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2014 ANNUAL REPORT
GRAHAM HOLDINGS

Table of contents

  • Page 1
    GRAHAM HolDInGS 2014 AnnuAl RepoRt

  • Page 2
    ReVenue By pRInCIpAl opeRAtIonS n eDuCAtIon 61% n CABle 23% n teleVISIon BRoADCAStInG 10% n otHeR BuSIneSSeS 6%

  • Page 3
    ... 17.32 6.40 2010 2011 2012 2013 2014 23.36 31.04 14.70 17.39 32.05 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 *Computed on a comparable basis, excluding the impact of the adjustment for pensions and other postretirement plans on average common stockholders' equity. 2014 ANNUAL REPORT 1

  • Page 4
    ...company. / We're smaller. In revenues, 2014 ended up at $3.5 billion. In 2010, revenues were $4.7 billion, reflecting our ownership of The Washington Post and higher revenues at Kaplan Higher Education. In 2015, with Cable ONE spun-off, we'll be smaller still. / We have many fewer shares outstanding...

  • Page 5
    ... think about selling the stock.) The focus on long-term increase in value will be total. /// When we sold The Washington Post to Jeff Bezos in 2013, we included, along with the newspaper, several other assets: a printing plant in Springfield, VA, and the land around it; Robinson Terminal Warehouse...

  • Page 6
    ...who's not a director." I've recounted in past reports how much Warren's advice has been worth to The Washington Post Company/Graham Holdings. Kay took his advice and switched pension advisers in the late 1970s. Result: perhaps the most overfunded pension plan in the Fortune 1000. He also recommended...

  • Page 7
    ... of building the Springfield plant, ever since the principal home of printing The Washington Post. Tom moved through assignments in production, marketing and advertising, and, when the chance came to go to Cable ONE 15 years later, he was ready. Kay Graham and Dick Simmons had bought Cable ONE...

  • Page 8
    ... own significant cash flow, its own stock and its own debt to be more aligned with typical cable capitalization. I will be a major shareholder in Cable ONE personally, and I won't be selling a share of that company (or of Graham Holdings). /// The end of this long list of transactions may be a good...

  • Page 9
    ... added a tiny business called Dev Bootcamp. It's one of many businesses aiming to train young people to become successful computer programmers/software developers. (In this case, the typical student is a college graduate who didn't major in computer science, but now wishes to change 2014 ANNUAL...

  • Page 10
    ... the quality of the education provided and the placement rates of our graduates into careers have been as good as we hoped. This is a business that can grow. The same is true of our wonderful TV station group, now known as Graham Media Group and headed by Emily Barr. In 2014, we added SocialNewsDesk...

  • Page 11
    ...youngest member of the Graham Holdings senior corporate team, has been a star at identifying companies that are sensible acquisition prospects for us. /// I mentioned earlier that we sold The Washington Post building at 15th and L Streets, NW, our Company's We can acquire companies in businesses we...

  • Page 12
    ... in their programs. Typically, these are working adults who have children and are seeking an education to climb the economic ladder. Kaplan does a good job understanding and meeting the needs of these students; our students attain a higher graduation rate than similar students do, on average. Our...

  • Page 13
    ...and had Newsweek and every smaller editorial business reporting to her from time to time-a daily newspaper in Washington State, weeklies near Washington, DC, Slate and The Root. Ann's been a uniquely helpful adviser to me during every highpressure situation the Company has faced. Her duties will be...

  • Page 14

  • Page 15
    ... executive offices) 22209 (Zip Code) Registrant's Telephone Number, Including Area Code: (703) 345-6300 Securities Registered Pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Class B Common Stock, par value New York Stock Exchange $1.00 per share...

  • Page 16
    GRAHAM HOLDINGS COMPANY 2014 FORM 10-K Item 1. Business ...Education ...Cable Operations ...Television Broadcasting ...Other Activities ...Competition ...Executive Officers ...Employees ...Forward-Looking Statements ...Available Information ...Item 1A. Risk Factors ...Item 1B. Unresolved Staff ...

  • Page 17
    ... revenues are reported net of intersegment sales, which did not exceed 0.1% of consolidated operating revenues. The Company's operations in geographic areas outside the U.S. consist primarily of Kaplan's non-U.S. operations. During the fiscal years 2014, 2013 and 2012, these operations accounted...

  • Page 18
    ..., funds received under various state and agency grant programs and corporate reimbursement under tuition assistance programs accounted for most of the remaining 2014 KHE revenues. The significant role of Title IV funding in the operations of KHE is expected to continue. 2 GRAHAM HOLDINGS COMPANY

  • Page 19
    ... Could Result in Loss of Access to U.S. Federal Student Loans and Grants Under Title IV, a Requirement to Pay Fines or Monetary Liabilities or Other Sanctions. Student Default Rates. A school may lose its eligibility to participate in Title IV programs if student defaults on the repayment of...

  • Page 20
    ...Loan Program; and • The application of the repeat coursework provisions to graduate and undergraduate programs. We believe that the ED will likely reinstate the distance-education state authorization requirements and may require the online programs at Kaplan University and Mount Washington College...

  • Page 21
    ... to eliminate or limit enrollments in certain educational programs at some or all of its schools, result in the loss of student access to Title IV programs and have a material adverse effect on KHE's revenues, operating income, cash flows and the estimated fair value of the reporting unit. Incentive...

  • Page 22
    ...is taking various measures to reduce the percentage of its receipts attributable to Title IV funds, including modifying student payment options; emphasizing direct-pay and employer-paid education programs; encouraging students to evaluate carefully the amount of their Title IV borrowing; eliminating...

  • Page 23
    ... result in new distance-education state authorization requirements that may require Kaplan University and Mount Washington College to be registered in additional states. If Kaplan is unable to obtain the required approvals for distance-education programs, then Kaplan students residing in the state...

  • Page 24
    ... an institution submits itself to qualitative review by an organization of peer institutions. Pursuant to the Higher Education Act, the ED relies on accrediting agencies to determine whether the academic quality of an institution's educational programs is sufficient to 8 GRAHAM HOLDINGS COMPANY

  • Page 25
    ...California and Illinois with two offerings. The acquisition of Dev Bootcamp (Bootcamp Education Inc.) established KTP as a leader in software developer bootcamps, which are programs that provide students with job-ready computer coding skills. KTP also launched Metis, offers data science and plans to...

  • Page 26
    .... Kaplan also operates three higher education institutions in Europe, located in the U.K. and Ireland. These institutions are Dublin Business School, Holborn College and Kaplan Open Learning. At the end of 2014, these institutions enrolled an aggregate of approximately 7,200 students. Certain Kaplan...

  • Page 27
    ... be contacted at all times, and verification that they have academic progression and that their visa is valid at all times while they are present in the U.K. Failure to meet these requirements obliges Kaplan International to withdraw sponsorship and report these students to the UKVI. In 2014, there...

  • Page 28
    ..., western and southern states. At the end of 2014, Cable ONE provided cable service to approximately 451,217 video subscribers, representing about 31% of the 1,470,336 homes passed by the systems, had approximately 488,454 subscriptions to high-speed data (HSD) service 12 GRAHAM HOLDINGS COMPANY

  • Page 29
    ...Pole Attachments. U.S. Federal law requires most telephone and power utilities to charge reasonable rates to cable operators for utilizing space on utility poles or in underground conduits. In May 2010 and again in April 2011, the FCC adopted new requirements relating to pole access and construction...

  • Page 30
    ... universal set-top box solution that allows access to both online and traditional video. In 2011, the FCC initiated a rulemaking proceeding to review a rule prohibiting encryption of the basic service tier. In 2012, the FCC amended its rules to allow cable operators to encrypt the basic service tier...

  • Page 31
    ...Cable ONE to incur certain compliance costs. Broadband Internet access service is subject to many of the same U.S. Federal and state privacy laws that apply to other electronic communications. These include Section 222 of the Communications Act, which governs customer proprietary network information...

  • Page 32
    ... adopted by the FCC in October 2011 in connection with universal service reform also addressed intercarrier compensation and specified that "VoIP-PSTN traffic," that is, traffic exchanged over public switched telephone network facilities that originates and/or terminates in IP format, which includes...

  • Page 33
    ... ability to port their telephone numbers when changing service providers. Cable ONE, along with other providers of interconnected VoIP service, must contribute funds to cover the shared costs of local number portability and the costs of North American Numbering Plan Administration. In October 2007...

  • Page 34
    ... is derived primarily from the sale of advertising time to local, regional and national advertisers. In 2014, advertising revenue accounted for 81% of the total for GMG's operations. Advertising revenue is sensitive to a number of factors, some specific to a particular station or market and...

  • Page 35
    ...operations. Public Interest Obligations. To satisfy FCC requirements, stations generally are expected to air a specified number of hours of programming intended to serve the educational and informational needs of children and to complete reports on a quarterly basis concerning children's programming...

  • Page 36
    ... technology and services company helping companies maximize their marketing efforts on social-media platforms such as Facebook, Twitter, LinkedIn, Instagram and Pinterest. Celtic Healthcare, Inc. Celtic Healthcare, Inc. (Celtic) is a Medicare-certified provider of home health and hospice services...

  • Page 37
    ... to Cable ONE. Video programming, including broadcast programming, is becoming more available on the Internet, where viewers can watch programming for free, as well as access pay-per-view offerings. Cable ONE distinguishes itself from its competition by providing excellent local customer service and...

  • Page 38
    ...elected to the Board of Directors, in November 2014. From 2007 to August 2014, Mr. O'Shaughnessy served as chief executive officer of LivingSocial, an e-commerce and marketing company that he co-founded in 2007. Mr. O'Shaughnessy is the son-in-law of Donald E. Graham, Chairman of the Company. Gerald...

  • Page 39
    ...referred to in Item 10 of this Annual Report on Form 10-K are all available on the Company's website; printed copies of such documents may be obtained by any stockholder upon written request to the Secretary, Graham Holdings Company at 1300 North 17th Street, Arlington, VA 22209. The contents of the...

  • Page 40
    .... In addition, if a program's graduates' debt payments exceed 12% of the graduates' mean and median annual earnings and 30% of the graduates' mean and median discretionary earnings, the program will fail the gainful employment test. If a program fails the test two times 24 GRAHAM HOLDINGS COMPANY

  • Page 41
    ... programs for military service members attending forprofit colleges. Beginning in June 2010, the HELP Committee held a series of hearings to examine the for-profit education sector and requested information from various for-profit institutions, including KHE institutions. In July 2012, the majority...

  • Page 42
    ... offering postsecondary education and render students ineligible to participate in Title IV programs. Loss of authorization at those state campus locations, or, in states that require it, for Kaplan University online, would have a material adverse effect on KHE's business and operations. Some states...

  • Page 43
    ... effect on its business and operations. • Failure to Correctly Calculate or Timely Return Title IV Funds for Students Who Withdraw Prior to Completing Programs Could Result in a Requirement to Post a Letter of Credit or Other Sanctions ED regulations require schools participating in Title IV...

  • Page 44
    ... could damage Kaplan's reputation, reduce student demand for Kaplan programs, adversely impact its revenues and operating profit or result in increased regulatory scrutiny. • Changes in the Extent to Which Standardized Tests Are Used in the Admissions Process by Colleges or Graduate Schools Could...

  • Page 45
    ... Resulting From Technological Innovations in News, Information and Video Programming Distribution Systems The development of DBS systems has significantly increased the competition faced by the Company's cable systems. The continuing growth and technological expansion of Internet-based services has...

  • Page 46
    ...in their interpretation and enforcement, and the enactment of new laws or regulations could have a material adverse effect on the Company's health care businesses' operations. • The Proposed Spin-Off of Cable ONE May Not Be Completed on the Terms or Timeline Currently Contemplated In November 2014...

  • Page 47
    ... six-story building located at 131 West 56th Street in New York City, used by KIC North America as an education center primarily for international students; a redeveloped 47,410-square-foot, four-story brick building in Lincoln, NE, used by Kaplan University; a 4,000square-foot office condominium in...

  • Page 48
    ... the Company, sold properties in Everett, WA, in a stock transaction in April 2014. These properties included a plant, two warehouses, an office building and a small rental building adjacent to the plant. The offices of the Company's broadcasting operations are located in leased space in Chicago, IL...

  • Page 49
    ...The subpoena sought information pertaining to the online and on-campus schools operated by KHE in and outside of Florida. In June 2014, Kaplan entered into an Assurance of Voluntary Compliance (AVC) with the FL AG on behalf of Kaplan University, Kaplan Higher Education Campuses and Kaplan, Inc. This...

  • Page 50
    ...Education Corporation has cooperated with the Massachusetts Attorney General and provided the requested information, as well as additional information requested in 2012 and 2013. In October 2014, the Attorney General's office sent Kaplan a "notice of intention to file" a lawsuit letter under section...

  • Page 51
    ... include information relating to restricted stock grants awarded under the Graham Holdings Company's Incentive Compensation Plan, which plan has been approved by the stockholders of the Company. At December 31, 2014, there were 18,275 shares of restricted stock outstanding under the 2011-2014 Award...

  • Page 52
    ... and Comprehensive Income (Unaudited)," which are included in this Annual Report on Form 10-K and listed in the index to financial information on page 40 hereof. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. Not applicable. 36 GRAHAM HOLDINGS COMPANY

  • Page 53
    ...2014, the Company's Chief Executive Officer submitted to the New York Stock Exchange the annual certification regarding compliance with the NYSE's corporate governance listing standards required by Section 303A.12(a) of the NYSE Listed Company Manual. Item 11. Executive Compensation. The information...

  • Page 54
    ... IV Item 15. Exhibits, Financial Statement Schedules. The following documents are filed as part of this report: 1. 2. Financial Statements. Exhibits. As listed in the index to financial information on page 40 hereof. As listed in the index to exhibits on page 97 hereof. 38 GRAHAM HOLDINGS COMPANY

  • Page 55
    SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 27, 2015. GRAHAM HOLDINGS COMPANY (Registrant) By /s/ Hal S. Jones ...

  • Page 56
    ... TO FINANCIAL INFORMATION GRAHAM HOLDINGS COMPANY Management's Discussion and Analysis of Results of Operations and Financial Condition (Unaudited) ...Financial Statements: Management's Report on Internal Control Over Financial Reporting ...Report of Independent Registered Public Accounting Firm...

  • Page 57
    ... shares outstanding in 2014. Items included in the Company's income from continuing operations for 2014 are listed below: • $31.6 million in early retirement program expense and related charges, restructuring charges and software asset write-offs at the education division and the corporate office...

  • Page 58
    ... operations for 2014 includes a $375.0 million gain from the WPLG exchange. In November 2014, the Company announced that its Board of Directors authorized management to proceed with plans for the complete legal and structural separation of Cable ONE, Inc., a Graham Holdings subsidiary, from Graham...

  • Page 59
    ... programming costs. Cable division operating income grew 5% to $178.7 million, from $169.7 million in 2013. The cable division continues its focus on higher margin businesses, namely high-speed data and business sales. Residential high-speed data revenue increased 5.3% in 2014 on 2.5% customer...

  • Page 60
    ... that builds products and technologies in the news space. Other businesses also includes a number of businesses acquired in 2014. In April 2014, Celtic Healthcare, Inc. (Celtic) acquired the assets of VNA-TIP Healthcare of Bridgeton, MO. This acquisition has expanded Celtic's home health and hospice...

  • Page 61
    ... to acquisitions, the Berkshire exchange transaction and the cable spin-off, and incremental costs associated with the corporate office headquarters move to Arlington, VA. Equity in Earnings of Affiliates. At September 30, 2014, the Company held a 16.5% interest in Classified Ventures, LLC (CV) and...

  • Page 62
    ...SocialCode and Slate, and from the Celtic and Forney acquisitions. Operating costs and expenses for the year declined to $3,088.7 million in 2013, from $3,224.0 million in 2012. Excluding the noncash intangible assets impairment charge at Kaplan, overall costs at Kaplan declined in 2013 and expenses...

  • Page 63
    ..., which publish online and print magazines and websites; SocialCode, a marketing solutions provider helping companies with marketing on social-media platforms; Celtic, a provider of home health and hospice services in the northeastern and mid-Atlantic regions, acquired by the Company 2014 FORM 10...

  • Page 64
    ... in 2012. The assets and liabilities of the companies acquired have been recorded at their estimated fair values at the date of acquisition. During 2014, the Company acquired nine businesses. On April 1, 2014, Celtic acquired VNA-TIP Healthcare, a provider of home health and hospice services in...

  • Page 65
    ... and related websites. In March 2013, the Company completed the sale of The Herald, a daily and Sunday newspaper headquartered in Everett, WA. The Company divested its interest in Avenue100 Media Solutions in July 2012, which was previously reported in other businesses. Kaplan completed the sales of...

  • Page 66
    ...shares of Class B common stock. Shares acquired as part of the exchange transaction received separate authorization by the Company's Board of Directors. The annual dividend rate for 2015 was increased to $10.60 per share, up from $10.20 in 2014. No dividends were paid in 2013. Liquidity. During 2014...

  • Page 67
    ...1,620,190 shares of Graham Holdings Class B common stock owned by Berkshire Hathaway (Berkshire exchange transaction). In July 2014, the cable division sold its wireless spectrum licenses for $98.8 million. On October 1, 2014, the Company and the remaining partners completed the sale of their entire...

  • Page 68
    ..., discount rates, long-term growth rates and market values to determine each reporting unit's estimated fair value. The methodology used to estimate the fair value of the Company's reporting units on November 30, 2014, was consistent with the one used during the 2013 annual goodwill impairment test...

  • Page 69
    ... costs, revenues, operating margins and growth rates. These cash flows and growth rates were based on forecasts and long-term business plans and take into account numerous factors, including historical experience, anticipated economic conditions, changes in the cable systems' cost structures, homes...

  • Page 70
    ... newspaper publishing businesses, the Company remeasured the accumulated and projected benefit obligation as of October 1, 2013, and recorded a curtailment gain and settlement loss. During the first nine months of 2013, there were significant pension asset gains and an increase in the discount rate...

  • Page 71
    ... in accordance with accounting principles generally accepted in the United States of America. The Company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the...

  • Page 72
    ...PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Graham Holdings Company: In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive income, cash flows and changes in common stockholders' equity present fairly...

  • Page 73
    ... Share Information Attributable to Graham Holdings Company Common Stockholders Basic income per common share from continuing operations ...Basic income per common share from discontinued operations ...Basic net income per common share ...Basic average number of common shares outstanding ...Diluted...

  • Page 74
    GRAHAM HOLDINGS COMPANY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) Year Ended December 31 2014 2013 2012 $1,293,260 $ 237,345 $132,187 Net Income ...Other Comprehensive (Loss) Income, Before Tax Foreign currency translation adjustments: Translation adjustments arising during ...

  • Page 75
    GRAHAM HOLDINGS COMPANY CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) As of December 31 2014 2013 Assets Current Assets Cash and cash equivalents ...Restricted cash ...Investments in marketable equity securities and other investments ...Accounts receivable, net ...Income taxes ...

  • Page 76
    ...by operating activities: Depreciation of property, plant and equipment ...Amortization of intangible assets ...Goodwill and other long-lived asset impairment charges ...Net pension (benefit) expense ...Early retirement program expense ...Stock-based compensation expense, net ...Foreign exchange loss...

  • Page 77
    GRAHAM HOLDINGS COMPANY CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS' EQUITY Unrealized Cumulative Unrealized Gain (Loss) on Foreign Gain on Pensions and Other Cash Currency AvailableTranslation for-sale Postretirement Flow Plans Hedge Adjustment Securities $ 63,625 $ (in thousands) As...

  • Page 78
    ... Test Preparation (KTP) and Kaplan International. Media-The Company's diversified media operations comprise cable operations, television broadcasting, several websites and print publications, and a marketing solutions provider. Cable. Cable ONE provides cable services that include video, high-speed...

  • Page 79
    ...market funds with weighted average maturities of three months or less. Restricted Cash. Restricted cash represents amounts held for students that were received from U.S. Federal and state governments under various aid grant and loan programs, such as Title IV of the U.S. Federal Higher Education Act...

  • Page 80
    ...the affiliate's industry), a write-down would be recorded to estimated fair value. Cost Method Investments. The Company uses the cost method of accounting for its minority investments in nonpublic companies where it does not have significant influence over the operations 64 GRAHAM HOLDINGS COMPANY

  • Page 81
    ... delivered. Cable revenues. Cable revenues are primarily derived from subscriber fees for video, high-speed data and voice services, and from advertising. Cable subscriber revenue is recognized monthly, as services are delivered. Advertising revenue is recognized when the commercials or programs are...

  • Page 82
    ... the period. Diluted earnings per share is calculated similarly except that the weighted average number of common shares outstanding during the period includes the dilutive effect of the assumed exercise of options and restricted stock issuable under the Company's stock plans. The dilutive effect of...

  • Page 83
    ... Company completed the sale of its newspaper publishing businesses for $250.0 million. The publishing businesses sold include The Washington Post, Express, The Gazette Newspapers, Southern Maryland Newspapers, Greater Washington Publishing, Fairfax County Times, El Tiempo Latino and related websites...

  • Page 84
    ... 2014, the Company held a 40% interest in Residential Home Health Illinois, a 42.5% interest in Residential Hospice Illinois and interests in several other affiliates. During the fourth quarter of 2012, the Company sold its 49% interest in the common stock of Bowater Mersey Paper Company Limited for...

  • Page 85
    ... 2012. The assets and liabilities of the companies acquired have been recorded at their estimated fair values at the date of acquisition. During 2014, the Company acquired nine businesses. On April 1, 2014, Celtic Healthcare acquired VNA-TIP Healthcare, a provider of home health and hospice services...

  • Page 86
    ...Newspapers, Greater Washington Publishing, Fairfax County Times, El Tiempo Latino and related websites. In March 2013, the Company completed the sale of The Herald, a daily and Sunday news-paper headquartered in Everett, WA. The Company divested its interest in Avenue100 Media Solutions in July 2012...

  • Page 87
    ... at the Company's education division were as follows: (in thousands) Higher Education Test Preparation Kaplan International Total As of December 31, 2012 Goodwill ...Accumulated impairment losses ...Foreign currency exchange rate changes ...As of December 31, 2013 Goodwill ...Accumulated...

  • Page 88
    ... respect to discontinued operations were recorded in 2014, 2013 and 2012, respectively. Total ... $6.7 The Company has established at December 31, 2014, $2.4 million in U.S. Federal deferred tax assets with respect to these U.S. Federal income tax loss carryforwards. 72 GRAHAM HOLDINGS COMPANY

  • Page 89
    ... against state income tax assets are recorded at the parent company and the education division and may increase or decrease within the next 12 months, based on operating results or the market value of investment holdings. As a result, the Company is unable to estimate the potential tax impact, given...

  • Page 90
    ... 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 2014 and 2013, the Company had average borrowings outstanding of approximately...

  • Page 91
    ... are classified as available-for-sale. Includes U.S. Government Securities, corporate bonds, mutual funds and time deposits. Includes Graham Holdings Company's Deferred Compensation Plan and supplemental savings plan benefits under the Graham Holdings Company's Supplemental Executive Retirement Plan...

  • Page 92
    ... unrecognized compensation expense related to these awards. That cost is expected to be recognized on a straight-line basis over a weighted average period of 1.6 years. Stock Options. The Company's 2003 employee stock option plan reserves 1,900,000 shares of the Company's Class B common stock for...

  • Page 93
    ... except per share amounts) 2014 2013 2012 Numerator: Numerator for basic earnings per share Income from continuing operations attributable to Graham Holdings Company common stockholders ...$920,747 $171,995 $ 50,323 Less: Dividends paid-common stock outstanding and unvested restricted shares ...(67...

  • Page 94
    ... funded from the assets of the Company's pension plan. In addition, the Company recorded a $2.4 million SERP charge related to the VRIP for certain Corporate employees. In February 2013, the Company offered a VRIP to certain employees of The Washington Post newspaper and recorded early retirement...

  • Page 95
    ... in Total Cost and Other Comprehensive Income (Before Tax Effects) ...$ Key assumptions utilized for determining the benefit obligation are as follows: Pension Plans As of December 31 2014 2013 Discount rate ...Rate of compensation increase ... SERP Year Ended December 31 2014 2013 2012 1,493...

  • Page 96
    ... reported in discontinued operations. The costs for the Company's defined benefit pension plans are actuarially determined. Below are the key assumptions utilized to determine periodic cost: Pension Plans SERP Year Ended December 31Year Ended December 31 2014 2013 2012 2014 2013 2012 Discount rate...

  • Page 97
    ... 6.50% for the post-age 65 non MA-PD plan, decreasing to 5.0% in the year 2021 and thereafter. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A change of one percentage point in the assumed health care cost trend rates would have the...

  • Page 98
    ... operations. In 2012, the Company offered a VRPI to certain employees of The Washington Post newspaper and recorded early retirement expense of $0.4 million, which is included in discontinued operations. The costs for the Company's postretirement plans are actuarially determined. The discount rates...

  • Page 99
    ... the year ...Reclassification adjustment for realization of (gain) loss on exchange, sale or write-down of available-for-sale securities included in net income ...Pension and other postretirement plans Actuarial loss ...Prior service cost ...Amortization of net actuarial gain included in net income...

  • Page 100
    ... IRC Section 355 and 361 (see Note 7). The amounts for 2013 and 2012 were recorded in Provision for Income Taxes. These accumulated other comprehensive income components are included in the computation of net periodic pension and postretirement plan cost (see Note 14). 84 GRAHAM HOLDINGS COMPANY

  • Page 101
    ... COMMITMENTS The Company leases real property under operating agreements. Many of the leases contain renewal options and escalation clauses that require payments of additional rent to the extent of increases in the related operating costs. At December 31, 2014, future minimum rental payments under...

  • Page 102
    ...Education Corporation has cooperated with the Massachusetts Attorney General and provided the requested information, as well as additional information requested in 2012 and 2013. In October 2014, the Attorney General's office sent Kaplan a "notice of intention to file" a lawsuit letter under section...

  • Page 103
    ... December 31, 2014, 2013 and 2012, approximately $806 million, $819 million and $882 million, respectively, of the Company's education division revenue was derived from financial aid received by students under Title IV programs. Management believes that the Company's education division schools that...

  • Page 104
    ... results of The Slate Group and Foreign Policy Group, which publish online and print magazines and websites; SocialCode, a marketing solutions provider helping companies with marketing on socialmedia platforms; Celtic, a provider of home health and hospice services; Forney, a global supplier of...

  • Page 105
    ...of skilled home health care and hospice services in Michigan and Illinois. Corporate Office. Corporate office includes the expenses of the Company's corporate office, a net pension credit and certain continuing obligations related to prior business dispositions. Geographical Information. The Company...

  • Page 106
    ...811,046 Identifiable Assets Education ...Cable ...Television broadcasting ...Other businesses ...Corporate office ...Investments in Marketable Equity Securities ...Investments in Affiliates ...Prepaid Pension Cost ...Assets of Discontinued Operations ...Total Assets ... 90 GRAHAM HOLDINGS COMPANY

  • Page 107
    ... information for the Company's education division is as follows: (in thousands) As of December 31 2014 2013 $ 749,421 167,055 838,148 26,919 $1,781,543 $ 859,208 173,435 864,507 23,887 $1,921,037 Identifiable Assets Higher education ...Test preparation ...Kaplan international ...Kaplan corporate...

  • Page 108
    ... The sum of the four quarters may not necessarily be equal to the annual amounts reported in the Consolidated Statements of Operations due to rounding and the reduction in shares outstanding as a result of the Berkshire exchange transaction that closed on June 30, 2014. 92 GRAHAM HOLDINGS COMPANY

  • Page 109
    ...79 14.41 21.20 6.77 14.37 21.14 Operating Revenues Education ...Subscriber ...Advertising ...Other ...Operating Costs and Expenses Operating ...Selling, general and administrative ...Depreciation of property, plant and equipment ...Amortization of intangible assets ...Impairment of intangibles and...

  • Page 110
    ... the Classified Ventures' sale of apartments.com ...• Gain of $266.7 million from the Berkshire exchange transaction ...• Gain of $81.8 million on the sale of the corporate headquarters building ...• Gain of $48.2 million from the sale of wireless licenses at the cable division ...• Losses...

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    ...for the summary of significant accounting policies and additional information relative to the years 2012-2014 and refer to Note 3 for discussion of discontinued operations. (in thousands, except per share amounts) 2014 2013 2012 2011 2010 Results of Operations Operating revenues ...Income from...

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    [THIS PAGE INTENTIONALLY LEFT BLANK] 96 GRAHAM HOLDINGS COMPANY

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    ... Financial Officer. Section 1350 Certification of the Chief Executive Officer and the Chief Financial Officer. The following financial information from Graham Holdings Company Annual Report on Form 10-K for the year ended December 31, 2014, formatted in Extensible Business Reporting Language (XBRL...

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    ...educational services, television broadcasting, cable systems and online, print and local TV news. The Company also owns a social marketing solutions company, health care providers and manufacturing companies. Graham Holdings Company ghco.com Education Kaplan Kaplan.com Kaplan Higher education Kaplan...

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    ... Conference Center, 1919 North Lynn Street, Arlington, VA 22209. sTOCk TRaDinG FORm 10-k The Company's Form 10-K annual report to the Securities and Exchange Commission is part of this annual report to shareholders. All of the Company's SEC filings are accessible from the Company's website...

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    GRAHAM HOLDINGS 1300 NORTH 17TH STREET SUITE 1700 ARLINGTON, VA 22209 703 345 6300 GHCO.COM