Washington Post 2014 Annual Report Download - page 66

purchases. The authorization included 43,573 shares that remained
under the previous authorization. At December 31, 2014, the
Company had remaining authorization from the Board of Directors to
purchase up to 159,219 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, the Company’s cash and cash equivalents
increased by $204.3 million and the Company’s borrowings
decreased by $4.9 million.
At December 31, 2014, the Company has $772.8 million in cash
and cash equivalents, compared to $569.7 million at December 31,
2013. Restricted cash at December 31, 2014, totaled $24.9 million,
compared to $83.8 million at December 31, 2013. As of
December 31, 2014 and 2013, the Company had commercial paper
and money market investments of $594.3 million and $431.8 million,
respectively, that are classified as cash, cash equivalents and restricted
cash in the Company’s Consolidated Financial Statements. At
December 31, 2014, the Company has approximately $5.1 million in
cash and cash equivalents in countries outside the U.S., which is not
immediately available for use in operations or for distribution.
At December 31, 2014 and 2013, the Company had borrowings
outstanding of $445.9 million and $450.8 million, respectively.
The Company’s borrowings at December 31, 2014 and 2013,
are mostly from $400.0 million of 7.25% unsecured notes due
February 1, 2019, and AUD 50 million revolving credit borrowings;
the interest on $400.0 million of 7.25% unsecured notes is payable
semiannually on February 1 and August 1. The Company did not
have any outstanding commercial paper borrowing or USD revolving
credit borrowing as of December 31, 2014 and 2013. The
Company intends to pay off the AUD 50 million debt in March
2015. The Company also intends to retire the Series A redeemable
preferred stock in October 2015.
The Company expects to receive a dividend of about $450 million
on or around the effective date of the cable spin-off transaction later
in 2015.
On June 17, 2011, the Company entered into a credit agreement (the
Credit Agreement) providing for a 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,
and J.P. Morgan Australia Limited as Australian Sub-Agent. 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
Facility will expire on June 17, 2015, unless the Company and the
banks agree to extend the term. The Company expects to replace the
revolving credit facility with a new revolving credit facility in 2015.
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.
In September 2013, Standard & Poor’s affirmed the Company’s
“BBB” long-term corporate debt rating and changed the outlook
from Negative to Stable. In addition, S&P upgraded the Company’s
short-term corporate debt rating from “A-3” to “A-2.” On March 12,
2014, Moody’s placed the Company’s senior unsecured rating and
its Prime-2 commercial paper rating on review for downgrade. On
June 26, 2014, Moody’s downgraded the Company’s long-term
credit ratings by two levels from “Baa1” to “Baa3” and down-
graded the short-term rating by one level from Prime-2 to Prime-3
and changed the outlook to stable. In November 2014, S&P
placed the Company’s “BBB” corporate credit rating and “A-2”
commercial paper rating on Credit Watch with negative
implications, and Moody’s placed the Company’s “Baa3” senior
unsecured rating under review for possible downgrade. The
Company’s current credit ratings are as follows:
Moody’s Standard & Poor’s
Long-term .......................... Baa3 BBB
Short-term ......................... Prime-3 A-2
During 2014 and 2013, the Company had average borrowings
outstanding of approximately $450.9 million and $471.4 million,
respectively, at average annual interest rates of approximately 7.0%
and 6.7%, respectively. The Company incurred net interest expense
of $34.5 million and $33.8 million, respectively, during 2014 and
2013.
At December 31, 2014 and 2013, the Company had working
capital of $639.9 million and $768.3 million, respectively. The
Company maintains working capital levels consistent with its
underlying business requirements and consistently generates cash
from operations in excess of required interest or principal payments.
The Company’s net cash provided by operating activities, as reported
in the Company’s Consolidated Statements of Cash Flows, was
$372.4 million in 2014, compared to $310.2 million in 2013.
On March 27, 2014, the Company completed the sale of its
headquarters building for approximately $158.0 million. On
April 1, 2014, the Company received a gross cash distribution of
$95.0 million from Classified Ventures’ sale of apartments.com.
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
WPLG, a Miami-based television station, 2,107 Class A Berkshire
shares and 1,278 Class B Berkshire shares owned by Graham
50 GRAHAM HOLDINGS COMPANY