Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Graham Holdings Co | d8k.htm |
| EX-2.1 - EXHIBIT 2.1 - Graham Holdings Co | dex21.htm |
Exhibit 99.1
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On September 30, 2010, The Washington Post Company (“the Company”) completed the sale of Newsweek magazine to Harman Media, LLC and Dr. Sidney Harman. Under the terms of the asset purchase agreement, the buyer assumed Newsweek’s subscription obligations and received Newsweek’s intellectual property, target working capital and selected equipment used in the business. The Company retained the pension assets and liabilities and certain employee obligations, including severance, and other liabilities arising prior to the sale.
The accompanying unaudited pro forma condensed consolidated balance sheet presents the Company’s financial position assuming the sale of Newsweek magazine occurred on July 4, 2010.
The accompanying unaudited pro forma condensed consolidated statements of income present the Company’s results of operations for each of the three fiscal years in the period ended January 3, 2010 assuming the sale of Newsweek magazine occurred on January 1, 2007. The Company reported the disposition of Newsweek magazine as a discontinued operation in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 205, “Presentation of Financial Statements” (“ASC 205”) for the twenty six weeks ended July 4, 2010 and June 28, 2009 in its quarterly report on Form 10-Q for the quarterly period ended July 4, 2010, and therefore the Company did not include the unaudited pro forma condensed consolidated statements of income for these periods in this Current Report on Form 8-K.
The unaudited pro forma condensed consolidated financial statements have been prepared using assumptions and estimates that the Company believes are reasonable under the circumstances and are intended for informational purposes only. They are not necessarily indicative of the financial results that would have occurred if the transactions described herein had taken place on the dates indicated, nor are they indicative of the future consolidated results of the Company. However, management believes that the estimates and assumptions used provide a reasonable basis for presenting the significant effects of the sale of Newsweek magazine. Management also believes the pro forma adjustments give appropriate effect to the estimates and assumptions and are applied in conformity with accounting principles generally accepted in the United States of America.
The accompanying unaudited pro forma condensed consolidated balance sheet as of July 4, 2010 and the unaudited pro forma condensed consolidated statements of income for each of the three fiscal years in the period ended January 3, 2010 should be read in conjunction with the historical financial statements of the Company for the twenty six weeks ended July 4, 2010 (unaudited) and for each of the three fiscal years in the period ended January 3, 2010 (audited), including the related notes, filed with the Securities and Exchange Commission, respectively, on Form 10-Q on August 11, 2010 and on Form 10-K on March 2, 2010.
The following is a brief description of the amounts recorded under each of the column headings in the accompanying unaudited condensed consolidated balance sheet and the unaudited condensed consolidated statements of income:
Historical TWPC
This column reflects the Company’s historical financial position as of July 4, 2010 and historical operating results for each of the three years in the period ended January 3, 2010, prior to any adjustment for the sale of Newsweek magazine.
Sale of Newsweek
This column reflects Newsweek magazine’s historical financial position of the assets sold and liabilities assumed as of July 4, 2010 and its historical operating results for each of the three fiscal years in the period ended January 3, 2010, and the pro forma adjustments that arise as a direct result of the sale of Newsweek magazine. These adjustments are more fully described in the notes to the accompanying unaudited pro forma condensed consolidated financial information.
THE WASHINGTON POST COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JULY 4, 2010
| (in thousands) |
Historical TWPC |
Sale of Newsweek |
The Company Pro Forma |
|||||||||
| (1) | ||||||||||||
| Assets |
||||||||||||
| Current assets |
||||||||||||
| Cash and cash equivalents |
$ | 659,027 | $ | — | $ | 659,027 | ||||||
| Investments in marketable equity securities and other investments |
392,515 | — | 392,515 | |||||||||
| Accounts receivable, net |
374,901 | — | 374,901 | |||||||||
| Deferred income taxes |
15,376 | — | 15,376 | |||||||||
| Inventories |
9,064 | — | 9,064 | |||||||||
| Other current assets |
65,622 | — | 65,622 | |||||||||
| Current assets of discontinued operations |
27,723 | (27,723 | ) | — | ||||||||
| Total current assets |
1,544,228 | (27,723 | ) | 1,516,505 | ||||||||
| Property, plant, and equipment, net |
1,175,493 | — | 1,175,493 | |||||||||
| Investment in affiliates |
42,308 | — | 42,308 | |||||||||
| Goodwill, net |
1,368,605 | — | 1,368,605 | |||||||||
| Indefinite-lived intangible assets, net |
530,406 | — | 530,406 | |||||||||
| Amortized intangible assets, net |
71,546 | — | 71,546 | |||||||||
| Prepaid pension cost |
412,838 | 1,206 | 414,044 | |||||||||
| Deferred charges and other assets |
57,430 | — | 57,430 | |||||||||
| Noncurrent assets of discontinued operations |
27,201 | (27,201 | ) | — | ||||||||
| Total assets |
$ | 5,230,055 | $ | (53,718 | ) | $ | 5,176,337 | |||||
| Liabilities and Equity |
||||||||||||
| Current liabilities |
||||||||||||
| Accounts payable and accrued liabilities |
$ | 552,321 | $ | 22,236 | $ | 574,557 | ||||||
| Income taxes payable |
24,214 | 3,874 | 28,088 | |||||||||
| Deferred revenue |
375,534 | — | 375,534 | |||||||||
| Dividends declared |
20,930 | — | 20,930 | |||||||||
| Short-term borrowings |
3,037 | — | 3,037 | |||||||||
| Current liabilities of discontinued operations |
50,681 | (50,681 | ) | — | ||||||||
| Total current liabilities |
1,026,717 | (24,571 | ) | 1,002,146 | ||||||||
| Postretirement benefits other than pensions |
74,817 | (8,533 | ) | 66,284 | ||||||||
| Accrued compensation and related benefits |
210,448 | — | 210,448 | |||||||||
| Other liabilities |
123,696 | — | 123,696 | |||||||||
| Deferred income taxes |
404,382 | — | 404,382 | |||||||||
| Long-term debt |
396,443 | — | 396,443 | |||||||||
| Noncurrent liabilities of discontinued operations |
14,174 | (14,174 | ) | — | ||||||||
| Total liabilities |
2,250,677 | (47,278 | ) | 2,203,399 | ||||||||
| Redeemable noncontrolling interest |
6,843 | — | 6,843 | |||||||||
| Redeemable preferred stock |
11,526 | — | 11,526 | |||||||||
| Preferred stock |
— | — | — | |||||||||
| Common shareholders’ equity |
||||||||||||
| Common stock |
20,000 | — | 20,000 | |||||||||
| Capital in excess of par value |
243,987 | — | 243,987 | |||||||||
| Retained earnings |
4,399,356 | (6,440 | ) | 4,392,916 | ||||||||
| Accumulated other comprehensive income (loss) |
||||||||||||
| Cumulative foreign currency translation adjustment |
13,570 | — | 13,570 | |||||||||
| Unrealized gain on available-for-sale securities |
81,709 | — | 81,709 | |||||||||
| Unrealized loss on pensions and other postretirement plans |
(4,094 | ) | — | (4,094 | ) | |||||||
| Cost of Class B common stock held in treasury |
(1,794,034 | ) | — | (1,794,034 | ) | |||||||
| Total The Washington Post Company common shareholders’ equity |
2,960,494 | (6,440 | ) | 2,954,054 | ||||||||
| Noncontrolling interests |
515 | — | 515 | |||||||||
| Total equity |
2,961,009 | (6,440 | ) | 2,954,569 | ||||||||
| Total liabilities and equity |
$ | 5,230,055 | $ | (53,718 | ) | $ | 5,176,337 | |||||
Note:
| (1) | This column includes the elimination of the historical assets and liabilities of Newsweek magazine estimated to be transferred to the buyer as part of the sale as if the transaction occurred on July 4, 2010. This column also reflects the estimated impact of the Newsweek sale, including certain employee obligations, such as severance, pension and other postretirement benefit obligations, and income taxes payable. |
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THE WASHINGTON POST COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FISCAL YEAR ENDED JANUARY 3, 2010
| (in thousands, except per share amounts) |
Historical TWPC |
Sale of Newsweek |
The Company Pro Forma |
|||||||||
| (1) | ||||||||||||
| Operating Revenues |
||||||||||||
| Education |
$ | 2,636,638 | $ | — | $ | 2,636,638 | ||||||
| Advertising |
858,109 | (79,951 | ) | 778,158 | ||||||||
| Circulation and subscriber |
932,402 | (86,554 | ) | 845,848 | ||||||||
| Other |
142,582 | (16,710 | ) | 125,872 | ||||||||
| 4,569,731 | (183,215 | ) | 4,386,516 | |||||||||
| Operating Costs and Expenses |
||||||||||||
| Operating |
2,002,938 | (134,191 | ) | 1,868,747 | ||||||||
| Selling, general and administrative |
2,024,901 | (108,724 | ) | 1,916,177 | ||||||||
| Depreciation of property, plant and equipment |
295,871 | (4,187 | ) | 291,684 | ||||||||
| Amortization of intangible assets |
26,642 | — | 26,642 | |||||||||
| Impairment of goodwill and other long-lived assets |
25,387 | — | 25,387 | |||||||||
| 4,375,739 | (247,102 | ) | 4,128,637 | |||||||||
| Income from Operations |
193,992 | 63,887 | 257,879 | |||||||||
| Equity in losses of affiliates |
(29,421 | ) | — | (29,421 | ) | |||||||
| Interest income |
2,597 | — | 2,597 | |||||||||
| Interest expense |
(31,565 | ) | — | (31,565 | ) | |||||||
| Other income, net |
13,197 | — | 13,197 | |||||||||
| Income before Income Taxes |
148,800 | 63,887 | 212,687 | |||||||||
| Provision for Income Taxes |
57,600 | 18,800 | 76,400 | |||||||||
| Income from Continuing Operations |
91,200 | 45,087 | 136,287 | |||||||||
| Loss from Continuing Operations Attributable to Noncontrolling Interests |
1,574 | — | 1,574 | |||||||||
| Income from Continuing Operations Attributable to The Washington Post Company |
92,774 | 45,087 | 137,861 | |||||||||
| Redeemable Preferred Stock Dividends |
(928 | ) | — | (928 | ) | |||||||
| Income from Continuing Operations Available for Common Shares |
$ | 91,846 | $ | 45,087 | $ | 136,933 | ||||||
| Basic income per common share from continuing operations |
$ | 9.78 | $ | 14.61 | ||||||||
| Basic average number of common shares outstanding |
9,332 | 9,332 | ||||||||||
| Diluted income per common share from continuing operations |
$ | 9.78 | $ | 14.57 | ||||||||
| Diluted average number of common shares outstanding |
9,392 | 9,392 | ||||||||||
Note:
| (1) | The adjustment reflects the elimination of the results of operations of Newsweek magazine as if the transaction occurred on January 1, 2007. The elimination excludes Newsweek magazine’s historical pension credit since the associated pension assets and liabilities will be retained by the Company. |
3
THE WASHINGTON POST COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FISCAL YEAR ENDED DECEMBER 28, 2008
| (in thousands, except per share amounts) |
Historical TWPC |
Sale of Newsweek |
The Company Pro Forma |
|||||||||
| (1) | ||||||||||||
| Operating Revenues |
||||||||||||
| Education |
$ | 2,331,580 | $ | — | $ | 2,331,580 | ||||||
| Advertising |
1,083,084 | (128,715 | ) | 954,369 | ||||||||
| Circulation and subscriber |
901,898 | (100,226 | ) | 801,672 | ||||||||
| Other |
145,018 | (20,924 | ) | 124,094 | ||||||||
| 4,461,580 | (249,865 | ) | 4,211,715 | |||||||||
| Operating Costs and Expenses |
||||||||||||
| Operating |
2,023,816 | (159,283 | ) | 1,864,533 | ||||||||
| Selling, general and administrative |
1,839,986 | (146,242 | ) | 1,693,744 | ||||||||
| Depreciation of property, plant and equipment |
265,606 | (2,052 | ) | 263,554 | ||||||||
| Amortization of intangible assets |
22,525 | — | 22,525 | |||||||||
| Impairment of goodwill and other long-lived assets |
135,439 | — | 135,439 | |||||||||
| 4,287,372 | (307,577 | ) | 3,979,795 | |||||||||
| Income from Operations |
174,208 | 57,712 | 231,920 | |||||||||
| Equity in losses of affiliates |
(7,837 | ) | — | (7,837 | ) | |||||||
| Interest income |
5,672 | — | 5,672 | |||||||||
| Interest expense |
(24,658 | ) | — | (24,658 | ) | |||||||
| Other expense, net |
(2,189 | ) | — | (2,189 | ) | |||||||
| Income before Income Taxes |
145,196 | 57,712 | 202,908 | |||||||||
| Provision for Income Taxes |
79,400 | 27,200 | 106,600 | |||||||||
| Income from Continuing Operations |
65,796 | 30,512 | 96,308 | |||||||||
| Income from Continuing Operations Attributable to Noncontrolling Interests |
(74 | ) | — | (74 | ) | |||||||
| Income from Continuing Operations Attributable to The Washington Post Company |
65,722 | 30,512 | 96,234 | |||||||||
| Redeemable Preferred Stock Dividends |
(946 | ) | — | (946 | ) | |||||||
| Income from Continuing Operations Available for Common Shares |
$ | 64,776 | $ | 30,512 | $ | 95,288 | ||||||
| Basic income per common share from continuing operations |
$ | 6.89 | $ | 10.13 | ||||||||
| Basic average number of common shares outstanding |
9,408 | 9,408 | ||||||||||
| Diluted income per common share from continuing operations |
$ | 6.87 | $ | 10.11 | ||||||||
| Diluted average number of common shares outstanding |
9,430 | 9,430 | ||||||||||
Note:
| (1) | The adjustment reflects the elimination of the results of operations of Newsweek magazine as if the transaction occurred on January 1, 2007. The elimination excludes Newsweek magazine’s historical pension credit since the associated pension assets and liabilities will be retained by the Company. |
4
THE WASHINGTON POST COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FISCAL YEAR ENDED DECEMBER 30, 2007
| (in thousands, except per share amounts) |
Historical TWPC |
Sale of Newsweek |
The Company Pro Forma |
|||||||||
| (1) | ||||||||||||
| Operating Revenues |
||||||||||||
| Education |
$ | 2,030,889 | $ | — | $ | 2,030,889 | ||||||
| Advertising |
1,234,643 | (155,827 | ) | 1,078,816 | ||||||||
| Circulation and subscriber |
817,807 | (113,961 | ) | 703,846 | ||||||||
| Other |
97,067 | (17,476 | ) | 79,591 | ||||||||
| 4,180,406 | (287,264 | ) | 3,893,142 | |||||||||
| Operating Costs and Expenses |
||||||||||||
| Operating |
1,882,984 | (165,874 | ) | 1,717,110 | ||||||||
| Selling, general and administrative |
1,581,596 | (124,168 | ) | 1,457,428 | ||||||||
| Depreciation of property, plant and equipment |
221,239 | (2,177 | ) | 219,062 | ||||||||
| Amortization of intangible assets |
17,571 | — | 17,571 | |||||||||
| 3,703,390 | (292,219 | ) | 3,411,171 | |||||||||
| Income from Operations |
477,016 | 4,955 | 481,971 | |||||||||
| Equity in earnings of affiliates |
5,975 | — | 5,975 | |||||||||
| Interest income |
11,338 | — | 11,338 | |||||||||
| Interest expense |
(24,046 | ) | — | (24,046 | ) | |||||||
| Other income, net |
11,182 | — | 11,182 | |||||||||
| Income before Income Taxes |
481,465 | 4,955 | 486,420 | |||||||||
| Provision for Income Taxes |
192,500 | 1,986 | 194,486 | |||||||||
| Income from Continuing Operations |
288,965 | 2,969 | 291,934 | |||||||||
| Income from Continuing Operations Attributable to Noncontrolling Interests |
(358 | ) | — | (358 | ) | |||||||
| Income from Continuing Operations Attributable to The Washington Post Company |
288,607 | 2,969 | 291,576 | |||||||||
| Redeemable Preferred Stock Dividends |
(952 | ) | — | (952 | ) | |||||||
| Income from Continuing Operations Available for Common Shares |
$ | 287,655 | $ | 2,969 | $ | 290,624 | ||||||
| Basic income per common share from continuing operations |
$ | 30.31 | $ | 30.62 | ||||||||
| Basic average number of common shares outstanding |
9,492 | 9,492 | ||||||||||
| Diluted income per common share from continuing operations |
$ | 30.19 | $ | 30.50 | ||||||||
| Diluted average number of common shares outstanding |
9,528 | 9,528 | ||||||||||
Note:
| (1) | The adjustment reflects the elimination of the results of operations of Newsweek magazine as if the transaction occurred on January 1, 2007. The elimination excludes Newsweek magazine’s historical pension credit since the associated pension assets and liabilities will be retained by the Company. |
5