Washington Post 2011 Annual Report Download - page 69

At December 31, 2011, the Company has $381.1 million in cash
and cash equivalents, compared to $437.7 million at January 2,
2011. As of December 31, 2011, and January 2, 2011, the
Company had money market investments of $180.1 million and
$308.9 million, respectively, that are classified as cash, cash
equivalents and restricted cash in the Company’s Consolidated
Financial Statements. At December 31, 2011, the Company has
approximately $18.0 million in cash and cash equivalents in
countries outside the U.S. which is not immediately available for use
in operations or for distribution.
On June 17, 2011, the Company terminated its U.S. $500 million
five-year revolving credit agreement, dated as of August 8, 2006,
among the Company, the lenders party thereto and Citibank, N.A.
(the 2006 Credit Agreement), in connection with the entrance into a
new revolving credit facility. No borrowings were outstanding under
the 2006 Credit Agreement at the time of termination. On June 17,
2011, the Company entered into a credit agreement (the Credit
Agreement) providing for a new U.S. $450 million, AUD 50 million
four-year revolving credit facility (the Facility), with each of the lenders
party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent (JP
Morgan), and J.P. Morgan Australia Limited, as Australian Sub-Agent.
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 Credit Agreement provides for an option to
increase the total U.S. dollar commitments up to an aggregate amount
of U.S. $700 million. The Facility will expire on June 17, 2015, unless
the Company and the banks agree to extend the term.
On September 7, 2011, the Company borrowed AUD 50 million
under its revolving credit facility. On the same date, the Company
entered into interest rate swap agreements with a total notional
value of AUD 50 million and a maturity date of March 7, 2015.
These interest rate swap agreements will pay the Company variable
interest on the AUD 50 million notional amount at the three-month
bank bill rate, and the Company will pay the counterparties a fixed
rate of 4.5275%. These interest rate swap agreements were
entered into to convert the variable rate Australian dollar borrowing
under the revolving credit facility into a fixed rate borrowing. Based
on the terms of the interest rate swap agreements and the underlying
borrowing, these interest rate swap agreements were determined to
be effective, and thus qualify as a cash flow hedge. As such, any
changes in the fair value of these interest rate swaps are recorded
in other comprehensive income on the accompanying condensed
consolidated balance sheets until earnings are affected by the
variability of cash flows.
At December 31, 2011, and January 2, 2011, the Company had
borrowings outstanding of $565.2 million and $399.7 million,
respectively. The Company’s borrowings at December 31, 2011
are mostly from $400.0 million of 7.25% unsecured notes due
February 1, 2019, $109.7 million in commercial paper
borrowings and AUD 50 million under the Company’s revolving
credit facility due March 7, 2015; the interest on $400.0 million of
7.25% unsecured notes is payable semiannually on February 1 and
August 1. There were no commercial paper borrowings outstanding
at January 2, 2011. In May 2011, Standard & Poor’s placed the
Company’s long-term corporate credit and senior unsecured ratings
and short-term commercial paper rating on CreditWatch with
negative implications. In August 2011, Standard & Poor’s lowered
the Company’s long-term rating to “A-” from “A,” lowered the
commercial paper rating to “A-2” from “A-1” and kept the ratings
outlook at negative. In November 2011, Standard & Poor’s
lowered the Company’s long-term corporate debt rating from “A-” to
“BBB+” and changed the outlook from Negative to Stable.
Standard & Poor’s kept the short-term rating unchanged at “A-2.” In
September 2011, Moody’s placed the Company’s long-term debt
rating and commercial paper rating on review for possible
downgrade. In November 2011, Moody’s downgraded the
Company’s senior unsecured rating from “A2” to “A3” and the
commercial paper rating from “Prime-1” to “Prime-2.” The outlook
was changed from Rating Under Review to Negative. The
Company’s current credit ratings are as follows:
Moody’s Standard & Poor’s
Long-term ........................... A3 BBB+
Short-term ........................... Prime-2 A-2
During 2011 and 2010, the Company had average borrowings
outstanding of approximately $426.7 million and $399.5 million,
respectively, at average annual interest rates of approximately 7.0% and
7.2%, respectively. The Company incurred net interest expense of $29.1
million and $27.9 million, respectively, during 2011 and 2010.
At December 31, 2011 and January 2, 2011, the Company had
working capital of $250.1 million and $353.6 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
$393.3 million in 2011, compared to $693.7 million in 2010.
The Company expects to fund its estimated capital needs primarily
through existing cash balances and internally generated funds and,
to a lesser extent, commercial paper. In management’s opinion, the
Company will have ample liquidity to meet its various cash needs in
2012.
The following reflects a summary of the Company’s contractual
obligations as of December 31, 2011:
(in thousands) 2012 2013 2014 2015 2016 Thereafter Total
Debt and
interest . . . . . . . . $144,733 $ 31,750 $ 31,750 $ 81,750 $ 29,000 $472,500 $ 791,483
Programming
purchase
commitments (1) . . . 213,876 191,621 114,210 17,814 1,286 381 539,188
Operating leases . . 135,911 116,435 99,335 78,955 69,597 243,736 743,969
Other purchase
obligations (2) . . . . 182,948 73,371 43,965 11,572 6,059 2,943 320,858
Long-term
liabilities (3) . . . . . . 5,906 6,238 6,513 6,830 7,162 67,377 100,026
Total . . . . . . . . . $683,374 $419,415 $295,773 $196,921 $113,104 $786,937 $2,495,524
(1) Includes commitments for the Company’s television broadcasting and cable television businesses that
are reflected in the Company’s Consolidated Financial Statements and commitments to purchase
programming to be produced in future years.
(2) Includes purchase obligations related to newsprint contracts, printing contracts, employment
agreements, circulation distribution agreements, capital projects and other legally binding
commitments. Other purchase orders made in the ordinary course of business are excluded from the
table above. Any amounts for which the Company is liable under purchase orders are reflected in the
Company’s Consolidated Balance Sheets as accounts payable and accrued liabilities.
(3) Primarily made up of postretirement benefit obligations other than pensions. The Company has other
long-term liabilities excluded from the table above, including obligations for deferred compensation,
long-term incentive plans and long-term deferred revenue.
2011 FORM 10-K 57