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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JANUARY 1, 2006
Commission file number 1-6714
The Washington Post 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.) | |
1150 15th St., N.W., Washington, D.C. | 20071 | |
(Address of principal executive offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (202) 334-6000
Securities Registered Pursuant to Section 12(b) of the Act:
Name of each exchange | ||
Title of each class | on which registered | |
Class B Common Stock, Par Value | New York Stock Exchange | |
$1.00 Per Share |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Act”). Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Act 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. Yesþ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See the definitions of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Act. (Check one):
Large accelerated filer þ Accelerated filer o Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ
Aggregate market value of the Company’s voting stock held by non-affiliates on July 1, 2005, based on the closing price for the Company’s Class B Common Stock on the New York Stock Exchange on such date: approximately $4,700,000,000.
Shares of common stock outstanding at February 21, 2006:
Class A Common Stock – 1,722,250 shares
Class B Common Stock – 7,879,881 shares
Documents partially incorporated by reference:
Definitive Proxy Statement for the Company’s 2006 Annual Meeting of Stockholders
(incorporated in Part III to the extent provided in Items 10, 11, 12, 13 and 14 hereof).
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PART I | ||||||||||
Business | 1 | |||||||||
Newspaper Publishing | 1 | |||||||||
Television Broadcasting | 3 | |||||||||
Magazine Publishing | 7 | |||||||||
Cable Television Operations | 8 | |||||||||
Education | 12 | |||||||||
Other Activities | 16 | |||||||||
Production and Raw Materials | 16 | |||||||||
Competition | 17 | |||||||||
Executive Officers | 20 | |||||||||
Employees | 20 | |||||||||
Forward-Looking Statements | 21 | |||||||||
Available Information | 21 | |||||||||
Risk Factors | 21 | |||||||||
Unresolved Staff Comments | 23 | |||||||||
Properties | 23 | |||||||||
Legal Proceedings | 24 | |||||||||
Submission of Matters to a Vote of Security Holders | 25 | |||||||||
PART II | ||||||||||
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 25 | |||||||||
Selected Financial Data | 25 | |||||||||
Management’s Discussion and Analysis of Financial Condition and Results of Operation | 25 | |||||||||
Quantitative and Qualitative Disclosures About Market Risk | 25 | |||||||||
Financial Statements and Supplementary Data | 26 | |||||||||
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 26 | |||||||||
Controls and Procedures | 26 | |||||||||
Other Information | 27 | |||||||||
PART III | ||||||||||
Directors and Executive Officers of the Registrant | 27 | |||||||||
Executive Compensation | 27 | |||||||||
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 28 | |||||||||
Certain Relationships and Related Transactions | 28 | |||||||||
Principal Accountant Fees and Services | 28 | |||||||||
PART IV | ||||||||||
Exhibits and Financial Statement Schedules | 28 | |||||||||
SIGNATURES | 29 | |||||||||
INDEX TO FINANCIAL INFORMATION | 30 | |||||||||
Management’s Discussion and Analysis of Results of Operations and Financial Condition (Unaudited) | 31 | |||||||||
Financial Statements and Schedules: | ||||||||||
Report of Independent Registered Public Accounting Firm | 42 | |||||||||
Consolidated Statements of Income and Consolidated Statements of Comprehensive Income for the Three Fiscal Years Ended January 1, 2006 | 43 | |||||||||
Consolidated Balance Sheets at January 1, 2006 and January 2, 2005 | 44 | |||||||||
Consolidated Statements of Cash Flows for the Three Fiscal Years Ended January 1, 2006 | 46 | |||||||||
Consolidated Statements of Changes in Common Shareholders’ Equity for the Three Fiscal Years Ended January 1, 2006 | 47 | |||||||||
Notes to Consolidated Financial Statements | 48 | |||||||||
Financial Statement Schedule for the Three Fiscal Years Ended January 1, 2006: | ||||||||||
II — Valuation and Qualifying Accounts | 65 | |||||||||
Ten-Year Summary of Selected Historical Financial Data (Unaudited) | 66 | |||||||||
INDEX TO EXHIBITS | 69 | |||||||||
Exhibit 11 | ||||||||||
Exhibit 21 | ||||||||||
Exhibit 23 | ||||||||||
Exhibit 24 | ||||||||||
Exhibit 31.1 | ||||||||||
Exhibit 31.2 | ||||||||||
Exhibit 32.1 | ||||||||||
Exhibit 32.2 |
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Average Paid Circulation | ||||||||
Daily | Sunday | |||||||
2001 | 771,614 | 1,066,723 | ||||||
2002 | 767,843 | 1,058,458 | ||||||
2003 | 749,323 | 1,035,204 | ||||||
2004 | 729,068 | 1,016,163 | ||||||
2005 | 706,135 | 983,243 |
2001 | 2002 | 2003 | 2004 | 2005 | |||||||||||||||||
Total Inches (in thousands) | 2,714 | 2,657 | 2,675 | 2,726 | 2,661 | ||||||||||||||||
Full-Run Inches | 2,296 | 2,180 | 2,121 | 2,120 | 1,941 | ||||||||||||||||
Part-Run Inches | 418 | 477 | 554 | 606 | 720 | ||||||||||||||||
Preprints (in millions) | 1,556 | 1,656 | 1,835 | 1,887 | 1,833 |
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National | $ | 101,055,000 | |||
Local | 212,379,000 | ||||
Network | 13,810,000 | ||||
Total | $ | 327,244,000 | |||
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Station Location and | Expiration | Total Commercial Stations in | ||||||||||||||||||||||
Year Commercial | National | Expiration | Date of | DMA(b) | ||||||||||||||||||||
Operation | Market | Network | Date of FCC | Network | ||||||||||||||||||||
Commenced | Ranking(a) | Affiliation | License | Agreement | Allocated | Operating | ||||||||||||||||||
KPRC | 10th | NBC | Aug. 1, | Dec. 31, | VHF-3 | VHF-3 | ||||||||||||||||||
Houston, Tx | 2006 | 2011 | UHF-11 | UHF-11 | ||||||||||||||||||||
1949 | ||||||||||||||||||||||||
WDIV | 11th | NBC | Oct. 1, | Dec. 31, | VHF-4 | VHF-4 | ||||||||||||||||||
Detroit, Mich | 2005(c) | 2011 | UHF-6 | UHF-5 | ||||||||||||||||||||
1947 | ||||||||||||||||||||||||
WPLG | 17th | ABC | Feb. 1, | Dec. 31, | VHF-5 | VHF-5 | ||||||||||||||||||
Miami, Fla | 2005 | (c) | 2009 | UHF-8 | UHF-8 | |||||||||||||||||||
1961 | ||||||||||||||||||||||||
WKMG | 20th | CBS | Feb. 1, | Apr. 6, | VHF-3 | VHF-3 | ||||||||||||||||||
Orlando, Fla | 2013 | 2015 | UHF-10 | UHF-9 | ||||||||||||||||||||
1954 | ||||||||||||||||||||||||
KSAT | 37th | ABC | Aug. 1, | Dec. 31, | VHF-4 | VHF-4 | ||||||||||||||||||
San Antonio, Tx | 2006 | 2009 | UHF-6 | UHF-6 | ||||||||||||||||||||
1957 | ||||||||||||||||||||||||
WJXT | 52nd | None | Feb. 1, | — | VHF-2 | VHF-2 | ||||||||||||||||||
Jacksonville, Fla | 2013 | UHF-6 | UHF-5 | |||||||||||||||||||||
1947 |
(a) | Source: 2005/2006 DMA Market Rankings, Nielsen Media Research, Fall 2005, based on television homes in DMA (see note (b) below). |
(b) | Designated Market Area (“DMA”) is a market designation of A.C. Nielsen which defines each television market exclusive of another, based on measured viewing patterns. References to stations that are operating in each market are to stations that are broadcasting analog signals. However most of the stations in these markets are also engaged in digital broadcasting using theFCC-assigned channels for DTV operations. |
(c) | The Company has filed timely applications to renew the FCC licenses of WDIV and WPLG, and such filings extend the effectiveness of each station’s existing license until the renewal application is acted upon. |
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* | All references in this report to newsprint tonnage and prices refer to short tons (2,000 pounds) and not to metric tons (2,204.6 pounds), which are often used in newsprint quotations. |
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• | Changes in Prevailing Economic Conditions, Particularly in the Specific Geographic Markets Served by the Company’s Newspaper Publishing and Television Broadcasting Businesses |
• | Actions of Competitors, Including Price Changes and the Introduction of Competitive Offerings |
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• | Changing Preferences of Readers or Viewers |
• | Changing Perceptions About the Effectiveness of Publishing and Television Broadcasting in Delivering Advertising |
• | Technological Innovations in News, Information or Video Programming Distribution Systems |
• | Changes in the Nature and Extent of Government Regulations, Particularly in the Case of Television Broadcasting and Cable Television Operations |
• | Changes in the Cost or Availability of Raw Materials, Particularly Newsprint |
• | Changes in the Extent to Which Standardized Tests Are Used in the Admissions Process by Colleges or Graduate Schools |
• | Changes in the Extent to Which Licensing and Proficiency Examinations Are Used to Qualify Individuals to Pursue Certain Careers |
• | Reductions in the Amount of Funds Available Under the Federal Title IV Programs to Students in Kaplan’s Higher Education Division Schools |
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2005 | 2004 | |||||||||||||||
Quarter | High | Low | High | Low | ||||||||||||
January – March | $963 | $880 | $921 | $790 | ||||||||||||
April – June | 900 | 814 | 983 | 886 | ||||||||||||
July – September | 900 | 787 | 956 | 830 | ||||||||||||
October – December | 806 | 717 | 999 | 862 |
Value of Common Stock Investments | Value of Common Stock Investments | |||||||||||||||||||||
Assuming Indicated Decrease in | Assuming Indicated Increase in | |||||||||||||||||||||
Each Stock’s Price | Each Stock’s Price | |||||||||||||||||||||
-30% | -20% | -10% | +10% | +20% | +30% | |||||||||||||||||
$ | 230,945,000 | $ | 263,937,000 | $ | 296,929,000 | $ | 362,913,000 | $ | 395,905,000 | $ | 428,897,000 |
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Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. |
1. Financial Statements |
As listed in the index to financial information on page 30 hereof. |
2. Financial Statement Schedules |
As listed in the index to financial information on page 30 hereof. |
3. Exhibits |
As listed in the index to exhibits on page 69 hereof. |
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THE WASHINGTON POST COMPANY | |
(Registrant) |
By | /s/John B. Morse, Jr. |
John B. Morse, Jr. | ||
Vice President–Finance |
Donald E. Graham | Chairman of the Board and Chief Executive Officer (Principal Executive Officer) and Director | |||
John B. Morse, Jr. | Vice President–Finance (Principal Financial and Accounting Officer) | |||
Warren E. Buffett | Director | |||
Christopher C. Davis | Director | |||
Barry Diller | Director | |||
John L. Dotson Jr. | Director | |||
Melinda French Gates | Director | |||
George J. Gillespie, III | Director | |||
Ronald L. Olson | Director | |||
Alice M. Rivlin | Director | |||
Richard D. Simmons | Director | |||
George W. Wilson | Director |
By | /s/John B. Morse, Jr. |
John B. Morse, Jr. | ||
Attorney-in-Fact |
Page | ||||||
31 | ||||||
Financial Statements and Schedules: | ||||||
42 | ||||||
43 | ||||||
44 | ||||||
46 | ||||||
47 | ||||||
48 | ||||||
Financial Statement Schedule for the Three Fiscal Years Ended January 1, 2006: | ||||||
65 | ||||||
66 |
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2005 | 2004 | ||||||||||
Customer premise equipment | $ | 30.0 | $ | 23.5 | |||||||
Commercial | 0.2 | 0.1 | |||||||||
Scaleable infrastructure | 8.1 | 8.6 | |||||||||
Line extensions | 14.6 | 14.0 | |||||||||
Upgrade/rebuild | 13.1 | 15.6 | |||||||||
Support capital | 45.3 | 17.1 | |||||||||
Total | $ | 111.3 | $ | 78.9 | |||||||
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2005 | 2004 | % Change | |||||||||||||
Revenue | |||||||||||||||
Supplemental education | $ | 690,815 | $ | 575,014 | 20 | ||||||||||
Higher education | 721,579 | 559,877 | 29 | ||||||||||||
$ | 1,412,394 | $ | 1,134,891 | 24 | |||||||||||
Operating income (loss) | |||||||||||||||
Supplemental education | $ | 117,075 | $ | 100,795 | 16 | ||||||||||
Higher education | 82,660 | 93,402 | (12 | ) | |||||||||||
Kaplan corporate overhead | (33,305 | ) | (31,533 | ) | (6 | ) | |||||||||
Other | (8,595 | ) | (41,209 | ) | 79 | ||||||||||
$ | 157,835 | $ | 121,455 | 30 | |||||||||||
2005 | 2004 | ||||||||||
Gain on sales of marketable securities | $ | 12.7 | $ | — | |||||||
Gain on sales of non-operating land | 5.1 | — | |||||||||
Foreign currency (losses) gains, net | (8.1 | ) | 5.5 | ||||||||
Impairment write-downs on cost method and other investments | (1.5 | ) | (0.7 | ) | |||||||
Gain on exchange of cable system business | — | 0.5 | |||||||||
Other gains | 0.8 | 2.8 | |||||||||
Total | $ | 9.0 | $ | 8.1 | |||||||
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2004 | 2003 | ||||||||||
Customer premise equipment | $ | 23.5 | $ | 17.0 | |||||||
Commercial | 0.1 | 0.1 | |||||||||
Scaleable infrastructure | 8.6 | 5.3 | |||||||||
Line extensions | 14.0 | 10.6 | |||||||||
Upgrade/rebuild | 15.6 | 21.4 | |||||||||
Support capital | 17.1 | 11.5 | |||||||||
Total | $ | 78.9 | $ | 65.9 | |||||||
2004 | 2003 | % Change | |||||||||||||
Revenue | |||||||||||||||
Supplemental education | $ | 575,014 | $ | 469,757 | 22 | ||||||||||
Higher education | 559,877 | 368,320 | 52 | ||||||||||||
$ | 1,134,891 | $ | 838,077 | 35 | |||||||||||
Operating income (loss) | |||||||||||||||
Supplemental education | $ | 100,795 | $ | 87,044 | 16 | ||||||||||
Higher education | 93,402 | 58,428 | 60 | ||||||||||||
Kaplan corporate overhead | (31,533 | ) | (36,782 | ) | 14 | ||||||||||
Other | (41,209 | ) | (120,399 | ) | 66 | ||||||||||
$ | 121,455 | $ | (11,709 | ) | — | ||||||||||
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2004 | 2003 | ||||||||||
Foreign currency gains, net | $ | 5.5 | $ | 4.2 | |||||||
Gain on sale of interest in IHT | — | 49.8 | |||||||||
Impairment write-downs on cost method and other investments | (0.7 | ) | (1.3 | ) | |||||||
Gain on exchange of cable system business | 0.5 | — | |||||||||
Other gains | 2.8 | 2.7 | |||||||||
Total | $ | 8.1 | $ | 55.4 | |||||||
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2006 | 2007 | 2008 | 2009 | 2010 | Thereafter | Total | |||||||||||||||||||||||
Debt | $ | 24,820 | $ | 2,453 | $ | 1,295 | $ | 399,887 | $ | — | $ | — | $ | 428,455 | |||||||||||||||
Programming purchase commitments(1) | 137,530 | 133,733 | 111,888 | 86,138 | 58,252 | 189,246 | 716,787 | ||||||||||||||||||||||
Operating leases | 95,226 | 91,109 | 82,649 | 71,907 | 61,703 | 185,392 | 587,986 | ||||||||||||||||||||||
Other purchase obligations(2) | 391,570 | 104,020 | 76,775 | 62,409 | 4,741 | 352 | 639,867 | ||||||||||||||||||||||
Long-term liabilities(3) | 7,200 | 8,800 | 10,400 | 12,000 | 13,600 | 107,992 | 159,992 | ||||||||||||||||||||||
Total | $ | 656,346 | $ | 340,115 | $ | 283,007 | $ | 632,341 | $ | 138,296 | $ | 482,982 | $ | 2,533,087 | |||||||||||||||
(1) | Includes commitments for the Company’s television broadcasting and cable television businesses that are reflected in the Company’s Consolidated Balance Sheet and commitments to purchase programming to be produced in future years. |
(2) | Includes purchase obligations related to newsprint contracts, printing contracts, employment agreements, circulation distribution agreements, capital projects and other legally binding commitments. Other purchase orders made in the ordinary course of business are excluded from the table above. Any amounts for which the Company is liable under purchase orders are reflected in the Company’s Consolidated Balance Sheet as “Accounts payable and accrued liabilities.” |
(3) | Primarily made up of postretirement benefit obligations other than pensions. The Company has other long-term liabilities excluded from the table above, including obligations for deferred compensation, long-term incentive plans and long-term deferred revenue. |
Lines of | |||||
Fiscal Year | Credit | ||||
2006 | $ | 250,000 | |||
2007 | 350,000 | ||||
2008 | — | ||||
2009 | — | ||||
2010 | — | ||||
Thereafter | — | ||||
Total | $ | 600,000 | |||
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Shareholders of The Washington Post Company:
McLean, Virginia
March 3, 2006
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Fiscal year ended | ||||||||||||||
January 1, | January 2, | December 28, | ||||||||||||
(in thousands, except per share amounts) | 2006 | 2005 | 2003 | |||||||||||
Operating Revenues | ||||||||||||||
Advertising | $ | 1,317,484 | $ | 1,346,870 | $ | 1,222,324 | ||||||||
Circulation and subscriber | 747,079 | 741,810 | 706,248 | |||||||||||
Education | 1,412,394 | 1,134,891 | 838,077 | |||||||||||
Other | 76,930 | 76,533 | 72,262 | |||||||||||
3,553,887 | 3,300,104 | 2,838,911 | ||||||||||||
Operating Costs and Expenses | ||||||||||||||
Operating | 1,909,615 | 1,717,059 | 1,549,262 | |||||||||||
Selling, general and administrative | 931,337 | 835,367 | 792,292 | |||||||||||
Gain on sale of land | — | — | (41,747 | ) | ||||||||||
Depreciation of property, plant and equipment | 190,543 | 175,338 | 173,848 | |||||||||||
Amortization of goodwill and other intangibles | 7,478 | 9,334 | 1,436 | |||||||||||
3,038,973 | 2,737,098 | 2,475,091 | ||||||||||||
Income from Operations | 514,914 | 563,006 | 363,820 | |||||||||||
Equity in losses of affiliates | (881 | ) | (2,291 | ) | (9,766 | ) | ||||||||
Interest income | 3,385 | 1,622 | 953 | |||||||||||
Interest expense | (26,754 | ) | (28,032 | ) | (27,804 | ) | ||||||||
Other income (expense), net | 8,980 | 8,127 | 55,385 | |||||||||||
Income Before Income Taxes | 499,644 | 542,432 | 382,588 | |||||||||||
Provision for Income Taxes | 185,300 | 209,700 | 141,500 | |||||||||||
Net Income | 314,344 | 332,732 | 241,088 | |||||||||||
Redeemable Preferred Stock Dividends | (981 | ) | (992 | ) | (1,027 | ) | ||||||||
Net Income Available for Common Shares | $ | 313,363 | $ | 331,740 | $ | 240,061 | ||||||||
Basic Earnings per Common Share | $ | 32.66 | $ | 34.69 | $ | 25.19 | ||||||||
Diluted Earnings per Common Share | $ | 32.59 | $ | 34.59 | $ | 25.12 | ||||||||
Fiscal year ended | ||||||||||||||
January 1, | January 2, | December 28, | ||||||||||||
(in thousands) | 2006 | 2005 | 2003 | |||||||||||
Net Income | $ | 314,344 | $ | 332,732 | $ | 241,088 | ||||||||
Other Comprehensive Income (Loss) | ||||||||||||||
Foreign currency translation adjustments | (8,834 | ) | 9,601 | 13,416 | ||||||||||
Reclassification adjustment on sale of affiliate investment | — | — | (1,633 | ) | ||||||||||
Change in net unrealized gain on available-for-sale securities | (15,014 | ) | 63,022 | 31,426 | ||||||||||
Less reclassification adjustment for realized (gains) losses included in net income | (13,085 | ) | (202 | ) | 214 | |||||||||
(36,933 | ) | 72,421 | 43,423 | |||||||||||
Income tax benefit (expense) related to other comprehensive income (loss) | 10,964 | (24,577 | ) | (12,348 | ) | |||||||||
(25,969 | ) | 47,844 | 31,075 | |||||||||||
Comprehensive Income | $ | 288,375 | $ | 380,576 | $ | 272,163 | ||||||||
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January 1, | January 2, | |||||||||
(in thousands) | 2006 | 2005 | ||||||||
Assets | ||||||||||
Current Assets | ||||||||||
Cash and cash equivalents | $ | 215,861 | $ | 119,400 | ||||||
Investments in marketable equity securities | 67,596 | 149,303 | ||||||||
Accounts receivable, net | 398,552 | 362,862 | ||||||||
Federal and state income taxes | 26,651 | 18,375 | ||||||||
Deferred income taxes | 37,320 | 30,871 | ||||||||
Inventories | 15,079 | 25,127 | ||||||||
Other current assets | 57,267 | 44,571 | ||||||||
818,326 | 750,509 | |||||||||
Property, Plant and Equipment | ||||||||||
Buildings | 327,569 | 304,606 | ||||||||
Machinery, equipment and fixtures | 1,839,983 | 1,730,997 | ||||||||
Leasehold improvements | 167,116 | 133,674 | ||||||||
2,334,668 | 2,169,277 | |||||||||
Less accumulated depreciation | (1,325,676 | ) | (1,197,375 | ) | ||||||
1,008,992 | 971,902 | |||||||||
Land | 42,257 | 37,470 | ||||||||
Construction in progress | 91,383 | 80,580 | ||||||||
1,142,632 | 1,089,952 | |||||||||
Investments in Marketable Equity Securities | 262,325 | 260,433 | ||||||||
Investments in Affiliates | 66,775 | 61,814 | ||||||||
Goodwill, Net | 1,125,570 | 1,023,140 | ||||||||
Indefinite-Lived Intangible Assets, Net | 494,692 | 493,192 | ||||||||
Amortized Intangible Assets, Net | 22,814 | 7,879 | ||||||||
Prepaid Pension Cost | 593,469 | 556,747 | ||||||||
Deferred Charges and Other Assets | 58,170 | 65,099 | ||||||||
$ | 4,584,773 | $ | 4,308,765 | |||||||
The information on pages 48 through 63 is an integral part of the financial statements. |
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January 1, | January 2, | ||||||||||
(in thousands, except share amounts) | 2006 | 2005 | |||||||||
Liabilities and Shareholders’ Equity | |||||||||||
Current Liabilities | |||||||||||
Accounts payable and accrued liabilities | $ | 438,693 | $ | 443,332 | |||||||
Deferred revenue | 231,208 | 186,593 | |||||||||
Short-term borrowings | 24,820 | 58,236 | |||||||||
694,721 | 688,161 | ||||||||||
Postretirement Benefits Other Than Pensions | 150,909 | 145,490 | |||||||||
Other Liabilities | 262,270 | 228,654 | |||||||||
Deferred Income Taxes | 422,548 | 403,698 | |||||||||
Long-Term Debt | 403,635 | 425,889 | |||||||||
1,934,083 | 1,891,892 | ||||||||||
Commitments and Contingencies | |||||||||||
Redeemable Preferred Stock,Series A, $1 par value, with a redemption and liquidation value of $1,000 per share; 23,000 shares authorized; 12,267 shares issued and outstanding | 12,267 | 12,267 | |||||||||
Preferred Stock,$1 par value; 977,000 shares authorized, none issued | — | — | |||||||||
Common Shareholders’ Equity | |||||||||||
Common stock | |||||||||||
Class A common stock, $1 par value; 7,000,000 shares authorized; 1,722,250 shares issued and outstanding | 1,722 | 1,722 | |||||||||
Class B common stock, $1 par value; 40,000,000 shares authorized; 18,277,750 shares issued; 7,879,281 and 7,853,822 shares outstanding | 18,278 | 18,278 | |||||||||
Capital in excess of par value | 207,328 | 186,827 | |||||||||
Retained earnings | 3,871,587 | 3,629,222 | |||||||||
Accumulated other comprehensive income, net of taxes | |||||||||||
Cumulative foreign currency translation adjustment | 5,039 | 13,873 | |||||||||
Unrealized gain on available-for-sale securities | 58,313 | 75,448 | |||||||||
Unearned stock compensation | (14,656 | ) | (7,876 | ) | |||||||
Cost of 10,398,469 and 10,423,928 shares of Class B common stock held in treasury | (1,509,188 | ) | (1,512,888 | ) | |||||||
2,638,423 | 2,404,606 | ||||||||||
$ | 4,584,773 | $ | 4,308,765 | ||||||||
The information on pages 48 through 63 is an integral part of the financial statements. |
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Fiscal year ended | ||||||||||||||||
January 1, | January 2, | December 28, | ||||||||||||||
(In thousands) | 2006 | 2005 | 2003 | |||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||||
Net income | $ | 314,344 | $ | 332,732 | $ | 241,088 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Depreciation of property, plant and equipment | 190,543 | 175,338 | 173,848 | |||||||||||||
Amortization of goodwill and other intangibles | 7,478 | 9,334 | 1,436 | |||||||||||||
Net pension benefit | (37,914 | ) | (41,954 | ) | (55,137 | ) | ||||||||||
Early retirement program expense | 1,192 | 132 | 34,135 | |||||||||||||
Gain from sale or exchange of businesses | — | (497 | ) | (49,762 | ) | |||||||||||
Gain on sale of non-operating land and property, plant and equipment | (5,148 | ) | (2,669 | ) | (41,734 | ) | ||||||||||
Gain on disposition of marketable equity securities | (12,661 | ) | — | — | ||||||||||||
Property, plant and equipment losses | 9,665 | — | — | |||||||||||||
Cost method investment and other write-downs | 1,465 | 677 | 1,337 | |||||||||||||
Equity in losses of affiliates, net of distributions | 1,731 | 3,091 | 10,516 | |||||||||||||
Foreign exchange loss (gain) | 8,099 | (5,505 | ) | (4,187 | ) | |||||||||||
Provision for deferred income taxes | 29,297 | 44,321 | 30,704 | |||||||||||||
Change in assets and liabilities: | ||||||||||||||||
Increase in accounts receivable, net | (19,416 | ) | (23,722 | ) | (9,936 | ) | ||||||||||
Decrease in inventories | 11,483 | 2,640 | 829 | |||||||||||||
(Decrease) increase in accounts payable and accrued liabilities | (27,033 | ) | 70,058 | (14,308 | ) | |||||||||||
Increase in income taxes receivable | (8,139 | ) | (13,079 | ) | (10,171 | ) | ||||||||||
Decrease in other assets and other liabilities, net | 53,618 | 3,477 | 34,460 | |||||||||||||
Other | 4,168 | 7,347 | (5,404 | ) | ||||||||||||
Net cash provided by operating activities | 522,772 | 561,721 | 337,714 | |||||||||||||
Cash Flows from Investing Activities: | ||||||||||||||||
Investments in certain businesses | (143,478 | ) | (55,232 | ) | (134,541 | ) | ||||||||||
Purchases of property, plant and equipment | (238,349 | ) | (204,632 | ) | (125,588 | ) | ||||||||||
Proceeds from sale of marketable equity securities | 64,801 | — | — | |||||||||||||
Proceeds from sale of property, plant and equipment | 24,077 | 5,340 | 44,973 | |||||||||||||
Purchases of cost method investments | (8,709 | ) | (224 | ) | (849 | ) | ||||||||||
Investments in affiliates | (4,981 | ) | — | (5,976 | ) | |||||||||||
Purchases of marketable equity securities | — | (94,560 | ) | — | ||||||||||||
Net proceeds from sale of businesses | — | — | 65,000 | |||||||||||||
Net cash used in investing activities | (306,639 | ) | (349,308 | ) | (156,981 | ) | ||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||
Repayment of commercial paper, net | (50,201 | ) | (138,116 | ) | (70,942 | ) | ||||||||||
Principal payments on debt | (6,964 | ) | (19,253 | ) | (784 | ) | ||||||||||
Dividends paid | (71,979 | ) | (67,917 | ) | (56,289 | ) | ||||||||||
Common shares repurchased | — | — | (687 | ) | ||||||||||||
Proceeds from exercise of stock options | 6,832 | 15,616 | 5,898 | |||||||||||||
Cash overdraft. | 6,534 | (1,953 | ) | 1,245 | ||||||||||||
Net cash used in financing activities | (115,778 | ) | (211,623 | ) | (121,559 | ) | ||||||||||
Effect of Currency Exchange Rate Change | (3,894 | ) | 2,049 | 737 | ||||||||||||
Net Increase in Cash and Cash Equivalents | 96,461 | 2,839 | 59,911 | |||||||||||||
Cash and Cash Equivalents at Beginning of Year | 119,400 | 116,561 | 56,650 | |||||||||||||
Cash and Cash Equivalents at End of Year | $ | 215,861 | $ | 119,400 | $ | 116,561 | ||||||||||
Supplemental Cash Flow Information: | ||||||||||||||||
Cash paid during the year for: | ||||||||||||||||
Income taxes | $ | 161,600 | $ | 171,400 | $ | 116,900 | ||||||||||
Interest, net of amounts capitalized | $ | 27,300 | $ | 25,500 | $ | 27,500 |
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Cumulative | Unrealized | ||||||||||||||||||||||||||||||||||
Foreign | Gain on | ||||||||||||||||||||||||||||||||||
Class A | Class B | Capital in | Currency | Available- | Unearned | ||||||||||||||||||||||||||||||
Common | Common | Excess of | Retained | Translation | for-Sale | Stock | |||||||||||||||||||||||||||||
(in thousands) | Stock | Stock | Par Value | Earnings | Adjustment | Securities | Compensation | Treasury Stock | |||||||||||||||||||||||||||
Balance, December 29, 2002 | $ | 1,722 | $ | 18,278 | $ | 149,090 | $ | 3,179,607 | $ | (7,511 | ) | $ | 17,913 | $ | (6,907 | ) | $ | (1,521,806 | ) | ||||||||||||||||
Net income for the year | 241,088 | ||||||||||||||||||||||||||||||||||
Dividends paid on common stock — $5.80 per share | (55,261 | ) | |||||||||||||||||||||||||||||||||
Dividends paid on redeemable preferred stock | (1,027 | ) | |||||||||||||||||||||||||||||||||
Repurchase of 910 shares of Class B common stock | (687 | ) | |||||||||||||||||||||||||||||||||
Issuance of 31,697 shares of Class B common stock, net of restricted stock award forfeitures | 14,147 | (11,315 | ) | 4,599 | |||||||||||||||||||||||||||||||
Amortization of unearned stock compensation | 5,962 | ||||||||||||||||||||||||||||||||||
Change in foreign currency translation adjustment (net of taxes) | 11,783 | ||||||||||||||||||||||||||||||||||
Change in unrealized gain on available-for-sale securities (net of taxes) | 19,292 | ||||||||||||||||||||||||||||||||||
Stock option expense | 606 | ||||||||||||||||||||||||||||||||||
Tax benefits arising from employee stock plans | 3,108 | ||||||||||||||||||||||||||||||||||
Balance, December 28, 2003 | 1,722 | 18,278 | 166,951 | 3,364,407 | 4,272 | 37,205 | (12,260 | ) | (1,517,894 | ) | |||||||||||||||||||||||||
Net income for the year | 332,732 | ||||||||||||||||||||||||||||||||||
Dividends paid on common stock — $7.00 per share | (66,925 | ) | |||||||||||||||||||||||||||||||||
Dividends paid on redeemable preferred stock | (992 | ) | |||||||||||||||||||||||||||||||||
Issuance of 34,492 shares of Class B common stock, net of restricted stock award forfeitures | 11,956 | (1,793 | ) | 5,006 | |||||||||||||||||||||||||||||||
Amortization of unearned stock compensation | 6,177 | ||||||||||||||||||||||||||||||||||
Change in foreign currency translation adjustment (net of taxes) | 9,601 | ||||||||||||||||||||||||||||||||||
Change in unrealized gain on available-for-sale securities (net of taxes) | 38,243 | ||||||||||||||||||||||||||||||||||
Stock option expense | 829 | ||||||||||||||||||||||||||||||||||
Tax benefits arising from employee stock plans | 7,091 | ||||||||||||||||||||||||||||||||||
Balance, January 2, 2005 | 1,722 | 18,278 | 186,827 | 3,629,222 | 13,873 | 75,448 | (7,876 | ) | (1,512,888 | ) | |||||||||||||||||||||||||
Net income for the year | 314,344 | ||||||||||||||||||||||||||||||||||
Dividends paid on common stock — $7.40 per share | (70,998 | ) | |||||||||||||||||||||||||||||||||
Dividends paid on redeemable preferred stock | (981 | ) | |||||||||||||||||||||||||||||||||
Issuance of 25,459 shares of Class B common stock, net of restricted stock award forfeitures | 15,496 | (12,358 | ) | 3,700 | |||||||||||||||||||||||||||||||
Amortization of unearned stock compensation | 5,578 | ||||||||||||||||||||||||||||||||||
Change in foreign currency translation adjustment (net of taxes) | (8,834 | ) | |||||||||||||||||||||||||||||||||
Change in unrealized gain on available-for-sale securities (net of taxes) | (17,135 | ) | |||||||||||||||||||||||||||||||||
Stock option expense | 1,101 | ||||||||||||||||||||||||||||||||||
Tax benefits arising from employee stock plans | 3,904 | ||||||||||||||||||||||||||||||||||
Balance, January 1, 2006 | $ | 1,722 | $ | 18,278 | $ | 207,328 | $ | 3,871,587 | $ | 5,039 | $ | 58,313 | $ | (14,656 | ) | $ | (1,509,188 | ) | |||||||||||||||||
The information on pages 48 through 63 is an integral part of the financial statements. |
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Table of Contents
2005 | 2004 | 2003 | ||||||||||||
Net income available for common shares, as reported | $ | 313,363 | $ | 331,740 | $ | 240,061 | ||||||||
Add: Company stock option compensation expense included in net income, net of related tax effects | 694 | 536 | 370 | |||||||||||
Deduct: Total Company stock option compensation expense determined under the fair-value-based method for all awards, net of related tax effects | (1,071 | ) | (2,946 | ) | (3,529 | ) | ||||||||
Pro forma net income available for common shares | $ | 312,986 | $ | 329,330 | $ | 236,902 | ||||||||
Basic earnings per share, as reported | $ | 32.66 | $ | 34.69 | $ | 25.19 | ||||||||
Pro forma basic earnings per share | $ | 32.62 | $ | 34.44 | $ | 24.86 | ||||||||
Diluted earnings per share, as reported | $ | 32.59 | $ | 34.59 | $ | 25.12 | ||||||||
Pro forma diluted earnings per share | $ | 32.55 | $ | 34.34 | $ | 24.79 |
Table of Contents
B. | ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
2005 | 2004 | |||||||||
Trade accounts receivable, less estimated returns, doubtful accounts and allowances of $78,099 and $70,965 | $ | 375,668 | $ | 342,879 | ||||||
Other accounts receivable | 22,884 | 19,983 | ||||||||
$ | 398,552 | $ | 362,862 | |||||||
2005 | 2004 | |||||||||
Accounts payable and accrued expenses | $ | 272,441 | $ | 231,066 | ||||||
Accrued compensation and related benefits | 158,612 | 204,225 | ||||||||
Due to affiliates (newsprint) | 7,640 | 8,041 | ||||||||
$ | 438,693 | $ | 443,332 | |||||||
C. | INVESTMENTS |
2005 | 2004 | |||||||||
Total cost | $ | 234,196 | $ | 285,912 | ||||||
Net unrealized gains | 95,725 | 123,824 | ||||||||
Total fair value | $ | 329,921 | $ | 409,736 | ||||||
2005 | 2004 | |||||||||
BrassRing | $ | 11,349 | $ | 8,755 | ||||||
Bowater Mersey Paper Company | 54,407 | 52,112 | ||||||||
Los Angeles Times–Washington Post News Service | 1,019 | 947 | ||||||||
$ | 66,775 | $ | 61,814 | |||||||
2005 | 2004 | 2003 | ||||||||||||
Financial Position | ||||||||||||||
Working capital | $ | 13,861 | $ | 9,014 | $ | 11,108 | ||||||||
Property, plant and equipment | 131,823 | 137,321 | 140,917 | |||||||||||
Total assets | 214,333 | 202,904 | 214,658 | |||||||||||
Long-term debt | — | — | — | |||||||||||
Net equity | 164,801 | 155,147 | 149,584 | |||||||||||
Results of Operations | ||||||||||||||
Operating revenues | $ | 236,233 | $ | 221,618 | $ | 174,505 | ||||||||
Operating income (loss) | 3,513 | 1,695 | (18,753 | ) | ||||||||||
Net loss | (1,806 | ) | (4,577 | ) | (20,164 | ) |
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2005 | 2004 | ||||||||
Beginning investment | $ | 61,814 | $ | 61,312 | |||||
Additional investment | 4,981 | — | |||||||
Equity in losses | (881 | ) | (2,291 | ) | |||||
Dividends and distributions received | (850 | ) | (800 | ) | |||||
Foreign currency translation | 1,711 | 3,593 | |||||||
Ending investment | $ | 66,775 | $ | 61,814 | |||||
Current | Deferred | Total | ||||||||||||
2005 | ||||||||||||||
U.S. Federal | $ | 132,650 | $ | 22,591 | $ | 155,241 | ||||||||
Foreign | 4,849 | 29 | 4,878 | |||||||||||
State and local | 18,504 | 6,677 | 25,181 | |||||||||||
$ | 156,003 | $ | 29,297 | $ | 185,300 | |||||||||
2004 | ||||||||||||||
U.S. Federal | $ | 138,429 | $ | 35,544 | $ | 173,973 | ||||||||
Foreign | 4,751 | (361 | ) | 4,390 | ||||||||||
State and local | 22,199 | 9,138 | 31,337 | |||||||||||
$ | 165,379 | $ | 44,321 | $ | 209,700 | |||||||||
2003 | ||||||||||||||
U.S. Federal | $ | 93,329 | $ | 27,189 | $ | 120,518 | ||||||||
Foreign | 4,129 | (159 | ) | 3,970 | ||||||||||
State and local | 13,338 | 3,674 | 17,012 | |||||||||||
$ | 110,796 | $ | 30,704 | $ | 141,500 | |||||||||
2005 | 2004 | 2003 | |||||||||||
U.S. Federal statutory taxes | $ | 174,875 | $ | 189,851 | $ | 133,906 | |||||||
State and local taxes, net of U.S. Federal income tax benefit | 16,368 | 20,369 | 11,058 | ||||||||||
Tax provided on foreign subsidiary earnings at less than the expected U.S. Federal statutory tax rate | (3,622 | ) | (1,373 | ) | — | ||||||||
Sale of affiliate with higher tax basis | — | — | (2,188 | ) | |||||||||
Other, net | (2,321 | ) | 853 | (1,276 | ) | ||||||||
Provision for income taxes | $ | 185,300 | $ | 209,700 | $ | 141,500 | |||||||
2005 | 2004 | ||||||||
Accrued postretirement benefits | $ | 63,129 | $ | 61,221 | |||||
Other benefit obligations | 104,105 | 122,608 | |||||||
Accounts receivable | 21,762 | 18,939 | |||||||
State income tax loss carryforwards | 9,185 | 10,753 | |||||||
Affiliate operations | 3,135 | 4,403 | |||||||
Other | 20,335 | 19,866 | |||||||
Deferred tax asset | 221,651 | 237,790 | |||||||
Property, plant and equipment | 153,445 | 173,101 | |||||||
Prepaid pension cost | 240,495 | 224,991 | |||||||
Unrealized gain on available-for-sale securities | 37,422 | 48,387 | |||||||
Goodwill and other intangibles | 175,517 | 164,138 | |||||||
Deferred tax liability | 606,879 | 610,617 | |||||||
Deferred income taxes | $ | 385,228 | $ | 372,827 | |||||
Table of Contents
2006 | $ | 4.3 | ||
2007 | 3.5 | |||
2008 | 3.8 | |||
2009 | 7.7 | |||
2010 | 8.6 | |||
2011 to 2023 | 152.3 | |||
Total | $ | 180.2 | ||
January 1, | January 2, | ||||||||
2006 | 2005 | ||||||||
Commercial paper borrowings | $ | — | $ 50.2 | ||||||
5.5% unsecured notes due February 15, 2009 | 399.2 | 398.9 | |||||||
4.0% notes due 2006 (£8.4 million) | 14.4 | 16.1 | |||||||
Other indebtedness | 14.8 | 18.9 | |||||||
Total | 428.4 | 484.1 | |||||||
Less current portion | (24.8 | ) | (58.2 | ) | |||||
Total long-term debt | $ | 403.6 | $425.9 | ||||||
Table of Contents
G. | CAPITAL STOCK, STOCK AWARDS AND STOCK OPTIONS |
2005 | 2004 | 2003 | ||||||||||||||||||||||||
Number | Average | Number | Average | Number | Average | |||||||||||||||||||||
of | Award | of | Award | of | Award | |||||||||||||||||||||
Shares | Price | Shares | Price | Shares | Price | |||||||||||||||||||||
Beginning of year | 28,001 | $644.51 | 29,845 | $643.89 | 27,625 | $536.74 | ||||||||||||||||||||
Awarded | 16,550 | 940.96 | 200 | 973.88 | 15,990 | 734.01 | ||||||||||||||||||||
Vested | (13,830 | ) | 609.87 | (561 | ) | 625.91 | (12,752 | ) | 523.60 | |||||||||||||||||
Forfeited | (1,141 | ) | 819.22 | (1,483 | ) | 683.58 | (1,018 | ) | 658.44 | |||||||||||||||||
End of year | 29,580 | $819.83 | 28,001 | $644.51 | 29,845 | $643.89 | ||||||||||||||||||||
2005 | 2004 | 2003 | |||||||||||||||||||||||
Number | Average | Number | Average | Number | Average | ||||||||||||||||||||
of | Option | of | Option | of | Option | ||||||||||||||||||||
Shares | Price | Shares | Price | Shares | Price | ||||||||||||||||||||
Beginning of year | 122,250 | $ | 561.05 | 152,475 | $530.81 | 163,900 | $515.74 | ||||||||||||||||||
Granted | 4,500 | 762.50 | 4,000 | 953.50 | 5,000 | 803.70 | |||||||||||||||||||
Exercised | (12,800 | ) | 533.24 | (33,225 | ) | 467.68 | (15,675 | ) | 450.87 | ||||||||||||||||
Forfeited | (625 | ) | 530.87 | (1,000 | ) | 621.38 | (750 | ) | 729.00 | ||||||||||||||||
End of year | 113,325 | $ | 572.36 | 122,250 | $561.05 | 152,475 | $530.81 | ||||||||||||||||||
Weighted | |||||||||||||||||||||||
Average | Weighted | Weighted | |||||||||||||||||||||
Number | Remaining | Average | Number | Average | |||||||||||||||||||
Range of | Outstanding | Contractual | Exercise | Exercisable | Exercise | ||||||||||||||||||
Exercise Prices | at 1/1/2006 | Life (yrs.) | Price | at 1/1/2006 | Price | ||||||||||||||||||
$ | 344 | 3,300 | 1.0 | $ | 343.94 | 3,300 | $ | 343.94 | |||||||||||||||
472–484 | 12,125 | 2.7 | 473.70 | 12,125 | 473.70 | ||||||||||||||||||
500–596 | 74,900 | 4.8 | 531.42 | 74,900 | 531.42 | ||||||||||||||||||
693 | 500 | 8.0 | 692.51 | 250 | 692.51 | ||||||||||||||||||
729–763 | 14,000 | 8.0 | 739.77 | 7,125 | 729.00 | ||||||||||||||||||
816 | 4,500 | 8.0 | 816.05 | 2,250 | 816.05 | ||||||||||||||||||
954 | 4,000 | 9.0 | 953.50 | 1,000 | 953.50 |
Table of Contents
2005 | 2004 | 2003 | |||||||||||
Expected life (years) | 7 | 7 | 7 | ||||||||||
Interest rate | 4.49 | % | 3.85 | % | 4.38 | % | |||||||
Volatility | 19.08 | % | 20.24 | % | 20.43 | % | |||||||
Dividend yield | 0.97 | % | 0.73 | % | 0.71 | % |
2005 | 2004 | 2003 | ||||||||||||||||||||||||
Number | Average | Number | Average | Number | Average | |||||||||||||||||||||
of | Option | of | Option | of | Option | |||||||||||||||||||||
Shares | Price | Shares | Price | Shares | Price | |||||||||||||||||||||
Beginning of Year | 68,000 | $ | 596.17 | 68,000 | $596.17 | 147,463 | $ | 311.24 | ||||||||||||||||||
Granted | 10,582 | 2,080.00 | — | — | 16,037 | 1,546.23 | ||||||||||||||||||||
Exercised | (16,153 | ) | 225.14 | — | — | (94,652 | ) | 303.66 | ||||||||||||||||||
Forfeited | (200 | ) | 652.00 | — | — | (848 | ) | 382.12 | ||||||||||||||||||
End of year | 62,229 | $ | 944.63 | 68,000 | $596.17 | 68,000 | $ | 596.17 | ||||||||||||||||||
Number | Weighted Average | Number | |||||||||||||
Range of | Outstanding | Remaining Contractual | Exercisable | ||||||||||||
Exercise Prices | at 1/1/06 | Life (yrs.) | at 1/1/06 | ||||||||||||
$ | 190 | 16,650 | 2.0 | 16,650 | |||||||||||
375 | 338 | 4.5 | 338 | ||||||||||||
526 | 18,672 | 5.5 | 15,139 | ||||||||||||
652 | 2,000 | 6.0 | 1,200 | ||||||||||||
861 | 487 | 6.0 | 204 | ||||||||||||
1,625 | 13,500 | 6.0 | 5,400 | ||||||||||||
2,080 | 10,582 | 6.0 | — |
Basic | Dilutive | Diluted | |||||||||||
Weighted Average | Effect of | Weighted Average | |||||||||||
Shares | Stock Options | Shares | |||||||||||
2005 | 9,593,837 | 22,060 | 9,615,897 | ||||||||||
2004 | 9,563,314 | 28,311 | 9,591,625 | ||||||||||
2003 | 9,530,209 | 24,454 | 9,554,663 |
Table of Contents
H. | PENSIONS AND OTHER POSTRETIREMENT PLANS |
Pension Plans | Postretirement Plans | ||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||
Change in Benefit Obligation | |||||||||||||||||
Benefit obligation at beginning of year | $ | 689,141 | $ | 625,774 | $ | 132,540 | $ | 120,444 | |||||||||
Service cost | 27,161 | 22,896 | 6,026 | 5,285 | |||||||||||||
Interest cost | 39,989 | 37,153 | 7,434 | 7,355 | |||||||||||||
Amendments | 3,751 | 218 | — | — | |||||||||||||
Actuarial loss | 15,272 | 46,655 | 1,860 | 5,764 | |||||||||||||
Benefits paid | (26,441 | ) | (43,555 | ) | (6,391 | ) | (6,308 | ) | |||||||||
Benefit obligation at end of year | $ | 748,873 | $ | 689,141 | $ | 141,469 | $ | 132,540 | |||||||||
Change in Plan Assets | |||||||||||||||||
Fair value of assets at beginning of year | $ | 1,588,213 | $ | 1,564,966 | $ | — | $ | — | |||||||||
Actual return on plan assets | 121,493 | 66,802 | — | — | |||||||||||||
Employer contributions | — | — | 6,391 | 6,308 | |||||||||||||
Benefits paid | (26,441 | ) | (43,555 | ) | (6,391 | ) | (6,308 | ) | |||||||||
Fair value of assets at end of year | $ | 1,683,265 | $ | 1,588,213 | $ | — | $ | — | |||||||||
Funded status | $ | 934,392 | $ | 899,072 | $ | (141,469 | ) | $ | (132,540 | ) | |||||||
Unrecognized transition asset | (249 | ) | (355 | ) | — | — | |||||||||||
Unrecognized prior service cost | 36,233 | 38,389 | (7,413 | ) | (8,001 | ) | |||||||||||
Unrecognized actuarial gain | (376,907 | ) | (380,359 | ) | (2,027 | ) | (4,949 | ) | |||||||||
Net prepaid (accrued) cost | $ | 593,469 | $ | 556,747 | $ | (150,909 | ) | $ | (145,490 | ) | |||||||
Pension Plans | Postretirement Plans | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Discount rate | 5.75% | 5.75% | 5.60% | 5.75% | ||||||||||||
Rate of compensation increase | 4.0% | 4.0% | — | — |
1% | 1% | |||||||
Increase | Decrease | |||||||
Benefit obligation at end of year | $ | 21,471 | $ | (20,075 | ) | |||
Service cost plus interest cost | $ | 2,150 | $ | (2,085 | ) |
Postretirement | ||||||||
Pension Plans | Plans | |||||||
2006 | $ | 28.5 | $ | 6.9 | ||||
2007 | $ | 30.1 | $ | 7.4 | ||||
2008 | $ | 32.3 | $ | 8.0 | ||||
2009 | $ | 34.4 | $ | 8.6 | ||||
2010 | $ | 36.6 | $ | 9.4 | ||||
2011-2015 | $ | 230.8 | $ | 55.7 |
Plan Asset Allocations | |||||||||||||||||
January 1, 2006 | January 2, 2005 | ||||||||||||||||
Equities | $ | 1,427 | 84.8% | $ | 1,362 | 85.8% | |||||||||||
Fixed Income | 256 | 15.2% | 226 | 14.2% | |||||||||||||
Total | $ | 1,683 | 100.0% | $ | 1,588 | 100.0% | |||||||||||
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Pension Plans | Postretirement Plans | ||||||||||||||||||||||||
2005 | 2004 | 2003 | 2005 | 2004 | 2003 | ||||||||||||||||||||
Service cost | $ | 27,161 | $ | 22,896 | $ | 19,965 | $ | 6,026 | $ | 5,285 | $ | 5,164 | |||||||||||||
Interest cost | 39,989 | 37,153 | 33,696 | 7,434 | 7,355 | 7,395 | |||||||||||||||||||
Expected return on assets | (104,589 | ) | (97,702 | ) | (96,116 | ) | — | — | — | ||||||||||||||||
Amortization of transition asset | (106 | ) | (1,086 | ) | (2,189 | ) | — | — | — | ||||||||||||||||
Amortization of prior service cost | 4,716 | 4,530 | 4,172 | (588 | ) | (588 | ) | (360 | ) | ||||||||||||||||
Recognized actuarial gain | (5,085 | ) | (7,745 | ) | (14,665 | ) | (1,061 | ) | (995 | ) | (1,675 | ) | |||||||||||||
Net periodic (benefit) cost for the year | (37,914 | ) | (41,954 | ) | (55,137 | ) | 11,811 | 11,057 | 10,524 | ||||||||||||||||
Early retirement programs expense | 1,192 | 132 | 34,135 | — | — | — | |||||||||||||||||||
Curtailment gain | — | — | — | — | — | (634 | ) | ||||||||||||||||||
Total (benefit) cost for the year | $ | (36,722 | ) | $ | (41,822 | ) | $ | (21,002 | ) | $ | 11,811 | $ | 11,057 | $ | 9,890 | ||||||||||
Pension Plans | Postretirement Plans | ||||||||||||||||||||||||
2005 | 2004 | 2003 | 2005 | 2004 | 2003 | ||||||||||||||||||||
Discount rate | 5.75% | 6.25% | 6.75% | 5.75% | 6.25% | 6.75% | |||||||||||||||||||
Expected return on plan assets | 7.5% | 7.5% | 7.5% | — | — | — | |||||||||||||||||||
Rate of compensation increase | 4.0% | 4.0% | 4.0% | — | — | — |
I. | LEASE AND OTHER COMMITMENTS |
2006 | $ | 95,226 | ||
2007 | 91,109 | |||
2008 | 82,649 | |||
2009 | 71,907 | |||
2010 | 61,703 | |||
Thereafter | 185,392 | |||
$ | 587,986 | |||
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Accumulated | ||||||||||||||
Gross | Amortization | Net | ||||||||||||
2005: | ||||||||||||||
Goodwill | $ | 1,423,972 | $ | 298,402 | $ | 1,125,570 | ||||||||
Indefinite-lived intangible assets | 658,498 | 163,806 | 494,692 | |||||||||||
Amortized intangible assets | 42,434 | 19,620 | 22,814 | |||||||||||
$ | 2,124,904 | $ | 481,828 | $ | 1,643,076 | |||||||||
2004: | ||||||||||||||
Goodwill | $ | 1,321,542 | $ | 298,402 | $ | 1,023,140 | ||||||||
Indefinite-lived intangible assets | 656,998 | 163,806 | 493,192 | |||||||||||
Amortized intangible assets | 20,021 | 12,142 | 7,879 | |||||||||||
$ | 1,998,561 | $ | 474,350 | $ | 1,524,211 | |||||||||
Newspaper | Television | Magazine | Cable | |||||||||||||||||||||||
Publishing | Broadcasting | Publishing | Television | Education | Total | |||||||||||||||||||||
Goodwill, Net | ||||||||||||||||||||||||||
Beginning of year | $ | 72,770 | $ | 203,165 | $ | 69,556 | $ | 85,666 | $ | 591,983 | $ | 1,023,140 | ||||||||||||||
Acquisitions | 7,881 | 111,623 | 119,504 | |||||||||||||||||||||||
Foreign currency exchange rate | (17,074 | ) | (17,074 | ) | ||||||||||||||||||||||
End of year | $ | 80,651 | $ | 203,165 | $ | 69,556 | $ | 85,666 | $ | 686,532 | $ | 1,125,570 | ||||||||||||||
Indefinite-Lived Intangible Assets, Net | ||||||||||||||||||||||||||
Beginning of year | $ | 486,330 | $ | 6,862 | $ | 493,192 | ||||||||||||||||||||
Acquisitions | 1,500 | 1,500 | ||||||||||||||||||||||||
End of year | $ | 486,330 | $ | 8,362 | $ | 494,692 | ||||||||||||||||||||
Amortized Intangible Assets, Net | ||||||||||||||||||||||||||
Beginning of year | $ | 118 | $ | 2,474 | $ | 5,287 | $ | 7,879 | ||||||||||||||||||
Acquisitions | 7,677 | 14,989 | 22,666 | |||||||||||||||||||||||
Foreign currency exchange rate | (253 | ) | (253 | ) | ||||||||||||||||||||||
Amortization | (1,119 | ) | (764 | ) | (5,595 | ) | (7,478 | ) | ||||||||||||||||||
End of year | $ | 6,676 | $ | 1,710 | $ | 14,428 | $ | 22,814 | ||||||||||||||||||
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Newspaper | Television | Magazine | Cable | |||||||||||||||||||||||
Publishing | Broadcasting | Publishing | Television | Education | Total | |||||||||||||||||||||
Goodwill, Net | ||||||||||||||||||||||||||
Beginning of year | $ | 71,277 | $ | 203,165 | $ | 69,556 | $ | 85,666 | $ | 536,030 | $ | 965,694 | ||||||||||||||
Acquisitions | 1,493 | 44,143 | 45,636 | |||||||||||||||||||||||
Foreign currency exchange rate | 11,810 | 11,810 | ||||||||||||||||||||||||
End of year | $ | 72,770 | $ | 203,165 | $ | 69,556 | $ | 85,666 | $ | 591,983 | $ | 1,023,140 | ||||||||||||||
Indefinite-Lived Intangible Assets, Net | ||||||||||||||||||||||||||
Beginning of year | $ | 484,556 | $ | 2,100 | $ | 486,656 | ||||||||||||||||||||
Acquisitions | 1,774 | 4,762 | 6,536 | |||||||||||||||||||||||
End of year | $ | 486,330 | $ | 6,862 | $ | 493,192 | ||||||||||||||||||||
Amortized Intangible Assets, Net | ||||||||||||||||||||||||||
Beginning of year | $ | 30 | $ | 1,081 | $ | 4,115 | $ | 5,226 | ||||||||||||||||||
Acquisitions | 107 | 2,045 | 9,845 | 11,997 | ||||||||||||||||||||||
Foreign currency exchange rate | (10 | ) | (10 | ) | ||||||||||||||||||||||
Amortization | (19 | ) | (652 | ) | (8,663 | ) | (9,334 | ) | ||||||||||||||||||
End of year | $ | 118 | $ | 2,474 | $ | 5,287 | $ | 7,879 | ||||||||||||||||||
2005 | 2004 | 2003 | ||||||||||||
Gain on sales of marketable securities | $ | 12.7 | $ | — | $ | — | ||||||||
Gain on sale of non-operating land | 5.1 | — | — | |||||||||||
Foreign currency (losses) gains, net | (8.1 | ) | 5.5 | 4.2 | ||||||||||
Impairment write-downs on cost method and other investments | (1.5 | ) | (0.7 | ) | (1.3 | ) | ||||||||
Gain on sale of interest in IHT | — | — | 49.8 | |||||||||||
Gain on sale or exchange of cable system businesses | — | 0.5 | — | |||||||||||
Other | 0.8 | 2.8 | 2.7 | |||||||||||
Total | $ | 9.0 | $ | 8.1 | $ | 55.4 | ||||||||
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Newspaper | Television | Magazine | Cable | Corporate | ||||||||||||||||||||||||||
(in thousands) | Publishing | Broadcasting | Publishing | Television | Education | Office | Consolidated | |||||||||||||||||||||||
2005 | ||||||||||||||||||||||||||||||
Operating revenues | $ | 957,082 | $ | 331,817 | $ | 344,894 | $ | 507,700 | $ | 1,412,394 | $ | — | $ | 3,553,887 | ||||||||||||||||
Income (loss) from operations | $ | 125,359 | $ | 142,478 | $ | 45,122 | $ | 76,720 | $ | 157,835 | $ | (32,600 | ) | $ | 514,914 | |||||||||||||||
Equity in losses of affiliates | (881 | ) | ||||||||||||||||||||||||||||
Interest expense, net | (23,369 | ) | ||||||||||||||||||||||||||||
Other income, net | 8,980 | |||||||||||||||||||||||||||||
Income before income taxes | $ | 499,644 | ||||||||||||||||||||||||||||
Identifiable assets | $ | 702,221 | $ | 420,154 | $ | 594,937 | $ | 1,122,654 | $ | 1,257,952 | $ | 90,159 | $ | 4,188,077 | ||||||||||||||||
Investments in marketable equity securities | 329,921 | |||||||||||||||||||||||||||||
Investments in affiliates | 66,775 | |||||||||||||||||||||||||||||
Total assets | $ | 4,584,773 | ||||||||||||||||||||||||||||
Depreciation of property, plant and equipment | $ | 36,556 | $ | 10,202 | $ | 2,801 | $ | 100,031 | $ | 39,453 | $ | 1,500 | $ | 190,543 | ||||||||||||||||
Amortization expense | $ | 1,119 | $ | — | $ | — | $ | 764 | $ | 5,595 | $ | — | $ | 7,478 | ||||||||||||||||
Pension credit (expense) | $ | (784 | ) | $ | 2,939 | $ | 38,184 | $ | (1,252 | ) | $ | (2,365 | ) | $ | — | $ | 36,722 | |||||||||||||
Kaplan stock-based incentive compensation | $ | 3,000 | $ | 3,000 | ||||||||||||||||||||||||||
Capital expenditures | $ | 33,276 | $ | 8,557 | $ | 660 | $ | 111,331 | $ | 84,257 | $ | 268 | $ | 238,349 | ||||||||||||||||
2004 | ||||||||||||||||||||||||||||||
Operating revenues | $ | 938,066 | $ | 361,716 | $ | 366,119 | $ | 499,312 | $ | 1,134,891 | $ | — | $ | 3,300,104 | ||||||||||||||||
Income (loss) from operations | $ | 143,086 | $ | 174,176 | $ | 52,921 | $ | 104,171 | $ | 121,455 | $ | (32,803 | ) | $ | 563,006 | |||||||||||||||
Equity in losses of affiliates | (2,291 | ) | ||||||||||||||||||||||||||||
Interest expense, net | (26,410 | ) | ||||||||||||||||||||||||||||
Other income, net | 8,127 | |||||||||||||||||||||||||||||
Income before income taxes | $ | 542,432 | ||||||||||||||||||||||||||||
Identifiable assets | $ | 685,744 | $ | 409,574 | $ | 581,601 | $ | 1,112,935 | $ | 1,033,810 | $ | 13,551 | $ | 3,837,215 | ||||||||||||||||
Investments in marketable equity securities | 409,736 | |||||||||||||||||||||||||||||
Investments in affiliates | 61,814 | |||||||||||||||||||||||||||||
Total assets | $ | 4,308,765 | ||||||||||||||||||||||||||||
Depreciation of property, plant and equipment | $ | 36,862 | $ | 11,093 | $ | 3,255 | $ | 94,974 | $ | 29,154 | $ | — | $ | 175,338 | ||||||||||||||||
Amortization expense | $ | 19 | $ | — | $ | — | $ | 652 | $ | 8,663 | $ | — | $ | 9,334 | ||||||||||||||||
Pension credit (expense) | $ | 3,598 | $ | 3,172 | $ | 37,613 | $ | (1,030 | ) | $ | (1,531 | ) | $ | — | $ | 41,822 | ||||||||||||||
Kaplan stock-based incentive compensation | $ | 32,546 | $ | 32,546 | ||||||||||||||||||||||||||
Capital expenditures | $ | 27,959 | $ | 6,967 | $ | 1,499 | $ | 78,873 | $ | 85,221 | $ | 4,113 | $ | 204,632 | ||||||||||||||||
2003 | ||||||||||||||||||||||||||||||
Operating revenues | $ | 872,754 | $ | 315,126 | $ | 353,555 | $ | 459,399 | $ | 838,077 | $ | — | $ | 2,838,911 | ||||||||||||||||
Income (loss) from operations(1) | $ | 134,197 | $ | 139,744 | $ | 43,504 | $ | 88,392 | $ | (11,709 | ) | $ | (30,308 | ) | $ | 363,820 | ||||||||||||||
Equity in losses of affiliates | (9,766 | ) | ||||||||||||||||||||||||||||
Interest expense, net | (26,851 | ) | ||||||||||||||||||||||||||||
Other income, net | 55,385 | |||||||||||||||||||||||||||||
Income before income taxes | $ | 382,588 | ||||||||||||||||||||||||||||
Identifiable assets | $ | 684,944 | $ | 411,434 | $ | 532,867 | $ | 1,130,410 | $ | 870,850 | $ | 10,023 | $ | 3,640,528 | ||||||||||||||||
Investments in marketable equity securities | 247,958 | |||||||||||||||||||||||||||||
Investments in affiliates | 61,312 | |||||||||||||||||||||||||||||
Total assets | $ | 3,949,798 | ||||||||||||||||||||||||||||
Depreciation of property, plant and equipment | $ | 41,914 | $ | 11,414 | $ | 3,727 | $ | 92,804 | $ | 23,989 | $ | — | $ | 173,848 | ||||||||||||||||
Amortization expense | $ | 15 | $ | — | $ | — | $ | 151 | $ | 1,270 | $ | — | $ | 1,436 | ||||||||||||||||
Pension credit (expense) | $ | (19,580 | ) | $ | 4,165 | $ | 38,493 | $ | (853 | ) | $ | (1,223 | ) | $ | — | $ | 21,002 | |||||||||||||
Kaplan stock-based incentive compensation | $ | 119,126 | $ | 119,126 | ||||||||||||||||||||||||||
Capital expenditures | $ | 18,642 | $ | 5,434 | $ | 1,027 | $ | 65,948 | $ | 34,537 | $ | — | $ | 125,588 |
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Corporate | ||||||||||||||||||
Higher | Supplemental | Overhead | Total | |||||||||||||||
(in thousands) | Education | Education | and Other | Education | ||||||||||||||
2005 | ||||||||||||||||||
Operating revenues | $ | 721,579 | $ | 690,815 | $ | — | $ | 1,412,394 | ||||||||||
Income (loss) from operations | $ | 82,660 | $ | 117,075 | $ | (41,900 | ) | $ | 157,835 | |||||||||
Identifiable assets | $ | 587,997 | $ | 645,957 | $ | 23,998 | $ | 1,257,952 | ||||||||||
Depreciation of property, plant and equipment | $ | 20,100 | $ | 16,073 | $ | 3,280 | $ | 39,453 | ||||||||||
Amortization expense | $ | 5,595 | $ | 5,595 | ||||||||||||||
Kaplan stock-based incentive compensation | $ | 3,000 | $ | 3,000 | ||||||||||||||
Capital expenditures | $ | 49,406 | $ | 30,134 | $ | 4,717 | $ | 84,257 | ||||||||||
2004 | ||||||||||||||||||
Operating revenues | $ | 559,877 | $ | 575,014 | $ | — | $ | 1,134,891 | ||||||||||
Income (loss) from operations | $ | 93,402 | $ | 100,795 | $ | (72,742 | ) | $ | 121,455 | |||||||||
Identifiable assets | $ | 505,077 | $ | 492,195 | $ | 36,538 | $ | 1,033,810 | ||||||||||
Depreciation of property, plant and equipment | $ | 13,222 | $ | 13,899 | $ | 2,033 | $ | 29,154 | ||||||||||
Amortization expense | $ | 8,663 | $ | 8,663 | ||||||||||||||
Kaplan stock-based incentive compensation | $ | 32,546 | $ | 32,546 | ||||||||||||||
Capital expenditures | $ | 48,990 | $ | 26,550 | $ | 9,681 | $ | 85,221 | ||||||||||
2003 | ||||||||||||||||||
Operating revenues | $ | 368,320 | $ | 469,757 | $ | — | $ | 838,077 | ||||||||||
Income (loss) from operations | $ | 58,428 | $ | 87,044 | $ | (157,181 | ) | $ | (11,709 | ) | ||||||||
Identifiable assets | $ | 389,365 | $ | 458,156 | $ | 23,329 | $ | 870,850 | ||||||||||
Depreciation of property, plant and equipment | $ | 7,970 | $ | 14,624 | $ | 1,395 | $ | 23,989 | ||||||||||
Amortization expense | $ | 1,270 | $ | 1,270 | ||||||||||||||
Kaplan stock-based incentive compensation | $ | 119,126 | $ | 119,126 | ||||||||||||||
Capital expenditures | $ | 20,876 | $ | 10,513 | $ | 3,148 | $ | 34,537 |
Table of Contents
First | Second | Third | Fourth | |||||||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||||||
2005 Quarterly Operating Results | ||||||||||||||||||||
Operating revenues | ||||||||||||||||||||
Advertising | $ | 305,550 | $ | 336,563 | $ | 311,581 | $ | 363,790 | ||||||||||||
Circulation and subscriber | 186,222 | 191,622 | 182,677 | 186,557 | ||||||||||||||||
Education | 325,383 | 345,780 | 362,822 | 378,409 | ||||||||||||||||
Other | 16,775 | 23,612 | 16,582 | 19,962 | ||||||||||||||||
833,930 | 897,577 | 873,662 | 948,718 | |||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||
Operating | 452,453 | 472,981 | 486,400 | 497,782 | ||||||||||||||||
Selling, general and administrative | 226,312 | 237,531 | 225,760 | 241,734 | ||||||||||||||||
Depreciation of property, plant and equipment | 45,568 | 47,905 | 47,531 | 49,538 | ||||||||||||||||
Amortization of goodwill and other intangibles | 1,608 | 1,465 | 1,587 | 2,818 | ||||||||||||||||
725,941 | 759,882 | 761,278 | 791,872 | |||||||||||||||||
Income from operations | 107,989 | 137,695 | 112,384 | 156,846 | ||||||||||||||||
Equity in (losses) earnings of affiliates | (525 | ) | 342 | (952 | ) | 254 | ||||||||||||||
Interest income | 574 | 576 | 611 | 1,624 | ||||||||||||||||
Interest expense | (6,519 | ) | (6,436 | ) | (7,554 | ) | (6,245 | ) | ||||||||||||
Other income (expense), net | 7,072 | (3,622 | ) | 6,869 | (1,339 | ) | ||||||||||||||
Income before income taxes | 108,591 | 128,555 | 111,358 | 151,140 | ||||||||||||||||
Provision for income taxes | 42,000 | 49,800 | 44,800 | 48,700 | ||||||||||||||||
Net income | 66,591 | 78,755 | 66,558 | 102,440 | ||||||||||||||||
Redeemable preferred stock dividends | (491 | ) | (245 | ) | (245 | ) | — | |||||||||||||
Net income available for common shares | $ | 66,100 | $ | 78,510 | $ | 66,313 | $ | 102,440 | ||||||||||||
Basic earnings per common share | $ | 6.89 | $ | 8.18 | $ | 6.91 | $ | 10.67 | ||||||||||||
Diluted earnings per common share | $ | 6.87 | $ | 8.16 | $ | 6.89 | $ | 10.65 | ||||||||||||
Basic average shares outstanding | 9,589 | 9,594 | 9,596 | 9,598 | ||||||||||||||||
Diluted average shares outstanding | 9,617 | 9,618 | 9,618 | 9,616 | ||||||||||||||||
2005 Quarterly comprehensive income | $ | 51,301 | $ | 66,397 | $ | 56,318 | $ | 114,359 | ||||||||||||
First | Second | Third | Fourth | |||||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||||
Charges and lost revenues associated with Katrina and other hurricanes ($12.6 million and $4.7 million in the third and fourth quarters, respectively) | $ | (1.31 | ) | $ | (0.49 | ) | ||||||||||||
Gain on sale of marketable equity securities and land ($5.4 million, $5.2 million and $0.6 million in the first, third and fourth quarters, respectively) | $ | 0.56 | $ | 0.54 | $ | 0.06 | ||||||||||||
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First | Second | Third | Fourth | |||||||||||||||||
(In thousands, except per share amounts) | Quarter | Quarter | Quarter | Quarter | ||||||||||||||||
2004 Quarterly Operating Results | ||||||||||||||||||||
Operating revenues | ||||||||||||||||||||
Advertising | $ | 299,127 | $ | 338,060 | $ | 323,021 | $ | 386,662 | ||||||||||||
Circulation and subscriber | 180,259 | 185,728 | 185,521 | 190,302 | ||||||||||||||||
Education | 258,271 | 276,696 | 293,621 | 306,303 | ||||||||||||||||
Other | 21,312 | 17,907 | 17,869 | 19,445 | ||||||||||||||||
758,969 | 818,391 | 820,032 | 902,712 | |||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||
Operating | 409,681 | 420,407 | 422,894 | 464,077 | ||||||||||||||||
Selling, general and administrative | 198,132 | 203,334 | 210,488 | 223,413 | ||||||||||||||||
Depreciation of property, plant and equipment | 43,859 | 44,769 | 45,020 | 41,690 | ||||||||||||||||
Amortization of goodwill and other intangibles | 2,380 | 3,881 | 1,332 | 1,741 | ||||||||||||||||
654,052 | 672,391 | 679,734 | 730,921 | |||||||||||||||||
Income from operations | 104,917 | 146,000 | 140,298 | 171,791 | ||||||||||||||||
Equity in losses of affiliates | (1,716 | ) | (353 | ) | 539 | (761 | ) | |||||||||||||
Interest income | 344 | 458 | 351 | 469 | ||||||||||||||||
Interest expense | (6,861 | ) | (6,830 | ) | (6,874 | ) | (7,467 | ) | ||||||||||||
Other income (expense), net | 742 | (71 | ) | 858 | 6,598 | |||||||||||||||
Income before income taxes | 97,426 | 139,204 | 135,172 | 170,630 | ||||||||||||||||
Provision for income taxes | 38,000 | 54,300 | 52,700 | 64,700 | ||||||||||||||||
Net income | 59,426 | 84,904 | 82,472 | 105,930 | ||||||||||||||||
Redeemable preferred stock dividends | (502 | ) | (245 | ) | (245 | ) | — | |||||||||||||
Net income available for common shares | $ | 58,924 | $ | 84,659 | $ | 82,227 | $ | 105,930 | ||||||||||||
Basic earnings per common share | $ | 6.17 | $ | 8.85 | $ | 8.59 | $ | 11.07 | ||||||||||||
Diluted earnings per common share | $ | 6.15 | $ | 8.82 | $ | 8.57 | $ | 11.03 | ||||||||||||
Basic average shares outstanding | 9,550 | 9,563 | 9,568 | 9,571 | ||||||||||||||||
Diluted average shares outstanding | 9,582 | 9,596 | 9,598 | 9,601 | ||||||||||||||||
2004 Quarterly comprehensive income | $ | 74,806 | $ | 78,719 | $ | 90,962 | $ | 136,089 | ||||||||||||
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Table of Contents
Column A | Column B | Column C | Column D | Column E | |||||||||||||||
Additions – | |||||||||||||||||||
Balance at | Charged to | Balance at | |||||||||||||||||
Beginning | Costs and | End of | |||||||||||||||||
Description | of Period | Expenses | Deductions | Period | |||||||||||||||
Year Ended December 28, 2003 | |||||||||||||||||||
Allowance for doubtful accounts and returns | $ | 60,240,000 | $ | 93,565,000 | $ | 91,951,000 | $ | 61,854,000 | |||||||||||
Allowance for advertising rate adjustments and discounts | 5,156,000 | 6,371,000 | 6,857,000 | 4,670,000 | |||||||||||||||
$ | 65,396,000 | $ | 99,936,000 | $ | 98,808,000 | $ | 66,524,000 | ||||||||||||
Year Ended January 2, 2005 | |||||||||||||||||||
Allowance for doubtful accounts and returns | $ | 61,854,000 | $ | 106,605,000 | $ | 102,807,000 | $ | 65,652,000 | |||||||||||
Allowance for advertising rate adjustments and discounts | 4,670,000 | 7,874,000 | 7,231,000 | 5,313,000 | |||||||||||||||
$ | 66,524,000 | $ | 114,479,000 | $ | 110,038,000 | $ | 70,965,000 | ||||||||||||
Year Ended January 1, 2006 | |||||||||||||||||||
Allowance for doubtful accounts and returns | $ | 65,652,000 | $ | 127,195,000 | $ | 121,722,000 | $ | 71,125,000 | |||||||||||
Allowance for advertising rate adjustments and discounts | 5,313,000 | 14,970,000 | 13,309,000 | 6,974,000 | |||||||||||||||
$ | 70,965,000 | $ | 142,165,000 | $ | 135,031,000 | $ | 78,099,000 | ||||||||||||
Table of Contents
(in thousands, except per share amounts) | 2005 | 2004 | 2003 | |||||||||||
Results of Operations | ||||||||||||||
Operating revenues | $ | 3,553,887 | $ | 3,300,104 | $ | 2,838,911 | ||||||||
Income from operations | $ | 514,914 | $ | 563,006 | $ | 363,820 | ||||||||
Income before cumulative effect of change in accounting principle | $ | 314,344 | $ | 332,732 | $ | 241,088 | ||||||||
Cumulative effect of change in method of accounting for goodwill and other intangibles | — | — | — | |||||||||||
Net income | $ | 314,344 | $ | 332,732 | $ | 241,088 | ||||||||
Per Share Amounts | ||||||||||||||
Basic earnings per common share | ||||||||||||||
Before cumulative effect of change in accounting principle | $ | 32.66 | $ | 34.69 | $ | 25.19 | ||||||||
Cumulative effect of change in accounting principle | — | — | — | |||||||||||
Net income available for common shares | $ | 32.66 | $ | 34.69 | $ | 25.19 | ||||||||
Basic average shares outstanding | 9,594 | 9,563 | 9,530 | |||||||||||
Diluted earnings per share | ||||||||||||||
Before cumulative effect of change in accounting principle | $ | 32.59 | $ | 34.59 | $ | 25.12 | ||||||||
Cumulative effect of change in accounting principle | — | — | — | |||||||||||
Net income available for common shares | $ | 32.59 | $ | 34.59 | $ | 25.12 | ||||||||
Diluted average shares outstanding | 9,616 | 9,592 | 9,555 | |||||||||||
Cash dividends | $ | 7.40 | $ | 7.00 | $ | 5.80 | ||||||||
Common shareholders’ equity | $ | 274.79 | $ | 251.11 | $ | 216.17 | ||||||||
Financial Position | ||||||||||||||
Current assets | $ | 818,326 | $ | 750,509 | $ | 550,571 | ||||||||
Working capital (deficit) | 123,605 | 62,348 | (190,426 | ) | ||||||||||
Property, plant and equipment | 1,142,632 | 1,089,952 | 1,051,373 | |||||||||||
Total assets | 4,584,773 | 4,308,765 | 3,949,798 | |||||||||||
Long-term debt | 403,635 | 425,889 | 422,471 | |||||||||||
Common shareholders’ equity | 2,638,423 | 2,404,606 | 2,062,681 |
• | charges and lost revenues of $17.3 million ($1.80 per share) associated with Katrina and other hurricanes |
• | gain of $11.2 million ($1.16 per share) from sales of non-operating land and marketable equity securities |
• | gain of $32.3 million ($3.38 per share) on the sale of the Company’s 50% interest in the International Herald Tribune |
• | gain of $25.5 million ($2.66 per share) on sale of land at The Washington Post newspaper |
• | charge of $20.8 million ($2.18 per share) for early retirement programs at The Washington Post newspaper |
• | Kaplan stock compensation expense of $6.4 million ($0.67 per share) for the 10% premium associated with the purchase of outstanding Kaplan stock options |
• | charge of $3.9 million ($0.41 per share) in connection with the establishment of the Kaplan Educational Foundation |
• | gain of $16.7 million ($1.75 per share) on the exchange of certain cable systems |
• | charge of $11.3 million ($1.18 per share) for early retirement programs at Newsweek and The Washington Post newspaper |
Table of Contents
2002 | 2001 | 2000 | 1999 | 1998 | 1997 | 1996 | |||||||||||||||||||||||||
Results of Operations | |||||||||||||||||||||||||||||||
Operating revenues | $ | 2,584,203 | $ | 2,411,024 | $ | 2,409,633 | $ | 2,212,177 | $ | 2,107,593 | $ | 1,952,986 | $ | 1,851,058 | |||||||||||||||||
Income from operations | $ | 377,590 | $ | 219,932 | $ | 339,882 | $ | 388,453 | $ | 378,897 | $ | 381,351 | $ | 337,169 | |||||||||||||||||
Income before cumulative effect of change in accounting principle | $ | 216,368 | $ | 229,639 | $ | 136,470 | $ | 225,785 | $ | 417,259 | $ | 281,574 | $ | 220,817 | |||||||||||||||||
Cumulative effect of change in method of accounting for goodwill and other intangibles | (12,100 | ) | — | — | — | — | — | — | |||||||||||||||||||||||
Net income | $ | 204,268 | $ | 229,639 | $ | 136,470 | $ | 225,785 | $ | 417,259 | $ | 281,574 | $ | 220,817 | |||||||||||||||||
Per Share Amounts | |||||||||||||||||||||||||||||||
Basic earnings per common share | |||||||||||||||||||||||||||||||
Before cumulative effect of change in accounting principle | $ | 22.65 | $ | 24.10 | $ | 14.34 | $ | 22.35 | $ | 41.27 | $ | 26.23 | $ | 20.08 | |||||||||||||||||
Cumulative effect of change in accounting principle | (1.27 | ) | — | — | — | — | — | — | |||||||||||||||||||||||
Net income available for common shares | $ | 21.38 | $ | 24.10 | $ | 14.34 | $ | 22.35 | $ | 41.27 | $ | 26.23 | $ | 20.08 | |||||||||||||||||
Basic average shares outstanding | 9,504 | 9,486 | 9,445 | 10,061 | 10,087 | 10,700 | 10,964 | ||||||||||||||||||||||||
Diluted earnings per share | |||||||||||||||||||||||||||||||
Before cumulative effect of change in accounting principle | $ | 22.61 | $ | 24.06 | $ | 14.32 | $ | 22.30 | $ | 41.10 | $ | 26.15 | $ | 20.05 | |||||||||||||||||
Cumulative effect of change in accounting principle | (1.27 | ) | — | — | — | — | — | — | |||||||||||||||||||||||
Net income available for common shares | $ | 21.34 | $ | 24.06 | $ | 14.32 | $ | 22.30 | $ | 41.10 | $ | 26.15 | $ | 20.05 | |||||||||||||||||
Diluted average shares outstanding | 9,523 | 9,500 | 9,460 | 10,082 | 10,129 | 10,733 | 10,980 | ||||||||||||||||||||||||
Cash dividends | $ | 5.60 | $ | 5.60 | $ | 5.40 | $ | 5.20 | $ | 5.00 | $ | 4.80 | $ | 4.60 | |||||||||||||||||
Common shareholders’ equity | $ | 192.45 | $ | 177.30 | $ | 156.55 | $ | 144.90 | $ | 157.34 | $ | 117.36 | $ | 121.24 | |||||||||||||||||
Financial Position | |||||||||||||||||||||||||||||||
Current assets | $ | 407,347 | $ | 426,603 | $ | 405,067 | $ | 476,159 | $ | 404,878 | $ | 308,492 | $ | 382,631 | |||||||||||||||||
Working capital (deficit) | (356,644 | ) | (37,233 | ) | (3,730 | ) | (346,389 | ) | 15,799 | (300,264 | ) | 100,995 | |||||||||||||||||||
Property, plant and equipment | 1,094,400 | 1,098,211 | 927,061 | 854,906 | 841,062 | 653,750 | 511,363 | ||||||||||||||||||||||||
Total assets | 3,604,866 | �� | 3,588,844 | 3,200,743 | 2,986,944 | 2,729,661 | 2,077,317 | 1,870,411 | |||||||||||||||||||||||
Long-term debt | 405,547 | 883,078 | 873,267 | 397,620 | 395,000 | — | — | ||||||||||||||||||||||||
Common shareholders’ equity | 1,830,386 | 1,683,485 | 1,481,007 | 1,367,790 | 1,588,103 | 1,184,074 | 1,322,803 |
• | gain of $196.5 million ($20.69 per share) on the exchange of certain cable systems |
• | non-cash goodwill and other intangibles impairment charge of $19.9 million ($2.10 per share) recorded in conjunction with the Company’s BrassRing investment |
• | charges of $18.3 million ($1.93 per share) from the write-down of a non-operating parcel of land and certain cost-method investments to their estimated fair value |
• | charge of $16.5 million ($1.74 per share) for an early retirement program at The Washington Post newspaper |
• | gains of $18.6 million ($1.81 per share) on the sales of marketable equity securities |
• | gain of $168.0 million ($16.59 per share) on the disposition of the Company’s 28% interest in Cowles Media Company |
• | gain of $13.8 million ($1.36 per share) from the sale of 14 small cable systems |
• | gain of $12.6 million ($1.24 per share) on the disposition of the Company’s investment in Junglee, a facilitator of internet commerce |
• | gain of $28.4 million ($2.65 per share) from the sale of the Company’s investments in Bear Island Paper Company LP and Bear Island Timberlands Company LP |
• | gain of $16.0 million ($1.50 per share) from the sale of the PASS regional cable sports network |
Table of Contents
Table of Contents
Exhibit | ||||
Number | Description | |||
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 Designation for the Company’s Series A Preferred Stock dated September 22, 2003 (incorporated by reference to Exhibit 3.2 to Amendment No. 1 to the Company’s Current Report on Form 8-K dated September 22, 2003). | ||
3 | .3 | By-Laws of the Company as amended and restated through September 22, 2003 (incorporated by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K dated September 22, 2003). | ||
4 | .1 | Form of the Company’s 5.50% Notes due February 15, 2009, issued under the Indenture dated as of February 17, 1999, between the Company and The First National Bank of Chicago, as Trustee (incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 1999). | ||
4 | .2 | Indenture dated as of February 17, 1999, between the Company and The First National Bank of Chicago, as Trustee (incorporated by reference to Exhibit 4.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 1999). | ||
4 | .3 | First Supplemental Indenture dated as of September 22, 2003, among WP Company LLC, the Company and Bank One, NA, as successor to The First National Bank of Chicago, as Trustee, to the Indenture dated as of February 17, 1999, between The Washington Post Company and The First National Bank of Chicago, as Trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K dated September 22, 2003). | ||
4 | .4 | 364-Day Credit Agreement dated as of August 10, 2005, among the Company, Citibank, N.A., JP Morgan Chase Bank, N.A., Wachovia Bank, National Association, SunTrust Bank, The Bank of New York and PNC Bank, N.A. (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on form 8-K dated August 12, 2005). | ||
4 | .5 | 5-Year Credit Agreement dated as of August 14, 2002, among the Company, Citibank, N.A., Wachovia Bank, N.A., SunTrust Bank, Bank One, N.A., JPMorgan Chase Bank, The Bank of New York and PNC Bank, N.A. (incorporated by reference to Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 29, 2002). | ||
4 | .6 | Consent and Amendment No. 1 dated as of August 13, 2003, to the 5-Year Credit Agreement dated as of August 14, 2002, among the Company, Citibank, N.A. and the other lenders that are parties to such Credit Agreement (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K dated September 22, 2003). | ||
10 | .1 | The Washington Post Company Incentive Compensation Plan as amended and restated on January 20, 2006 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 20, 2006).* | ||
10 | .2 | The Washington Post Company Stock Option Plan as amended and restated effective May 31, 2003 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 28, 2003).* | ||
10 | .3 | The Washington Post Company Supplemental Executive Retirement Plan as amended and restated through March 14, 2002 (incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2001).* | ||
10 | .4 | The Washington Post Company Deferred Compensation Plan as amended and restated effective May 12, 2005 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated May 12, 2005).* | ||
11 | Calculation of earnings per share of common stock. | |||
21 | List of subsidiaries of the Company. | |||
23 | Consent of independent registered public accounting firm. | |||
24 | Power of attorney dated February 28, 2006. | |||
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 | .1 | Section 1350 Certification of the Chief Executive Officer. | ||
32 | .2 | Section 1350 Certification of the Chief Financial Officer. |