Washington Post 2012 Annual Report Download - page 95

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.
During 2012 and 2011, the Company had average borrowings
outstanding of approximately $483.3 million and $426.7 million,
respectively, at average annual interest rates of approximately 6.7%
and 7.0%, respectively. The Company incurred net interest expense
of $32.6 million, $29.1 million and $27.9 million during 2012,
2011 and 2010, respectively.
At December 31, 2012 and 2011, the fair value of the Company’s
7.25% unsecured notes, based on quoted market prices, totaled
$481.4 million and $460.5 million, respectively, compared with
the carrying amount of $397.5 million and $397.1 million.
The carrying value of the Company’s other unsecured debt at
December 31, 2012, approximates fair value.
11. REDEEMABLE PREFERRED STOCK
The Series A preferred stock has a par value of $1.00 per share
and a liquidation preference of $1,000 per share; it is redeemable
by the Company at any time on or after October 1, 2015, at a
redemption price of $1,000 per share. In addition, the holders of
such stock have a right to require the Company to purchase their
shares at the redemption price during an annual 60-day election
period. Dividends on the Series A preferred stock are payable four
times a year at the annual rate of $80.00 per share and in
preference to any dividends on the Company’s common stock. The
Series A preferred stock is not convertible into any other security of
the Company, and the holders thereof have no voting rights except
with respect to any proposed changes in the preferences and
special rights of such stock.
12. CAPITAL STOCK, STOCK AWARDS AND STOCK OPTIONS
Capital Stock. Each share of Class A common stock and Class B
common stock participates equally in dividends. The Class B stock
has limited voting rights and as a class has the right to elect 30% of
the Board of Directors; the Class A stock has unlimited voting rights,
including the right to elect a majority of the Board of Directors. In
2012 and 2011, the Company’s Class A shareholders converted
10,000, or 1%, and 11,500, or 1%, respectively, of the Class A
shares of the Company to an equal number of Class B shares. The
conversions had no impact on the voting rights of the Class A and
Class B common stock.
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 Board of Directors increased the auth-
orization to repurchase a total of 750,000 shares of 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 authorization from
the Board of Directors to purchase up to 192,243 shares of
Class B common stock.
Stock Awards. In 1982, the Company adopted a long-term
incentive compensation plan, which, among other provisions,
authorizes the awarding of Class B common stock to key
employees. Stock awards made under this incentive compen-
sation plan are primarily subject to the general restriction that stock
awarded to a participant will be forfeited and revert to Company
ownership if the participant’s employment terminates before the
end of a specified period of service to the Company. Some of the
awards are also subject to performance and market conditions
and will be forfeited and revert to Company ownership if the
conditions are not met. At December 31, 2012, there were
302,055 shares reserved for issuance under the incentive
compensation plan. Of this number, 207,917 shares were sub-
ject to awards outstanding and 94,138 shares were available
for future awards. Activity related to stock awards under the
long-term incentive compensation plan for the years ended
December 31, 2012 and 2011, and January 2, 2011, was
as follows:
2012 2011 2010
Number
of
Shares
Average
Grant-
Date
Fair
Value
Number
of
Shares
Average
Grant-
Date
Fair
Value
Number
of
Shares
Average
Grant-
Date
Fair
Value
Beginning of year,
unvested ... 77,319 $424.45 48,359 $498.95 66,020 $494.97
Awarded..... 145,348 321.56 44,030 432.09 1,859 442.29
Vested....... (7,134) 499.06 (13,132) 722.67 (2,644) 754.81
Forfeited ..... (7,616) 417.79 (1,938) 436.31 (16,876) 437.06
End of Year,
Unvested ... 207,917 $350.21 77,319 $424.45 48,359 $498.95
For the share awards outstanding at December 31, 2012,
the aforementioned restriction will lapse in 2013 for 28,555
shares, in 2014 for 2,674 shares, in 2015 for 41,968 shares,
in 2016 for 24,850 shares, in 2017 for 67,370 shares
and in 2018 for 42,500 shares. Also, in early 2013, the
Company made stock awards of 7,681 shares. Stock-based
compensation costs resulting from Company stock awards were
$11.4 million, $8.9 million and $4.8 million in 2012, 2011
and 2010, respectively.
As of December 31, 2012, there was $50.9 million of total
unrecognized compensation expense related to this plan. That
cost is expected to be recognized on a straight-line basis over a
weighted average period of 2.3 years.
2012 FORM 10-K 83