Washington Post 2014 Annual Report Download - page 84

4. INVESTMENTS
Commercial Paper and Money Market Investments. 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
Balance Sheets.
Investments in Marketable Equity Securities. Investments in
marketable equity securities consist of the following:
As of December 31
(in thousands) 2014 2013
Total cost ........................ $106,909 $197,718
Net unrealized gains ................ 86,884 289,438
Total Fair Value ................... $193,793 $487,156
At December 31, 2013, the Company owned 2,214 shares of
Berkshire Hathaway Inc. (Berkshire) Class A common stock and
424,250 shares of Berkshire Class B common stock. The Company’s
ownership of Berkshire accounted for $444.2 million, or 91%, of the
total fair value of the Company’s investments in marketable equity
securities at December 31, 2013. Berkshire is a holding company
owning subsidiaries engaged in a number of diverse business
activities. Berkshire also owned approximately 23% of the common
stock of the Company. 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.
The Company invested $49.9 million, $15.0 million and $45.0
million in marketable equity securities during 2014, 2013 and
2012, respectively. In the first quarter of 2014, the Company
recorded a $0.5 million write-down of the Company’s investment in
Corinthian Colleges, Inc., a publicly traded company. In the second
quarter of 2014, the Company sold its remaining investment in
Corinthian Colleges, Inc. During 2014, the proceeds from the sale
of these marketable securities were $5.8 million and net realized
losses were $2.6 million. During 2013 and 2012, proceeds from
sales of marketable equity securities were $3.6 million and $2.0
million, respectively, and net realized gains on such sales were
$0.9 million and $0.5 million, respectively.
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.
Investments in Affiliates. On April 1, 2014, the Company
received a gross cash distribution of $95.0 million from Classified
Ventures’ sale of apartments.com. In connection with this sale, the
Company recorded a pre-tax gain of $90.9 million in the second
quarter of 2014. On September 30, 2014, the Company held a
16.5% interest in Classified Ventures. On October 1, 2014, the
Company and the remaining partners completed the sale of their
entire stakes in Classified Ventures. Total proceeds to the Company,
net of transaction costs, were $408.5 million, of which $16.5
million will be held in escrow until October 1, 2015. The Company
recorded a pre-tax gain of $396.6 million in connection with the
sale in the fourth quarter of 2014.
At December 31, 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 a nominal amount; no loss was recorded as the
investment had previously been written down to zero.
5. ACCOUNTS RECEIVABLE, ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES
Accounts receivable consist of the following:
As of December 31
(in thousands) 2014 2013
Trade accounts receivable, less estimated
returns, doubtful accounts and
allowances of $32,598 and
$33,384 ...................... $538,532 $407,234
Other receivables .................. 32,825 21,419
$571,357 $428,653
The changes in allowance for doubtful accounts and returns and
allowance for advertising rate adjustments and discounts were as
follows:
(in thousands)
Balance at
Beginning
of Period
Additions –
Charged to
Costs and
Expenses Deductions
Balance
at
End of
Period
2014
Allowance for
doubtful
accounts and
returns ....... $ 33,834 $ 47,356 $ (48,592) $ 32,598
2013
Allowance for
doubtful
accounts and
returns ....... $33,612 $57,245 $(57,023) $33,834
Allowance for
advertising rate
adjustments and
discounts ..... 1,850 — (1,850) —
$35,462 $57,245 $(58,873) $33,834
2012
Allowance for
doubtful
accounts and
returns ....... $48,199 $55,605 $(70,192) $33,612
Allowance for
advertising rate
adjustments and
discounts ..... 2,026 15,088 (15,264) 1,850
$50,225 $70,693 $(85,456) $35,462
68 GRAHAM HOLDINGS COMPANY