Washington Post 2012 Annual Report Download - page 88

The summarized income (loss) from discontinued operations, net of
tax, for the years ended December 31, 2012 and 2011 and
January 2, 2011 is presented below:
(in thousands) 2012 2011 2010
Operating revenues ........ $ 35,342 $ 118,457 $ 231,388
Operating costs and
expenses .............. (42,583) (155,720) (315,031)
Loss from discontinued
operations ............. (7,241) (37,263) (83,643)
Benefit from income taxes .... (2,068) (8,433) (20,769)
Net Loss from Discontinued
Operations ............ (5,173) (28,830) (62,874)
Gain (loss) on sales and
disposition of discontinued
operations ............. 23,759 2,975 (9,156)
(Benefit) provision for income
taxes on sales and
disposition of discontinued
operations ............. (64,591) 2,616 5,869
Income (Loss) from
Discontinued Operations,
Net of Tax ............. $ 83,177 $ (28,471) $ (77,899)
4. INVESTMENTS
Investments in Marketable Equity Securities. Investments in
marketable equity securities at December 31, 2012 and 2011
consist of the following:
(in thousands) 2012 2011
Total cost .......................... $195,832 $169,271
Net unrealized gains ................. 184,255 133,930
Total Fair Value ..................... $380,087 $303,201
At December 31, 2012 and 2011, the Company owned 2,214
shares of Berkshire Hathaway Inc. (Berkshire) Class A common
stock and 424,250 shares of Berkshire Class B common stock,
respectively. The Company’s ownership of Berkshire accounted for
$334.9 million, or 88%, and $286.4 million, or 94%, of the total
fair value of the Company’s investments in marketable equity
securities at December 31, 2012 and December 31, 2011,
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 approx-
imately 23% of the common stock of the Company. The chairman,
chief executive officer and largest shareholder of Berkshire,
Mr. Warren Buffet, was a member of the Company’s Board of
Directors until May 2011, at which time Mr. Buffet retired from the
Company’s Board. The Company’s investment in Berkshire common
stock is less than 1% of the consolidated equity of Berkshire. 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; 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 of the
investment. The investment continued to decline, and in the third
quarter of 2011, the Company recorded an additional $23.1
million write-down of the investment.
The Company invested $45.0 million in marketable equity securities
during 2012. There were no new investments of marketable equity
securities in 2011 and 2010. During 2012, proceeds from sales
of marketable equity securities were $2.0 million, and net realized
gains on such sales were $0.5 million. There were no sales of
marketable equity securities during 2011 and 2010.
Investments in Affiliates. At the end of 2012, the Company holds
a 16.5% interest in Classified Ventures, LLC, which owns and
operates several leading businesses in the online classified
advertising space, and several other investments.
In the third quarter of 2011, the Company recorded impairment
charges of $9.2 million on the Company’s interest in Bowater
Mersey Paper Company Limited as a result of the challenging
economic environment for newsprint producers. During the fourth
quarter of 2012, the Company sold its 49% interest in the common
stock of Bowater Mersey Paper Company Limited for a nominal
amount; no loss was recorded as the investment had previously
been written down to zero.
5. ACCOUNTS RECEIVABLE, ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES
Accounts receivable at December 31, 2012 and 2011, consist of
the following:
(in thousands) 2012 2011
Trade accounts receivable, less estimated
returns, doubtful accounts and allowances
of $35,462 and $50,225 ........... $379,355 $375,577
Other accounts receivable .............. 19,849 17,148
$399,204 $392,725
76 THE WASHINGTON POST COMPANY