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Discontinued Operations
 9 Months Ended
Sep. 30, 2013
Discontinued Operations [Abstract]  
Discontinued Operations [Text Block]

2. DISCONTINUED OPERATIONS

 

On August 5, 2013, after approval by the Company's Board of Directors on the same day, the Company announced that it had entered into a binding letter agreement (the Letter Agreement) with Nash Holdings LLC, a Delaware limited liability company (the Purchaser), and Explore Holdings LLC, a Washington limited liability company, as guarantor (the Guarantor), to sell all the issued and outstanding equity securities of each of WP Company LLC, Express Publications Company, LLC, El Tiempo Latino, LLC, Robinson Terminal Warehouse, LLC, Greater Washington Publishing, LLC and Post-Newsweek Media, LLC (the Publishing Subsidiaries). The Publishing Subsidiaries together conducted most of the Company's publishing businesses, including publishing The Washington Post, Express, The Gazette Newspapers, Southern Maryland Newspapers, Fairfax County Times and El Tiempo Latino and related websites, and operating Washington Post Live and Washington Post News Media Services and the Company's commercial printing and distribution business and paper handling and storage business (collectively, the Publishing Business), subject to satisfying certain conditions.

 

On October 1, 2013, the Company entered into a Purchase Agreement and completed the sale. Under the terms of the Purchase Agreement, the Purchaser acquired all the issued and outstanding equity securities of each of the entities that comprise the Publishing Subsidiaries for $250 million, subject to customary adjustment for cash, debt and working capital of the Publishing Subsidiaries at closing. The Purchaser also acquired all other assets of the Company primarily related to the Publishing Business, including all of the Company's rights in the name “The Washington Post”. The Company will change its corporate name within 60 days of the October 1 closing. The Company retained its interest in Classified Ventures, LLC, Slate magazine, TheRoot.com and Foreign Policy, as well as the WaPo Labs and SocialCode business and certain real estate, including the headquarters building in downtown Washington, DC and certain land and property in Alexandria, VA. The liabilities under the Retirement Plan for The Washington Post Companies relating to the active employees of the Publishing Business will be transferred to the Purchaser, along with pension assets that have a value equal to the projected benefit obligation in respect of these active employees plus an additional $50 million. The results of operations of Publishing Subsidiaries for the three and nine months ended September 30, 2013 and 2012, are included in the Company's Condensed Consolidated Statements of Operations as Income (Loss) from Discontinued Operations, Net of Tax.

 

The Company will not record the gain or the net proceeds on the sale until the fourth quarter of 2013; however, the Company recognized $28.4 million (after-tax impact of $18.3 million) in expenses related to the sale that are included in discontinued operations in the third quarter of 2013. These costs include the net impact of accelerated vesting provisions and forfeitures of restricted stock awards and stock options that were made in contemplation of the sale, and certain other transaction-related expenses. Also included in discontinued operations is $22.7 million (after-tax basis of $14.5 million) in early retirement program expense for the first nine months of 2013 and $7.5 million (after-tax basis of $4.6 million) and $8.5 million (after-tax basis of $5.3 million) for the third quarter and first nine months of 2012, respectively. The historical pension and postretirement benefits expense for retirees has been excluded from the reclassification of the Publishing Subsidiaries' results to discontinued operations, since the associated assets and liabilities will be retained by the Company. Although the Company has retained ownership of certain real estate assets, including the headquarters building in downtown Washington, DC, related operating costs are included in the reclassification of the Publishing Subsidiaries' results to discontinued operations since the Purchase Agreement includes a lease to the buyer for the real estate assets that provides for recovery of operating costs by the Company.

 

All corresponding prior period operating results presented in the Company's Condensed Consolidated Financial Statements and the accompanying notes have been reclassified to reflect the discontinued operations presented. The assets and liabilities of the Publishing Subsidiaries have been classified on the Company's condensed consolidated balance sheet as assets and liabilities of discontinued operations as of September 30, 2013. The Company did not reclassify its Statements of Cash Flows or prior Condensed Consolidated Balance Sheets to reflect the discontinued operations.

The carrying amounts of the major classes of assets and liabilities of the Publishing Subsidiaries included in discontinued operations at September 30, 2013 are as follows: 

     September 30,
(in thousands) 2013
Cash and cash equivalents $ 849
Accounts receivable, net   60,369
Inventories   3,965
Other current assets   5,177
 Current Assets of Discontinued Operations $ 70,360
Property, plant and equipment, net $ 116,639
Goodwill, net   13,602
Prepaid pension cost   50,000
Deferred charges and other assets   4,499
 Noncurrent Assets of Discontinued Operations $ 184,740
Accounts payable and accrued liabilities $ 35,616
Deferred revenue   22,207
 Current Liabilities of Discontinued Operations $ 57,823
Postretirement benefits other than pensions $ 24,999
Accrued compensation and related benefits   8,998
Other liabilities   11,735
 Noncurrent Liabilities of Discontinued Operations $ 45,732

In March 2013, the Company completed the sale of The Herald, a daily and Sunday newspaper headquartered in Everett, WA. Under the terms of the agreement, the purchaser received most of the assets and liabilities; however, certain land and buildings and other assets and liabilities were retained by the Company. The results of operations of The Herald for the three and nine months ended September 30, 2013 and 2012, are included in the Company's Condensed Consolidated Statements of Operations as Income (Loss) from Discontinued Operations, Net of Tax.

 

In August 2012, the Company completed the sale of Kidum and recorded a pre-tax gain of $3.6 million and an after-tax gain of $10.2 million related to this sale in the third quarter of 2012. On July 31, 2012, the Company disposed of its interest in Avenue100 Media Solutions, Inc. and recorded a pre-tax loss of $5.7 million related to the disposition. An income tax benefit of $44.5 million was also recorded in the third quarter of 2012 as the Company determined that Avenue100 had no value. The income tax benefit was due to the Company's tax basis in the stock of Avenue100 exceeding its net book value, as a result of goodwill and other intangible asset impairment charges recorded in 2008, 2010 and 2011 for which no tax benefit was previously recorded. In April 2012, the Company completed the sale of Kaplan EduNeering. Under the terms of the agreement, the purchaser acquired the stock of EduNeering and received substantially all the assets and liabilities. In the second quarter of 2012, the Company recorded an after-tax gain of $18.5 million related to this sale. In February 2012, Kaplan completed the stock sale of Kaplan Learning Technologies (KLT) and recorded an after-tax loss on the sale of $1.9 million. The Company recorded $23.2 million of income tax benefits in the first quarter of 2012 in connection with the sale of its stock in EduNeering and KLT related to the excess of the outside stock tax basis over the net book value of the net assets disposed. The results of operations of Kidum, Avenue100, EduNeering, and KLT, for the three and nine months ended September 30, 2012 are included in the Company's Condensed Consolidated Statement of Operations as Income (Loss) from Discontinued Operations, Net of Tax.

The summarized income (loss) from discontinued operations, net of tax, is presented below:

   Three Months Ended Nine Months Ended
   September 30, September 30,
(in thousands) 2013 2012 2013 2012
Operating revenues $ 124,725 $ 137,668 $ 382,705 $ 441,308
Operating costs and expenses   (165,380)   (155,701)   (467,434)   (491,698)
Loss from discontinued operations   (40,655)   (18,033)   (84,729)   (50,390)
Benefit from income taxes   (14,783)   (5,568)   (30,059)   (16,568)
Net Loss from Discontinued Operations   (25,872)   (12,465)   (54,670)   (33,822)
(Loss) gain on sales of discontinued operations   ―   (2,174)   (70)   23,759
Benefit from income taxes on sales of discontinued operations   ―   (52,178)   (24)   (64,591)
(Loss) Income from Discontinued Operations, Net of Tax $ (25,872) $ 37,539 $ (54,716) $ 54,528

The following table summarizes the 2013 quarterly operating results of the Company following the reclassification of the operations discussed above as discontinued operations:

   March 31, June 30,
(in thousands, except per share amounts) 2013 2013
Operating Revenues      
 Education $ 527,815 $ 548,230
 Advertising   82,994   96,670
 Subscriber and circulation   186,790   192,273
 Other   39,241   52,423
     836,840   889,596
Operating Costs and Expenses      
 Operating   381,965   400,515
 Selling, general and administrative   337,865   323,182
 Depreciation of property, plant and equipment   59,895   57,816
 Amortization of intangible assets   3,717   3,313
     783,442   784,826
Income from Operations   53,398   104,770
 Equity in earnings of affiliates, net   3,418   3,868
 Interest income   510   522
 Interest expense   (8,960)   (9,048)
 Other expense, net   (4,083)   (12,858)
Income from Continuing Operations before Income Taxes   44,283   87,254
Provision for Income Taxes   17,800   34,500
Income from Continuing Operations   26,483   52,754
Loss from Discontinued Operations, Net of Tax   (21,224)   (7,620)
Net Income   5,259   45,134
Net Income Attributable to Noncontrolling Interests   (97)   (253)
Net Income Attributable to The Washington Post Company   5,162   44,881
Redeemable Preferred Stock Dividends   (444)   (206)
Net Income Attributable to The Washington Post Company Common Stockholders $ 4,718 $ 44,675
Amounts Attributable to The Washington Post Company Common Stockholders      
Income from continuing operations $ 25,942 $ 52,295
Loss from discontinued operations, net of tax   (21,224)   (7,620)
Net income attributable to the Washington Post Company common stockholders $ 4,718 $ 44,675
Per Share Information Attributable to The Washington Post Company Common Stockholders      
Basic income per common share from continuing operations $ 3.50 $ 7.05
Basic loss per common share from discontinued operations   (2.86)   (1.03)
Basic net income per common share $ 0.64 $ 6.02
Diluted income per common share from continuing operations $ 3.50 $ 7.05
Diluted loss per common share from discontinued operations   (2.86)   (1.03)
Diluted net income per common share $ 0.64 $ 6.02

The following table summarizes the 2012 quarterly operating results of the Company following the reclassification of the operations discussed above as discontinued operations:

    March 31, June 30, September 30, December 31,
(in thousands, except per share amounts) 2012 2012 2012 2012
Operating Revenues            
 Education $ 546,685 $ 551,774 $ 551,696 $ 546,341
 Advertising   82,600   94,649   105,855   117,696
 Subscriber and circulation   178,022   182,639   185,326   186,383
 Other   20,305   25,368   34,760   45,471
      827,612   854,430   877,637   895,891
Operating Costs and Expenses            
 Operating   382,106   387,167   407,364   389,620
 Selling, general and administrative   347,841   335,054   314,359   336,262
 Depreciation of property, plant and equipment   56,165   56,594   57,588   73,731
 Amortization of intangible assets   3,839   4,407   5,090   7,610
 Impairment of goodwill and other long-lived assets   ―   ―   ―   111,593
      789,951   783,222   784,401   918,816
Income (Loss) from Operations   37,661   71,208   93,236   (22,925)
 Equity in earnings of affiliates, net   3,888   3,314   4,099   2,785
 Interest income   1,069   775   648   901
 Interest expense   (9,163)   (8,979)   (8,738)   (9,064)
 Other income (expense), net   8,588   (635)   4,163   (17,572)
Income (Loss) from Continuing Operations before Income Taxes   42,043   65,683   93,408   (45,875)
Provision for Income Taxes   17,200   23,900   37,000   5,100
Income (Loss) from Continuing Operations   24,843   41,783   56,408   (50,975)
Income from Discontinued Operations, Net of Tax   6,725   10,264   37,539   5,600
Net Income (Loss)   31,568   52,047   93,947   (45,375)
Net (Income) Loss Attributable to Noncontrolling Interests   (70)   (11)   71   (64)
Net Income (Loss) Attributable to The Washington Post Company   31,498   52,036   94,018   (45,439)
Redeemable Preferred Stock Dividends   (451)   (222)   (222)   ―
Net Income (Loss) Attributable to The Washington Post Company            
 Common Stockholders $ 31,047 $ 51,814 $ 93,796 $ (45,439)
Amounts Attributable to The Washington Post Company            
 Common Stockholders            
Income (loss) from continuing operations $ 24,322 $ 41,550 $ 56,257 $ (51,039)
Income from discontinued operations, net of tax   6,725   10,264   37,539   5,600
Net income (loss) attributable to the Washington Post             
 Company common stockholders $ 31,047 $ 51,814 $ 93,796 $ (45,439)
Per Share Information Attributable to The Washington Post             
 Company Common Stockholders            
Basic income (loss) per common share from continuing operations $ 3.17 $ 5.48 $ 7.58 $ (7.35)
Basic income per common share from discontinued operations   0.90   1.36   5.06   0.78
Basic net income (loss) per common share $ 4.07 $ 6.84 $ 12.64 $ (6.57)
Diluted income (loss) per common share from continuing operations $ 3.17 $ 5.48 $ 7.58 $ (7.35)
Diluted income per common share from discontinued operations   0.90   1.36   5.06   0.78
Diluted net income (loss) per common share $ 4.07 $ 6.84 $ 12.64 $ (6.57)

The following table summarizes the annual operating results of the Company following the reclassification of operations discussed above as discontinued operations:

(in thousands, except per share amounts) 2012 2011
Operating Revenues      
 Education $ 2,196,496 $ 2,404,459
 Advertising   400,800   327,877
 Subscriber and circulation   732,370   710,253
 Other   125,904   83,408
     3,455,570   3,525,997
Operating Costs and Expenses      
 Operating   1,566,257   1,562,615
 Selling, general and administrative   1,333,516   1,383,660
 Depreciation of property, plant and equipment   244,078   223,403
 Amortization of intangible assets   20,946   22,201
 Impairment of goodwill and other long-lived assets   111,593   ―
     3,276,390   3,191,879
Income from Operations   179,180   334,118
 Equity in earnings of affiliates, net   14,086   5,949
 Interest income   3,393   4,147
 Interest expense   (35,944)   (33,226)
 Other expense, net   (5,456)   (55,200)
Income from Continuing Operations Before Income Taxes   155,259   255,788
Provision for Income Taxes   83,200   104,400
Income from Continuing Operations   72,059   151,388
Income (Loss) from Discontinued Operations, Net of Tax   60,128   (34,231)
Net Income   132,187   117,157
Net Income Attributable to Noncontrolling Interests   (74)   (7)
Net Income Attributable to The Washington Post Company   132,113   117,150
Redeemable Preferred Stock Dividends   (895)   (917)
Net Income Attributable to The Washington Post Company Common Stockholders $ 131,218 $ 116,233
Amounts Attributable to The Washington Post Company Common Stockholders      
Income from continuing operations $ 71,090 $ 150,464
Income (loss) from discontinued operations, net of tax   60,128   (34,231)
Net income attributable to the Washington Post Company common stockholders $ 131,218 $ 116,233
Per Share Information Attributable to The Washington Post Company Common       
 Stockholders      
Basic income per common share from continuing operations $ 9.22 $ 19.03
Basic income (loss) per common share from discontinued operations   8.17   (4.33)
Basic net income per common share $ 17.39 $ 14.70
Diluted income per common share from continuing operations $ 9.22 $ 19.03
Diluted income (loss) per common share from discontinued operations   8.17   (4.33)
Diluted net income per common share $ 17.39 $ 14.70