UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

ý ~~Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~

For the Quarterly Period Ended ~~September 30, 2017~~March 31, 2021

¨ ~~Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number ~~1-671~~001-06714

GRAHAM HOLDINGS COMPANY



~~GRAHAM HOLDINGS COMPANY~~
(Exact name of registrant as specified in its charter)

Delaware

53-0182885

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1300 North 17th Street, Arlington, Virginia

22209

(Address of principal executive offices)

(Zip Code)

(703) 345-6300

(Registrant’s telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class B Common Stock, par value $1.00 per share

GHC

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý☒. No ¨☐.

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ý☒. No ¨☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” ~~“small~~“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large ~~accelerated~~

~~filer~~

Accelerated Filer

ý☒

Accelerated

filer

¨☐

Non-accelerated

filer

¨☐

Smaller reporting

company

¨☐

Emerging growth

company

¨☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐. No ☒. No ý.

Shares outstanding at ~~October 27, 2017:~~April 30, 2021:

Class A Common Stock – 964,001 Shares

Class B Common Stock – ~~4,567,815~~4,037,648 Shares

GRAHAM HOLDINGS COMPANY

Index to Form 10-Q



PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	a. Condensed Consolidated Statements of Operations ~~(Unaudited) for the Three and Nine Months Ended September 30, 2017 and 2016~~	1

	b. Condensed Consolidated Statements of Comprehensive Income ~~(Unaudited) for the Three and Nine Months Ended September 30, 2017 and 2016~~(Loss)	2

	c. Condensed Consolidated Balance Sheets ~~at September 30, 2017 (Unaudited) and December 31, 2016~~	3

	d. Condensed Consolidated Statements of Cash Flows ~~(Unaudited) for the Nine Months Ended September 30, 2017 and 2016~~	4

	Condensed Consolidated Statements of Changes in Common Stockholders' Equity	5

	e. Notes to Condensed Consolidated Financial Statements ~~(Unaudited)~~	56

	Organization, Basis of Presentation and Recent Accounting Pronouncements	6
	Acquisitions and Dispositions of Businesses	6
	Investments	7
	Accounts Receivable	9
	Inventories, Contracts in Progress and Vehicle Floor Plan Payable	9

	Goodwill and Other Intangible Assets	9
	Debt	11
	Fair Value Measurements	12
	Income Taxes	13
	Revenue From Contracts With Customers	13
	Earnings (Loss) Per Share	14
	Pension and Postretirement Plans	15
	Other Non-Operating Income	17
	Accumulated Other Comprehensive Income (Loss)	17
	Contingencies	18
	Business Segments	18

Item 2.	Management’s Discussion and Analysis of Results of Operations and Financial Condition	2322

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3230

Item 4.	Controls and Procedures	3231

PART II. OTHER INFORMATION

~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	33



Item 6.	Exhibits	3432

Signatures		3533

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

GRAHAM HOLDINGS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


	Three Months Ended September 30						Nine Months Ended September 30								Three Months Ended March 31
														Three Months Ended March 31
(in thousands, except per share amounts)	2017			2016			2017			2016			(in thousands, except per share amounts)			2021			2020
Operating Revenues													Operating Revenues
Education	$	377,033		$	386,936		$	1,136,706		$	1,207,086
Advertising	69,495			86,531			207,143			225,590
Other	210,697			148,171			572,180			419,635
Sales of services													Sales of services				$	483,669		$	516,637
Sales of goods													Sales of goods				228,786			215,620
	657,225			621,638			1,916,029			1,852,311							712,455			732,257
Operating Costs and Expenses													Operating Costs and Expenses
Operating	352,635			293,194			1,011,553			880,859
Cost of services sold													Cost of services sold				292,434			333,049
Cost of goods sold													Cost of goods sold				178,787			166,701
Selling, general and administrative	232,782			237,694			678,139			709,344			Selling, general and administrative				175,861			177,152
Depreciation of property, plant and equipment	16,002			16,097			46,525			48,903			Depreciation of property, plant and equipment				16,545			16,704
Amortization of intangible assets	10,923			6,620			28,290			19,160			Amortization of intangible assets				13,937			14,165
Impairment of goodwill and other long-lived assets	312			—			9,536			—			Impairment of goodwill and other long-lived assets				1,047			16,401
	612,654			553,605			1,774,043			1,658,266							678,611			724,172
Income from Operations	44,571			68,033			141,986			194,045			Income from Operations				33,844			8,085
Equity in (losses) earnings of affiliates, net	(532		)	(1,008		)	1,448			(895		)
Equity in earnings (losses) of affiliates, net													Equity in earnings (losses) of affiliates, net				13,428			(1,547)
Interest income	861			740			3,397			2,052			Interest income				890			1,151
Interest expense	(8,619		)	(8,614		)	(25,783		)	(24,533		)	Interest expense				(8,448)			(7,678)
Other income (expense), net	1,963			(18,225		)	6,881			15,871
Income Before Income Taxes	38,244			40,926			127,929			186,540
Provision for Income Taxes	13,400			7,800			40,000			54,000
Net Income	24,844			33,126			87,929			132,540
Net Income Attributable to Noncontrolling Interests	(60		)	—			(63		)	(868		)
Net Income Attributable to Graham Holdings Company Common Stockholders	$	24,784		$	33,126		$	87,866		$	131,672
Non-operating pension and postretirement benefit income, net													Non-operating pension and postretirement benefit income, net				28,787			18,403
Gain (loss) on marketable equity securities, net													Gain (loss) on marketable equity securities, net				79,214			(100,393)
Other income, net													Other income, net				6,320			2,688
Income (Loss) Before Income Taxes													Income (Loss) Before Income Taxes				154,035			(79,291)
Provision for (Benefit from) Income Taxes													Provision for (Benefit from) Income Taxes				41,400			(45,400)
Net Income (Loss)													Net Income (Loss)				112,635			(33,891)
Net (Income) Loss Attributable to Noncontrolling Interests													Net (Income) Loss Attributable to Noncontrolling Interests				(185)			646
Net Income (Loss) Attributable to Graham Holdings Company Common Stockholders													Net Income (Loss) Attributable to Graham Holdings Company Common Stockholders				$	112,450		$	(33,245)

Per Share Information Attributable to Graham Holdings Company Common Stockholders													Per Share Information Attributable to Graham Holdings Company Common Stockholders
Basic net income per common share	$	4.45		$	5.90		$	15.74		$	23.33
Basic net income (loss) per common share													Basic net income (loss) per common share				$	22.49		$	(6.32)
Basic average number of common shares outstanding	5,518			5,544			5,530			5,570			Basic average number of common shares outstanding				4,967			5,274
Diluted net income per common share	$	4.42		$	5.87		$	15.64		$	23.21
Diluted net income (loss) per common share													Diluted net income (loss) per common share				$	22.44		$	(6.32)
Diluted average number of common shares outstanding	5,554			5,574			5,567			5,600			Diluted average number of common shares outstanding				4,977			5,274

See accompanying Notes to Condensed Consolidated Financial Statements.

GRAHAM HOLDINGS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)


	Three Months Ended March 31
(in thousands)		2021		2020
Net Income (Loss)		$	112,635	$	(33,891)
Other Comprehensive Loss, Before Tax
Foreign currency translation adjustments:
Translation adjustments arising during the period		(486)		(37,376)


Pension and other postretirement plans:
Amortization of net prior service cost included in net income		792		671
Amortization of net actuarial (gain) loss included in net income		(2,429)		220

		(1,637)		891
Cash flow hedges gain (loss)		621		(1,578)
Other Comprehensive Loss, Before Tax		(1,502)		(38,063)
Income tax benefit related to items of other comprehensive loss		299		120
Other Comprehensive Loss, Net of Tax		(1,203)		(37,943)
Comprehensive Income (Loss)		111,432		(71,834)
Comprehensive (income) loss attributable to noncontrolling interests		(185)		646
Total Comprehensive Income (Loss) Attributable to Graham Holdings Company		$	111,247	$	(71,188)

   Three Months Ended
September 30 Nine Months Ended
September 30
(in thousands) 2017 2016 2017 2016
Net Income $ 24,844
$ 33,126
$ 87,929
$ 132,540
Other Comprehensive Income, Before Tax
Foreign currency translation adjustments:
Translation adjustments arising during the period 11,470
(353 ) 34,776
(1,629 )
Unrealized gains on available-for-sale securities:
Unrealized gains for the period, net 47,836
12,154
71,370
7,190
Reclassification of realized gain on sale of available-for-sale securities included in net income —
—
—
(6,256 )
   47,836
12,154
71,370
934
Pension and other postretirement plans:
Amortization of net prior service cost included in net income 118
105
358
314
Amortization of net actuarial (gain) loss included in net income (1,567 ) 289
(4,958 ) 868
   (1,449 ) 394
(4,600 ) 1,182
Cash flow hedge (loss) gain (72 ) 49
(215 ) 49
Other Comprehensive Income, Before Tax 57,785
12,244
101,331
536
Income tax expense related to items of other comprehensive income (18,540 ) (5,039 ) (26,665 ) (866 )
Other Comprehensive Income (Loss), Net of Tax 39,245
7,205
74,666
(330 )
Comprehensive Income 64,089
40,331
162,595
132,210
Comprehensive income attributable to noncontrolling interests (60 ) —
(63 ) (868 )
Total Comprehensive Income Attributable to Graham Holdings Company $ 64,029
$ 40,331
$ 162,532
$ 131,342

See accompanying Notes to Condensed Consolidated Financial Statements.

GRAHAM HOLDINGS COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS


	As of
(in thousands)	March 31, 2021		December 31, 2020
	(Unaudited)
Assets
Current Assets
Cash and cash equivalents	$	350,135	$	413,991
Restricted cash	22,484		9,063
Investments in marketable equity securities and other investments	715,580		587,582
Accounts receivable, net	515,220		537,156

Inventories and contracts in progress	132,136		120,622
Prepaid expenses	85,119		75,523
Income taxes receivable	15,339		29,313
Other current assets	1,427		942

Total Current Assets	1,837,440		1,774,192
Property, Plant and Equipment, Net	375,862		378,286
Lease Right-of-Use Assets	453,193		462,560
Investments in Affiliates	169,203		155,777
Goodwill, Net	1,485,137		1,484,750
Indefinite-Lived Intangible Assets	121,050		120,437
Amortized Intangible Assets, Net	190,041		204,646
Prepaid Pension Cost	1,730,625		1,708,305
Deferred Income Taxes	7,651		8,396
Deferred Charges and Other Assets	148,218		146,770

Total Assets	$	6,518,420	$	6,444,119

Liabilities and Equity
Current Liabilities
Accounts payable and accrued liabilities	$	492,625	$	520,236
Deferred revenue	331,678		331,021
Income taxes payable	6,891		5,140


Current portion of lease liabilities	84,749		86,797
Current portion of long-term debt	4,238		6,452
Dividends declared	7,553		0


Total Current Liabilities	927,734		949,646

Accrued Compensation and Related Benefits	196,558		201,918
Other Liabilities	36,591		48,768
Deferred Income Taxes	549,418		521,274
Mandatorily Redeemable Noncontrolling Interest	10,272		9,240
Lease Liabilities	419,131		428,849
Long-Term Debt	506,091		506,103

Total Liabilities	2,645,795		2,665,798

Redeemable Noncontrolling Interests	7,786		11,928
Preferred Stock	0		0
Common Stockholders’ Equity
Common stock	20,000		20,000
Capital in excess of par value	385,257		388,159
Retained earnings	6,902,166		6,804,822
Accumulated other comprehensive income, net of taxes
Cumulative foreign currency translation adjustment	9,268		9,754

Unrealized gain on pensions and other postretirement plans	594,093		595,287
Cash flow hedges	(1,250)		(1,727)
Cost of Class B common stock held in treasury	(4,051,909)		(4,056,993)
Total Common Stockholders’ Equity	3,857,625		3,759,302
Noncontrolling Interests	7,214		7,091
Total Equity	3,864,839		3,766,393
Total Liabilities and Equity	$	6,518,420	$	6,444,119

As of
(in thousands) September 30,
2017 December 31,
2016
   (Unaudited)
Assets
Current Assets
Cash and cash equivalents $ 395,009
$ 648,885
Restricted cash 21,403
21,931
Investments in marketable equity securities and other investments 519,586
448,241
Accounts receivable, net 525,779
615,101
Income taxes receivable 28,108
41,635
Inventories and contracts in progress 62,531
34,818
Other current assets 65,443
60,735
Total Current Assets 1,617,859
1,871,346
Property, Plant and Equipment, Net 259,809
233,664
Investments in Affiliates 122,166
58,806
Goodwill, Net 1,299,226
1,122,954
Indefinite-Lived Intangible Assets, Net 109,901
66,026
Amortized Intangible Assets, Net 239,152
107,939
Prepaid Pension Cost 863,098
881,593
Deferred Income Taxes 15,820
17,246
Deferred Charges and Other Assets 92,884
73,096
Total Assets $ 4,619,915
$ 4,432,670

Liabilities and Equity

Current Liabilities

Accounts payable and accrued liabilities $ 446,076
$ 500,726
Deferred revenue 353,367
312,107
Current portion of long-term debt 6,713
6,128
Dividends declared 7,025
—
Total Current Liabilities 813,181
818,961
Postretirement Benefits Other Than Pensions 22,929
21,859
Accrued Compensation and Related Benefits 198,907
195,910
Other Liabilities 67,589
65,554
Deferred Income Taxes 454,027
379,092
Mandatorily Redeemable Noncontrolling Interest 12,584
12,584
Long-Term Debt 486,242
485,719
Total Liabilities 2,055,459
1,979,679
Redeemable Noncontrolling Interest 3,779
50
Preferred Stock —
—
Common Stockholders’ Equity

Common stock 20,000
20,000
Capital in excess of par value 368,505
364,363
Retained earnings 5,648,479
5,588,942
Accumulated other comprehensive income (loss), net of tax
Cumulative foreign currency translation adjustment 7,778
(26,998 )
Unrealized gain on available-for-sale securities 135,753
92,931
Unrealized gain on pensions and other postretirement plans 168,070
170,830
Cash flow hedge (449 ) (277 )
Cost of Class B common stock held in treasury (3,787,459 ) (3,756,850 )
Total Equity 2,560,677
2,452,941
Total Liabilities and Equity $ 4,619,915
$ 4,432,670

See accompanying Notes to Condensed Consolidated Financial Statements.

GRAHAM HOLDINGS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Three Months Ended March 31
(in thousands)	2021		2020
Cash Flows from Operating Activities
Net Income (Loss)	$	112,635	$	(33,891)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and goodwill and other long-lived asset impairments	31,529		47,270
Amortization of lease right-of-use asset	18,594		23,749
Net pension benefit	(24,501)		(13,784)
(Gain) loss on marketable equity securities and cost method investments, net	(81,937)		100,393
(Gain) loss on disposition and write-down of businesses, property, plant and equipment and investments, net	(240)		2,761
Provision for doubtful trade receivables	1,126		2,429
Stock-based compensation expense, net	1,485		1,568
Foreign exchange gain	(3)		(4,290)
Equity in (earnings) losses of affiliates, net of distributions	(11,241)		1,547
Provision for (benefit from) deferred income taxes	29,311		(21,550)
Change in operating assets and liabilities:
Accounts receivable, net	25,196		100,732
Inventories	(11,493)		(8,512)
Accounts payable and accrued liabilities	(29,965)		(97,476)
Deferred revenue	(6,655)		(12,790)
Income taxes receivable	10,860		(27,774)
Lease liabilities	(21,119)		(22,503)
Other assets and other liabilities, net	(20,881)		(24,980)
Other	1,298		(496)
Net Cash Provided by Operating Activities	23,999		12,403
Cash Flows from Investing Activities
Purchases of marketable equity securities	(48,036)		0
Purchases of property, plant and equipment	(13,113)		(25,235)
Investments in equity affiliates, cost method and other investments	(2,415)		(7,427)
Net proceeds from disposition of businesses, property, plant and equipment, and investments	270		218

Proceeds from sales of marketable equity securities	0		48,016




Investments in certain businesses, net of cash acquired	0		(6,011)
Other	4		0
Net Cash (Used in) Provided by Investing Activities	(63,290)		9,561
Cash Flows from Financing Activities
Dividends paid	(7,553)		(7,703)
Purchase of noncontrolling interest	(3,508)		0
Proceeds from bank overdrafts	3,212		9,062
Net proceeds from vehicle floor plan payable	2,462		2,478
Net payments under revolving credit facilities	(2,223)		0
Deferred payments of acquisition	(1,340)		(2,423)
Repayments of borrowings	(1,034)		(847)
Common shares repurchased	0		(33,610)

Proceeds from exercise of stock options	0		5,335
Issuance of borrowings	0		1,023

Other	(145)		0
Net Cash Used in Financing Activities	(10,129)		(26,685)
Effect of Currency Exchange Rate Change	(1,015)		(7,684)
Net Decrease in Cash and Cash Equivalents and Restricted Cash	(50,435)		(12,405)
Beginning Cash and Cash Equivalents and Restricted Cash	423,054		214,044
Ending Cash and Cash Equivalents and Restricted Cash	$	372,619	$	201,639

   Nine Months Ended
September 30
(in thousands) 2017 2016
Cash Flows from Operating Activities
Net Income $ 87,929
$ 132,540
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and goodwill and other long-lived asset impairment 84,351
68,063
Net pension benefit (44,281 ) (36,714 )
Early retirement program expense 932
—
Stock-based compensation expense, net 7,528
10,319
Loss (gain) on disposition of businesses, property, plant and equipment, investments and other assets, net 504
(62,132 )
Foreign exchange (gain) loss (6,608 ) 33,324
Write-down of cost method investments 200
15,161
Equity in (earnings) losses of affiliates, net of distributions (1,434 ) 895
Provision (benefit) for deferred income taxes 16,306
(17,281 )
Change in operating assets and liabilities:
Accounts receivable, net 106,230
5,980
Accounts payable and accrued liabilities (63,255 ) (38,099 )
Deferred revenue 27,254
28,014
Income taxes receivable 14,477
27,206
Other assets and other liabilities, net (9,795 ) (16,492 )
Other 519
671
Net Cash Provided by Operating Activities 220,857
151,455
Cash Flows from Investing Activities
Investments in certain businesses, net of cash acquired (299,938 ) (242,472 )
Investments in equity affiliates, cost method and other investments (66,097 ) (4,550 )
Purchases of property, plant and equipment (43,863 ) (41,373 )
Disbursement of loan to affiliate (6,771 ) (7,730 )
Return of investment in equity affiliate 3,527
—
Net proceeds from disposition of businesses, property, plant and equipment, investments and other assets 2,672
36,777
Proceeds from sales of marketable equity securities —
22,837
Purchases of marketable equity securities —
(48,265 )
Net Cash Used in Investing Activities (410,470 ) (284,776 )
Cash Flows from Financing Activities
Common shares repurchased (35,394 ) (90,328 )
Dividends paid (21,304 ) (20,532 )
Repayments of borrowings (7,712 ) —
Deferred payments of acquisition and noncontrolling interest (5,187 ) —
Issuance of borrowings —
98,610
Purchase of noncontrolling interest —
(21,000 )
Payments of financing costs —
(648 )
Other (4,962 ) 16,608
Net Cash Used in Financing Activities (74,559 ) (17,290 )
Effect of Currency Exchange Rate Change 9,768
(3,147 )
Net Decrease in Cash and Cash Equivalents and Restricted Cash (254,404 ) (153,758 )
Beginning Cash and Cash Equivalents and Restricted Cash 670,816
774,952
Ending Cash and Cash Equivalents and Restricted Cash $ 416,412
$ 621,194

See accompanying Notes to Condensed Consolidated Financial Statements.

GRAHAM HOLDINGS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS’ EQUITY (UNAUDITED)


(in thousands)	Common Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income		Treasury Stock		Noncontrolling Interest		Total Equity		Redeemable Noncontrolling Interest
As of December 31, 2020	$	20,000	$	388,159	$	6,804,822	$	603,314	$	(4,056,993)	$	7,091	$	3,766,393	$	11,928
Net income for the period					112,635								112,635
Net income attributable to noncontrolling interests					(185)						185		0


Change in redemption value of redeemable noncontrolling interests			697								64		761		(634)
Distribution to noncontrolling interest											(126)		(126)
Dividends on common stock					(15,106)								(15,106)

Issuance of Class B common stock, net of restricted stock forfeitures			(5,188)						5,084				(104)
Amortization of unearned stock compensation and stock option expense			1,589										1,589
Other comprehensive loss, net of income taxes							(1,203)						(1,203)
Purchase of redeemable noncontrolling interest													0		(3,508)

As of March 31, 2021	$	20,000	$	385,257	$	6,902,166	$	602,111	$	(4,051,909)	$	7,214	$	3,864,839	$	7,786






































(in thousands)	Common Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income		Treasury Stock		Noncontrolling Interest		Total Equity		Redeemable Noncontrolling Interest
As of December 31, 2019	$	20,000	$	381,669	$	6,534,427	$	303,295	$	(3,920,152)	$	7,557	$	3,326,796	$	5,655
Net loss for the period					(33,891)								(33,891)

Net loss attributable to noncontrolling interest					772						(772)		0

Net income attributable to redeemable noncontrolling interests					(126)								(126)		126

Dividends on common stock					(15,289)								(15,289)

Repurchase of Class B common stock									(33,610)				(33,610)
Issuance of Class B common stock									5,335				5,335
Amortization of unearned stock compensation and stock option expense			1,568										1,568
Other comprehensive loss, net of income taxes							(37,943)						(37,943)


As of March 31, 2020	$	20,000	$	383,237	$	6,485,893	$	265,352	$	(3,948,427)	$	6,785	$	3,212,840	$	5,781

See accompanying Notes to Condensed Consolidated Financial Statements.

GRAHAM HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. ORGANIZATION, BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS

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.~~States (U.S.). The Company’s media operations comprise the ownership and operation of ~~seven~~7 television broadcasting stations, several websites and print publications, podcast content and a marketing solutions provider. The Company’s other business operations include manufacturing, automotive dealerships, restaurants and entertainment venues, custom framing services and home health and hospice services.

Basis of Presentation – The accompanying condensed consolidated financial statements have been prepared in accordance with: (i) generally accepted accounting principles in the United States of America (GAAP) for interim financial information; (ii) the instructions to Form 10-Q; and (iii) the guidance of Rule 10-01 of Regulation S-X under the Securities and Exchange Act of 1934, as amended, for financial statements required to be filed with the Securities and Exchange Commission (SEC). They include the assets, liabilities, results of operations and cash flows of the Company, including its domestic and foreign subsidiaries that are more than 50% owned or otherwise controlled by the Company. As permitted under such rules, certain notes and other financial information normally required by GAAP have been condensed or omitted. Management believes the accompanying condensed consolidated financial statements reflect all normal and recurring adjustments necessary for a fair statement of the Company’s financial position, results of operations, and cash flows as of and for the periods presented herein. The Company’s results of operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 may not be indicative of the Company’s future results. These condensed consolidated financial statements are unaudited and should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2020.

The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.

~~Out of Period Adjustment~~ ~~– In the second quarter of 2016, the Company benefited from a favorable~~ ~~$5.6 million~~ ~~out of period adjustment to the provision for deferred income taxes related to the~~ ~~$248.6 million~~ goodwill impairment at the KHE reporting unit in the third quarter of 2015. With respect to this error, the Company has concluded that it was not material to the Company’s financial position or results of operations for 2016 and the related interim periods, based on its consideration of quantitative and qualitative factors.

Use of Estimates in the Preparation of the Condensed Consolidated Financial Statements – The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported herein. Management bases its estimates and assumptions on historical experience and on various other factors that are believed to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in those estimates.

~~Recently Adopted and Issued Accounting Pronouncements~~ ~~– In May 2014,~~The Company assessed certain accounting matters that generally require consideration of forecasted financial information, in context with the ~~Financial Accounting Standards Board (FASB) issued comprehensive new guidance that supersedes all existing revenue recognition guidance. In August 2015, the FASB issued an amendment~~information reasonably available to the ~~guidance that defers~~Company and the ~~effective date by one year. The new guidance requires revenue to be recognized when~~unknown future impacts of the Company transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The new guidance also significantly expands the disclosure requirements for revenue recognition. The guidance is effective for interim and fiscal years beginning after December 15, 2017. Early adoption is permitted onlynovel coronavirus (COVID-19) pandemic as of ~~annual reporting periods beginning after December 15, 2016.~~March 31, 2021 and through the date of this filing. The standard permits two implementation approaches, full retrospective, requiring retrospective application of the new guidance with a restatement of prior years, or modified retrospective, requiring prospective application of the new guidance with disclosure of results under the old guidance in the first year of adoption. The Company will adopt the new guidance on January 1, 2018 using the modified retrospective approach.

~~The Company is in the process of completing the evaluation of the impact of adopting the new guidance, as well as assessing the need for any potential changes~~accounting matters assessed included, but were not limited to, the Company’s ~~accounting policies and internal control structure. The evaluation~~carrying value of ~~contracts at the Company’s television broadcasting~~goodwill and other ~~businesses is substantially complete,~~long-lived assets, allowance for doubtful accounts, inventory valuation and based upon the results of the work performed to date, the Company does not expect the application of the new guidance to have a material impact to the Company’s Consolidated Statement of Operations or Balance Sheet, either at initial implementation or on an ongoing basis. The Company is continuing its evaluation of contracts at the education division and is not yet able to estimate the anticipated impact of these arrangements to the Company’s Consolidated Financial Statements. The Company expects adoption of the new guidance will result in a

change to its current treatment of certain commissions paid to employees and agents at the education division. The Company currently expenses such commissions as incurred. Under the new guidance, the Company expects to capitalize certain commission costs as an incremental cost of obtaining a contract and subsequently amortize the cost as the tuition services are delivered to students. The Company expects to complete its evaluation of the impact of the new guidance in the fourth quarter of 2017. The Company is also evaluating the new disclosures required by the guidance to determine additional information that will need to be disclosed.

In January 2016, the FASB issued new guidance that substantially revises the recognition, measurement and presentation of financial assets and financial liabilities. The new guidance, among other things, requires, (i) equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, with some exceptions, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (iii) requires public business entities to use the exit price notion when measuring therelated reserves, fair value of financial ~~instruments~~assets, valuation allowances for ~~disclosure purposes, (iv) requires separate presentation of financial~~tax assets and ~~financial liabilities by measurement category and form of financial~~revenue recognition. Other than the other long-lived asset ~~on the balance sheet or the accompanying notes~~impairment charges (see Note 8), there were no other impacts to the Company’s condensed consolidated financial statements and (v) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The guidance is effective for interim and fiscal years beginning after December 15, 2017. Early adoption is not permitted. The Company is in the processas of ~~evaluating the impact of this new guidance on its Condensed Consolidated Financial Statements.~~

~~In February 2016, the FASB issued new guidance that requires, among other things, a lessee to recognize a right-of-use asset representing an entity’s right to use the underlying asset~~and for the ~~lease term~~three months ended March 31, 2021 resulting from our assessments. The Company’s assessments as of and a liability for lease payments on its balance sheet, regardless of classification of a lease as operating or financing. For leases with a term of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and liabilities and account for the ~~lease similar to existing guidance for operating leases today. This new guidance supersedes all prior guidance.~~ three months ended March 31, 2020 resulted in goodwill and indefinite-lived asset impairment charges (see Note 6 and Note 8). The guidance is effective for interim and fiscal years beginning after December 15, 2018. Early adoption is permitted. The standard requires lessees and lessors to recognize and measure leases at the beginningCompany’s future assessment of the ~~earliest period presented using a modified retrospective approach. The Company is~~magnitude and duration of COVID-19, as well as other factors, could result in ~~the process of evaluating the impact of this new guidance on its Condensed Consolidated Financial Statements.~~

In March 2016, the FASB issued new guidance that simplifies the accounting for stock-based compensation. The new guidance (i) requires all excess tax benefits and tax deficiencies to be recognized in the income statement with the tax effects of vested or exercised awards treated as discrete items. Additionally, excess tax benefits will be recognized regardless of whether the benefit reduces taxes payable in the current period, effectively eliminating the APIC pool, (ii) concludes excess tax benefits should be classified as an operating activity in the statement of cash flows, (iii) requires an entity to make an entity-wide accounting policy election to either estimate a forfeiture rate for awards or account for forfeitures as they occur, (iv) changes the threshold for equity classification for cash settlements of awards for withholding requirementsmaterial impacts to the maximum statutory tax rate in the applicable jurisdiction and (v) concludes cash paid by an employer when directly withholding shares for tax-withholding purposes should be classified as a financing activity in the statement of cash flows. The guidance is effective for interim and fiscal years beginning after December 15, 2016. The Company adopted the new guidance as of January 1, 2017. As a result of adoption, the Company recognized a $5.9 million excess tax benefit as a discrete item in its tax provision related to the vesting of restricted stock awards in the first quarter of 2017. This tax benefit is classified as an operating activity on the Condensed Consolidated Statement of Cash Flows. Additionally, the Company elected to account for forfeitures of stock awards as they occur and not estimate a forfeiture rate. The Company does not expect the forfeiture rate election to have a material impact on its financial statements.

In November 2016, the FASB issued new guidance that clarifies how restricted cash and restricted cash equivalents should be presented in the statement of cash flows. The guidance requires the cash flow statement to show changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents, which eliminates the presentation of transfers between cash and cash equivalents and restricted cash and cash equivalents. The guidance is effective for interim and fiscal years beginning after December 15, 2017, with early adoption permitted. The Company adopted the new guidance retrospectively as of December 31, 2016. The prior period has been adjusted to reflect this adoption, as detailed below:

Nine Months Ended September 30, 2016
As
Previously As
(in thousands) Reported Adjustment Adopted
Cash Flows from Operating Activities
Increase in Restricted Cash $ (7,266 ) $ 7,266
$ —
Net Cash Provided by Operating Activities 144,189
7,266
151,455

Net Decrease in Cash and Cash Equivalents and Restricted Cash (161,024 ) 7,266
(153,758 )
Cash and Cash Equivalents and Restricted Cash at Beginning of Period 754,207
20,745
774,952
Cash and Cash Equivalents and Restricted Cash at End of Period 593,183
28,011
621,194

In January 2017, the FASB issued new guidance which simplifies the subsequent measurement of goodwill. The new guidance eliminates Step 2 from the goodwill impairment test, which required entities to determine the implied fair value of goodwill as of the test date to measure a goodwill impairment charge. Instead, an entity should continue to test goodwill for impairment by comparing the fair value of a reporting unit with its carrying amount (Step 1), and an impairment charge will be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The guidance is effective for interim and fiscal years beginning after December 15, 2019, with early adoption permitted. The Company early adopted this guidance in the second quarter of 2017.

In March 2017, the FASB issued new guidance that changes the presentation of net periodic pension cost and net periodic postretirement benefit cost for defined benefit plans. The guidance requires an issuer to disaggregate the service cost component of net periodic pension and postretirement benefit cost from other components. Under the new guidance, service cost will be included in the same line item(s) as other compensation costs arising from services rendered by employees during the period, while the other components will be recognized after income from operations. The guidance is effective for interim and fiscal years beginning after December 15, 2017. The guidance must be applied retrospectively; however, a practical expedient is available which permits an employer to use amounts previously disclosed in its pension and postretirement plans footnote for the prior comparative periods. The Company will adopt the new standard in the first quarter of 2018, and expects the following changes to itsCompany’s condensed consolidated financial statements ~~upon adoption, as detailed below:~~

Income from Operations Non-operating pension and postretirement benefit income Income Before Income Taxes
(in thousands)
Three Months Ended September 30, 2017
As Reported $ 44,571
$ —
$ 38,244
Adjustment (17,621 ) 17,621
—
Upon Adoption 26,950
17,621
38,244

Three Months Ended September 30, 2016
As Reported $ 68,033
$ —
$ 40,926
Adjustment (15,705 ) 15,705
—
Upon Adoption 52,328
15,705
40,926

Nine Months Ended September 30, 2017
As Reported $ 141,986
$ —
$ 127,929
Adjustment (55,042 ) 55,042
—
Upon Adoption 86,944
55,042
127,929

Nine Months Ended September 30, 2016
As Reported $ 194,045
$ —
$ 186,540
Adjustment (46,966 ) 46,966
—
Upon Adoption 147,079
46,966
186,540

Twelve Months Ended December 31, 2016
As Reported $ 303,534
$ —
$ 250,658
Adjustment (80,665 ) 80,665
—
Upon Adoption 222,869
80,665
250,658

in future reporting periods.

2. ~~INVESTMENTS~~

As of September 30, 2017 and December 31, 2016, the Company had commercial paper and money market investments of $205.8 million and $485.1 million, respectively, that are classified as cash, cash equivalents and restricted cash in the Company’s Condensed Consolidated Balance Sheets.

~~Investments in marketable equity securities comprised the following:~~

As of
September 30,
2017 December 31,
2016
(in thousands)
Total cost $ 269,343
$ 269,343
Gross unrealized gains 226,256
154,886
Total Fair Value $ 495,599
$ 424,229

There were no purchases of marketable equity securities during the first nine months of 2017. The Company settled on $48.3 million of marketable equity securities purchases during the first nine months of 2016, of which $47.9 million was purchased in the first nine months of 2016.

There were no sales of marketable equity securities for the first nine months of 2017. The total proceeds from the sales of marketable equity securities for the first nine months of 2016 were $22.8 million, with realized gains of $6.3 million.

In September 2017, the Company acquired approximately 10% of Intersection Holdings, LLC, a company that provides digital marketing and advertising services and products for cities, transit systems, airports, and other public and private spaces, which is accounted for as an investment in affiliate. As of September 30, 2017, the Company held interests in several affiliates; Residential Healthcare (Residential) held a 40% interest in Residential Home

Health Illinois, a 42.5% interest in Residential Hospice Illinois and a 40% interest in the joint venture formed between Residential and a Michigan hospital; and Celtic Healthcare (Celtic) held a 40% interest in the joint venture formed between Celtic Healthcare and Allegheny Health Network (AHN). For the three and nine months ended September 30, 2017, the Company recorded $4.5 million and $14.1 million, respectively, in revenue for services provided to the affiliates of Celtic and Residential.

Additionally, Kaplan International Holdings Limited (KIHL) held a 45% interest in a joint venture formed with York University. KIHL agreed to loan the joint venture £25 million, of which, £11.0 million was advanced in 2016 and £5.0 million was advanced in 2017. The loan will be repayable over 25 years at an interest rate of 7% and the loan is guaranteed by the University of York.

3. ACQUISITIONS AND DISPOSITIONS OF BUSINESSES

Acquisitions. ~~In the first nine months of 2017,~~During 2020, the Company acquired ~~six businesses, two~~3 businesses: 2 in ~~its~~ education ~~division, two in its television broadcasting division~~ and ~~two~~1 in other businesses for ~~$318.7~~$96.8 million in cash and contingent ~~consideration,~~consideration. The assets and liabilities of the ~~assumption~~companies acquired were recorded at their estimated fair values at the date of ~~$59.1 million~~acquisition.

In the first three months of 2020, Kaplan acquired 2 small businesses; 1 in ~~certain pension~~its supplemental education division and ~~postretirement obligations.~~1 in its international division.

At the end of June 2017, Graham Healthcare Group (GHG) acquired a 100% interest in Hometown Home Health and Hospice, a Lapeer, MI-based healthcare services provider by purchasing all of its issued and outstanding shares. This acquisition expands GHG’s service area in Michigan. GHG is included in other businesses.

In ~~April 2017,~~May 2020, the Company acquired ~~97.72%~~an additional interest in Framebridge, Inc. for cash and contingent consideration that resulted in the Company obtaining control of the ~~issued~~investee. Following the acquisition, the Company owns 93.4% of Framebridge. The Company previously accounted for Framebridge under the equity method, and ~~outstanding shares~~included it in Investments in Affiliates on the Condensed Consolidated Balance Sheet (see Note 3). The contingent consideration is primarily based on Framebridge achieving revenue milestones within a specific time

period. The fair value of ~~Hoover Treated Wood Products, Inc.,~~the contingent consideration at the acquisition date was $50.6 million, determined using a ~~Thomson, GA-based supplier of pressure impregnated kiln-dried lumber and plywood products for fire retardant and preservative applications for $206.8 million, net of cash acquired.~~Monte Carlo simulation. The fair value of the redeemable noncontrolling interest in ~~Hoover~~Framebridge was ~~$3.7~~$6.0 million atas of the acquisition date, determined using a market approach. The minority ~~shareholders have~~shareholder has an option to put ~~some~~20% of ~~their~~the minority shares ~~to the Company~~annually starting in ~~2019 and the remaining shares starting in 2021.~~2024. The ~~Company has an option to buy the shares of minority shareholders starting in 2027. This~~ acquisition is ~~consistent with~~expected to provide benefits in the future by diversifying the Company’s ~~ongoing strategy of investing in companies with a history of profitability~~business operations and ~~strong management. Hoover~~ is included in other businesses.

In February 2017, Kaplan acquired a 100% interest in Genesis Training Institute, a Dubai-based provider of professional development training in the United Arab Emirates, by purchasing all of its issued and outstanding shares. Additionally, Kaplan acquired a 100% interest in Red Marker Pty Ltd, an Australia-based regulatory technology company by purchasing all of its outstanding shares. These acquisitions are expected to provide certain strategic benefits in the future.

On January 17, 2017, the Company closed on its agreement with Nexstar Broadcasting Group, Inc. and Media General, Inc. to acquire the assets of WCWJ, a CW affiliate television station in Jacksonville, FL and WSLS, an NBC affiliate television station in Roanoke, VA for cash and the assumption of certain pension obligations. The acquisition of WCWJ and WSLS will complement the other stations that GMG operates.

During 2016, the Company acquired five businesses, three businesses included in its education division and two businesses in other businesses. In January 2016, Kaplan acquired a 100% interest in Mander Portman Woodward, a leading provider of high-quality, bespoke education to UK and international students in London, Cambridge and Birmingham, by purchasing all of its issued and outstanding shares. In February 2016, Kaplan acquired a 100% interest in Osborne Books, an educational publisher of learning resources for accounting qualifications in the UK, by purchasing all of its issued and outstanding shares. The primary rationale for these acquisitions was based on several strategic benefits expected to be realized in the future. Both of these acquisitions are included in Kaplan International.

In September 2016, Group Dekko, Inc. (Dekko) acquired a 100% interest in Electri-Cable Assemblies (ECA), a Shelton, CT-based manufacturer of power, data and electrical solutions for the office furniture industry, by purchasing all of its issued and outstanding shares. Dekko’s primary reasons for the acquisition were to complement existing product offerings and provide opportunities for synergies across the businesses. Dekko is included in other businesses.

Acquisition-related costs ~~of $3.5 million related to these 2017 acquisitions~~ were expensed as incurred. The aggregate purchase price of the ~~2017 and 2016~~2020 acquisitions was allocated as follows ~~(2017~~based on ~~a preliminary basis):~~

acquisition date fair values to the following assets and liabilities:

Purchase Price Allocation
As of
(in thousands) September 30, 2017 December 31, 2016
Accounts receivable $ 12,502
$ 8,538
Inventory 25,253
878
Other current assets 593
1,420
Property, plant and equipment 30,961
3,940
Goodwill 143,433
184,118
Indefinite-lived intangible assets 41,600
53,110
Amortized intangible assets 158,907
28,267
Pension and other postretirement benefits liabilities (59,116 ) —
Other liabilities (10,822 ) (21,892 )
Deferred income taxes (34,875 ) (11,009 )
Redeemable noncontrolling interest (3,666 ) —
Aggregate purchase price, net of cash acquired $ 304,770
$ 247,370


	Purchase Price Allocation
	Year Ended
(in thousands)	December 31, 2020
Accounts receivable	$	745
Inventory	3,496
Property, plant and equipment	3,346
Lease right-of-use assets	6,580
Goodwill	73,951

Amortized intangible assets	14,589
Other assets	975
Deferred income taxes	15,958


Other liabilities	(14,917)

Current and noncurrent lease liabilities	(6,593)
Redeemable noncontrolling interest	(6,005)

Aggregate purchase price, net of cash acquired	$	92,125

The ~~2017~~2020 fair values recorded were based upon ~~preliminary~~ valuations and the estimates and assumptions used in such valuations are subject to change ~~which could be significant,~~ within the measurement period (up to one year from the acquisition date). ~~The recording of deferred tax assets or liabilities, working capital and the final amount of residual goodwill and other intangibles are not yet finalized.~~ Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The goodwill recorded due to these acquisitions is attributable to the assembled workforces of the acquired companies and expected synergies. The Company expects to deduct ~~$11.0 million and $22.2~~$3.2 million of goodwill for income tax purposes for the acquisitions completed in ~~2017 and 2016, respectively.~~2020.

The acquired companies were consolidated into the Company’s financial statements starting on their respective acquisition dates. The Company’s Condensed Consolidated Statements of Operations include aggregate revenues and operating income for the companies acquired in 2017 of $64.9 million and $4.0 million, respectively, for the third quarter of 2017, and aggregate revenues and operating income of $133.8 million and $3.8 million, respectively, for the first nine months of 2017. The following unaudited pro forma financial information presents the Company’s results as if the ~~2017~~2020 acquisitions ~~had~~ occurred at the beginning of ~~2016. The unaudited pro forma information also includes the 2016 acquisitions as if they occurred at the beginning of 2015:~~

2019:

Three Months Ended
September 30 Nine Months Ended
September 30
(in thousands) 2017 2016 2017 2016
Operating revenues $ 657,225
$ 696,767
$ 1,979,784
$ 2,058,571
Net income 24,735
36,250
96,065
137,967


	Three Months Ended March 31
(in thousands)		2020
Operating revenues		$	738,331
Net loss		(40,396)

These pro forma results were based on estimates and assumptions, which the Company believes are reasonable, and include the historical results of operations of the acquired companies and adjustments for depreciation and amortization of identified assets and the effect of pre-acquisition transaction related expenses incurred by the Company and the acquired entities. The pro forma information does not include efficiencies, cost reductions and synergies expected to result from the acquisitions. They are not the results that would have been realized had these entities been part of the Company during the periods presented and are not necessarily indicative of the Company’s consolidated results of operations in future periods.

Sale of Businesses. In ~~February 2017, GHG~~December 2020, the Company completed the sale of ~~Celtic Healthcare of Maryland.~~

~~In January 2016, Kaplan completed the sale of Colloquy,~~Megaphone which was included in ~~Kaplan Corporate and Other.~~other businesses.

~~Other.~~ Other Transactions. In June 2016, Residential and a Michigan hospital formed a joint venture to provide home health services to patients in western Michigan. In connection with this transaction, Residential contributed its western Michigan home health operationsMarch 2021, Hoover’s minority shareholders put the remaining outstanding shares to the ~~joint venture~~Company, which had a redemption value of $3.5 million. Following the redemption, the Company owns 100% of Hoover.

3. INVESTMENTS

Money Market Investments. As of March 31, 2021 and ~~then sold 60%~~December 31, 2020, the Company had money market investments of $175.2 million and $268.8 million, respectively, that are classified as cash and cash equivalents in the Company’s Condensed Consolidated Balance Sheets.

Investments in Marketable Equity Securities. Investments in marketable equity securities consist of the ~~newly formed venture to its Michigan hospital partner. Although Residential manages~~following:


	As of
	March 31, 2021		December 31, 2020
(in thousands)
Total cost	$	280,883	$	232,847
Gross unrealized gains	419,469		340,255

Total Fair Value	$	700,352	$	573,102

At March 31, 2021 and December 31, 2020, the ~~operations~~Company owned 44,430 shares and 28,000 shares, respectively, in Markel Corporation (Markel) valued at $50.6 million and $28.9 million, respectively. The Co-Chief Executive Officer of Markel, Mr. Thomas S. Gayner, is a member of the ~~joint venture,~~Company’s Board of Directors. As of March 31, 2021, there was 0 marketable equity security holding that exceeded 5% of the Company’s total assets.

The Company purchased $48.0 million of marketable equity securities during the first three months of 2021. There were 0 purchases of marketable equity securities during the first three months of 2020.

There were 0 sales of marketable equity securities during the first three months of 2021. During the first three months of 2020, the gross cumulative realized losses from the sales of marketable equity securities were $2.0 million. The total proceeds from such sales were $48.0 million.

The net gain (loss) on marketable equity securities comprised the following:


	Three Months Ended March 31
(in thousands)		2021		2020
Gain (loss) on marketable equity securities, net		$	79,214	$	(100,393)
Less: Net losses in earnings from marketable equity securities sold and donated		0		8,774
Net unrealized gains (losses) in earnings from marketable equity securities still held at the end of the period		$	79,214	$	(91,619)

Investments in Affiliates. As of March 31, 2021, the Company held an approximate 12% interest in Intersection Holdings, LLC, and in several other affiliates; Graham Healthcare Group (GHG) held a 40% interest in Residential ~~holds~~Home Health Illinois, a 42.5% interest in Residential Hospice Illinois, a 40% interest in the joint venture ~~so the operating results of~~formed between GHG and a Michigan hospital, and a 40% interest in the joint venture formed between GHG and Allegheny Health Network (AHN). For each of the three months ended March 31, 2021 and 2020, the Company recorded $2.5 million in revenue for services provided to the affiliates of GHG.

The Company had $39.4 million and $26.1 million in its investment account that represents cumulative undistributed income in its investments in affiliates as of March 31, 2021 and December 31, 2020, respectively.

In the first quarter of 2020, the Company recorded impairment charges of $3.6 million on 2 of its investments in affiliates as a result of the challenging economic environment for these businesses, of which $2.7 million related to the Company’s investment in Framebridge. It is reasonably possible that further COVID-19 disruptions could result in additional impairment charges related to the Company’s investments in affiliates should the impact of COVID-19 not dissipate or have a worsening adverse impact on our affiliates in future periods. The Company records its share of the earnings or losses of its affiliates from their most recent available financial statements. In some instances, the reporting period of the affiliates’ financial statements lags the Company’s financial reporting period, but such lag is never more than three months. It is possible that the Company’s results of operations for the three months ended March 31, 2021 does not capture the impact of the COVID-19 pandemic on the earnings or losses of the affiliates whose financial results are ~~not consolidated~~recorded on a lag basis.

In May 2020, the Company made an additional investment in Framebridge (see Note 2) that resulted in the Company obtaining control of the investee. The results of operations, cash flows, assets and ~~the pro rata operating results~~liabilities of Framebridge are included in the ~~Company’s equity in earnings~~condensed consolidated financial statements of ~~affiliates.~~

~~In June 2016,~~ the Company ~~purchased~~from the ~~outstanding 20% redeemable noncontrolling~~date of the acquisition. Timothy J. O’Shaughnessy, President and Chief Executive Officer of Graham Holdings Company, was a personal investor in Framebridge and served as Chairman of the Board prior to the acquisition of the additional interest. The Company acquired Mr. O’Shaughnessy’s interest under the same terms as the other Framebridge investors.

Additionally, Kaplan International Holdings Limited (KIHL) held a 45% interest in ~~Residential. At~~a joint venture formed with York University. KIHL loaned the joint venture £22 million, which loan is repayable over 25 years at an interest rate of 7% and guaranteed by the University of York. The loan is repayable by December 2041.

Cost Method Investments. The Company held investments without readily determinable fair values in a number of equity securities that ~~time,~~are accounted for as cost method investments, which are recorded at cost, less impairment, and adjusted for observable price changes for identical or similar investments of the same issuer. The carrying value of these investments was $38.6 million and $35.7 million as of March 31, 2021 and December 31, 2020, respectively. During the three months ended March 31, 2021, the Company recorded ~~an increase~~gains of $2.7 million to ~~redeemable noncontrolling interest of $3.0 million, with a corresponding decrease to capital in excess of par value, to reflect~~those equity securities based on observable transactions. During the redemption value of the redeemable noncontrolling interest at $24.0 million. Following this transaction, Celtic and Residential combined their business operations to form GHG. The redeemable noncontrolling interest shareholders in Celtic exchanged their 20% interest in Celtic for a 10% mandatorily redeemable noncontrolling interest in the combined entity andthree months ended March 31, 2020, the Company recorded ~~a $4.1~~impairment losses of $2.6 million ~~net increase~~ to ~~the mandatorily redeemable noncontrolling interest to reflect the estimated fair value~~those equity securities.

4. ACCOUNTS RECEIVABLE

Accounts receivable consist of the ~~mandatorily redeemable noncontrolling interest.~~ following:


	As of
	March 31, 2021		December 31, 2020
(in thousands)
Receivables from contracts with customers, less estimated credit losses of $21,126 and $21,494	$	495,443	$	519,577
Other receivables	19,777		17,579
	$	515,220	$	537,156

Credit loss expense was $1.1 million and $2.4 million for the three months ended March 31, 2021 and 2020, respectively.

5. INVENTORIES, CONTRACTS IN PROGRESS AND VEHICLE FLOOR PLAN PAYABLE

Inventories and contracts in progress consist of the following:


	As of
	March 31, 2021		December 31, 2020
(in thousands)
Raw materials	$	46,177	$	45,382
Work-in-process	14,534		10,402
Finished goods	71,254		64,061
Contracts in progress	171		777
	$	132,136	$	120,622

The ~~minority shareholders have an option to put their shares to the~~ Company ~~starting in 2020,~~finances new and ~~are required to put~~used vehicle inventory through a ~~percentage of their shares in 2022 and 2024,~~standardized floor plan facility (the “floor plan facility”) with ~~the remaining shares required to be put by the minority shareholders in 2026.~~Truist Bank. The ~~redemption value is~~vehicle floor plan facility bears interest at variable rates that are based on ~~an EBITDA multiple, adjusted~~LIBOR plus 1.15% per annum. The weighted average interest rate for ~~working capital~~the floor plan facility was 1.2% and 2.6% for the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, the aggregate capacity under the floor plan facility was $50 million, of which $28.4 million had been utilized, and is included in accounts payable and accrued liabilities in the Condensed Consolidated Balance Sheet. Changes in the vehicle floor plan payable are reported as cash flows from financing activities in the Condensed Consolidated Statements of Cash Flows.

The floor plan facility is collateralized by vehicle inventory and other items, computed annually, with no limit on the amount payable. The Company now owns 90% of GHG. Because the noncontrolling interest is now mandatorily redeemable by the Company by 2026, it is reported as a noncurrent liability at September 30, 2017.

~~Kaplan University Transaction.~~ ~~On April 27, 2017, certain Kaplan subsidiaries entered into a Contribution and Transfer Agreement (Transfer Agreement) to contribute Kaplan University (KU), its institutional~~ assets and operations to a new, nonprofit, public-benefit corporation (New University) affiliated with Purdue University (Purdue) in exchange for a Transition and Operations Support Agreement (TOSA) to provide key non-academic operations support to New University for an initial term of 30 years with a buy-out option after six years. The transfer does not include any of the ~~assets~~relevant dealership subsidiary, and contains a number of Kaplan University School of Professional and Continuing Education (KU-PACE), which provides professional training and exam preparation for professional certifications and licensures, nor does it include the transfer of other Kaplan businesses such as Kaplan Test Preparation and Kaplan International.

~~Consummation of the transactions contemplated by the Transfer Agreement is subject to various closing conditions,~~covenants, including, among others, ~~regulatory approvals~~covenants restricting the dealership subsidiary with respect to the creation of liens and changes in ownership, officers and key management personnel. The Company was in compliance with all of these restrictive covenants as of March 31, 2021.

The floor plan interest expense related to the vehicle floor plan arrangements is offset by amounts received from manufacturers in the ~~U.S. Department~~form of ~~Education (ED),~~floor plan assistance capitalized in inventory and recorded against cost of goods sold in the ~~Indiana Commission for Higher Education (ICHE)~~Condensed Consolidated Statements of Operations when the associated inventory is sold. For the three months ended March 31, 2021 and ~~Higher Learning Commissions (HLC), which is~~2020, the ~~regional accreditor~~Company recognized a reduction in cost of ~~both Purdue~~goods sold of $0.6 million and KU, and certain other state educational agencies and accreditors of programs. In the third quarter of 2017, ICHE granted its approval and the ED provided preliminary approval based on its review of a pre-acquisition application, subject$0.4 million, respectively, related to certain conditions. Kaplan is unable to predict with certainty when and if HLC approval will be obtained; however, such approval is not expected to be received until the first quarter of 2018. If the transaction is not consummated by April 30, 2018, either party may terminate the Transfer Agreement.manufacturer floor plan assistance.

4.6. GOODWILL AND OTHER INTANGIBLE ASSETS

In the ~~second~~first quarter of ~~2017,~~2020, as a result of athe uncertainty and challenging operating environment created by the ~~Forney reporting unit recorded a goodwill and other long-lived asset impairment charge of $9.2 million. The~~COVID-19 pandemic, the Company performed an interim review of the goodwill, indefinite-lived intangibles and other long-lived assets of the Clyde’s Restaurant Group (CRG) and automotive dealership reporting ~~unit~~units and asset groups. As a result of the impairment reviews, the Company recorded a $9.7 million goodwill and indefinite-lived intangible asset impairment charge at CRG and a $6.7 million indefinite-lived intangible asset impairment charge at the auto dealerships. The Company estimated the fair value of the reporting units and indefinite-lived intangible assets by utilizing a discounted cash flow ~~model to estimate the fair value.~~model. The carrying value of the CRG reporting unit and the indefinite-lived intangible assets exceeded the estimated fair value, resulting in a goodwill and indefinite-lived intangible asset impairment charge for the amount by which the carrying value exceeded the ~~reporting unit’s~~ estimated fair value. CRG and the automotive dealerships are included in other businesses. Additional COVID-19 disruptions could result in future

adverse changes in projections for future operating results or other key assumptions, such as projected revenue, profit margin, capital expenditures or cash flows associated with fair value estimates and could lead to additional future impairments, which could be material.

Amortization of intangible assets for the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020, was ~~$10.9~~$13.9 million and ~~$6.6 million, respectively. Amortization of intangible assets for the nine months ended September 30, 2017 and 2016 was $28.3 million and $19.2~~$14.2 million, respectively. Amortization of intangible assets is estimated to be approximately ~~$10~~$38 million for the remainder of ~~2017,~~2021, $46 million in 2022, $38 million in ~~2018, $37~~2023, $27 million in ~~2019, $33~~2024, $21 million in ~~2020, $28~~2025 and $20 million ~~in 2021 and $93 million~~ thereafter.

The changes in the carrying amount of goodwill, by segment, were as follows:


(in thousands)	Education			Television Broadcasting		Other Businesses			Total			(in thousands)	Education		Television Broadcasting		Manufacturing		Healthcare		Other Businesses		Total
Balance as of December 31, 2016
Balance as of December 31, 2020												Balance as of December 31, 2020
Goodwill	$	1,111,003		$	168,345	$	202,141		$	1,481,489		Goodwill	$	1,183,379	$	190,815	$	234,993	$	98,421	$	130,472	$	1,838,080
Accumulated impairment losses	(350,850		)	—		(7,685		)	(358,535		)	Accumulated impairment losses	(331,151)		0		(7,616)		0		(14,563)		(353,330)
	760,153			168,345		194,456			1,122,954				852,228		190,815		227,377		98,421		115,909		1,484,750
Acquisitions	18,986			24,256		100,191			143,433
Impairment	—			—		(7,616		)	(7,616		)
Dispositions	—			—		(412		)	(412		)

Foreign currency exchange rate changes	40,867			—		—			40,867			Foreign currency exchange rate changes	387		0		0		0		0		387
Balance as of September 30, 2017
Balance as of March 31, 2021												Balance as of March 31, 2021
Goodwill	1,170,856			192,601		301,920			1,665,377			Goodwill	1,183,766		190,815		234,993		98,421		130,472		1,838,467
Accumulated impairment losses	(350,850		)	—		(15,301		)	(366,151		)	Accumulated impairment losses	(331,151)		0		(7,616)		0		(14,563)		(353,330)
	$	820,006		$	192,601	$	286,619		$	1,299,226			$	852,615	$	190,815	$	227,377	$	98,421	$	115,909	$	1,485,137

Other intangible assets consist of the following:

As of September 30, 2017 As of December 31, 2016
(in thousands)
Useful Life
Range

Gross
Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount
Gross
Carrying
Amount Accumulated
Amortization Net
Carrying
Amount
Amortized Intangible Assets
Student and customer relationships 1–10 years (1) $ 224,872
$ 74,304
$ 150,568
$ 129,616
$ 55,863
$ 73,753
Trade names and trademarks 2–10 years 58,917
33,143
25,774
55,240
29,670
25,570
Network affiliation agreements 15 years 42,600
2,067
40,533
—
—
—
Databases and technology 3–6 years (1) 19,583
4,173
15,410
5,601
4,368
1,233
Noncompete agreements 2–5 years 2,080
1,549
531
1,730
1,404
326
Other 1–8 years 13,430
7,094
6,336
12,030
4,973
7,057
      $ 361,482
$ 122,330
$ 239,152
$ 204,217
$ 96,278
$ 107,939
Indefinite-Lived Intangible Assets



Trade names and trademarks    $ 82,651


$ 65,192


FCC licenses 26,600
—

Licensure and accreditation    650


834


   $ 109,901
$ 66,026

~~____________~~


		As of March 31, 2021						As of December 31, 2020
(in thousands)	Useful Life Range	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortized Intangible Assets
Student and customer relationships	2–10 years	$	293,481	$	185,781	$	107,700	$	294,077	$	178,075	$	116,002
Trade names and trademarks	2–10 years	109,485		57,667		51,818		109,809		54,766		55,043
Network affiliation agreements	10 years	17,400		7,322		10,078		17,400		6,888		10,512
Databases and technology	3–6 years	34,747		21,572		13,175		34,864		19,924		14,940
Noncompete agreements	2–5 years	1,000		963		37		1,000		937		63
Other	1–8 years	24,800		17,567		7,233		24,800		16,714		8,086
		$	480,913	$	290,872	$	190,041	$	481,950	$	277,304	$	204,646
Indefinite-Lived Intangible Assets
Trade names and trademarks		$	88,042					$	87,429
Franchise agreements		21,858						21,858
FCC licenses		11,000						11,000
Licensure and accreditation		150						150
		$	121,050					$	120,437

7.25% unsecured notes due February 1, 2019 ⁽¹⁾

UK Credit facility ⁽²⁾

5.75% unsecured notes due June 1, 2026 (1)

(1) The carrying value is net of $3.7 million and $3.9 million of unamortized debt issuance costs as of March 31, 2021 and December 31, 2020, respectively.

The outstanding balance on the Company’s revolving credit facility was £55 million as of March 31, 2021 with interest payable at the 3 month GBP LIBOR plus 1.50%. The Company’s other indebtedness at ~~September 30, 2017~~March 31, 2021 and December 31, 2020 is at an interest ~~rate~~rates of 2%0% to 16% and matures ~~in 2025.~~between 2023 and 2030.

On July 14, 2016, Kaplan entered into a Facility Agreement (the Kaplan Credit Agreement) among Kaplan International Holdings Limited, as borrower, the lenders party thereto, HSBC BANK PLC as Facility Agent, and other agents party thereto. The Kaplan Credit Agreement provides for a four-year credit facility in an aggregate principal amount of £75 million. Borrowings bear interest at a rate per annum of LIBOR plus an applicable interest rate margin between 1.25% and 1.75%, in each case determined on a quarterly basis by reference to a pricing grid

based upon the Company’s total leverage ratio. The Kaplan Credit Agreement requires that 6.66% of the amount of the loan be repaid on the first three anniversaries of funding, with the remaining balance due on July 1, 2020. The Kaplan Credit Agreement contains terms and conditions, including remedies in the event of a default by the Company, typical of facilities of this type and requires the Company to maintain a leverage ratio of not greater than 3.5 to 1.0 and a consolidated interest coverage ratio of at least 3.5 to 1.0 based upon the ratio of consolidated adjusted EBITDA to consolidated interest expense as determined pursuant to the Kaplan Credit Agreement. As of September 30, 2017, the Company is in compliance with all financial ~~covenants.~~covenants as of March 31, 2021.

On July 25, 2016, Kaplan borrowed £75 million under the Kaplan Credit Agreement. On the same date, Kaplan entered into an interest rate swap agreement with a total notional value of £75 million and a maturity date of July 1, 2020. The interest rate swap agreement will pay Kaplan variable interest on the £75 million notional amount at the three-month LIBOR, and Kaplan will pay the counterparties a fixed rate of 0.51%, effectively resulting in a total fixed interest rate of 2.01% on the outstanding borrowings at the current applicable margin of 1.50%. The interest rate swap agreement was entered into to convert the variable rate British pound borrowing under the Kaplan Credit Agreement into a fixed rate borrowing. The Company provided a guarantee on any borrowings under the Kaplan Credit Agreement. Based on the terms of the interest rate swap agreement and the underlying borrowing, the interest rate swap agreement was determined to be effective, and thus qualifies as a cash flow hedge. As such, changes in the fair value of the interest rate swap are recorded in other comprehensive income on the accompanying Condensed Consolidated Balance Sheets until earnings are affected by the variability of cash flows.

~~During the nine months ended September 30, 2017 and 2016, the Company had average borrowings outstanding of approximately $493.5~~$512.1 million and ~~$429.4~~$511.4 million, respectively, at average annual interest rates of approximately ~~6.3%~~5.0% and ~~6.9%~~5.1%, respectively. During the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, the Company incurred net interest expense of ~~$22.4~~$7.6 million and ~~$22.5~~$6.5 million, respectively.

During the three months ended March 31, 2021, the Company recorded interest expense of $1.1 million to adjust the fair value of the mandatorily redeemable noncontrolling interest. The fair value of the mandatorily redeemable noncontrolling interest was based on the fair value of the underlying subsidiaries owned by GHC One, after taking into account any debt and other noncontrolling interests of its subsidiary investments. The fair value of the owned subsidiaries is determined by reference to either a discounted cash flow or EBITDA multiple, which approximates fair value (Level 3 fair value assessment).

At ~~September 30, 2017,~~March 31, 2021 and December 31, 2020, the fair value of the Company’s ~~7.25%~~5.75% unsecured notes, based on quoted market prices (Level 2 fair value assessment), totaled ~~$424.1~~$418.4 million and $421.7 million, respectively, compared with the carrying amount of ~~$399.4 million. At December 31, 2016, the fair value of the Company’s 7.25% unsecured notes, based on quoted market prices (Level 2 fair value assessment), totaled $438.7~~$396.3 million ~~compared with the carrying amount of $399.1 million.~~and $396.1 million, respectively. The carrying value of the Company’s other unsecured debt at ~~September 30, 2017~~March 31, 2021 and December 31, 2020 approximates fair value.

6.8. FAIR VALUE MEASUREMENTS

The Company’s financial assets and liabilities measured at fair value on a recurring basis were as follows:

Money market investments ⁽¹⁾

Money market investments (1)

Marketable equity securities ⁽³⁾

Other current investments ⁽⁴⁾

Marketable equity securities (2)

Other current investments (3)

Deferred compensation plan liabilities ⁽⁵⁾

Deferred compensation plan liabilities (4)

Contingent consideration liabilities (5)

Interest rate swap ⁽⁶⁾

Interest rate swap (6)

Mandatorily redeemable noncontrolling interest ⁽⁷⁾

Mandatorily redeemable noncontrolling interest (7)

Money market investments ⁽¹⁾

Money market investments (1)

Commercial paper ⁽²⁾

Marketable equity securities ⁽³⁾

Other current investments ⁽⁴⁾

Marketable equity securities (2)

Other current investments (3)

Deferred compensation plan liabilities ⁽⁵⁾

Deferred compensation plan liabilities (4)

Contingent consideration liabilities (5)

Interest rate swap ⁽⁶⁾

Interest rate swap (6)

Foreign exchange swap (8)

Mandatorily redeemable noncontrolling interest ⁽⁷⁾

Mandatorily redeemable noncontrolling interest (7)


(1)			The Company’s money market investments are included in cash and cash equivalents ~~and restricted cash~~ and the value considers the liquidity of the counterparty.


(2)			~~The Company’s commercial paper investments with original maturities of three months or less are included in cash and cash equivalents.~~


~~(3)~~	The Company’s investments in marketable equity securities are ~~classified as available-for-sale.~~

	held in common shares of U.S. and Canadian corporations that are actively traded on U.S. and Canadian stock exchanges. Price quotes for these shares are readily available.
~~(4)~~(3)			Includes U.S. Government Securities, corporate bonds, mutual funds and time deposits. These investments are valued using a market approach based on the quoted market prices of the security or inputs that include quoted market prices for similar instruments and are classified as either Level 1 or Level 2 in the ~~valuation~~fair value hierarchy.


~~(5)~~(4)			Includes Graham Holdings Company’s Deferred Compensation Plan and supplemental savings plan benefits under the Graham Holdings Company’s Supplemental Executive Retirement Plan, which are included in accrued compensation and related benefits. These plans measure the market value of a participant’s balance in a notional investment account that is comprised primarily of mutual funds, which are based on observable market prices. However, since the deferred compensation obligations are not exchanged in an active market, they are classified as Level 2 in the fair value hierarchy. Realized and unrealized gains (losses) on deferred compensation are included in operating income.

(5)			Included in Accounts payable and accrued liabilities and Other Liabilities. The Company determined the fair value of the contingent consideration liabilities using a Monte Carlo simulation as of the acquisition dates, which included using estimated financial projections for the acquired businesses.
(6)			Included in Other Liabilities. The Company utilized a market approach model using the notional amount of the interest rate swap multiplied by the observable inputs of time to maturity and market interest rates.


(7)			The fair value of the mandatorily redeemable noncontrolling interest is based on anthe fair value of the underlying subsidiaries owned by GHC One, after taking into account any debt and other noncontrolling interests of its subsidiary investments. The fair value of the owned subsidiaries is determined by reference to either a discounted cash flow or EBITDA multiple, ~~adjusted for working capital and other items,~~ which approximates fair value.
(8)			Included in Accounts payable and accrued liabilities, and valued based on a valuation model that calculates the differential between the contract price and the market-based forward rate.

The following table provides a reconciliation of changes in the ~~second quarter of 2017,~~Company’s financial liabilities measured at fair value on a recurring basis, using Level 3 inputs:


(in thousands)	Contingent consideration liabilities		Mandatorily redeemable noncontrolling interest
As of December 31, 2020	$	37,174	$	9,240

Changes in fair value	$	0	$	1,051
Accretion of value included in net income	$	606	$	0
Settlements or distributions	$	(1,849)	$	(19)
Foreign currency exchange rate changes	$	(109)	$	0
As of March 31, 2021	$	35,822	$	10,272

During the three months ended March 31, 2021, the Company recorded ~~a goodwill and~~ other long-lived asset impairment ~~charge~~charges of ~~$9.2~~$1.0 million. During the three months ended March 31, 2020, the Company recorded goodwill and indefinite-lived intangible asset impairment charges of $16.4 million. The remeasurement of the goodwill and other long-lived assets is classified as a Level 3 fair value assessment due to the significance of unobservable inputs developed in the determination of the fair value. The Company used a discounted cash flow model to determine the estimated fair value of the reporting unit, indefinite-lived intangible assets, and other long-lived assets. A market value approach was also utilized to supplement the discounted cash flow model. The Company made estimates and assumptions regarding future cash flows, royalty rates, discount rates, market values, and long-term growth rates.

InDuring the ~~third quarter of 2016,~~three months ended March 31, 2021, the Company recorded ~~an impairment charge~~gains of ~~$15.0~~$2.7 million to equity securities that are accounted for as cost method investments based on observable transactions for identical or similar investments of the same issuer. During the three months ended March 31, 2020, the Company recorded impairment losses of $2.6 million to equity securities that are accounted for as cost method investments.

During the three months ended March 31, 2020, the Company recorded impairment charges of $3.6 million on 2 of its ~~preferred~~investments in affiliates.

On July 1, 2015 (the Distribution Date), the Company completed the spin-off of Cable ONE as an independent, publicly traded company. The transaction was structured as a tax-free spin-off of Cable ONE to the stockholders of the Company. Since July 1, 2015, Cable One has been an independent public company trading on the New York Stock Exchange under the symbol “CABO”. In connection with the Coronavirus Aid, Relief and Economic Security (CARES) Act, Cable One has the ability to carryback its 2019 taxable losses to the tax period from January 1, 2015 to June 30, 2015, the period in which Cable One was included in the Company’s 2015 tax return. As a result, the Company amended its 2015 tax returns in order to accommodate Cable One's request to carryback its 2019 taxable losses. The Company expects that this action will have no impact on the results or the financial position of the Company. To reflect the expected refund due to Cable One, the Company has included an estimated $15.9 million current income tax receivable and a corresponding current liability to Cable One on its balance sheet as of March 31, 2021.

The Company's effective tax rate for the first three months of 2021 was 26.9%. The Company’s effective tax rate for the first three months of 2020 was 57.3%, which was generally based on the Company’s estimated effective tax rate for fiscal year 2020. The Company’s estimated tax rate for 2020 included the adverse impacts of the COVID-19 pandemic and losses on marketable equity ~~interest~~securities on the Company’s estimated pre-tax income for 2020, resulting in a ~~vocational school company due~~significantly higher overall estimated tax rate, as permanent differences and increased valuation allowances have a larger impact on the overall estimated effective tax rate.

10. REVENUE FROM CONTRACTS WITH CUSTOMERS

The Company generated 77% and 74% of its revenue from U.S. domestic sales for the three months ended March 31, 2021 and March 31, 2020, respectively. The remaining 23% and 26% of revenue was generated from non-U.S. sales for the three months ended March 31, 2021 and March 31, 2020, respectively.

For the three months ended March 31, 2021, the Company recognized 70% of its revenue over time as control of the services and goods transferred to the customer, and the remaining 30% at a point in time, when the customer obtained control of the promised goods. For the three months ended March 31, 2020, the Company recognized 73% of its revenue over time, and the remaining 27% at a point in time.

Contract Assets. As of March 31, 2021, the Company recognized a contract asset of $10.0 million related to a ~~decline~~contract at a Kaplan International business, which is included in ~~business conditions.~~Deferred Charges and Other Assets. The ~~measurement~~Company expects to recognize an additional $7.8 million related to this performance obligation over the next twelve months. As of December 31, 2020, the contract asset was $8.7 million.

Deferred Revenue. The Company records deferred revenue when cash payments are received or due in advance of the ~~preferred equity interest is classified~~Company’s performance, including amounts which are refundable. The following table presents the change in the Company’s deferred revenue balance:


	As of
	March 31, 2021		December 31, 2020		%
(in thousands)					Change
Deferred revenue	$	336,440	$	343,322	(2)

In April 2020, GHG received $31.5 million under the expanded Medicare Accelerated and Advanced Payment Program modified by the CARES Act as a ~~Level 3 fair value assessment due~~result of COVID-19. The amount is included in the current and noncurrent deferred revenue balances on the Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020. The Department of Health and Human Services will recoup this advance beginning 365 days after the payment was issued, and the deferred revenue will be reduced by a portion of the amount of revenue recognized for claims submitted for services provided after the recoupment period begins.

The majority of the change in deferred revenue balance is related to the ~~significance~~cyclical nature of ~~unobservable inputs developed~~services in the ~~determination~~education segment. During the three months ended March 31, 2021, the Company recognized $145.1 million related to the Company’s deferred revenue balance as of December 31, 2020.

Revenue allocated to remaining performance obligations represents deferred revenue amounts that will be recognized as revenue in future periods. As of March 31, 2021, the ~~fair value.~~ deferred revenue balance related to certain medical and nursing qualifications with an original contract length greater than twelve months at Kaplan Supplemental Education was $7.3 million. Kaplan Supplemental Education expects to recognize 64% of this revenue over the next twelve months and the remainder thereafter.

Costs to Obtain a Contract. The ~~Company used~~following table presents changes in the Company’s costs to obtain a ~~discounted cash flow model to determine~~contract asset:


(in thousands)	Balance at Beginning of Period		Costs associated with new contracts		Less: Costs amortized during the period		Other		Balance at End of Period
2021	$	24,363	$	11,833	$	(13,298)	$	(95)	$	22,803

Other activity includes currency translation adjustments for the estimated fair value of the preferred equity interest and made estimates and assumptions regarding future cash flows, discount rates, long-term growth rates and market values to determine the estimated fair value.

three months ended March 31, 2021.

7.11. EARNINGS (LOSS) PER SHARE

The Company’s unvested restricted stock awards contain nonforfeitable rights to dividends and, therefore, are considered participating securities for purposes of computing earnings per share pursuant to the two-class method. The diluted earnings per share computed under the two-class method is lower than the diluted earnings per share computed under the treasury stock method, resulting in the presentation of the lower amount in diluted earnings per share. The computation of the earnings per share under the two-class method excludes the income attributable to the unvested restricted stock awards from the numerator and excludes the dilutive impact of those underlying shares from the denominator.

The following reflects the Company’s net income (loss) and share data used in the basic and diluted earnings (loss) per share computations using the two-class method:

Three Months Ended
September 30 Nine Months Ended
September 30
(in thousands, except per share amounts) 2017 2016 2017 2016
Numerator:
Numerator for basic earnings per share:
Net income attributable to Graham Holdings Company common stockholders $ 24,784
$ 33,126
$ 87,866
$ 131,672
Less: Dividends paid-common stock outstanding and unvested restricted shares (7,047 ) (6,796 ) (28,329 ) (27,329 )
Undistributed earnings 17,737
26,330
59,537
104,343
Percent allocated to common stockholders 99.07 % 98.70 % 99.07 % 98.70 %
17,572
25,987
58,981
102,987
Add: Dividends paid-common stock outstanding 6,981
6,708
28,066
26,976
Numerator for basic earnings per share $ 24,553
$ 32,695
$ 87,047
$ 129,963
Add: Additional undistributed earnings due to dilutive stock options 1
2
4
7
Numerator for diluted earnings per share $ 24,554
$ 32,697
$ 87,051
$ 129,970
Denominator:


Denominator for basic earnings per share:

Weighted average shares outstanding 5,518
5,544
5,530
5,570
Add: Effect of dilutive stock options 36
30
37
30
Denominator for diluted earnings per share 5,554
5,574
5,567
5,600
Graham Holdings Company Common Stockholders:
Basic earnings per share $ 4.45
$ 5.90
$ 15.74
$ 23.33
Diluted earnings per share $ 4.42
$ 5.87
$ 15.64
$ 23.21


	Three Months Ended March 31
(in thousands, except per share amounts)		2021			2020
Numerator:
Numerator for basic earnings (loss) per share:
Net income (loss) attributable to Graham Holdings Company common stockholders		$	112,450		$	(33,245)
Less: Dividends paid-common stock outstanding and unvested restricted shares		(15,106)			(15,289)
Undistributed earnings (loss)		97,344			(48,534)
Percent allocated to common stockholders (1)		99.33		%	100.00		%
		96,693			(48,534)
Add: Dividends paid-common stock outstanding		15,005			15,205
Numerator for basic earnings (loss) per share		$	111,698		$	(33,329)
Add: Additional undistributed earnings due to dilutive stock options		1			0
Numerator for diluted earnings (loss) per share		$	111,699		$	(33,329)
Denominator:
Denominator for basic earnings (loss) per share:
Weighted average shares outstanding		4,967			5,274
Add: Effect of dilutive stock options		10			0
Denominator for diluted earnings (loss) per share		4,977			5,274
Graham Holdings Company Common Stockholders:
Basic earnings (loss) per share		$	22.49		$	(6.32)
Diluted earnings (loss) per share		$	22.44		$	(6.32)

(1) Percent of undistributed losses allocated to common stockholders was 100% in the first three months of 2020 as participating securities are not contractually obligated to share in losses.

Diluted earnings (loss) per share excludes the following weighted average potential common shares, as the effect would be antidilutive, as computed under the treasury stock method:

The diluted earnings (loss) per share amounts for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~September 30, 2016~~March 31, 2020 exclude the effects of 104,000 ~~and 102,000~~ stock options outstanding, as their inclusion would have been antidilutive due to a market condition. The diluted earnings per share amounts for the three and nine months ended September 30, 2017 and September 30, 2016 exclude the effects of 5,250 and 6,100 restricted stock awards, respectively, as their inclusion would have been antidilutive due to a performance condition.

In the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2021 and March 31, 2020, the Company declared regular dividends totaling ~~$1.27~~$3.02 and ~~$5.08~~$2.90 per common share, respectively. ~~In the three and nine months ended September 30, 2016, the Company declared regular dividends totaling $1.21 and $4.84 per common share, respectively.~~

8.12. PENSION AND POSTRETIREMENT PLANS

Defined Benefit Plans. The total benefit arising from the Company’s defined benefit pension plans consists of the following components:


	Three Months Ended March 31
(in thousands)		2021		2020
Service cost		$	5,602	$	5,783
Interest cost		6,654		8,169
Expected return on assets		(34,576)		(28,444)
Amortization of prior service cost		711		708
Recognized actuarial gain		(2,892)		0
Net Periodic Benefit		$	(24,501)	$	(13,784)

Three Months Ended September 30 Nine Months Ended September 30
(in thousands) 2017 2016 2017 2016
Service cost $ 4,591
$ 5,040
$ 14,096
$ 15,422
Interest cost 11,980
12,845
35,945
38,763
Expected return on assets (30,338 ) (30,348 ) (91,078 ) (91,122 )
Amortization of prior service cost 42
74
128
223
Recognized actuarial gain (1,039 ) —
(3,372 ) —
Net Periodic Benefit (14,764 ) (12,389 ) (44,281 ) (36,714 )
Special separation benefit expense 932
—
932
—
Total Benefit $ (13,832 ) $ (12,389 ) $ (43,349 ) $ (36,714 )

In the third quarter of 2017, the Company recorded $0.9 million related to a Separation Incentive Program for certain Forney employees, which will be funded from the assets of the Company's pension plan.

Defined Benefit Plan Assets. The Company’s defined benefit pension obligations are funded by a portfolio made up of a private investment fund, a U.S. stock index fund, and a relatively small number of stocks and high-quality fixed-income securities that are held by a third-party trustee. The assets of the Company’s pension ~~plan~~plans were allocated as follows:

The Company manages approximately ~~45%~~40% of the pension assets internally, of which the majority is invested in a ~~U.S. stock index~~private investment fund with the remaining investments in Berkshire Hathaway stock, a U.S. stock index fund and short-term ~~fixed income~~fixed-income securities. The remaining ~~55%~~60% of plan assets are managed by ~~two~~2 investment companies. The goal ~~for~~of the ~~investments~~investment managers is to produce moderate long-term growth in the value of these assets, while protecting them against large decreases in value. Both investment managers may invest in a combination of equity and fixed-income securities and cash. The managers are not permitted to invest in securities of the Company or in alternative investments. One investment manager cannot invest more than 15% of the assets at the time of purchase in the stock of Alphabet and Berkshire Hathaway, and no more than 30% of the assets it manages in specified international exchanges at the time the investment is made. The other investment ~~managers~~manager cannot invest more than 20% of the assets at the time of purchase in the stock of Berkshire Hathaway, orand no more than 15% of the assets it manages in specified international exchanges at the time the investment is made, and no less than 10% of the assets could be invested in fixed-income securities. Excluding the exceptions noted above, the investment managers cannot invest more than 10% of the assets in the securities of any other single issuer, except for obligations of the U.S. Government, without receiving prior approval from the Plan administrator. As of September 30, 2017, the investment managers can invest no more than 23% of the assets they manage in specified international exchanges, at the time the investment is made, and no less than 10% of the assets could be invested in fixed-income securities.

In determining the expected rate of return on plan assets, the Company considers the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes and economic and other indicators of future performance. In addition, the Company may consult with and consider the input of financial and other professionals in developing appropriate return benchmarks.

The Company evaluated its defined benefit pension plan asset portfolio for the existence of significant concentrations (defined as greater than 10% of plan assets) of credit risk as of ~~September 30, 2017.~~March 31, 2021. Types of concentrations that were evaluated include, but are not limited to, investment concentrations in a single entity, type

of industry, foreign country and individual fund. At ~~September 30, 2017 and December~~March 31, ~~2016,~~2021, the pension plan held investments in ~~one~~1 common stock and ~~one U.S. stock index~~1 private investment fund that exceeded 10% of total plan ~~assets. These investments were~~assets, valued at ~~$1,057.5~~$885.3 million, ~~and $978.8 million at September 30, 2017 and~~or approximately 30% of total plan assets. At December 31, ~~2016, respectively,~~2020, the pension plan held investments in 1 common stock and 1 private investment fund that exceeded 10% of total plan assets, valued at $850.6 million, or approximately ~~47% and 48%, respectively,~~30% of total plan assets.

Other Postretirement Plans. The total cost arising from the Company’s other postretirement plans consists of the following components:


	Three Months Ended March 31
(in thousands)		2021		2020

Interest cost		$	36	$	62
Amortization of prior service credit		(2)		(120)
Recognized actuarial gain		(1,019)		(1,097)
Net Periodic Benefit		$	(985)	$	(1,155)

Three Months Ended September 30 Nine Months Ended September 30
(in thousands) 2017 2016 2017 2016
Service cost $ 257
$ 346
$ 771
$ 1,039
Interest cost 195
308
584
923
Amortization of prior service credit (38 ) (83 ) (112 ) (251 )
Recognized actuarial gain (972 ) (376 ) (2,917 ) (1,127 )
Net Periodic (Benefit) Cost $ (558 ) $ 195
$ (1,674 ) $ 584

9.13. OTHER NON-OPERATING INCOME ~~(EXPENSE)~~

A summary of non-operating income ~~(expense)~~ is as follows:

Three Months Ended
September 30 Nine Months Ended
September 30
(in thousands) 2017 2016 2017 2016
Foreign currency gain (loss), net $ 1,414
$ (3,797 ) $ 6,608
$ (33,324 )
(Loss) gain on sales of businesses —
—
(342 ) 18,931
Loss on write-downs of cost method investments (200 ) (15,000 ) (200 ) (15,161 )
Gain on sale of land —
—
—
34,072
Gain on sales of marketable equity securities (see Note 2) —
—
—
6,256
Gain on the formation of a joint venture —
—
—
3,232
Other, net 749
572
815
1,865
Total Other Non-Operating Income (Expense) $ 1,963
$ (18,225 ) $ 6,881
$ 15,871

~~In the third quarter of 2016, the Company recorded an impairment of $15.0 million to the preferred equity interest in a vocational school company.~~

~~In the second quarter of 2016, the Company sold the remaining portion of the Robinson Terminal real estate retained from the sale of the Publishing Subsidiaries, for a gain of $34.1 million.~~

In June 2016, Residential contributed assets to a joint venture entered into with a Michigan hospital in exchange for a 40% equity interest and other assets, resulting in a $3.2 million gain (see Note 3). The Company used an income and market approach to value the equity interest. The measurement of the equity interest in the joint venture is classified as a Level 3 fair value assessment due to the significance of unobservable inputs developed in the determination of the fair value.


	Three Months Ended March 31
(in thousands)		2021		2020
Gain on a cost method investment		$	2,723	$	0
Gain on sale of businesses		802		107
Gain on sale of cost method investments		94		518
Foreign currency gain, net		3		4,290

Impairment of cost method investments		0		(2,577)
Loss on sale of an equity affiliate		0		(103)

Other gain, net		2,698		453
Total Other Non-Operating Income		$	6,320	$	2,688

In the first quarter of ~~2016, Kaplan sold Colloquy, which was a part of Kaplan corporate and other, for~~2021, the Company recorded a gain of ~~$18.9 million.~~

$2.7 million resulting from observable price changes in the fair value of an equity security accounted for under the cost method.

In the first quarter of 2020, the Company recorded impairment losses of $2.6 million to equity securities that are accounted for as cost method investments.

14. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Three Months Ended September 30
   2017 2016
   Before-Tax Income After-Tax Before-Tax Income After-Tax
(in thousands) Amount Tax Amount Amount Tax Amount
Foreign currency translation adjustments:
Translation adjustments arising during the period $ 11,470
$ —
$ 11,470
$ (353 ) $ —
$ (353 )
Unrealized gains on available-for-sale securities:
Unrealized gains for the period, net 47,836
(19,134 ) 28,702
12,154
(4,862 ) 7,292
Pension and other postretirement plans:
Amortization of net prior service cost included in net income 118
(47 ) 71
105
(41 ) 64
Amortization of net actuarial (gain) loss included in net income (1,567 ) 627
(940 ) 289
(116 ) 173
(1,449 ) 580
(869 ) 394
(157 ) 237
Cash flow hedge:
(Loss) gain for the period (72 ) 14
(58 ) 49
(20 ) 29
Other Comprehensive Income $ 57,785
$ (18,540 ) $ 39,245
$ 12,244
$ (5,039 ) $ 7,205

   Nine Months Ended September 30
   2017 2016
   Before-Tax Income After-Tax Before-Tax Income After-Tax
(in thousands) Amount Tax Amount Amount Tax Amount
Foreign currency translation adjustments:
Translation adjustments arising during the period $ 34,776
$ —
$ 34,776
$ (1,629 ) $ —
$ (1,629 )
Unrealized gains on available-for-sale securities:
Unrealized gains for the period, net 71,370
(28,548 ) 42,822
7,190
(2,876 ) 4,314
Reclassification of realized gain on sale of available-for-sale securities included in net income —
—
—
(6,256 ) 2,502
(3,754 )
   71,370
(28,548 ) 42,822
934
(374 ) 560
Pension and other postretirement plans:
Amortization of net prior service cost included in net income 358
(143 ) 215
314
(125 ) 189
Amortization of net actuarial (gain) loss included in net income (4,958 ) 1,983
(2,975 ) 868
(347 ) 521
   (4,600 ) 1,840
(2,760 ) 1,182
(472 ) 710
Cash flow hedge:
(Loss) gain for the period (215 ) 43
(172 ) 49
(20 ) 29
Other Comprehensive Income $ 101,331
$ (26,665 ) $ 74,666
$ 536
$ (866 ) $ (330 )


	Three Months Ended March 31
	2021						2020
	Before-Tax		Income		After-Tax		Before-Tax		Income		After-Tax
(in thousands)	Amount		Tax		Amount		Amount		Tax		Amount
Foreign currency translation adjustments:


Translation adjustments arising during the period	$	(486)	$	0	$	(486)	$	(37,376)	$	0	$	(37,376)
Pension and other postretirement plans:
Amortization of net prior service cost included in net income	792		(213)		579		671		(181)		490
Amortization of net actuarial (gain) loss included in net income	(2,429)		656		(1,773)		220		(60)		160

	(1,637)		443		(1,194)		891		(241)		650
Cash flow hedges:
Gain (loss) for the period	621		(144)		477		(1,578)		361		(1,217)
Other Comprehensive Loss	$	(1,502)	$	299	$	(1,203)	$	(38,063)	$	120	$	(37,943)

The accumulated balances related to each component of other comprehensive income (loss) are as follows:


(in thousands, net of taxes)	Cumulative Foreign Currency Translation Adjustment		Unrealized Gain on Pensions and Other Postretirement Plans		Cash Flow Hedges		Accumulated Other Comprehensive Income
Balance as of December 31, 2020	$	9,754	$	595,287	$	(1,727)	$	603,314

Other comprehensive (loss) income before reclassifications	(486)		0		323		(163)
Net amount reclassified from accumulated other comprehensive income (loss)	0		(1,194)		154		(1,040)
Other comprehensive (loss) income, net of tax	(486)		(1,194)		477		(1,203)
Balance as of March 31, 2021	$	9,268	$	594,093	$	(1,250)	$	602,111

(in thousands, net of taxes)
Cumulative
Foreign
Currency
Translation
Adjustment

Unrealized Gain
on Available-for- Sale Securities

Unrealized Gain
on Pensions
and Other
Postretirement
Plans

Cash Flow
Hedge

Accumulated
Other
Comprehensive
Income
Balance as of December 31, 2016 $ (26,998 ) $ 92,931
$ 170,830
$ (277 ) $ 236,486
Other comprehensive income (loss) before reclassifications 34,776
42,822
—
(270 ) 77,328
Net amount reclassified from accumulated other comprehensive income (loss) —
—
(2,760 ) 98
(2,662 )
Other comprehensive income (loss), net of tax 34,776
42,822
(2,760 ) (172 ) 74,666
Balance as of September 30, 2017 $ 7,778
$ 135,753
$ 168,070
$ (449 ) $ 311,152

   Three Months Ended
September 30 Nine Months Ended
September 30 Affected Line Item in the Condensed Consolidated Statement of Operations

(in thousands) 2017 2016 2017 2016
Unrealized Gains on Available-for-sale Securities:
Realized gain for the period $ —
$ —
$ —
$ (6,256 ) Other income (expense), net
   —
—
—
2,502
Provision for Income Taxes
   —
—
—
(3,754 ) Net of Tax
Pension and Other Postretirement Plans:
Amortization of net prior service cost 118
105
358
314
(1)
Amortization of net actuarial (gain) loss (1,567 ) 289
(4,958 ) 868
(1)
   (1,449 ) 394
(4,600 ) 1,182
Before tax
   580
(157 ) 1,840
(472 ) Provision for Income Taxes
   (869 ) 237
(2,760 ) 710
Net of Tax
Cash Flow Hedge
   51
(3 ) 123
(3 ) Interest expense
   (11 ) 1
(25 ) 1
Provision for Income Taxes
   40
(2 ) 98
(2 ) Net of Tax
Total reclassification for the period $ (829 ) $ 235
$ (2,662 ) $ (3,046 ) Net of Tax

~~11.~~


	Three Months Ended March 31			Affected Line Item in the Condensed Consolidated Statements of Operations

(in thousands)		2021				2020



Pension and Other Postretirement Plans:
Amortization of net prior service cost		$	792	$	671		(1)
Amortization of net actuarial (gain) loss		(2,429)		220			(1)

		(1,637)		891			Before tax
		443		(241)			Provision for (Benefit from) Income Taxes
		(1,194)		650			Net of Tax
Cash Flow Hedges
		154		29			Interest expense
		0		7			Provision for (Benefit from) Income Taxes
		154		36			Net of Tax
Total reclassification for the period		$	(1,040)	$	686		Net of Tax

(1) These accumulated other comprehensive income components are included in the computation of net periodic pension and postretirement plan cost (see Note 12) and are included in non-operating pension and postretirement benefit income in the Company’s Condensed Consolidated Statements of Operations.

Litigation, Legal and Other ~~Matters.~~Matters. The Company and its subsidiaries are ~~involved~~subject to complaints and administrative proceedings and are defendants in various ~~legal, regulatory and other proceedings~~civil lawsuits that ~~arise~~have arisen in the ordinary course of ~~its business.~~their businesses, including contract disputes; actions alleging negligence, libel, defamation and invasion of privacy; trademark, copyright and patent infringement; violations of employment laws and applicable wage and hour laws; and statutory or common law claims involving current and former students and employees. Although the outcomes of ~~these~~the legal claims and proceedings against the Company cannot be predicted with certainty, based on currently available information, management believes that there are no0 existing claims or proceedings ~~(asserted or unasserted)~~ that are likely to have a material effect on the Company’s business, financial condition, results of operations or cash flows. However, based on currently available information, management believes it is reasonably possible that future losses from existing and threatened legal, regulatory and other proceedings in excess of the amounts recorded could reach approximately ~~$25~~$10 million.

Kaplan subsidiaries were subject to two unsealed cases filed by former employees that include, among other allegations, claims under the False Claims Act relating to eligibility for Title IV funding. The U.S. Government declined to intervene in all cases, and, as previously reported, court decisions either dismissed the cases in their entirety or narrowed the scope of their allegations. The two cases are captioned: ~~United States of America~~ ~~ex rel.~~ ~~Carlos Urquilla-Diaz~~ ~~et al. v.~~ ~~Kaplan University~~ ~~et al. (“Diaz”, unsealed March 25, 2008) and~~ ~~United States of America~~ ~~ex rel.~~ ~~Charles Jajdelski~~ v. ~~Kaplan Higher Education Corp. et al. (“Jajdelski”, unsealed January 6, 2009).~~

On August 17, 2011, the U.S. District Court for the Southern District of Florida issued a series of rulings in the Diaz case, which actually included three separate complainants: Diaz, Wilcox and Gillespie. The court dismissed the Wilcox complaint in its entirety; dismissed all False Claims Act allegations in the Diaz complaint, leaving only an individual employment claim; and dismissed in part the Gillespie complaint limiting the scope and time frame of its False Claims Act allegations regarding compliance with the U.S. Federal Rehabilitation Act. On July 16, 2013, the court entered summary judgment in favor of the Company on all remaining claims in the Gillespie complaint and on March 11, 2015, the U.S. Court of Appeals for the Eleventh Judicial Circuit affirmed that dismissal ending the Gillespie claims in Kaplan’s favor. On October 31, 2012, the court entered summary judgment in favor of the Company as to the sole remaining employment claim in the Diaz complaint. And, on March 11, 2015, the appellate court affirmed the summary judgment on all issues in the Diaz case except the court reversed and remanded Diaz’s claim that incentive compensation for admissions representatives was improperly based solely on enrollments in violation of the Title IV regulations. On July 13, 2017, the District Court again granted summary judgment on this final issue in the Diaz case in Kaplan’s favor, ending the case at the U.S. District Court level; the plaintiff has filed a notice of appeal.

On July 7, 2011, the U.S. District Court for the District of Nevada dismissed the Jajdelski complaint in its entirety and entered a final judgment in favor of Kaplan. On February 13, 2013, the U.S. Circuit Court for the Ninth Judicial Circuit affirmed the dismissal in part and reversed the dismissal on one allegation under the False Claims Act relating to eligibility for Title IV funding based on claims of false attendance. The surviving claim was remanded to the District Court, where Kaplan was again granted summary judgment on March 9, 2015. Plaintiff has appealed this judgment and briefing is complete. In March 2017, the Appellate Court denied the appeal and ruled fully in

~~Kaplan’s favor and Jajdelski filed a motion to re-hear the matter. On May 12, 2017, the Court of Appeals issued its Mandate ending the case and relinquishing jurisdiction.~~

~~Despite the sale of the nationally accredited Kaplan Higher Education Campuses business, Kaplan retains liability for these claims.~~

Her Majesty's Revenue and Customs (HMRC), a department of the UK government responsible for the collection of taxes, has raised assessments against the Kaplan UK Pathways business for VAT relating to 2017 and earlier years, which have been paid by Kaplan. Kaplan has challenged these assessments and the case is currently on appeal to a tax tribunal with a hearing expected in 2018. The Company believes it has met all requirements under UK VAT law and expects to recover the receivable related to the assessments that have been paid.

On February 23, 2015, the ED began a review of Kaplan University. The review will assess Kaplan’s administration of its Title IV, HEA programs and will initially focus on the 2013 to 2014 and 2014 to 2015 award years. On December 17, 2015, Kaplan University received a notice from the ED that it had been placed on provisional certification status until September 30, 2018, in connection with the open and ongoing ED program review. The ED has not notified Kaplan University of any negative findings. However, at this time, Kaplan cannot predict the outcome of this review, when it will be completed or any liability or other limitations that the ED may place on Kaplan University as a result of this review. During the period of provisional certification, Kaplan University must obtain prior ED approval to open a new location, add an educational program, acquire another school or make any other significant change.

~~The Company does not expect the open program reviews to have a material impact on KHE; however, the results of open program reviews and their impact on Kaplan’s operations are uncertain.~~

~~12.~~16. BUSINESS SEGMENTS

The Company has ~~four~~6 reportable segments: Kaplan International, Kaplan Higher Education, Kaplan ~~Test Preparation, Kaplan International~~Supplemental Education, Television Broadcasting, Manufacturing and ~~television broadcasting.~~Healthcare.

The following ~~table summarizes~~tables summarize the financial information related to each of the Company’s business segments:


	Three months ended
	March 31
(in thousands)		2021		2020
Operating Revenues
Education		$	329,317	$	356,378
Television broadcasting		113,625		115,448
Manufacturing		115,960		113,458
Healthcare		50,043		45,994
Other businesses		104,039		101,282
Corporate office		0		0
Intersegment elimination		(529)		(303)
		$	712,455	$	732,257
Income (Loss) from Operations before Amortization of Intangible Assets and Impairment of Goodwill and Other Long-Lived Assets
Education		$	24,148	$	8,893
Television broadcasting		34,337		37,136
Manufacturing		15,894		13,638
Healthcare		7,921		4,479
Other businesses		(18,692)		(16,923)
Corporate office		(14,780)		(8,572)
		$	48,828	$	38,651
Amortization of Intangible Assets and Impairment of Goodwill and Other Long-Lived Assets
Education		$	5,212	$	4,201
Television broadcasting		1,359		1,360
Manufacturing		6,987		7,137
Healthcare		781		1,310
Other businesses		645		16,558
Corporate office		0		0
		$	14,984	$	30,566
Income (Loss) from Operations
Education		$	18,936	$	4,692
Television broadcasting		32,978		35,776
Manufacturing		8,907		6,501
Healthcare		7,140		3,169
Other businesses		(19,337)		(33,481)
Corporate office		(14,780)		(8,572)
		$	33,844	$	8,085
Equity in Earnings (Losses) of Affiliates, Net		13,428		(1,547)
Interest Expense, Net		(7,558)		(6,527)
Non-Operating Pension and Postretirement Benefit Income, Net		28,787		18,403
Gain (Loss) on Marketable Equity Securities, Net		79,214		(100,393)
Other Income, Net		6,320		2,688
Income (Loss) Before Income Taxes		$	154,035	$	(79,291)
Depreciation of Property, Plant and Equipment
Education		$	7,780	$	7,329
Television broadcasting		3,473		3,343
Manufacturing		2,517		2,527
Healthcare		317		540
Other businesses		2,290		2,790
Corporate office		168		175
		$	16,545	$	16,704
Pension Service Cost
Education		$	2,283	$	2,585
Television broadcasting		835		796
Manufacturing		395		394
Healthcare		172		159
Other businesses		369		463
Corporate office		1,548		1,386
		$	5,602	$	5,783

   Three Months Ended September 30 Nine Months Ended September 30
(in thousands) 2017 2016 2017 2016
Operating Revenues
Education $ 376,805
$ 386,936
$ 1,136,201
$ 1,207,225
Television broadcasting 101,295
112,389
298,893
300,927
Other businesses 179,125
122,313
480,935
344,298
Corporate office —
—
—
—
Intersegment elimination —
—
—
(139 )
   $ 657,225
$ 621,638
$ 1,916,029
$ 1,852,311
Income (Loss) from Operations
Education $ 13,391
$ 16,333
$ 55,347
$ 63,713
Television broadcasting 32,948
59,159
98,181
144,594
Other businesses (7,033 ) (10,801 ) (26,515 ) (21,593 )
Corporate office 5,265
3,342
14,973
7,331
   $ 44,571
$ 68,033
$ 141,986
$ 194,045
Equity in Earnings (Losses) of Affiliates, Net (532 ) (1,008 ) 1,448
(895 )
Interest Expense, Net (7,758 ) (7,874 ) (22,386 ) (22,481 )
Other Income (Expense), Net 1,963
(18,225 ) 6,881
15,871
Income Before Income Taxes $ 38,244
$ 40,926
$ 127,929
$ 186,540
Depreciation of Property, Plant and Equipment
Education $ 8,085
$ 9,977
$ 24,994
$ 31,322
Television broadcasting 3,118
2,540
8,703
7,367
Other businesses 4,520
3,289
11,968
9,389
Corporate office 279
291
860
825
   $ 16,002
$ 16,097
$ 46,525
$ 48,903
Amortization of Intangible Assets and Impairment of Goodwill and Other Long-Lived Assets

Education $ 1,355
$ 1,773
$ 3,798
$ 5,158
Television broadcasting 1,071
63
2,943
189
Other businesses 8,809
4,784
31,085
13,813
Corporate office —
—
—
—
   $ 11,235
$ 6,620
$ 37,826
$ 19,160
Net Pension (Credit) Expense

Education $ 2,430
$ 2,838
$ 7,289
$ 8,965
Television broadcasting 485
428
1,457
1,285
Other businesses 1,375
279
2,273
839
Corporate office (18,122 ) (15,934 ) (54,368 ) (47,803 )
   $ (13,832 ) $ (12,389 ) $ (43,349 ) $ (36,714 )

Asset information for the Company’s business segments ~~are~~is as follows:


	As of					As of
(in thousands)	September 30, 2017		December 31, 2016		(in thousands)	March 31, 2021		December 31, 2020
Identifiable Assets					Identifiable Assets
Education	$	1,615,116	$	1,479,267	Education	$	1,901,257	$	1,975,104
Television broadcasting	447,702		336,631		Television broadcasting	450,403		453,988
Manufacturing					Manufacturing	557,631		551,611
Healthcare					Healthcare	160,033		160,654
Other businesses	918,684		796,935		Other businesses	506,936		517,533
Corporate office	157,550		455,209		Corporate office	341,980		348,045
	$	3,139,052	$	3,068,042		$	3,918,240	$	4,006,935
Investments in Marketable Equity Securities	495,599		424,229		Investments in Marketable Equity Securities	700,352		573,102
Investments in Affiliates	122,166		58,806		Investments in Affiliates	169,203		155,777
Prepaid Pension Cost	863,098		881,593		Prepaid Pension Cost	1,730,625		1,708,305
Total Assets	$	4,619,915	$	4,432,670	Total Assets	$	6,518,420	$	6,444,119

The Company’s education division comprises the following operating segments:


	Three months ended
	March 31
(in thousands)		2021		2020
Operating Revenues
Kaplan international		$	171,895	$	199,615
Higher education		75,686		73,537


Supplemental education		79,655		81,288
Kaplan corporate and other		3,363		3,205
Intersegment elimination		(1,282)		(1,267)
		$	329,317	$	356,378

Income (Loss) From Operations before Amortization of Intangible Assets and Impairment of Long-Lived Assets
Kaplan international		$	10,207	$	18,980
Higher education		6,253		(2,020)


Supplemental education		12,497		(6,550)
Kaplan corporate and other		(4,907)		(1,522)
Intersegment elimination		98		5
		$	24,148	$	8,893
Amortization of Intangible Assets		$	4,165	$	4,201
Impairment of Long-Lived Assets		$	1,047	$	0

Income (Loss) from Operations
Kaplan international		$	10,207	$	18,980
Higher education		6,253		(2,020)


Supplemental education		12,497		(6,550)
Kaplan corporate and other		(10,119)		(5,723)
Intersegment elimination		98		5
		$	18,936	$	4,692
Depreciation of Property, Plant and Equipment
Kaplan international		$	5,252	$	4,578
Higher education		852		723


Supplemental education		1,576		1,939
Kaplan corporate and other		100		89
		$	7,780	$	7,329

Pension Service Cost
Kaplan international		$	71	$	112
Higher education		1,083		1,070


Supplemental education		931		1,085
Kaplan corporate and other		198		318
		$	2,283	$	2,585

   Three Months Ended Nine Months Ended
   September 30 September 30
(in thousands) 2017 2016 2017 2016
Operating Revenues
Higher education $ 133,459
$ 148,602
$ 416,973
$ 472,131
Test preparation 72,680
78,291
212,978
224,102
Kaplan international 171,259
160,456
507,568
512,068
Kaplan corporate and other 49
47
120
190
Intersegment elimination (642 ) (460 ) (1,438 ) (1,266 )
   $ 376,805
$ 386,936
$ 1,136,201
$ 1,207,225
Income (Loss) from Operations


Higher education $ 8,809
$ 11,494
$ 39,124
$ 50,037
Test preparation 7,330
8,588
10,207
13,314
Kaplan international 5,348
1,561
29,009
22,937
Kaplan corporate and other (8,037 ) (5,310 ) (22,957 ) (22,526 )
Intersegment elimination (59 ) —
(36 ) (49 )
   $ 13,391
$ 16,333
$ 55,347
$ 63,713
Depreciation of Property, Plant and Equipment



Higher education $ 2,768
$ 4,157
$ 9,448
$ 12,325
Test preparation 1,407
1,441
4,080
4,837
Kaplan international 3,780
4,360
11,071
13,739
Kaplan corporate and other 130
19
395
421
   $ 8,085
$ 9,977
$ 24,994
$ 31,322
Amortization of Intangible Assets $ 1,355
$ 1,773
$ 3,798
$ 5,158
Pension Expense



Higher education $ 548
$ 1,905
$ 4,636
$ 5,715
Test preparation 244
768
2,066
2,304
Kaplan international 24
67
198
201
Kaplan corporate and other 1,614
98
389
745
   $ 2,430
$ 2,838
$ 7,289
$ 8,965


	As of

(in thousands)	March 31, 2021		December 31, 2020
Identifiable Assets
Kaplan international	$	1,387,772	$	1,455,722
Higher education	188,602		187,123


Supplemental education	265,408		274,687
Kaplan corporate and other	59,475		57,572
	$	1,901,257	$	1,975,104

   As of
(in thousands) September 30,
2017 December 31,
2016
Identifiable assets
Higher education $ 349,756
$ 373,127
Test preparation 135,442
133,709
Kaplan international 1,110,596
950,922
Kaplan corporate and other 19,322
21,509
   $ 1,615,116
$ 1,479,267

Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition.

This analysis should be read in conjunction with the condensed consolidated financial statements and the notes thereto.

Results of Operations

The Company reported net income attributable to common shares of ~~$24.8~~$112.5 million ($~~4.42~~22.44 per share) for the ~~third~~first quarter of ~~2017,~~2021, compared to ~~$33.1~~a loss of $33.2 million ($~~5.87~~6.32 per share) for the ~~third~~first quarter of ~~2016.~~2020.

The COVID-19 pandemic and measures taken to prevent its spread, such as travel restrictions, shelter in place orders and mandatory closures, significantly impacted the Company’s results for 2020 and the first three months of 2021, largely from reduced demand for the Company’s products and services. This significant adverse impact is expected to continue for several of the Company’s businesses for the remainder of 2021. The Company’s management has taken a variety of measures to reduce costs and implement changes to business operations. The Company cannot predict the severity or duration of the pandemic, the extent to which demand for the Company’s products and services will be adversely affected or the degree to which financial and operating results will be negatively impacted.

Items included in the Company’s ~~net~~ income before income taxes for the ~~third~~first quarter of ~~2017:~~2021:

•a $0.6 million reduction to operating expenses from property, plant and equipment gains in connection with the spectrum repacking mandate of the FCC;

•$~~1.4~~79.2 million in net gains on marketable equity securities;

•$10.3 million in net earnings of affiliates whose operations are not managed by the Company;

•a non-operating ~~foreign currency gains (after-tax impact~~gain of ~~$0.9~~$2.7 million ~~or $0.16 per share).~~from the write-up of a cost method investment; and

•$1.1 million in interest expense to adjust the fair value of the mandatorily redeemable noncontrolling interest.

Items included in the Company’s ~~net~~loss before income taxes for the ~~third~~first quarter of ~~2016:~~2020:

•$16.4 million in goodwill and intangible asset impairment charges;

•a ~~$15.0~~$0.3 million reduction to operating expenses from property, plant and equipment gains in connection with the spectrum repacking mandate of the FCC;

•$100.4 million in net losses on marketable equity securities;

•$0.6 million in net losses of affiliates whose operations are not managed by the Company;

•non-operating ~~expense~~losses of $6.1 million from ~~the write-down~~impairments of a cost method ~~investment (after-tax impact of~~ ~~$9.6 million, or $1.70 per share);~~

and equity method investments; and

•$~~3.8~~4.3 million in non-operating foreign currency ~~losses (after-tax impact of~~ ~~$2.4 million, or~~ ~~$0.43~~ ~~per share); and~~

~~a net nonrecurring $8.3 million deferred tax benefit related to Kaplan's international operations ($1.47 per share).~~

Revenue for the ~~third~~first quarter of ~~2017~~2021 was ~~$657.2~~$712.5 million, ~~up 6%~~down 3% from ~~$621.6~~$732.3 million in the ~~third~~first quarter of ~~2016.~~2020. Revenues ~~increased in other businesses, offset by a decline~~declined at ~~the~~ education and television broadcasting, ~~divisions.~~partially offset by increases at manufacturing, healthcare and other businesses. The Company reported operating income of ~~$44.6~~$33.8 million for the third quarter of 2017, compared to $68.0 million for the third quarter of 2016. The operating income decline is driven by lower earnings at the television broadcasting and education divisions, offset by an increase in other businesses.

~~For the first nine months of 2017, the Company reported income attributable to common shares of $87.9 million ($15.64 per share),~~2021, compared to ~~$131.7 million ($23.21 per share) for the first nine months of 2016.~~

a ~~$9.2 million~~ ~~goodwill and other long-lived asset impairment charge in other businesses (after-tax impact of~~ ~~$5.8 million, or~~ ~~$1.03~~ ~~per share);~~

~~$5.9 million in income tax benefits related to stock compensation ($1.06 per share).~~

~~a $40.3 million non-operating gain from the sales of land and marketable equity securities (after-tax impact of $25.0 million, or $4.42 per share);~~

~~a $22.2 million non-operating gain arising from the sale of a business and the formation of a joint venture (after-tax impact of $13.6 million, or $2.37 per share);~~

~~a net nonrecurring $8.3 million deferred tax benefit related to Kaplan's international operations ($1.47 per share); and~~

~~a favorable $5.6 million out of period deferred tax adjustment related to the KHE goodwill impairment recorded in the third quarter of 2015 ($1.00 per share).~~

On April 5, 2021, the Company announced it had entered into an agreement to ~~$194.0 million for first nine months~~acquire all outstanding shares of ~~2016. Operating results declined~~common stock of Leaf Group Ltd. (NYSE:LEAF) at $8.50 per share in an all cash transaction valued at approximately $323 million. Leaf Group, headquartered in Santa Monica, CA, is a consumer internet company that builds enduring, creator-driven brands that reach passionate audiences in large and growing lifestyle categories, including fitness and wellness (Well+Good, Livestrong.com and MyPlate App), and home, art and design (Saatchi Art, Society6 and Hunker). The transaction is expected to close in June or July of 2021 and is subject to approval of the ~~education~~Leaf Group shareholders, regulatory approval and ~~television broadcasting divisions and in~~the satisfaction of other ~~businesses.~~closing conditions.

Education division revenue totaled ~~$376.8~~$329.3 million for the ~~third~~first quarter of ~~2017,~~2021, down 3%8% from ~~$386.9~~$356.4 million for the same period of ~~2016.~~2020. Kaplan reported operating income of ~~$13.4 million for the third quarter of 2017, compared to $16.3 million for the third quarter of 2016.~~

The COVID-19 pandemic adversely impacted Kaplan’s operating results beginning in February 2020 and continuing through the first quarter of 2021.

Kaplan serves a significant number of students who travel to other countries to study a second language, prepare for licensure, or pursue a higher education degree. Government-imposed travel restrictions and school closures arising from COVID-19 had a negative impact on the ability of international students to travel and attend Kaplan’s programs, particularly Kaplan International’s Language programs. In ~~recent years,~~addition, most licensing bodies and administrators of standardized exams postponed or canceled scheduled examinations due to COVID-19, resulting in a significant number of students deciding to defer their studies, negatively impacting Kaplan’s exam preparation education businesses. Overall, this is expected to continue to adversely impact Kaplan's revenues and operating results for the remainder of 2021, particularly at Kaplan ~~has formulated~~International Languages.

To help mitigate the adverse impact of COVID-19, Kaplan implemented a number of significant cost reduction and ~~implemented~~ restructuring ~~plans at~~activities across its ~~various~~ businesses ~~that have resulted~~ in 2020. Related to these restructuring activities, Kaplan recorded $1.0 million in lease impairment charges in the first quarter of 2021 and $2.1 million in lease restructuring costs ~~with the objective of establishing lower cost levels~~ in ~~future periods. Across all businesses, restructuring costs totaled $2.7 million and $4.9 million for~~ the first ~~nine months~~quarter of ~~2017~~2020. Kaplan management is continuing to monitor the ongoing COVID-19 disruptions and ~~2016, respectively. Additional~~changes in its operating environment and may develop and implement further restructuring ~~costs are expected to be incurred~~activities in 2021.

In 2020, Kaplan also accelerated the development and promotion of various online programs and solutions, rapidly transitioned most of its classroom-based programs online and addressed the individual needs of its students and partners, substantially reducing the disruption from COVID-19 while simultaneously adding important new product offerings and operating capabilities. Further, in the fourth quarter of ~~2017.~~ 2020, Kaplan combined its three primary divisions based in the United States (Kaplan Test Prep, Kaplan Professional, and Kaplan Higher Education) into one business known as Kaplan North America (KNA). This combination is designed to enhance Kaplan’s competitiveness by better leveraging its diversified academic and professional portfolio, as well as its relationship with students, universities and businesses. For financial reporting purposes, KNA is reported in two segments: Higher Education and Supplemental Education (combining Kaplan Test Prep and Kaplan Professional (U.S.) into one reporting segment).

A summary of Kaplan’s operating results is as follows:

KHE includes Kaplan’s domestic postsecondary education businesses, made up of fixed-facility colleges and online postsecondary and career programs. KHE also includes the domestic professional and other continuing education businesses.

In the third quarter and first nine months of 2017, KHE revenue was down 10% and 12%, respectively, due to declines in average enrollments at Kaplan University. KHE operating results declined in the first nine months of 2017 due primarily to lower enrollment at Kaplan University.

New higher education student enrollments at Kaplan University declined 8% in the third quarter of 2017 and 4% for the first nine months of 2017; total students at Kaplan University were 30,461 at September 30, 2017, down 12% from September 30, 2016.

Languages from significant COVID-19 disruptions. Due to the continuation of travel restrictions imposed as a result of COVID-19, Kaplan expects the disruption of its Languages business operating environment to continue in 2021.

Higher Education includes the results of Kaplan as a service provider to higher education institutions. In the first quarter of 2021, Higher Education revenue grew 3%, due to an increase in the Purdue Global fee recorded and revenue from new university agreements. For the first quarter of 2021, Kaplan recorded a portion of the fee with Purdue Global based on an assessment of its collectability under the TOSA; no fee with Purdue Global was recorded in the first quarter of 2020. Purdue Global experienced increased ~~6% for the third quarter and 3%~~enrollment for the first ~~nine~~three months of ~~2017, respectively, primarily~~2021, which resulted in improved Higher Education results. The Company will continue to assess the collectability of the fee with Purdue Global on a quarterly basis to make a determination as to whether to record all or part of the fee in the future and whether to make adjustments to fee amounts recognized in earlier periods. The first quarter 2020 operating loss at Higher Education includes $2.0 million in lease restructuring costs.

As of March 31, 2021, Kaplan had a total outstanding accounts receivable balance of $88.6 million from Purdue Global related to amounts due for reimbursements for services, fees earned and a deferred fee. Included in this total, Kaplan has a $19.0 million long-term receivable balance due from Purdue Global at March 31, 2021, related to the advance of $20 million during the initial KU Transaction.

Supplemental Education includes Kaplan’s standardized test preparation programs and domestic professional and other continuing education businesses. Supplemental Education revenue declined 2% for the first quarter of 2021, due to ~~growth~~a decline in ~~Pathways enrollments and favorable timing of class starts~~retail comprehensive test preparation demand, offset in ~~the third quarter of 2017. Operating income increased~~ ~~26%~~part by product-life extensions in the first ~~nine months~~quarter of ~~2017,~~2020 related to the postponement of various standardized test and certification exam dates due ~~largely~~ to COVID-19, as well as growth in real estate and insurance programs. Operating results improved ~~Pathways results, partially offset by a decline~~ in ~~Singapore. Restructuring costs at Kaplan International totaled $0.9 million~~2021 due to savings from restructuring activities implemented in 2020 and ~~$3.2 million for~~the adverse revenue impact from product-life extensions in the first ~~nine months~~quarter of ~~2017 and 2016, respectively.~~2020.

Kaplan corporate and other represents unallocated expenses of Kaplan, Inc.’s corporate office, other minor businesses and certain shared activities. Overall, Kaplan corporate and other expenses increased in the first three months of 2021 due to higher incentive compensation costs.

Television Broadcasting

On January 17, 2017, the Company closed on its agreement with Nexstar Broadcasting Group, Inc. and Media General, Inc. to acquire WCWJ, a CW affiliate television station in Jacksonville, FL and WSLS, an NBC affiliate television station in Roanoke, VA for $60 million in cash and the assumption of certain pension obligations. The Company continues to operate both stations under their current network affiliations.

In the third quarter of 2017, the Company's televisions stations in Texas and Florida ran extensive news programming coverage of hurricanes Harvey and Irma; this adversely impacted revenues by an estimated $2.1 million and resulted in $0.6 million in additional expenses during the third quarter of 2017.


	Three Months Ended
	March 31
(in thousands)		2021		2020		% Change
Revenue		$	113,625	$	115,448	(2)
Operating Income		32,978		35,776		(8)

Revenue at the television broadcasting division decreased ~~10%~~2% to ~~$101.3~~$113.6 million in the ~~third~~first quarter of ~~2017,~~2021, from ~~$112.4~~$115.4 million in the same period of ~~2016. Excluding~~2020. The revenue ~~from the two newly acquired stations, revenue declined 15%~~decrease is due to ~~$13.1~~a $10.3 million ~~in third quarter 2016 incremental summer Olympics-related advertising revenue at the Company's NBC affiliates, an $8.1 million decrease~~decline in political advertising revenue, ~~lower network revenue~~partially offset by a $4.1 million increase in retransmission revenues and increased local and national advertising revenues, which were adversely impacted in 2020 by reduced demand related to the ~~adverse impact~~COVID-19 pandemic. In the first quarter of 2021 and 2020, the television broadcasting division recorded $0.6 million and $0.3 million, respectively, in reductions to operating expenses related to property, plant and equipment gains due to new equipment received at no cost in connection with the spectrum repacking mandate of the hurricanes, offset by $6.0 million in higher retransmission revenues. As previously disclosed, the Company’s NBC affiliates in Houston and Detroit are operating under a new contract with NBC effective January 1, 2017 that has resulted in a significant increase in network fees in 2017, compared to 2016.FCC. Operating income for the ~~third~~first quarter of ~~2017~~2021 decreased ~~44%~~8% to ~~$32.9~~$33.0 million, from ~~$59.2~~$35.8 million in the same period of ~~2016~~2020, due to ~~lower~~reduced revenues and ~~the significantly~~ higher network fees.

~~Revenue at~~In March 2021, the Company’s television ~~broadcasting division decreased 1% to $298.9 million~~stations located in ~~the first nine months~~Orlando, FL and Jacksonville, FL received approval of 2017, from $300.9 million in the same period of 2016. Excluding revenue from the two newly acquired stations, revenue declined 7% due to $13.1 million in third quarter 2016 incremental summer Olympic-related advertising revenue at the Company's NBC affiliates, a $13.4 million decrease in political advertising revenue, lower network revenue and the adverse impact of the hurricanes, offset by $14.7 million in higher retransmission revenues. Operating incometheir FCC license renewals through February 1, 2029.

~~for the first nine months of 2017 decreased 32% to $98.2 million from $144.6 million in the same period of 2016, due to lower revenues and the significantly higher network fees.~~

Manufacturing includes four businesses: Hoover, a supplier of pressure impregnated kiln-dried lumber and plywood products for fire retardant and preservative applications; Dekko, a manufacturer of electrical workspace solutions, architectural lighting and electrical components and assemblies; Joyce/Dayton, ~~Corp.,~~ a manufacturer of screw jacks and other linear motion systems; and Forney, a global supplier of products and systems that control and monitor combustion processes in electric utility and industrial ~~applications;~~applications.

Manufacturing revenues increased 2% in the first quarter of 2021. The revenue growth is due primarily to increased revenues at Hoover from significantly higher wood prices but lower product demand, partially offset by lower

revenues at Dekko due to a significant reduction in product demand, particularly in the commercial office electrical products, hospitality, transportation and industrial sectors. Manufacturing operating results improved in the first quarter of 2021 due to significantly higher results at Hoover ~~Treated Wood Products, Inc.,~~from substantial gains on inventory sales, partially offset by a ~~supplier~~significant decline in Dekko results from lower revenues. Since the onset of ~~pressure impregnated kiln-dried lumber and plywood products for fire retardant and preservative applications that~~ the ~~Company acquired~~COVID-19 pandemic in ~~April 2017. In September 2016, Dekko acquired Electri-Cable Assemblies (ECA), a manufacturer of power, data and electrical solutions for the office furniture industry.~~

In the second ~~quarter~~half of ~~2017, the Company recorded a $9.2 million goodwill and other long-lived asset impairment charge~~March 2020, lower product demand at ~~Forney, due to lower than expected revenues resulting from sluggish overall demand for its energy products. Excluding this impairment charge,~~Dekko has adversely impacted manufacturing revenues and operating income ~~increased in the first nine months of 2017 due~~and this is expected to the Hoover acquisition and growth and improved results at Dekko, including the ECA acquisition, offset by a decline in results at Forney, which included $1.2 million in expense related to a separation incentive program implemented in the third quarter of 2017 that will be mostly funded from the assets of the Company's pension plan.continue throughout 2021.


	Three Months Ended
	March 31
(in thousands)		2021		2020		% Change
Revenue		$	50,043	$	45,994	9
Operating Income		7,140		3,169		—

The Graham Healthcare Group (GHG) provides home health and hospice services in three states. ~~In June 2016, the Company acquired the outstanding 20% redeemable noncontrolling~~GHG provides other healthcare services, including nursing care and prescription services for patients receiving in-home infusion treatments through its 75% interest in ~~Residential~~CSI Pharmacy Holdings Company, LLC (CSI). Healthcare ~~(Residential). Also~~revenues increased 9% for the first quarter of 2021, due to growth at CSI and home health services. The increase in ~~June 2016, Celtic Healthcare (Celtic)~~GHG operating results in the first quarter of 2021 is due to improved results from home health services and ~~Residential combined their business operations~~CSI. In the second half of March 2020, GHG home health patient volumes declined, due primarily to the curtailment of elective procedures by health systems due to the COVID-19 pandemic.

Automotive includes three automotive dealerships in the Washington, D.C. metropolitan area: Lexus of Rockville, Honda of Tysons Corner, and Ourisman Jeep of Bethesda. Revenues for the first quarter of 2021 increased due to sales growth at each of the three dealerships, due partly to significantly reduced demand for sales and service in the first quarter of 2020 at the onset of the COVID-19 pandemic in March 2020. As a result of the pandemic and the ~~Company now~~related recessionary conditions, the Company’s automotive dealerships recorded a $6.7 million intangible asset impairment charge in the first quarter of 2020. Operating earnings for the first quarter of 2021 improved from a loss in the prior year due to increased sales, in addition to the impairment charge recorded in the first quarter of 2020.

Clyde’s Restaurant Group (CRG)

Clyde’s Restaurant Group (CRG) owns ~~90%~~and operates eleven restaurants and entertainment venues in the Washington, D.C. metropolitan area, including Old Ebbitt Grill and The Hamilton. As a result of the ~~combined entity.~~COVID-19 pandemic, CRG temporarily closed all of its restaurants and venues in the second half of March 2020 through mid-June 2020, pursuant to government orders, maintaining limited operations for outdoor dining, delivery and pickup. CRG recorded a $9.7 million goodwill and intangible assets impairment charge in the first quarter of 2020. In December 2020, CRG temporarily closed its restaurant dining rooms in Maryland and the District of Columbia for the second time, reopening again for limited indoor dining service in mid-February 2021.

Overall, CRG incurred significant operating losses in each of the first quarters of 2021 and 2020 due to limited revenues and costs incurred to maintain its facilities and support its employees, and CRG is uncertain as to the timing and other details regarding a full reopening. While CRG revenues have been adversely impacted as a result of the pandemic, such revenues improved steadily in each of the first three months of 2021. CRG continues to develop and implement initiatives to increase sales and reduce costs to mitigate the impact of COVID-19. The ~~company incurred approximately $2.0 million in expense in conjunction with these transactions~~pandemic is expected to continue to adversely impact CRG revenues and operating results in the second quarter of ~~2016.~~2021.

On May 15, 2020, the Company acquired Framebridge, Inc., a custom framing service company, headquartered in Washington, DC, with two retail locations in the DC metropolitan area and a manufacturing facility in Richmond, KY. At the end of ~~June 2017, GHG acquired Hometown Home Health~~the first quarter of 2021, Framebridge had six retail locations in the Washington, DC, Brooklyn, NY and ~~Hospice, a Lapeer, MI-based healthcare services provider. Healthcare~~Atlanta, GA areas and two manufacturing facilities in Kentucky. Framebridge revenues ~~increased 5%~~ in the first ~~nine months of 2017, while operating results were down, due largely to increased bad debt expense and higher information systems and other integration costs.~~

~~SocialCode is a provider of marketing solutions on social, mobile and video platforms. SocialCode revenue declined 4% in~~2021 were up substantially from the third quarter of 2017 due to lower digital advertising spend from its clients in the retail and consumer packaged goods sectors. SocialCode revenue increased 8% for the first nine months of 2017, due to growth in digital advertising service revenues. SocialCodeprior year. As an investment stage business, Framebridge reported operating losses ~~of $6.2 million and $8.2 million~~ in the ~~third~~first quarter 2021.

Code3 is a performance marketing agency focused on driving performance for brands through three core elements of digital success: media, creative and commerce. Code3 revenue declined in the first ~~nine months~~quarter of ~~2017, compared~~2021, due to continued sluggish marketing spending by some advertising clients as a result of the recessionary environment from

the COVID-19 pandemic, offset by increased commerce and creative revenues. Code3 reported operating losses ~~of $10.8 million and $15.3 million~~ in the ~~third~~first quarter of 2021 and the first ~~nine months~~quarter of ~~2016. SocialCode's operating results~~2020. Code3 implemented a restructuring plan in 2020 that included ~~incentive accruals of $5.1 million and $1.2 million related~~initiatives to ~~SocialCode’s phantom equity plans~~reduce Code3’s cost structure.

Megaphone was sold by the Company to Spotify in the third quarter and first nine months of 2017, respectively; whereas 2016 results included incentive accruals of $11.3 million and $12.0 million related to phantom equity plans for the relevant periods. As of September 30, 2017, the accrual balance related to these plans is $23.2 million.December 2020.

Other businesses also include Slate and Foreign Policy, which publish online and print magazines and websites; and ~~two~~three investment stage businesses, ~~Panoply~~Cybervista, Decile and ~~CyberVista.~~Pinna. All of these businesses reported revenue increases in the first three months of 2021. Losses from each of these five businesses in the first ~~nine~~three months of ~~2017~~2021 adversely affected operating results.

Overall, for the first quarter of 2021, operating revenues for other businesses increased due largely to increases at the automotive dealerships and from the Framebridge acquisition, partially offset by declines at CRG and Code3, and due to the sale of Megaphone in December 2020. Operating results improved in the first quarter of 2021 primarily due to the goodwill and other long-lived asset impairment charges recorded in the first quarter of 2020 at the automotive dealerships and CRG.

Corporate office includes the expenses of the Company’s corporate office ~~the pension credit for the Company’s traditional defined benefit plan~~ and certain continuing obligations related to prior business dispositions. ~~The total pension credit for the Company’s traditional defined benefit plan was $54.6 million and $48.1 million~~Corporate office expenses increased in the first ~~nine~~three months of ~~2017 and 2016, respectively.~~2021 due primarily to higher compensation costs.

~~Without the pension credit, corporate office expenses declined slightly in the first nine months of 2017.~~

At ~~September 30, 2017,~~March 31, 2021, the Company held ~~interests~~an approximate 12% interest in ~~a number of home health and hospice joint ventures, and interests in several other affiliates. In September 2017, the Company acquired approximately 10% of~~ Intersection Holdings, LLC, ~~which~~a company that provides digital marketing and advertising services and products for cities, transit systems, airports, and other public and private spaces. The Company ~~recorded equity~~also holds interests in ~~losses~~several other affiliates, including a number of ~~affiliates of $0.5 million for~~home health and hospice joint ventures managed by GHG and two joint ventures managed by Kaplan. Overall, the ~~third quarter of 2017, compared to $1.0 million for the third quarter of 2016. The~~ Company recorded equity in earnings of affiliates of ~~$1.4~~$13.4 million for the first ~~nine months~~quarter of ~~2017,~~2021, compared to ~~equity in~~ losses of ~~affiliates of $0.9~~$1.5 million for the first ~~nine months~~quarter of ~~2016.~~

The recessionary environment resulting from the COVID-19 pandemic adversely impacted the underlying businesses of Intersection Holdings, LLC due to lower marketing spending by advertising clients. The decline in revenues adversely impacted the operating results and liquidity of the business since the onset of the COVID-19 pandemic. The Company concluded that these events are not indicative of an other ~~non-operating income, net,~~than temporary decline in the value of ~~$2.0~~its investment to an amount less than its carrying value. Given the uncertain economic impact of the COVID-19 pandemic, it is possible that an other than temporary impairment charge could occur in the future should Intersection Holdings, LLC fail to execute on its operating and financing strategy to address the decline in revenues and operating results. Further, the Company recorded a $5.4 million loss in equity earnings related to Intersection in the first quarter of 2021 and expects to record additional losses for the ~~third quarter~~remainder of 2017, compared to other non-operating expense, net, of $18.2 million for the third quarter of 2016. The 2017 amounts included $1.4 million in foreign currency gains and other items. The 2016 amounts included a $15.0 million write-down of a cost method investment and $3.8 million in foreign currency losses, partially offset by other items.2021.

The Company recorded total other non-operating income, net, of $6.9 million for the first nine months of 2017, compared to $15.9 million for the first nine months of 2016. The 2017 amounts included $6.6 million in foreign currency gains and other items. The 2016 amounts included a $34.1 million gain on the sale of land; an $18.9 million gain on the sale of a business; a $6.3 million gain on the sale of marketable equity securities; a $3.2 million gain on the Residential joint venture transaction and other items, partially offset by $33.3 million in foreign currency losses and $15.2 million in cost method investment write-downs.

The Company incurred net interest expense of ~~$7.8 million and $22.4~~$7.6 million for the ~~third~~first quarter ~~and first nine months~~ of ~~2017,~~2021, compared to ~~$7.9 million and $22.5~~$6.5 million for the ~~third~~first quarter ~~and~~of 2020. The Company recorded interest expense of $1.1 million to adjust the fair value of the mandatorily redeemable noncontrolling interest at GHG in the first ~~nine months~~quarter of ~~2016.~~ 2021.

At ~~September 30, 2017,~~March 31, 2021, the Company had ~~$493.0~~$510.3 million in borrowings outstanding at an average interest rate of ~~6.3%~~5.1% and cash, marketable equity securities and other investments of ~~$936.0~~$1,088.2 million. At March 31, 2021, the Company had £55 million ($75.6 million) outstanding on its $300 million revolving credit facility. In management’s opinion, the Company will have sufficient financial resources to meet its business requirements in the next twelve months, including working capital requirements, capital expenditures, interest payments and dividends.

Non-operating Pension and Postretirement Benefit Income, net

The Company recorded net non-operating pension and postretirement benefit income of $28.8 million for the first quarter of 2021, compared to $18.4 million for the first quarter of 2020, respectively.

Gain (Loss) on Marketable Equity Securities, net

Overall, the Company recognized $79.2 million in net gains on marketable equity securities in the first quarter of 2021, compared to $100.4 million in net losses on marketable equity securities in the first quarter of 2020.

Other Non-Operating Income

The Company recorded total other non-operating income, net, of $6.3 million for the first quarter of 2021, compared to $2.7 million for the first quarter of 2020. The 2021 amounts included a $2.7 million fair value increase on a cost method investment and other items. The 2020 amounts included $4.3 million in foreign currency gains and other items; partially offset by $2.6 million in impairments on cost method investments.

Provision for (Benefit from) Income Taxes

The Company’s effective tax rate for the first ~~nine~~three months of ~~2017~~2021 was 31.3%, compared to 28.9% for the first nine months of 2016. The low effective tax rate in the first nine months of 2017 is due to a $5.9 million income tax benefit related to the vesting of restricted stock awards. In the first quarter of 2017, the Company adopted a new accounting standard that requires all excess income tax benefits and deficiencies from stock compensation to be recorded as discrete items in the provision for income taxes. Excluding this $5.9 million benefit, the overall income tax rate for the first nine months of 2017 was 35.9%26.9%.

In the third quarter of 2016, a net nonrecurring $8.3 million deferred tax benefit related to Kaplan's international operations was recorded. In the second quarter of 2016, the Company benefited from a favorable $5.6 million out of period deferred tax adjustment related to the KHE goodwill impairment recorded in the third quarter of 2015. Excluding these adjustments, theThe Company’s effective tax rate for the first ~~nine~~three months of ~~2016~~2020 was ~~36.4%.~~


	As of							As of
	September 30, 2017			December 31, 2016				March 31, 2021		December 31, 2020
(in thousands)							(in thousands)
7.25% unsecured notes due February 1, 2019 ⁽¹⁾	$	399,393		$	399,052
UK Credit facility ⁽²⁾	93,450			91,316
5.75% unsecured notes due June 1, 2026 (1)							5.75% unsecured notes due June 1, 2026 (1)	$	396,289	$	396,112
Revolving credit facility							Revolving credit facility	75,621		74,686

Commercial note							Commercial note	24,500		25,250
Pinnacle Bank term loan							Pinnacle Bank term loan	10,411		10,692
Pinnacle Bank line of credit							Pinnacle Bank line of credit	73		2,295
Other indebtedness	112			1,479			Other indebtedness	3,435		3,520
Total Debt	$	492,955		$	491,847		Total Debt	$	510,329	$	512,555
Less: current portion	(6,713		)	(6,128		)	Less: current portion	(4,238)		(6,452)
Total Long-Term Debt	$	486,242		$	485,719		Total Long-Term Debt	$	506,091	$	506,103



	Nine Months Ended September 30, 2016
	As
	Previously					As
(in thousands)	Reported			Adjustment		Adopted
Cash Flows from Operating Activities
Increase in Restricted Cash	$	(7,266	)	$	7,266	$	—
Net Cash Provided by Operating Activities	144,189			7,266		151,455

Net Decrease in Cash and Cash Equivalents and Restricted Cash	(161,024		)	7,266		(153,758		)
Cash and Cash Equivalents and Restricted Cash at Beginning of Period	754,207			20,745		774,952
Cash and Cash Equivalents and Restricted Cash at End of Period	593,183			28,011		621,194


(in thousands)	Higher Education			Test Preparation			Kaplan International		Total			(in thousands)	Kaplan International		Higher Education		Supplemental Education		Total
Balance as of December 31, 2016
Balance as of December 31, 2020												Balance as of December 31, 2020
Goodwill	$	389,720		$	166,098		$	555,185	$	1,111,003		Goodwill	$	634,749	$	174,564	$	374,066	$	1,183,379
Accumulated impairment losses	(248,591		)	(102,259		)	—		(350,850		)	Accumulated impairment losses	0		(111,324)		(219,827)		(331,151)
	141,129			63,839			555,185		760,153				634,749		63,240		154,239		852,228
Acquisitions	—			—			18,986		18,986

Foreign currency exchange rate changes	154			—			40,713		40,867			Foreign currency exchange rate changes	361		0		26		387
Balance as of September 30, 2017
Balance as of March 31, 2021												Balance as of March 31, 2021
Goodwill	389,874			166,098			614,884		1,170,856			Goodwill	635,110		174,564		374,092		1,183,766
Accumulated impairment losses	(248,591		)	(102,259		)	—		(350,850		)	Accumulated impairment losses	0		(111,324)		(219,827)		(331,151)
	$	141,283		$	63,839		$	614,884	$	820,006			$	635,110	$	63,240	$	154,265	$	852,615



		As of September 30, 2017						As of December 31, 2016
(in thousands)	Useful Life Range	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortized Intangible Assets
Student and customer relationships	1–10 years (1)	$	224,872	$	74,304	$	150,568	$	129,616	$	55,863	$	73,753
Trade names and trademarks	2–10 years	58,917		33,143		25,774		55,240		29,670		25,570
Network affiliation agreements	15 years	42,600		2,067		40,533		—		—		—
Databases and technology	3–6 years (1)	19,583		4,173		15,410		5,601		4,368		1,233
Noncompete agreements	2–5 years	2,080		1,549		531		1,730		1,404		326
Other	1–8 years	13,430		7,094		6,336		12,030		4,973		7,057
		$	361,482	$	122,330	$	239,152	$	204,217	$	96,278	$	107,939
Indefinite-Lived Intangible Assets
Trade names and trademarks		$	82,651					$	65,192
FCC licenses		26,600						—
Licensure and accreditation		650						834
		$	109,901					$	66,026


~~(1)~~	~~As of December 31, 2016, the student and customer relationships’ minimum useful life was 2 years and the databases and technology’s maximum useful life was 5 years.~~


~~(1)~~	~~The carrying value is net of $0.1 million of unamortized debt issuance costs as of September 30, 2017 and December 31, 2016, respectively.~~


~~(2)~~	~~The carrying value is net of $0.4 million and $0.5 million of unamortized debt issuance costs as of September 30, 2017 and December 31, 2016, respectively.~~



	Three Months Ended September 30						Nine Months Ended September 30
(in thousands)	2017			2016			2017			2016
Service cost	$	4,591		$	5,040		$	14,096		$	15,422
Interest cost	11,980			12,845			35,945			38,763
Expected return on assets	(30,338		)	(30,348		)	(91,078		)	(91,122		)
Amortization of prior service cost	42			74			128			223
Recognized actuarial gain	(1,039		)	—			(3,372		)	—
Net Periodic Benefit	(14,764		)	(12,389		)	(44,281		)	(36,714		)
Special separation benefit expense	932			—			932			—
Total Benefit	$	(13,832	)	$	(12,389	)	$	(43,349	)	$	(36,714	)



(in thousands, net of taxes)	Cumulative Foreign Currency Translation Adjustment			Unrealized Gain on Available-for- Sale Securities		Unrealized Gain on Pensions and Other Postretirement Plans			Cash Flow Hedge			Accumulated Other Comprehensive Income
Balance as of December 31, 2016	$	(26,998	)	$	92,931	$	170,830		$	(277	)	$	236,486
Other comprehensive income (loss) before reclassifications	34,776			42,822		—			(270		)	77,328
Net amount reclassified from accumulated other comprehensive income (loss)	—			—		(2,760		)	98			(2,662		)
Other comprehensive income (loss), net of tax	34,776			42,822		(2,760		)	(172		)	74,666
Balance as of September 30, 2017	$	7,778		$	135,753	$	168,070		$	(449	)	$	311,152


~~(1)~~	~~These accumulated other comprehensive income components are included in the computation of net periodic pension and postretirement plan cost (see Note 8).~~



	Three Months Ended						Nine Months Ended
	September 30						September 30
(in thousands)	2017			2016			2017			2016
Operating Revenues
Higher education	$	133,459		$	148,602		$	416,973		$	472,131
Test preparation	72,680			78,291			212,978			224,102
Kaplan international	171,259			160,456			507,568			512,068
Kaplan corporate and other	49			47			120			190
Intersegment elimination	(642		)	(460		)	(1,438		)	(1,266		)
	$	376,805		$	386,936		$	1,136,201		$	1,207,225
Income (Loss) from Operations
Higher education	$	8,809		$	11,494		$	39,124		$	50,037
Test preparation	7,330			8,588			10,207			13,314
Kaplan international	5,348			1,561			29,009			22,937
Kaplan corporate and other	(8,037		)	(5,310		)	(22,957		)	(22,526		)
Intersegment elimination	(59		)	—			(36		)	(49		)
	$	13,391		$	16,333		$	55,347		$	63,713
Depreciation of Property, Plant and Equipment
Higher education	$	2,768		$	4,157		$	9,448		$	12,325
Test preparation	1,407			1,441			4,080			4,837
Kaplan international	3,780			4,360			11,071			13,739
Kaplan corporate and other	130			19			395			421
	$	8,085		$	9,977		$	24,994		$	31,322
Amortization of Intangible Assets	$	1,355		$	1,773		$	3,798		$	5,158
Pension Expense
Higher education	$	548		$	1,905		$	4,636		$	5,715
Test preparation	244			768			2,066			2,304
Kaplan international	24			67			198			201
Kaplan corporate and other	1,614			98			389			745
	$	2,430		$	2,838		$	7,289		$	8,965



	As of September 30
	2017		2016
Certificate	10.0	%	7.7	%
Associate’s	16.8	%	19.5	%
Bachelor’s	50.1	%	51.0	%
Master’s	23.1	%	21.8	%
	100.0	%	100.0	%



	~~Moody’s~~	~~Standard~~ ~~& Poor’s~~
~~Long-term~~	~~Ba1~~	~~BB+~~


	Moody’s	Standard & Poor’s
Long-term	Ba1	BB
Outlook	Negative	Stable



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan*	Maximum Number of Shares that May Yet Be Purchased Under the Plan*
July	—	$	—	—	223,526
August	41,258	586.17		41,258	182,268
September	19,031	568.28		19,031	163,237
	60,289	$	580.52	60,289


Exhibit Number		Description

~~Exhibit~~ ~~Number~~ 3.1		~~Description~~

~~2.1~~	Contribution and Transfer Agreement, dated April 27, 2017, by and among Kaplan Higher Education, LLC, Iowa College Acquisition, LLC, Purdue University, and Purdue New U, Inc. (incorporated by reference to the Company’s Current Report on Form 8-K filed April 27, 2017). *

~~3.1~~	Restated Certificate of Incorporation of the Company dated November 13, 2003 (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2003).

3.2		Certificate of Amendment, effective November 29, 2013, to the Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s current Report on Form 8-K dated November 29, 2013).

3.3		By-Laws of the Company as amended and restated through November 29, 2013 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K dated November 29, 2013).

4.1		~~Second Supplemental~~Senior Notes Indenture dated ~~January~~as of May 30, ~~2009,~~2018, between the Company and The Bank of New York Mellon Trust Company, N.A., as ~~successor to The First National Bank of Chicago, as~~ Trustee (incorporated by reference to Exhibit ~~10.2~~4.1 to the Company’s Current Report on Form 8-K dated ~~January~~May 30, ~~2009)~~2018).

4.2		~~Five Year Credit Agreement,~~First Supplemental Indenture, dated as of ~~June 29, 2015,~~March 24, 2020, among Graham Healthcare Group, Inc., a Delaware corporation, a subsidiary of the Company, and ~~certain~~The Bank of ~~its domestic subsidiaries as guarantors, the several lenders from time to time party thereto, Wells Fargo Bank, National Association, as Administrative Agent and JPMorgan Chase Bank,~~New York Mellon Trust Company, N.A., as ~~Syndication Agent.~~trustee (incorporated by reference to Exhibit ~~10.1~~4.2 to the Company’s ~~Current~~Quarterly Report on Form ~~8-K dated June 29, 2015)~~10-Q for the quarter ended March 31, 2020).

31.1		Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer.

31.2		Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer.

32		Section 1350 Certification of the Chief Executive Officer and the Chief Financial Officer. ** *

~~101~~101.INS		~~The following financial information from Graham Holdings Company Quarterly Report on Form 10-Q for~~Inline XBRL Instance Document - the ~~period ended September 30, 2017, formatted~~instance document does not appear in ~~Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Statements of Operations for~~ the ~~Three and Nine Months Ended September 30, 2017 and 2016, (ii) Condensed Consolidated Statements of Comprehensive Income for~~Interactive Data File because its XBRL tags are embedded within the Three and Nine Months Ended September 30, 2017 and 2016, (iii) Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016, (iv) Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016, and (v) Notes to Condensed Consolidated Financial Statements. Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed "furnished" and not "filed" or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed "furnished" and not "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise are not subject to liability under these sections.Inline XBRL document


*101.SCH			~~Graham Holdings Company hereby undertakes to furnish supplementally a copy of any omitted exhibit or schedule to such agreement to the U.S. Securities and Exchange Commission upon request.~~Inline XBRL Taxonomy Extension Schema Document


**101.CAL			~~Furnished herewith.~~Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document

104			Cover Page Interactive Data File, formatted in Inline XBRL and included as Exhibit 101



						GRAHAM HOLDINGS COMPANY
						(Registrant)

Date: ~~November 1, 2017~~May 5, 2021						/s/ Timothy J. O’Shaughnessy
						Timothy J. O’Shaughnessy, President & Chief Executive Officer (Principal Executive Officer)

Date: ~~November 1, 2017~~May 5, 2021						/s/ Wallace R. Cooney
						Wallace R. Cooney, ~~Senior Vice President-Finance~~ Chief Financial Officer (Principal Financial Officer)