Washington Post 2012 Annual Report Download - page 70

Education Connection, which was part of Kaplan Ventures, and in
September 2010, the Company completed the sale of Newsweek.
Consequently, the Company’s income from continuing operations
excludes results from these businesses, which have been reclassified
to discontinued operations, as discussed in Note 3 to the Company’s
Consolidated Financial Statements.
Capital expenditures. During 2012, the Company’s capital expend-
itures totaled $218.0 million. The Company’s capital expenditures
for businesses included in continuing operations for 2012, 2011
and 2010 are disclosed in Note 18 to the Consolidated Financial
Statements. The Company estimates that its capital expenditures will
be in the range of $235 million to $260 million in 2013.
Investments in Marketable Equity Securities. At December 31,
2012, the fair value of the Company’s investments in marketable
equity securities was $380.1 million, which includes $334.9
million in Berkshire Hathaway Inc. Class A and B common stock
and $45.2 million in the common stock of two publicly traded
education companies.
At December 31, 2012 and 2011, the unrealized gain related to
the Company’s Berkshire stock investment totaled $177.6 million
and $129.1 million, respectively.
At the end of 2012, the Company’s investment in Strayer Education,
Inc. had been in an unrealized loss position for almost six months. The
Company evaluated this investment for other-than-temporary impairment
based on various factors, including the duration and severity of the
unrealized loss; the reason for the decline in value; the potential
recovery period; and the Company’s ability and intent to hold the
investment. Based on this evaluation, the Company concluded that the
unrealized loss was other-than-temporary and recorded an $18.0
million write-down of the investment.
At the end of the first quarter of 2011, the Company’s investment in
Corinthian Colleges, Inc. had been in an unrealized loss position
for over six months. The Company evaluated this investment for
other-than-temporary impairment based on various factors, including
the duration and severity of the unrealized loss; the reason for the
decline in value; and the potential recovery period; and the
Company’s ability and intent to hold the investment. Based on this
evaluation, the Company concluded the unrealized loss was other-
than-temporary and recorded a $30.7 million write-down on the
investment. The investment continued to decline, and in the third
quarter of 2011, the Company recorded an additional $23.1
million write-down on the investment.
Common Stock Repurchases and Dividend Rate. During 2012,
2011 and 2010, the Company purchased a total of 301,231,
644,948 and 1,057,940 shares, respectively, of its Class B
common stock at a cost of approximately $103.2 million, $248.1
million and $404.8 million, respectively. In September 2011, the
Company’s Board of Directors authorized the Company to acquire
up to 750,000 shares of its Class B common stock. The Company
did not announce a ceiling price or a time limit for the purchases.
The authorization included 43,573 shares that remained under the
previous authorization. At December 31, 2012, the Company had
remaining authorization from the Board of Directors to purchase up
to 192,243 shares of Class B common stock. In December 2012,
the Company declared and paid an accelerated cash dividend
totaling $9.80 per share of outstanding common stock, in lieu of
regular quarterly dividends that the Company otherwise would have
declared and paid in calendar year 2013. The annual dividend
rate for 2011 was $9.40 per share.
Liquidity. During 2012, the Company’s borrowings, net of repay-
ments, increased by $131.5 million and the Company’s cash and
cash equivalents increased by $131.3 million.
At December 31, 2012, the Company has $512.4 million in cash
and cash equivalents, compared to $381.1 million at December 31,
2011. As of December 31, 2012, and December 31, 2011, the
Company had money market investments of $432.7 million and
$180.1 million, respectively, that are classified as cash, cash
equivalents and restricted cash in the Company’s Consolidated
Financial Statements. At December 31, 2012, the Company has
approximately $15.0 million in cash and cash equivalents in
countries outside the U.S., which is not immediately available for
use in operations or for distribution.
At December 31, 2012 and 2011, the Company had borrowings
outstanding of $696.7 million and $565.2 million, respectively.
The Company’s borrowings at December 31, 2012, are mostly
from $400.0 million of 7.25% unsecured notes due February 1,
2019, $240.1 million in USD revolving credit borrowings and
AUD 50 million revolving credit borrowings; the interest on
$400.0 million of 7.25% unsecured notes is payable semiannually
on February 1 and August 1. The Company did not have any out-
standing commercial paper borrowing as of December 31, 2012.
The Company fully repaid the $240 million USD revolving credit
borrowing on January 11, 2013. 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 revolving credit
borrowings. There were no USD revolving credit borrowings
outstanding at December 31, 2011.
On June 17, 2011, the Company terminated its U.S. $500 million
five-year revolving credit agreement, dated 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. 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
58 THE WASHINGTON POST COMPANY