Washington Post 2010 Annual Report Download - page 70

employees accepting the offer; $79.8 million in early retirement
program expense was recorded in the second quarter of 2008,
also funded primarily from the assets of the Company’s pension
plans.
The Post closed its College Park, MD, printing plant in July 2009
and consolidated its printing operations in Springfield, VA. The Post
is also in the process of consolidating certain other operations in
Washington, DC. In connection with these activities, accelerated
depreciation of $33.8 million and $22.3 million was recorded in
2009 and 2008, respectively. The Post incurred additional costs
related to the shutdown of the College Park, MD, printing plant of
$1.7 million in 2009. In the fourth quarter of 2009, the Company
recorded a $2.2 million loss on an office lease in conjunction with
the consolidation of operations. Also in 2008, as a result of the
challenging advertising environment at the Company’s community
newspapers, The Herald and other operations included in the
newspaper publishing division, the Company recorded goodwill
impairment charges of $65.8 million.
The newspaper division reported an operating loss of $163.5
million in 2009, compared to an operating loss of $192.7 million
in 2008. Excluding early retirement program charges, accelerated
depreciation and goodwill impairment losses, operating results
declined in 2009 due to the significant decline in division
advertising revenue, offset by expense reductions and a 19%
reduction in newsprint expense due to a decline in newsprint
consumption and prices.
Television Broadcasting Division. Revenue for the television
broadcasting division decreased 16% to $272.7 million in 2009,
from $325.1 million in 2008. The decrease in revenue is due to
weaker advertising demand in most markets and product
categories, particularly automotive, and a $19.4 million decrease
in political advertising revenue in 2009. Additionally, in the third
quarter of 2008, the television broadcasting division benefited from
$6.3 million in incremental summer Olympics-related advertising at
the Company’s NBC affiliates.
In 2008, the television broadcasting division recorded $6.9 million
in noncash property, plant and equipment gains as a reduction to
expense due to new digital equipment received at no cost from
Sprint/Nextel in connection with an FCC mandate reallocating a
portion of the broadcast spectrum.
Television broadcasting division operating income for 2009
declined 43% to $70.5 million, from $123.5 million in 2008. The
operating income decline for 2009 is due to the revenue decreases
discussed above and the noncash gains in 2008. Operating
margin at the television broadcasting division was 26% in 2009
and 38% in 2008.
Competitive market position remained strong for the Company’s
television stations. KSAT in San Antonio, WPLG in Miami and WJXT
in Jacksonville ranked number one in the November 2009 ratings
period, Monday through Friday, sign-on to sign-off; WDIV in Detroit
and WKMG in Orlando ranked second; and KPRC in Houston
ranked third.
Other Businesses. Other businesses includes the operating results
of Avenue100 Media Solutions and other small businesses. In the
fourth quarter of 2008, a goodwill and other intangible assets
impairment charge of $69.7 million was recorded to write down
the intangible assets of Avenue100 Media Solutions to their
estimated fair values.
Corporate Office. Corporate office includes the expenses of the
Company’s corporate office and the pension credit previously
reported in the magazine publishing division (refer to Discontinued
Operations discussion below). The 2008 results include $3.0
million in early retirement program expense at the corporate office.
Equity in Losses of Affiliates. The Company’s equity in losses of
affiliates for 2009 was $29.4 million, compared to $7.8 million in
losses for 2008. Results for 2009 included $29.0 million in write-
downs at two of the Company’s affiliate investments. Most of the
loss relates 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. Results
in 2008 include $6.8 million in impairment charges at two of the
Company’s affiliates.
At the end of 2009, the Company held a 49% interest in Bowater
Mersey Paper Company and interests in several other affiliates.
Non-Operating Items. The Company recorded other non-operating
income, net, of $13.2 million in 2009, compared to other non-
operating expense, net, of $2.2 million in 2008. The 2009
non-operating income, net, primarily included $16.9 million in
unrealized foreign currency gains, offset by $3.8 million in
impairment write-downs on cost method investments. The 2008
non-operating expense, net, primarily consisted of $46.3 million
in unrealized foreign currency losses, offset by $47.3 million in
gains from sales of marketable equity securities.
As noted above, a large part of the Company’s non-operating
income (expense) is from unrealized foreign currency gains or losses
arising from the translation of British pound and Australian dollar
denominated intercompany loans into U.S. dollars. The unrealized
foreign currency gains in 2009 were the result of a weakening of
the U.S. dollar against the British pound and the Australian dollar in
2009, versus the exchange rates in effect at the end of 2008. The
unrealized foreign currency losses in 2008 were the result of a
strengthening of the U.S. dollar against the British pound and the
Australian dollar in 2008, versus the exchange rates in effect at the
end of 2007.
A summary of non-operating income (expense) for the years ended
January 3, 2010 and December 28, 2008 follows:
(in millions) 2009 2008
Foreign currency gains (losses), net ............ $16.9 $(46.3)
Impairment write-downs on cost method
investments ........................... (3.8) (2.9)
Gain on sales of marketable equity securities .... —47.3
Other gains (losses) ....................... 0.1 (0.3)
Total ................................ $13.2 $ (2.2)
The Company incurred net interest expense of $29.0 million in
2009, compared to $19.0 million in 2008. The increase is due to
54 THE WASHINGTON POST COMPANY