Washington Post 2012 Annual Report Download - page 94

The Company does not currently anticipate that within the next 12
months there will be any events requiring the establishment of any
valuation allowances against U.S. Federal net deferred tax assets.
The valuation allowances established against non-U.S. deferred tax
assets are recorded at the education division, as this is the only
division with significant non-U.S operating activities, and these are
largely related to the educations division’s operations in Australia.
These valuation allowances may increase or decrease within the
next 12 months, based on operating results; as a result, the
Company is unable to estimate the potential tax impact, given the
uncertain operating environment. The Company will be monitoring
future education division operating results and projected future
operating results on a quarterly basis to determine whether the
valuation allowances provided against non-U.S. deferred tax assets
should be increased or decreased, as future circumstances warrant.
The Company files income tax returns with the U.S. Federal govern-
ment and in various state, local and non-U.S. governmental jurisdictions,
with the consolidated U.S. Federal tax return filing considered the only
major tax jurisdiction. The statute of limitations has expired on all
consolidated U.S. Federal corporate income tax returns filed through
2008, and the Internal Revenue Service is not currently examining any
of the post-2008 returns filed by the Company.
The Company endeavors to comply with tax laws and regulations
where it does business, but cannot guarantee that, if challenged,
the Company’s interpretation of all relevant tax laws and regulations
will prevail and that all tax benefits recorded in the financial
statements will ultimately be recognized in full. The Company has
taken reasonable efforts to address uncertain tax positions and has
determined that there are no material transactions and no material
tax positions taken by the Company that would fail to meet the
more-likely-than-not threshold for recognizing transactions or tax
positions in the financial statements. Accordingly, the Company has
not recorded a reserve for uncertain tax positions in the financial
statements, and the Company does not expect any significant tax
increase or decrease to occur within the next 12 months with
respect to any transactions or tax positions taken and reflected in
the financial statements. In making these determinations, the
Company presumes that taxing authorities pursuing examinations of
the Company’s compliance with tax law filing requirements will
have full knowledge of all relevant information, and, if necessary,
the Company will pursue resolution of disputed tax positions by
appeals or litigation.
10. DEBT
The Company’s borrowings at December 31, 2012 and 2011,
consist of the following:
(in thousands) 2012 2011
7.25% unsecured notes due
February 1, 2019 ............... $ 397,479 $ 397,065
USD Revolving credit borrowing ....... 240,121 —
AUD Revolving credit borrowing ....... 51,915 51,012
Commercial paper borrowings ........ —109,671
Other indebtedness ................ 7,196 7,464
Total Debt ....................... 696,711 565,212
Less: current portion ................ (243,327) (112,983)
Total Long-Term Debt .............. $ 453,384 $ 452,229
On December 20, 2012, the Company borrowed $240 million
under its revolving credit facility at an interest rate of 1.5107%; this
was fully repaid on January 11, 2013. The Company did not have
any outstanding commercial paper borrowing as of December 31,
2012. The Company did not borrow funds under its USD revolving
credit facility in 2011. At December 31, 2011, the average
interest rate on the Company’s outstanding commercial paper
borrowing was 0.5%. The Company’s other indebtedness at
December 31, 2012, is at interest rates of 0% to 6% and matures
from 2013 to 2017.
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
semiannually on February 1 and August 1. 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.
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 Facility consists of two
tranches: (a) U.S. $450 million and (b) AUD 50 million (subject,
at the Company’s option, to conversion of the unused Australian
dollar commitments into U.S. dollar commitments at a specified
exchange rate). 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 Company is required to pay a
facility fee on a quarterly basis, based on the Company’s long-
term debt ratings, of between 0.08% and 0.20% of the amount of
the Facility. Any borrowings are made on an unsecured basis
and bear interest at (a) for U.S. dollar borrowings, at the
Company’s option, either (i) a fluctuating interest rate equal to the
highest of JPMorgan’s prime rate, 0.50 percent above the Federal
funds rate or the one-month eurodollar rate plus 1%, or (ii) the
eurodollar rate for the applicable interest period; or (b) for
Australian dollar borrowings, the bank bill rate, in each case plus
an applicable margin that depends on the Company’s long-term
debt ratings. The Facility will expire on June 17, 2015, unless
the Company and the banks agree to extend the term. Any
outstanding borrowings must be repaid on or prior to the final
termination date. The 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 $1.5 billion of
consolidated stockholders’ equity.
82 THE WASHINGTON POST COMPANY