Washington Post 2009 Annual Report Download - page 78

D. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at January 3, 2010 and
December 28, 2008 consist of the following:
(in thousands) 2009 2008
Land ........................ $ 47,700 $ 49,859
Buildings ..................... 375,728 349,785
Machinery, equipment and fixtures . . 2,428,595 2,337,149
Leasehold improvements .......... 290,951 256,866
Construction in progress .......... 51,022 114,294
3,193,996 3,107,953
Less accumulated depreciation ..... (1,954,304) (1,805,619)
$ 1,239,692 $ 1,302,334
Depreciation expense was $295.9 million, $265.6 million and
$221.2 million in 2009, 2008 and 2007, respectively. Total
interest capitalized during 2008 was $0.5 million and was related
to the construction of a qualified asset. No interest expense was
capitalized in 2009 and 2007.
E. INVESTMENTS
Investments in Marketable Equity Securities. Investments in
marketable equity securities at January 3, 2010 and December 28,
2008 consist of the following:
(in thousands) 2009 2008
Total cost ....................... $223,064 $212,242
Gross unrealized gains ............. 130,820 121,077
$353,884 $333,319
At January 3, 2010 and December 28, 2008, the Company
owned 2,214 shares of Berkshire Hathaway Inc. (“Berkshire”)
Class A common stock and 8,485 and 3,870 shares of Berkshire
Class B common stock, respectively. The Company’s ownership of
Berkshire accounted for $247.5 million, or 70%, and $218.8
million, or 66%, of the total fair value of the Company’s investments
in marketable equity securities at January 3, 2010 and
December 28, 2008, respectively.
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 19% 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. The Company’s investment in Berkshire common
stock is less than 1% of the consolidated equity of Berkshire. At
January 3, 2010 and December 28, 2008, the gross unrealized
gain related to the Company’s Berkshire stock investment 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 were $64.4 million, and the net realized gains were
$26.0 million.
During 2009 and 2008, the Company invested $10.8 million and
$65.8 million in marketable equity securities, respectively. There
were no new investments in marketable equity securities in 2007.
During 2008 and 2007, proceeds from the sales of marketable
equity securities were $114.4 million and $0.5 million,
respectively, and net realized gains on such sales were $47.3
million and $0.4 million, respectively. There were no sales of
marketable equity securities during 2009.
Investments in Affiliates. At the end of 2009, 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.
During 2009 and 2008, the Company recorded $29.0 million
and $6.8 million of impairment charges at the Company’s affiliates,
respectively. The 2009 charges primarily relate to an impairment
charge recorded on the Company’s interest in Bowater Mersey
Paper Company as a result of the challenging economic
environment for newsprint producers. In the second quarter of
2008, the Company recorded $6.8 million in impairment charges
at two of the Company’s other affiliates.
F. ACQUISITIONS AND DISPOSITIONS
The Company completed business acquisitions totaling
approximately $26.1 million in 2009, $123.5 million in 2008
and $296.3 million in 2007. 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. Any additional purchase consideration related
to a 2008 acquisition is expected to be recorded as goodwill.
During 2009, the Company acquired three businesses for $22.9
million. Kaplan acquired one business in each of its International
and Test Preparation divisions, and the newspaper division
acquired a small local publication. The purchase price allocations
for these acquisitions mostly comprised goodwill and other
intangible assets. Also in 2009, the Company recorded $3.2
million of additional purchase consideration in connection with the
achievement of certain operating results by a company acquired in
2007 and allocated the additional purchase consideration to
goodwill.
In December 2009, the Company completed the sale of
Newsweek’s Budget Travel, which was part of the Company’s
magazine publishing segment, and recorded a gain.
During 2008, the Company acquired ten businesses within its
education and newspaper segments, for a total of $93.1 million,
financed with cash and $3.2 million in debt. Kaplan acquired nine
businesses in its International, Test Preparation, and Ventures
divisions. These included Kaplan International’s acquisition of a
majority interest in Shanghai Kai Bo Education Management
Investment Co., Ltd. (“Kaplan China”), a provider of education in
China that offers preparation courses for entry to U.K. universities,
along with degree and professional training programs at campuses
throughout China. In 2007, Kaplan purchased a 40% interest in
Kaplan China. In the first quarter of 2008, Kaplan exercised an
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