Washington Post 2014 Annual Report Download - page 78

GRAHAM HOLDINGS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND NATURE OF OPERATIONS
Graham Holdings Company (the Company), is a diversified
education and media company. The Company’s Kaplan subsidiary
provides a wide variety of educational services, both domestically
and outside the United States. The Company’s media operations
comprise the ownership and operation of cable systems and
television broadcasting (through the ownership and operation of five
television broadcast stations).
On June 30, 2014, the Company completed the exchange of
WPLG, its Miami-based television station (see Note 7). The
operating results of WPLG have been presented in income from
discontinued operations, net of tax, for all periods presented.
In November 2014, the Company announced that the Board of
Directors authorized management to proceed with plans for the
complete legal and structural separation of Cable ONE, Inc., a
wholly-owned subsidiary, from the Company. Following the
proposed transaction, Cable ONE will be an independent, publicly
traded company. The Company intends to complete the proposed
transaction later in 2015. The proposed transaction will be
structured as a tax-free spin-off of Cable ONE to the stockholders of
the Company. The transaction is contingent on the satisfaction of a
number of conditions, including completion of the review process by
the Securities and Exchange Commission of required filings under
applicable securities regulations, other applicable regulatory
approvals and the final approval of transaction terms by the
Company’s Board of Directors.
On February 12, 2015, Kaplan entered into a Purchase and Sale
Agreement with Education Corporation of America (ECA) to
sell substantially all of the assets of its KHE Campuses business,
consisting of 38 nationally accredited ground campuses and certain
related assets, in exchange for a preferred equity interest in ECA. The
transaction is contingent upon certain regulatory and accrediting
agency approvals and is expected to close in the second or third
quarter of 2015.
Education—Kaplan, Inc. provides an extensive range of educational
services for students and professionals. Kaplan’s various businesses
comprise three categories: Higher Education (KHE), 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 data and voice service in the midwestern, western and
southern states of the United States.
Television broadcasting. The Company owns five VHF television
stations located in Houston, TX; Detroit, MI; Orlando, FL; San
Antonio, TX; and Jacksonville, FL. Other than the Company’s
Jacksonville station, WJXT, the Company’s television stations are
affiliated with one of the major national networks.
Other—The Company’s other business operations include home
health and hospice services and manufacturing.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation. The accom-
panying Consolidated Financial Statements have been prepared in
accordance with generally accepted accounting principles (GAAP) in
the United States and include the assets, liabilities, results of operations
and cash flows of the Company and its majority-owned and controlled
subsidiaries. All significant intercompany accounts and transactions
have been eliminated in consolidation.
Revision of Prior Period Amounts. During the preparation of the 2014
financial statements, the Company concluded that its Consolidated
Statements of Cash Flows for the years ended December 31, 2013 and
2012, that were previously included in the Company’s annual reports,
should be revised to correct the impact of accounts payable and accrued
expenses related to capital expenditures. The Company revised its
Consolidated Statements of Cash Flows for the years ended December 31,
2013 and 2012 to properly eliminate noncash capital expenditures. The
result of this correction for the year ended December 31, 2013, was a
decrease in net cash used in investing activities of $17.6 million, with an
offsetting decrease recorded to net cash provided by operating activities
duringthesameperiod.Theresultofthiscorrectionfortheyearended
December 31, 2012, was an increase in net cash used in investing
activities of $6.7 million, with an offsetting increase recorded to net cash
provided by operating activities during the same period.
Management has concluded that this error is not material to the
previously issued Consolidated Financial Statements, and, as a
result, the Company has revised the Consolidated Statements of
Cash Flows for the years ended December 31, 2013 and 2012.
There was no impact on the previously reported total cash and cash
equivalents, Consolidated Balance Sheets or Consolidated
Statements of Operations.
As detailed below, these revisions impacted the following
consolidated cash flow items:
Year Ended December 31, 2013
(in thousands)
As
Previously
Reported Revision As Revised
Cash Flows from Operating
Activities
Increase (Decrease) in
Accounts Payable and
Accrued Liabilities ....... $ 37,926 (17,636) $ 20,290
Net Cash Provided by
Operating Activities ....... 327,864 (17,636) 310,228
Cash Flows from Investing
Activities
Purchases of Property, Plant
and Equipment .......... (224,093) 17,636 (206,457)
Net Cash Used in Investing
Activities .............. (25,401) 17,636 (7,765)
62 GRAHAM HOLDINGS COMPANY