Washington Post 2009 Annual Report Download - page 83

December 28, 2008 is at interest rates of 5% to 6% and matures in
2010. The final interest payment on the 5.5% unsecured notes was
made in February 2009.
In January 2009, the Company issued $400 million in unsecured
ten-year fixed-rate notes due February 1, 2019 (“the Notes”). The
Notes have a coupon rate of 7.25% per annum, 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 $400 million of 5.5% notes that matured
on February 15, 2009. Under the terms of the Notes, unless
the Company has exercised its right to redeem the Notes, the
Company is required to offer to repurchase the Notes in cash at
101% of the principal amount, plus accrued and unpaid interest,
upon the occurrence of both a Change of Control and Below
Investment Grade Rating Events as described in the Prospectus
Supplement of January 27, 2009.
The Company entered a $500 million five-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 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, $19.0 million and $12.7 million
during 2009, 2008 and 2007, respectively.
At January 3, 2010, the fair value of the Company’s 7.25%
unsecured notes, based on quoted market prices, totaled $443.1
million, compared with the carrying amount of $396.2 million. At
December 28, 2008, the fair value of the Company’s 5.5%
unsecured notes, based on quoted market prices, totaled $397.8
million, compared with the carrying amount of $399.9 million. The
carrying value of the Company’s other unsecured debt at January 3,
2010 approximates fair value.
J. 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 2009,
1,696 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.
K. CAPITAL STOCK, STOCK AWARDS AND STOCK OPTIONS
Capital Stock. Each share of Class A common stock and Class B
common stock participates equally in dividends. The Class B stock
has limited voting rights and as a class has the right to elect 30% of
the Board of Directors; the Class A stock has unlimited voting rights,
including the right to elect a majority of the Board of Directors. In
the third quarter of 2007, a majority of the Company’s Class A
shareholders voted to convert 430,557, or 25%, of the Class A
shares of the Company to an equal number of Class B shares. The
conversion had no impact on the voting rights of the Class A and
Class B common stock.
During 2009, 2008 and 2007, the Company purchased a total
of 145,040, 167,642 and 54,506 shares, respectively, of its
Class B common stock at a cost of approximately $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.
Stock Awards. In 1982, the Company adopted a long-term
incentive compensation plan, which, among other provisions,
authorizes the awarding of Class B common stock to key
employees. Stock awards made under this incentive compensation
plan are primarily subject to the general restriction that stock
awarded to a participant will be forfeited and revert to Company
ownership if the participant’s employment terminates before the end
of a specified period of service to the Company. Some of the
awards are also subject to performance conditions and will be
forfeited and revert to Company ownership if the conditions are not
met. At January 3, 2010, there were 151,395 shares reserved for
issuance under the incentive compensation plan. Of this number,
2009 FORM 10-K 69