Washington Post 2014 Annual Report Download - page 52

Item 6. Selected Financial Data.
See the information for the years 2010 through 2014 contained in the table titled “Five-Year Summary of Selected
Historical Financial Data,” which is included in this Annual Report on Form 10-K and listed in the index to financial
information on page 40 hereof (with only the information for such years to be deemed filed as part of this Annual Report
on Form 10-K).
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
See the information contained under the heading “Management’s Discussion and Analysis of Results of Operations and
Financial Condition,” which is included in this Annual Report on Form 10-K and listed in the index to financial information
on page 40 hereof.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The Company is exposed to market risk in the normal course of its business due primarily to its ownership of marketable
equity securities, which are subject to equity price risk; to its borrowing and cash-management activities, which are
subject to interest rate risk; and to its non-U.S. business operations, which are subject to foreign exchange rate risk.
Equity Price Risk. The Company has common stock investments in several publicly traded companies (as discussed in
Note 4 to the Company’s Consolidated Financial Statements) that are subject to market price volatility. The fair value of
these common stock investments totaled $193.8 million at December 31, 2014.
Interest Rate Risk. The Company’s long-term debt consists of $400 million principal amount of 7.25% unsecured notes
due February 1, 2019 (the Notes). At December 31, 2014, the aggregate fair value of the Notes, based upon quoted
market prices, was $450.3 million. An increase in the market rate of interest applicable to the Notes would not increase
the Company’s interest expense with respect to the Notes since the rate of interest the Company is required to pay on the
Notes is fixed, but such an increase in rates would affect the fair value of the Notes. Assuming, hypothetically, that the
market interest rate applicable to the Notes was 100 basis points higher than the Notes’ stated interest rate of 7.25%,
the fair value of the Notes at December 31, 2014, would have been approximately $386.3 million. Conversely, if the
market interest rate applicable to the Notes was 100 basis points lower than the Notes’ stated interest rate, the fair value
of the Notes at such date would have been approximately $414.2 million.
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.
Foreign Exchange Rate Risk. The Company is exposed to foreign exchange rate risk primarily at its Kaplan
international operations and its Corporate entity, and the primary exposure relates to the exchange rate between the U.S.
dollar and both the British pound and the Australian dollar. This exposure includes British pound and Australian dollar
denominated intercompany loans on U.S.-based Kaplan entities with a functional currency in U.S. dollars, and the AUD
50 million borrowing. In 2014, the Company reported unrealized foreign currency losses of $11.1 million. In 2013, the
Company reported unrealized foreign currency losses of $13.4 million. In 2012, the Company reported unrealized
foreign currency gains of $3.1 million.
If the values of the British pound and the Australian dollar relative to the U.S. dollar had been 10% lower than the values
that prevailed during 2014, the Company’s pre-tax income for 2014 would have been approximately $10 million lower.
Conversely, if such values had been 10% higher, the Company’s reported pre-tax income for 2014 would have been
approximately $10 million higher.
Item 8. Financial Statements and Supplementary Data.
See the Company’s Consolidated Financial Statements at December 31, 2014, and for the periods then ended, together
with the report of PricewaterhouseCoopers LLP thereon and the information contained in Note 20 to said Consolidated
Financial Statements titled “Summary of Quarterly Operating Results 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