Washington Post 2014 Annual Report Download - page 65

During 2013, the Company acquired six businesses. On August 1,
2013, the Company completed its acquisition of Forney Corporation,
a global supplier of products and systems that control and monitor
combustion processes in electric utility and industrial applications. The
operating results for Forney are included in other businesses. The
Company also acquired four small businesses in other businesses and
one small business in its education division. In the second quarter of
2013, Kaplan purchased the remaining 15% noncontrolling interest in
Kaplan China; this additional interest was accounted for as an equity
transaction. The purchase price allocations mostly comprised
goodwill, other intangible assets and current assets.
During 2012, the Company completed five business acquisitions. In
November 2012, the Company completed its acquisition of a
controlling interest in Celtic, a provider of home health care and
hospice services in the northeastern and mid-Atlantic regions. The
operating results of Celtic are included in other businesses. The fair
value of the noncontrolling interest in Celtic was $5.9 million at the
acquisition date, determined using a market approach. The minority
shareholder has an option to put their shares to the Company from
2018 to 2022, and the Company has an option to buy the shares
of the minority shareholder in 2022. The Company also acquired
three small businesses in its education division and one small
business in other businesses. The purchase price allocations mostly
comprised goodwill and other intangible assets.
Dispositions. In the third quarter of 2014, Kaplan completed the
sale of three of its schools in China that were previously included as
part of Kaplan International. In January 2015, Kaplan completed
the sale of an additional school in China.
On October 1, 2013, the Company completed the sale of its
Publishing Subsidiaries that together conducted most of the Company’s
publishing business and related services, including publishing The
Washington Post, Express, The Gazette Newspapers, Southern
Maryland 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
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 Kidum in August 2012, EduNeering in April
2012 and KLT in February 2012.
On February 12, 2015, Kaplan entered into a Purchase and Sale
AgreementwithEducationCorporationofAmerica(ECA)to
sell substantially all of the assets of its KHE Campuses business,
consisting of 38 nationally accredited ground campuses and certain
relatedassets,inexchangeforapreferredequityinterestinECA.The
transaction is contingent upon certain regulatory and accrediting
agency approvals and is expected to close in the second or third
quarter of 2015. In 2014, the KHE Campuses business had revenues
of approximately $275 million and operating losses of $12.5
million. The Company expects to report a pre-tax loss on the transaction
that is not material to the Company’s overall financial position.
Exchanges. On June 30, 2014, the Company and Berkshire
Hathaway Inc. completed a previously announced transaction in
which Berkshire acquired a wholly-owned subsidiary of the
Company that included, among other things, WPLG, a Miami-based
television station, 2,107 Class A Berkshire shares and 1,278 Class
B Berkshire shares owned by Graham Holdings and $327.7 million
in cash, in exchange for 1,620,190 shares of Graham Holdings
Class B common stock owned by Berkshire Hathaway (Berkshire
exchangetransaction).Asaresult,incomefromcontinuing
operations for the second quarter of 2014 includes a $266.7
milliongainfromthesaleoftheBerkshireHathawayshares,and
income from discontinued operations for the second quarter of 2014
includes a $375.0 million gain from the WPLG exchange.
The Company’s income from continuing operations excludes results
from the businesses described in dispositions and exchanges above,
which have been reclassified to discontinued operations (see Note 3).
Capital Expenditures. During 2014, the Company’s capital
expenditures totaled $223.6 million. The Company’s capital
expenditures for businesses included in continuing operations for
2014, 2013 and 2012 are disclosed in Note 19 to the
Consolidated Financial Statements. These amounts include assets
acquired during the year, whereas the amounts reflected in the
Company’s Statements of Cash Flows are based on cash payments
made during the relevant periods. The Company estimates that its
capital expenditures will be in the range of $225 million to $250
million in 2015, including a full-year estimate for the Cable division.
Investments in Marketable Equity Securities. At December 31,
2014, the fair value of the Company’s investments in marketable
equity securities was $193.8 million, which includes $87.7 million in
Berkshire Hathaway Inc. Class A and B common stock and $106.1
million in the common stock of four other publicly traded companies.
At December 31, 2013, the unrealized gain related to the
Company’s Berkshire stock investment totaled $286.9 million. On
June 30, 2014, the Company completed a transaction with
Berkshire, as described in Note 7, that included the exchange of
2,107 Class A Berkshire shares and 1,278 Class B Berkshire shares
owned by the Company; a $266.7 million gain was recorded.
At the end of 2013 and 2012, the Company’s investment in
Strayer Education, Inc. had been in an unrealized loss position for
about 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 a $10.4 million and an $18.0 million
write-down of the investment in 2013 and 2012, respectively.
Common Stock Repurchases and Dividend Rate. As part of the
exchange transaction with Berkshire Hathaway, the Company
acquired 1,620,190 shares of its Class B common stock at a cost
of approximately $1,165.4 million. During 2013 and 2012, the
Company purchased a total of 33,024 and 301,231 shares,
respectively, of its Class B common stock at a cost of approximately
$17.7 million and $103.2 million, respectively. In September
2011, the Board of Directors increased the authorization 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
2014 FORM 10-K 49