Discontinued Operations | 9 Months Ended |
Sep. 30, 2013 |
Discontinued Operations [Abstract] | ' |
Discontinued Operations [Text Block] | ' |
2. DISCONTINUED OPERATIONS |
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On August 5, 2013, after approval by the Company's Board of Directors on the same day, the Company announced that it had entered into a binding letter agreement (the Letter Agreement) with Nash Holdings LLC, a Delaware limited liability company (the Purchaser), and Explore Holdings LLC, a Washington limited liability company, as guarantor (the Guarantor), to sell all the issued and outstanding equity securities of each of WP Company LLC, Express Publications Company, LLC, El Tiempo Latino, LLC, Robinson Terminal Warehouse, LLC, Greater Washington Publishing, LLC and Post-Newsweek Media, LLC (the Publishing Subsidiaries). The Publishing Subsidiaries together conducted most of the Company's publishing businesses, including publishing The Washington Post, Express, The Gazette Newspapers, Southern Maryland Newspapers, Fairfax County Times and El Tiempo Latino and related websites, and operating Washington Post Live and Washington Post News Media Services and the Company's commercial printing and distribution business and paper handling and storage business (collectively, the Publishing Business), subject to satisfying certain conditions. |
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On October 1, 2013, the Company entered into a Purchase Agreement and completed the sale. Under the terms of the Purchase Agreement, the Purchaser acquired all the issued and outstanding equity securities of each of the entities that comprise the Publishing Subsidiaries for $250 million, subject to customary adjustment for cash, debt and working capital of the Publishing Subsidiaries at closing. The Purchaser also acquired all other assets of the Company primarily related to the Publishing Business, including all of the Company's rights in the name “The Washington Post”. The Company will change its corporate name within 60 days of the October 1 closing. The Company retained its interest in Classified Ventures, LLC, Slate magazine, TheRoot.com and Foreign Policy, as well as the WaPo Labs and SocialCode business and certain real estate, including the headquarters building in downtown Washington, DC and certain land and property in Alexandria, VA. The liabilities under the Retirement Plan for The Washington Post Companies relating to the active employees of the Publishing Business will be transferred to the Purchaser, along with pension assets that have a value equal to the projected benefit obligation in respect of these active employees plus an additional $50 million. The results of operations of Publishing Subsidiaries for the three and nine months ended September 30, 2013 and 2012, are included in the Company's Condensed Consolidated Statements of Operations as Income (Loss) from Discontinued Operations, Net of Tax. |
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The Company will not record the gain or the net proceeds on the sale until the fourth quarter of 2013; however, the Company recognized $28.4 million (after-tax impact of $18.3 million) in expenses related to the sale that are included in discontinued operations in the third quarter of 2013. These costs include the net impact of accelerated vesting provisions and forfeitures of restricted stock awards and stock options that were made in contemplation of the sale, and certain other transaction-related expenses. Also included in discontinued operations is $22.7 million (after-tax basis of $14.5 million) in early retirement program expense for the first nine months of 2013 and $7.5 million (after-tax basis of $4.6 million) and $8.5 million (after-tax basis of $5.3 million) for the third quarter and first nine months of 2012, respectively. The historical pension and postretirement benefits expense for retirees has been excluded from the reclassification of the Publishing Subsidiaries' results to discontinued operations, since the associated assets and liabilities will be retained by the Company. Although the Company has retained ownership of certain real estate assets, including the headquarters building in downtown Washington, DC, related operating costs are included in the reclassification of the Publishing Subsidiaries' results to discontinued operations since the Purchase Agreement includes a lease to the buyer for the real estate assets that provides for recovery of operating costs by the Company. |
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All corresponding prior period operating results presented in the Company's Condensed Consolidated Financial Statements and the accompanying notes have been reclassified to reflect the discontinued operations presented. The assets and liabilities of the Publishing Subsidiaries have been classified on the Company's condensed consolidated balance sheet as assets and liabilities of discontinued operations as of September 30, 2013. The Company did not reclassify its Statements of Cash Flows or prior Condensed Consolidated Balance Sheets to reflect the discontinued operations. |
The carrying amounts of the major classes of assets and liabilities of the Publishing Subsidiaries included in discontinued operations at September 30, 2013 are as follows: |
| | | | | September 30, | | | | | | | | |
(in thousands) | | 2013 | | | | | | | | |
Cash and cash equivalents | | $ | 849 | | | | | | | | |
Accounts receivable, net | | | 60,369 | | | | | | | | |
Inventories | | | 3,965 | | | | | | | | |
Other current assets | | | 5,177 | | | | | | | | |
| Current Assets of Discontinued Operations | | $ | 70,360 | | | | | | | | |
Property, plant and equipment, net | | $ | 116,639 | | | | | | | | |
Goodwill, net | | | 13,602 | | | | | | | | |
Prepaid pension cost | | | 50,000 | | | | | | | | |
Deferred charges and other assets | | | 4,499 | | | | | | | | |
| Noncurrent Assets of Discontinued Operations | | $ | 184,740 | | | | | | | | |
Accounts payable and accrued liabilities | | $ | 35,616 | | | | | | | | |
Deferred revenue | | | 22,207 | | | | | | | | |
| Current Liabilities of Discontinued Operations | | $ | 57,823 | | | | | | | | |
Postretirement benefits other than pensions | | $ | 24,999 | | | | | | | | |
Accrued compensation and related benefits | | | 8,998 | | | | | | | | |
Other liabilities | | | 11,735 | | | | | | | | |
| Noncurrent Liabilities of Discontinued Operations | | $ | 45,732 | | | | | | | | |
In March 2013, the Company completed the sale of The Herald, a daily and Sunday newspaper headquartered in Everett, WA. Under the terms of the agreement, the purchaser received most of the assets and liabilities; however, certain land and buildings and other assets and liabilities were retained by the Company. The results of operations of The Herald for the three and nine months ended September 30, 2013 and 2012, are included in the Company's Condensed Consolidated Statements of Operations as Income (Loss) from Discontinued Operations, Net of Tax. |
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In August 2012, the Company completed the sale of Kidum and recorded a pre-tax gain of $3.6 million and an after-tax gain of $10.2 million related to this sale in the third quarter of 2012. On July 31, 2012, the Company disposed of its interest in Avenue100 Media Solutions, Inc. and recorded a pre-tax loss of $5.7 million related to the disposition. An income tax benefit of $44.5 million was also recorded in the third quarter of 2012 as the Company determined that Avenue100 had no value. The income tax benefit was due to the Company's tax basis in the stock of Avenue100 exceeding its net book value, as a result of goodwill and other intangible asset impairment charges recorded in 2008, 2010 and 2011 for which no tax benefit was previously recorded. In April 2012, the Company completed the sale of Kaplan EduNeering. Under the terms of the agreement, the purchaser acquired the stock of EduNeering and received substantially all the assets and liabilities. In the second quarter of 2012, the Company recorded an after-tax gain of $18.5 million related to this sale. In February 2012, Kaplan completed the stock sale of Kaplan Learning Technologies (KLT) and recorded an after-tax loss on the sale of $1.9 million. The Company recorded $23.2 million of income tax benefits in the first quarter of 2012 in connection with the sale of its stock in EduNeering and KLT related to the excess of the outside stock tax basis over the net book value of the net assets disposed. The results of operations of Kidum, Avenue100, EduNeering, and KLT, for the three and nine months ended September 30, 2012 are included in the Company's Condensed Consolidated Statement of Operations as Income (Loss) from Discontinued Operations, Net of Tax. |
The summarized income (loss) from discontinued operations, net of tax, is presented below: |
| | | Three Months Ended | | Nine Months Ended | |
| | | September 30, | | September 30, | |
(in thousands) | | 2013 | | 2012 | | 2013 | | 2012 | |
Operating revenues | | $ | 124,725 | | $ | 137,668 | | $ | 382,705 | | $ | 441,308 | |
Operating costs and expenses | | | -165,380 | | | -155,701 | | | -467,434 | | | -491,698 | |
Loss from discontinued operations | | | -40,655 | | | -18,033 | | | -84,729 | | | -50,390 | |
Benefit from income taxes | | | -14,783 | | | -5,568 | | | -30,059 | | | -16,568 | |
Net Loss from Discontinued Operations | | | -25,872 | | | -12,465 | | | -54,670 | | | -33,822 | |
(Loss) gain on sales of discontinued operations | | | ― | | | -2,174 | | | -70 | | | 23,759 | |
Benefit from income taxes on sales of discontinued operations | | | ― | | | -52,178 | | | -24 | | | -64,591 | |
(Loss) Income from Discontinued Operations, Net of Tax | | $ | -25,872 | | $ | 37,539 | | $ | -54,716 | | $ | 54,528 | |
The following table summarizes the 2013 quarterly operating results of the Company following the reclassification of the operations discussed above as discontinued operations: |
| | | March 31, | | June 30, | | | | | | | |
(in thousands, except per share amounts) | | 2013 | | 2013 | | | | | | | |
Operating Revenues | | | | | | | | | | | | | |
| Education | | $ | 527,815 | | $ | 548,230 | | | | | | | |
| Advertising | | | 82,994 | | | 96,670 | | | | | | | |
| Subscriber and circulation | | | 186,790 | | | 192,273 | | | | | | | |
| Other | | | 39,241 | | | 52,423 | | | | | | | |
| | | | 836,840 | | | 889,596 | | | | | | | |
Operating Costs and Expenses | | | | | | | | | | | | | |
| Operating | | | 381,965 | | | 400,515 | | | | | | | |
| Selling, general and administrative | | | 337,865 | | | 323,182 | | | | | | | |
| Depreciation of property, plant and equipment | | | 59,895 | | | 57,816 | | | | | | | |
| Amortization of intangible assets | | | 3,717 | | | 3,313 | | | | | | | |
| | | | 783,442 | | | 784,826 | | | | | | | |
Income from Operations | | | 53,398 | | | 104,770 | | | | | | | |
| Equity in earnings of affiliates, net | | | 3,418 | | | 3,868 | | | | | | | |
| Interest income | | | 510 | | | 522 | | | | | | | |
| Interest expense | | | -8,960 | | | -9,048 | | | | | | | |
| Other expense, net | | | -4,083 | | | -12,858 | | | | | | | |
Income from Continuing Operations before Income Taxes | | | 44,283 | | | 87,254 | | | | | | | |
Provision for Income Taxes | | | 17,800 | | | 34,500 | | | | | | | |
Income from Continuing Operations | | | 26,483 | | | 52,754 | | | | | | | |
Loss from Discontinued Operations, Net of Tax | | | -21,224 | | | -7,620 | | | | | | | |
Net Income | | | 5,259 | | | 45,134 | | | | | | | |
Net Income Attributable to Noncontrolling Interests | | | -97 | | | -253 | | | | | | | |
Net Income Attributable to The Washington Post Company | | | 5,162 | | | 44,881 | | | | | | | |
Redeemable Preferred Stock Dividends | | | -444 | | | -206 | | | | | | | |
Net Income Attributable to The Washington Post Company Common Stockholders | | $ | 4,718 | | $ | 44,675 | | | | | | | |
Amounts Attributable to The Washington Post Company Common Stockholders | | | | | | | | | | | | | |
Income from continuing operations | | $ | 25,942 | | $ | 52,295 | | | | | | | |
Loss from discontinued operations, net of tax | | | -21,224 | | | -7,620 | | | | | | | |
Net income attributable to the Washington Post Company common stockholders | | $ | 4,718 | | $ | 44,675 | | | | | | | |
Per Share Information Attributable to The Washington Post Company Common Stockholders | | | | | | | | | | | | | |
Basic income per common share from continuing operations | | $ | 3.5 | | $ | 7.05 | | | | | | | |
Basic loss per common share from discontinued operations | | | -2.86 | | | -1.03 | | | | | | | |
Basic net income per common share | | $ | 0.64 | | $ | 6.02 | | | | | | | |
Diluted income per common share from continuing operations | | $ | 3.5 | | $ | 7.05 | | | | | | | |
Diluted loss per common share from discontinued operations | | | -2.86 | | | -1.03 | | | | | | | |
Diluted net income per common share | | $ | 0.64 | | $ | 6.02 | | | | | | | |
The following table summarizes the 2012 quarterly operating results of the Company following the reclassification of the operations discussed above as discontinued operations: |
| | | | March 31, | | June 30, | | September 30, | | December 31, |
(in thousands, except per share amounts) | | 2012 | | 2012 | | 2012 | | 2012 |
Operating Revenues | | | | | | | | | | | | |
| Education | | $ | 546,685 | | $ | 551,774 | | $ | 551,696 | | $ | 546,341 |
| Advertising | | | 82,600 | | | 94,649 | | | 105,855 | | | 117,696 |
| Subscriber and circulation | | | 178,022 | | | 182,639 | | | 185,326 | | | 186,383 |
| Other | | | 20,305 | | | 25,368 | | | 34,760 | | | 45,471 |
| | | | | 827,612 | | | 854,430 | | | 877,637 | | | 895,891 |
Operating Costs and Expenses | | | | | | | | | | | | |
| Operating | | | 382,106 | | | 387,167 | | | 407,364 | | | 389,620 |
| Selling, general and administrative | | | 347,841 | | | 335,054 | | | 314,359 | | | 336,262 |
| Depreciation of property, plant and equipment | | | 56,165 | | | 56,594 | | | 57,588 | | | 73,731 |
| Amortization of intangible assets | | | 3,839 | | | 4,407 | | | 5,090 | | | 7,610 |
| Impairment of goodwill and other long-lived assets | | | ― | | | ― | | | ― | | | 111,593 |
| | | | | 789,951 | | | 783,222 | | | 784,401 | | | 918,816 |
Income (Loss) from Operations | | | 37,661 | | | 71,208 | | | 93,236 | | | -22,925 |
| Equity in earnings of affiliates, net | | | 3,888 | | | 3,314 | | | 4,099 | | | 2,785 |
| Interest income | | | 1,069 | | | 775 | | | 648 | | | 901 |
| Interest expense | | | -9,163 | | | -8,979 | | | -8,738 | | | -9,064 |
| Other income (expense), net | | | 8,588 | | | -635 | | | 4,163 | | | -17,572 |
Income (Loss) from Continuing Operations before Income Taxes | | | 42,043 | | | 65,683 | | | 93,408 | | | -45,875 |
Provision for Income Taxes | | | 17,200 | | | 23,900 | | | 37,000 | | | 5,100 |
Income (Loss) from Continuing Operations | | | 24,843 | | | 41,783 | | | 56,408 | | | -50,975 |
Income from Discontinued Operations, Net of Tax | | | 6,725 | | | 10,264 | | | 37,539 | | | 5,600 |
Net Income (Loss) | | | 31,568 | | | 52,047 | | | 93,947 | | | -45,375 |
Net (Income) Loss Attributable to Noncontrolling Interests | | | -70 | | | -11 | | | 71 | | | -64 |
Net Income (Loss) Attributable to The Washington Post Company | | | 31,498 | | | 52,036 | | | 94,018 | | | -45,439 |
Redeemable Preferred Stock Dividends | | | -451 | | | -222 | | | -222 | | | ― |
Net Income (Loss) Attributable to The Washington Post Company | | | | | | | | | | | | |
| Common Stockholders | | $ | 31,047 | | $ | 51,814 | | $ | 93,796 | | $ | -45,439 |
Amounts Attributable to The Washington Post Company | | | | | | | | | | | | |
| Common Stockholders | | | | | | | | | | | | |
Income (loss) from continuing operations | | $ | 24,322 | | $ | 41,550 | | $ | 56,257 | | $ | -51,039 |
Income from discontinued operations, net of tax | | | 6,725 | | | 10,264 | | | 37,539 | | | 5,600 |
Net income (loss) attributable to the Washington Post | | | | | | | | | | | | |
| Company common stockholders | | $ | 31,047 | | $ | 51,814 | | $ | 93,796 | | $ | -45,439 |
Per Share Information Attributable to The Washington Post | | | | | | | | | | | | |
| Company Common Stockholders | | | | | | | | | | | | |
Basic income (loss) per common share from continuing operations | | $ | 3.17 | | $ | 5.48 | | $ | 7.58 | | $ | -7.35 |
Basic income per common share from discontinued operations | | | 0.9 | | | 1.36 | | | 5.06 | | | 0.78 |
Basic net income (loss) per common share | | $ | 4.07 | | $ | 6.84 | | $ | 12.64 | | $ | -6.57 |
Diluted income (loss) per common share from continuing operations | | $ | 3.17 | | $ | 5.48 | | $ | 7.58 | | $ | -7.35 |
Diluted income per common share from discontinued operations | | | 0.9 | | | 1.36 | | | 5.06 | | | 0.78 |
Diluted net income (loss) per common share | | $ | 4.07 | | $ | 6.84 | | $ | 12.64 | | $ | -6.57 |
The following table summarizes the annual operating results of the Company following the reclassification of operations discussed above as discontinued operations: |
(in thousands, except per share amounts) | | 2012 | | 2011 | | | | | | | |
Operating Revenues | | | | | | | | | | | | | |
| Education | | $ | 2,196,496 | | $ | 2,404,459 | | | | | | | |
| Advertising | | | 400,800 | | | 327,877 | | | | | | | |
| Subscriber and circulation | | | 732,370 | | | 710,253 | | | | | | | |
| Other | | | 125,904 | | | 83,408 | | | | | | | |
| | | | 3,455,570 | | | 3,525,997 | | | | | | | |
Operating Costs and Expenses | | | | | | | | | | | | | |
| Operating | | | 1,566,257 | | | 1,562,615 | | | | | | | |
| Selling, general and administrative | | | 1,333,516 | | | 1,383,660 | | | | | | | |
| Depreciation of property, plant and equipment | | | 244,078 | | | 223,403 | | | | | | | |
| Amortization of intangible assets | | | 20,946 | | | 22,201 | | | | | | | |
| Impairment of goodwill and other long-lived assets | | | 111,593 | | | ― | | | | | | | |
| | | | 3,276,390 | | | 3,191,879 | | | | | | | |
Income from Operations | | | 179,180 | | | 334,118 | | | | | | | |
| Equity in earnings of affiliates, net | | | 14,086 | | | 5,949 | | | | | | | |
| Interest income | | | 3,393 | | | 4,147 | | | | | | | |
| Interest expense | | | -35,944 | | | -33,226 | | | | | | | |
| Other expense, net | | | -5,456 | | | -55,200 | | | | | | | |
Income from Continuing Operations Before Income Taxes | | | 155,259 | | | 255,788 | | | | | | | |
Provision for Income Taxes | | | 83,200 | | | 104,400 | | | | | | | |
Income from Continuing Operations | | | 72,059 | | | 151,388 | | | | | | | |
Income (Loss) from Discontinued Operations, Net of Tax | | | 60,128 | | | -34,231 | | | | | | | |
Net Income | | | 132,187 | | | 117,157 | | | | | | | |
Net Income Attributable to Noncontrolling Interests | | | -74 | | | -7 | | | | | | | |
Net Income Attributable to The Washington Post Company | | | 132,113 | | | 117,150 | | | | | | | |
Redeemable Preferred Stock Dividends | | | -895 | | | -917 | | | | | | | |
Net Income Attributable to The Washington Post Company Common Stockholders | | $ | 131,218 | | $ | 116,233 | | | | | | | |
Amounts Attributable to The Washington Post Company Common Stockholders | | | | | | | | | | | | | |
Income from continuing operations | | $ | 71,090 | | $ | 150,464 | | | | | | | |
Income (loss) from discontinued operations, net of tax | | | 60,128 | | | -34,231 | | | | | | | |
Net income attributable to the Washington Post Company common stockholders | | $ | 131,218 | | $ | 116,233 | | | | | | | |
Per Share Information Attributable to The Washington Post Company Common | | | | | | | | | | | | | |
| Stockholders | | | | | | | | | | | | | |
Basic income per common share from continuing operations | | $ | 9.22 | | $ | 19.03 | | | | | | | |
Basic income (loss) per common share from discontinued operations | | | 8.17 | | | -4.33 | | | | | | | |
Basic net income per common share | | $ | 17.39 | | $ | 14.7 | | | | | | | |
Diluted income per common share from continuing operations | | $ | 9.22 | | $ | 19.03 | | | | | | | |
Diluted income (loss) per common share from discontinued operations | | | 8.17 | | | -4.33 | | | | | | | |
Diluted net income per common share | | $ | 17.39 | | $ | 14.7 | | | | | | | |