security
investments totaled $40.6 million and $48.7 million at January 3,
2010, and December 28, 2008, respectively.
Common Stock Repurchases and Dividend Rate. During 2009,
2008 and 2007, the Company repurchased 145,040 shares,
167,642 shares and 54,506 shares, respectively, of its Class B
common stock at a cost of $61.0 million, $99.0 million and
$42.0 million, respectively. At January 3, 2010, the Company
had authorization from the Board of Directors to purchase up to
100,916 shares of Class B common stock. In January 2010,
the Board of Directors increased the authorization to a total of
750,000 shares of Class B common stock. The annual dividend
rate for 2010 was increased to $9.00 per share, from $8.60 per
share in 2009 and 2008.
Liquidity. At January 3, 2010, the Company had $477.7 million in
cash and cash equivalents, compared to $390.5 million at
December 28, 2008. As of January 3, 2010, and December 28,
2008, the Company had money market investments of $327.8
million and $99.1 million, respectively, that are classified as cash
and cash equivalents in the Company’s consolidated financial state-
ments.
At December 28, 2008, the Company had $150.0 million in
commercial paper borrowings outstanding at an average interest
rate of 0.2% with various maturities through the first quarter of
2009. In addition, the Company had outstanding $399.9 million
of 5.5% unsecured notes due February 15, 2009, and $3.9 million
in other debt. On January 30, 2009, the Company completed the
issuance of $400.0 million of 7.25% unsecured notes due
February 1, 2019. The interest is payable semi-annually on
February 1 and August 1, beginning August 1, 2009. The
Company used the net proceeds from the sale of the notes and
other cash to repay the Company’s $400.0 million unsecured notes
that matured on February 15, 2009.
During 2009, the Company’s borrowings, net of repayments,
decreased by $154.5 million, and the Company’s cash and cash
equivalents increased by $87.2 million. There were no commercial
paper borrowings outstanding at January 3, 2010.
The Company’s $500 million commercial paper program continues
to serve as a significant source of short-term liquidity. The $500
million revolving credit facility that expires in August 2011 supports
the issuance of the Company’s short-term commercial paper and
provides for general corporate purposes. The Company continued
to have access to and borrowed funds under its commercial paper
program and has not borrowed funds under its revolving credit
facility.
The Company’s credit ratings were affirmed by the rating agencies in
October 2008 with a change in ratings outlook from stable to
negative. In May 2009, Standard & Poor’s placed the Company’s
“A+” long-term corporate credit and senior unsecured ratings, and the
Company’s “A-1” short-term commercial paper rating on Credit-
Watch with negative implications. In June 2009, Standard & Poor’s
lowered its long-term rating to “A” from “A+,” affirmed the “A-1” short-
term rating and removed both ratings from CreditWatch. In December
2009, Standard & Poor’s revised the Company’s long-term outlook to
stable. Moody’s rating outlook for the Company remains negative.
The Company’s current credit ratings are as follows:
Moody’s Standard & Poor’s
Long-term ........................... A1 A
Short-term ........................... Prime-1 A-1
During 2009 and 2008, the Company had average borrowings
outstanding of approximately $426.7 million and $492.3 million,
respectively, at average annual interest rates of approximately 6.9%
and 4.9%, respectively. The Company incurred net interest costs on
its borrowings of $29.0 million and $19.0 million, respectively,
during 2009 and 2008.
At January 3, 2010, and December 28, 2008, the Company
had working capital of $398.5 million and $257.3 million,
respectively. The Company maintains working capital levels
consistent with its underlying business requirements and consistently
generates cash from operations in excess of required interest or
principal payments.
The Company’s net cash provided by operating activities, as reported
in the Company’s Consolidated Statements of Cash Flows, was
$653.0 million in 2009, compared to $535.8 million in 2008.
The Company expects to fund its estimated capital needs primarily
through existing cash balances and internally generated funds and,
to a lesser extent, through commercial paper borrowings. In
management’s opinion, the Company will have ample liquidity to
meet its various cash needs in 2010.
48 THE WASHINGTON POST COMPANY