|
|
☒
|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
☐
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
(Exact name of registrant as specified in its charter)
|
Delaware
|
|
53-0182885
|
||||
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
||||
|
|
|
|
|
|
|
1300 North 17th Street
|
,
|
Arlington
|
,
|
Virginia
|
|
22209
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
Class B Common Stock, par value $1.00 per share
|
|
GHC
|
|
New York Stock Exchange
|
Large Accelerated Filer
|
☒
|
Accelerated
filer
|
☐
|
Non-accelerated
filer
|
☐
|
Smaller reporting
company
|
☐
|
Emerging growth
company
|
☐
|
|
|
Three Months Ended
September 30 |
|
Nine Months Ended
September 30 |
||||||||||||
|
|
||||||||||||||
(in thousands, except per share amounts)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Operating Revenues
|
$
|
738,820
|
|
|
$
|
674,766
|
|
|
$
|
2,168,621
|
|
|
$
|
2,006,879
|
|
Operating Costs and Expenses
|
|
|
|
|
|
|
|
||||||||
Operating
|
517,935
|
|
|
448,920
|
|
|
1,498,928
|
|
|
1,254,726
|
|
||||
Selling, general and administrative
|
175,322
|
|
|
131,081
|
|
|
472,124
|
|
|
497,504
|
|
||||
Depreciation of property, plant and equipment
|
15,351
|
|
|
13,648
|
|
|
42,758
|
|
|
41,909
|
|
||||
Amortization of intangible assets
|
13,572
|
|
|
12,269
|
|
|
39,512
|
|
|
34,052
|
|
||||
Impairment of long-lived assets
|
372
|
|
|
8,109
|
|
|
1,065
|
|
|
8,109
|
|
||||
|
722,552
|
|
|
614,027
|
|
|
2,054,387
|
|
|
1,836,300
|
|
||||
Income from Operations
|
16,268
|
|
|
60,739
|
|
|
114,234
|
|
|
170,579
|
|
||||
Equity in earnings of affiliates, net
|
4,683
|
|
|
9,537
|
|
|
7,829
|
|
|
13,047
|
|
||||
Interest income
|
1,474
|
|
|
611
|
|
|
4,753
|
|
|
3,884
|
|
||||
Interest expense
|
(6,776
|
)
|
|
(6,135
|
)
|
|
(22,587
|
)
|
|
(31,371
|
)
|
||||
Debt extinguishment costs
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,378
|
)
|
||||
Non-operating pension and postretirement benefit income, net
|
19,556
|
|
|
22,214
|
|
|
51,737
|
|
|
66,641
|
|
||||
Gain on marketable equity securities, net
|
17,404
|
|
|
44,962
|
|
|
49,261
|
|
|
28,306
|
|
||||
Other income, net
|
5,556
|
|
|
3,142
|
|
|
36,135
|
|
|
14,662
|
|
||||
Income Before Income Taxes
|
58,165
|
|
|
135,070
|
|
|
241,362
|
|
|
254,370
|
|
||||
Provision for Income Taxes
|
15,200
|
|
|
10,000
|
|
|
59,500
|
|
|
39,700
|
|
||||
Net Income
|
42,965
|
|
|
125,070
|
|
|
181,862
|
|
|
214,670
|
|
||||
Net Loss (Income) Attributable to Noncontrolling Interests
|
180
|
|
|
(6
|
)
|
|
112
|
|
|
(149
|
)
|
||||
Net Income Attributable to Graham Holdings Company Common Stockholders
|
$
|
43,145
|
|
|
$
|
125,064
|
|
|
$
|
181,974
|
|
|
$
|
214,521
|
|
Per Share Information Attributable to Graham Holdings Company Common Stockholders
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic net income per common share
|
$
|
8.12
|
|
|
$
|
23.43
|
|
|
$
|
34.24
|
|
|
$
|
39.81
|
|
Basic average number of common shares outstanding
|
5,285
|
|
|
5,302
|
|
|
5,285
|
|
|
5,354
|
|
||||
Diluted net income per common share
|
$
|
8.05
|
|
|
$
|
23.28
|
|
|
$
|
33.96
|
|
|
$
|
39.54
|
|
Diluted average number of common shares outstanding
|
5,329
|
|
|
5,337
|
|
|
5,328
|
|
|
5,390
|
|
|
Three Months Ended
September 30 |
|
Nine Months Ended
September 30 |
||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net Income
|
$
|
42,965
|
|
|
$
|
125,070
|
|
|
$
|
181,862
|
|
|
$
|
214,670
|
|
Other Comprehensive Loss, Before Tax
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments:
|
|
|
|
|
|
|
|
||||||||
Translation adjustments arising during the period
|
(16,684
|
)
|
|
(2,844
|
)
|
|
(17,755
|
)
|
|
(22,447
|
)
|
||||
Pension and other postretirement plans:
|
|
|
|
|
|
|
|
||||||||
Amortization of net prior service (credit) cost included in net income
|
(932
|
)
|
|
69
|
|
|
(3,210
|
)
|
|
215
|
|
||||
Amortization of net actuarial gain included in net income
|
(511
|
)
|
|
(3,295
|
)
|
|
(1,534
|
)
|
|
(7,956
|
)
|
||||
|
(1,443
|
)
|
|
(3,226
|
)
|
|
(4,744
|
)
|
|
(7,741
|
)
|
||||
Cash flow hedges (loss) gain
|
(477
|
)
|
|
(6
|
)
|
|
(904
|
)
|
|
601
|
|
||||
Other Comprehensive Loss, Before Tax
|
(18,604
|
)
|
|
(6,076
|
)
|
|
(23,403
|
)
|
|
(29,587
|
)
|
||||
Income tax benefit related to items of other comprehensive loss
|
518
|
|
|
874
|
|
|
1,512
|
|
|
1,976
|
|
||||
Other Comprehensive Loss, Net of Tax
|
(18,086
|
)
|
|
(5,202
|
)
|
|
(21,891
|
)
|
|
(27,611
|
)
|
||||
Comprehensive Income
|
24,879
|
|
|
119,868
|
|
|
159,971
|
|
|
187,059
|
|
||||
Comprehensive loss (income) attributable to noncontrolling interests
|
180
|
|
|
(6
|
)
|
|
112
|
|
|
(149
|
)
|
||||
Total Comprehensive Income Attributable to Graham Holdings Company
|
$
|
25,059
|
|
|
$
|
119,862
|
|
|
$
|
160,083
|
|
|
$
|
186,910
|
|
|
As of
|
||||||
(in thousands)
|
September 30,
2019 |
|
December 31,
2018 |
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
142,264
|
|
|
$
|
253,256
|
|
Restricted cash
|
15,143
|
|
|
10,859
|
|
||
Investments in marketable equity securities and other investments
|
554,211
|
|
|
514,581
|
|
||
Accounts receivable, net
|
612,141
|
|
|
582,280
|
|
||
Income taxes receivable
|
9,440
|
|
|
19,166
|
|
||
Inventories and contracts in progress
|
113,196
|
|
|
69,477
|
|
||
Other current assets
|
87,863
|
|
|
82,723
|
|
||
Total Current Assets
|
1,534,258
|
|
|
1,532,342
|
|
||
Property, Plant and Equipment, Net
|
370,882
|
|
|
293,085
|
|
||
Lease Right-of-Use Assets
|
503,830
|
|
|
—
|
|
||
Investments in Affiliates
|
163,986
|
|
|
143,813
|
|
||
Goodwill, Net
|
1,345,393
|
|
|
1,297,712
|
|
||
Indefinite-Lived Intangible Assets
|
144,477
|
|
|
99,052
|
|
||
Amortized Intangible Assets, Net
|
245,393
|
|
|
263,261
|
|
||
Prepaid Pension Cost
|
1,038,676
|
|
|
1,003,558
|
|
||
Deferred Income Taxes
|
11,400
|
|
|
13,388
|
|
||
Deferred Charges and Other Assets
|
129,451
|
|
|
117,830
|
|
||
Total Assets
|
$
|
5,487,746
|
|
|
$
|
4,764,041
|
|
|
|
|
|
||||
Liabilities and Equity
|
|
|
|
|
|
||
Current Liabilities
|
|
|
|
|
|
||
Accounts payable and accrued liabilities
|
$
|
477,522
|
|
|
$
|
486,578
|
|
Deferred revenue
|
337,573
|
|
|
308,728
|
|
||
Income taxes payable
|
6,668
|
|
|
10,496
|
|
||
Current portion of lease liabilities
|
78,114
|
|
|
—
|
|
||
Current portion of long-term debt
|
81,697
|
|
|
6,360
|
|
||
Dividends declared
|
7,387
|
|
|
—
|
|
||
Total Current Liabilities
|
988,961
|
|
|
812,162
|
|
||
Accrued Compensation and Related Benefits
|
177,116
|
|
|
179,652
|
|
||
Other Liabilities
|
27,398
|
|
|
57,901
|
|
||
Deferred Income Taxes
|
348,054
|
|
|
322,421
|
|
||
Lease Liabilities
|
462,868
|
|
|
—
|
|
||
Long-Term Debt
|
420,535
|
|
|
470,777
|
|
||
Total Liabilities
|
2,424,932
|
|
|
1,842,913
|
|
||
Redeemable Noncontrolling Interest
|
3,903
|
|
|
4,346
|
|
||
Preferred Stock
|
—
|
|
|
—
|
|
||
Common Stockholders’ Equity
|
|
|
|
|
|
||
Common stock
|
20,000
|
|
|
20,000
|
|
||
Capital in excess of par value
|
379,923
|
|
|
378,837
|
|
||
Retained earnings
|
6,388,546
|
|
|
6,236,125
|
|
||
Accumulated other comprehensive income, net of tax
|
|
|
|
|
|||
Cumulative foreign currency translation adjustment
|
(47,025
|
)
|
|
(29,270
|
)
|
||
Unrealized gain on pensions and other postretirement plans
|
229,373
|
|
|
232,836
|
|
||
Cash flow hedges
|
(410
|
)
|
|
263
|
|
||
Cost of Class B common stock held in treasury
|
(3,918,397
|
)
|
|
(3,922,009
|
)
|
||
Total Common Stockholders’ Equity
|
3,052,010
|
|
|
2,916,782
|
|
||
Noncontrolling Interest
|
6,901
|
|
|
—
|
|
||
Total Equity
|
3,058,911
|
|
|
2,916,782
|
|
||
Total Liabilities and Equity
|
$
|
5,487,746
|
|
|
$
|
4,764,041
|
|
|
Nine Months Ended
September 30 |
||||||
(in thousands)
|
2019
|
|
2018
|
||||
Cash Flows from Operating Activities
|
|
|
|
||||
Net Income
|
$
|
181,862
|
|
|
$
|
214,670
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation, amortization and impairment of long-lived assets
|
83,335
|
|
|
84,070
|
|
||
Amortization of lease right-of-use asset
|
61,797
|
|
|
—
|
|
||
Net pension benefit and special separation benefit expense
|
(33,061
|
)
|
|
(55,458
|
)
|
||
Gain on marketable equity securities and cost method investments, net
|
(54,341
|
)
|
|
(36,793
|
)
|
||
Gain on disposition of businesses, property, plant and equipment and investments, net
|
(28,871
|
)
|
|
(13,379
|
)
|
||
Provision for doubtful trade and other receivables
|
21,532
|
|
|
7,858
|
|
||
Debt extinguishment costs
|
—
|
|
|
10,563
|
|
||
Stock-based compensation expense, net
|
4,752
|
|
|
5,172
|
|
||
Foreign exchange (gain) loss
|
(1,284
|
)
|
|
2,205
|
|
||
Write-down of cost method investments
|
—
|
|
|
2,500
|
|
||
Equity in earnings of affiliates, net of distributions
|
(3,882
|
)
|
|
(10,294
|
)
|
||
Provision (benefit) for deferred income taxes
|
26,310
|
|
|
(10,867
|
)
|
||
Change in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
(47,308
|
)
|
|
47,342
|
|
||
Inventories
|
(11,969
|
)
|
|
(10,913
|
)
|
||
Accounts payable and accrued liabilities
|
(60,708
|
)
|
|
(95,100
|
)
|
||
Deferred revenue
|
24,920
|
|
|
38,148
|
|
||
Income taxes receivable
|
5,526
|
|
|
23,073
|
|
||
Other assets and other liabilities, net
|
(96,913
|
)
|
|
(12,844
|
)
|
||
Other
|
587
|
|
|
1,905
|
|
||
Net Cash Provided by Operating Activities
|
72,284
|
|
|
191,858
|
|
||
Cash Flows from Investing Activities
|
|
|
|
||||
Investments in certain businesses, net of cash acquired
|
(162,060
|
)
|
|
(111,451
|
)
|
||
Purchases of property, plant and equipment
|
(75,712
|
)
|
|
(58,850
|
)
|
||
Net proceeds (payments) from disposition of businesses, property, plant and equipment and investments
|
53,785
|
|
|
(13,483
|
)
|
||
Investments in equity affiliates, cost method and other investments
|
(25,836
|
)
|
|
(10,679
|
)
|
||
Proceeds from sales of marketable equity securities
|
17,586
|
|
|
66,741
|
|
||
Purchases of marketable equity securities
|
(7,499
|
)
|
|
—
|
|
||
Loan to related party and advance related to Kaplan University transaction
|
(3,500
|
)
|
|
(28,061
|
)
|
||
Return of investment in equity affiliates
|
786
|
|
|
4,521
|
|
||
Net Cash Used in Investing Activities
|
(202,450
|
)
|
|
(151,262
|
)
|
||
Cash Flows from Financing Activities
|
|
|
|
||||
Common shares repurchased
|
—
|
|
|
(110,848
|
)
|
||
Issuance of borrowings
|
30,000
|
|
|
400,000
|
|
||
Net borrowing under revolving credit facility
|
5,000
|
|
|
—
|
|
||
Net proceeds from vehicle floor plan payable
|
15,106
|
|
|
—
|
|
||
Dividends paid
|
(22,167
|
)
|
|
(21,564
|
)
|
||
Issuance of noncontrolling interest
|
6,536
|
|
|
—
|
|
||
Purchase of noncontrolling interest
|
(550
|
)
|
|
(16,500
|
)
|
||
Repayments of borrowings and early redemption premium
|
(7,901
|
)
|
|
(417,112
|
)
|
||
Payments of debt financing costs
|
(33
|
)
|
|
(6,490
|
)
|
||
Other
|
(356
|
)
|
|
5,303
|
|
||
Net Cash Provided by (Used in) Financing Activities
|
25,635
|
|
|
(167,211
|
)
|
||
Effect of Currency Exchange Rate Change
|
(2,177
|
)
|
|
(4,216
|
)
|
||
Net Decrease in Cash and Cash Equivalents and Restricted Cash
|
(106,708
|
)
|
|
(130,831
|
)
|
||
Beginning Cash and Cash Equivalents and Restricted Cash
|
264,115
|
|
|
407,566
|
|
||
Ending Cash and Cash Equivalents and Restricted Cash
|
$
|
157,407
|
|
|
$
|
276,735
|
|
(in thousands)
|
Common
Stock |
Capital in
Excess of Par Value |
Retained
Earnings |
Accumulated Other Comprehensive Income
|
Treasury
Stock |
Noncontrolling
Interest |
Total Equity
|
|
Redeemable Noncontrolling Interest
|
||||||||||||||||
As of December 31, 2018
|
$
|
20,000
|
|
$
|
378,837
|
|
$
|
6,236,125
|
|
$
|
203,829
|
|
$
|
(3,922,009
|
)
|
$
|
—
|
|
$
|
2,916,782
|
|
|
$
|
4,346
|
|
Net income for the period
|
|
|
81,702
|
|
|
|
|
81,702
|
|
|
|
||||||||||||||
Issuance of noncontrolling interest
|
|
|
|
|
|
6,000
|
|
6,000
|
|
|
|
||||||||||||||
Net loss attributable to noncontrolling interest
|
|
|
62
|
|
|
|
(62
|
)
|
—
|
|
|
|
|||||||||||||
Net income attributable to redeemable noncontrolling interests
|
|
|
(16
|
)
|
|
|
|
(16
|
)
|
|
16
|
|
|||||||||||||
Change in redemption value of redeemable noncontrolling interests
|
|
(54
|
)
|
|
|
|
|
(54
|
)
|
|
54
|
|
|||||||||||||
Dividends on common stock
|
|
|
(14,779
|
)
|
|
|
|
(14,779
|
)
|
|
|
||||||||||||||
Issuance of Class B common stock, net of restricted stock award forfeitures
|
|
(3,783
|
)
|
|
|
3,755
|
|
|
(28
|
)
|
|
|
|||||||||||||
Amortization of unearned stock compensation and stock option expense
|
|
1,639
|
|
|
|
|
|
1,639
|
|
|
|
||||||||||||||
Other comprehensive income, net of income taxes
|
|
|
|
8,290
|
|
|
|
8,290
|
|
|
|
||||||||||||||
Purchase of redeemable noncontrolling interest
|
|
|
|
|
|
|
—
|
|
|
(550
|
)
|
||||||||||||||
As of March 31, 2019
|
$
|
20,000
|
|
$
|
376,639
|
|
$
|
6,303,094
|
|
$
|
212,119
|
|
$
|
(3,918,254
|
)
|
$
|
5,938
|
|
$
|
2,999,536
|
|
|
$
|
3,866
|
|
Net income for the period
|
|
|
57,195
|
|
|
|
|
57,195
|
|
|
|
||||||||||||||
Net income attributable to noncontrolling interest
|
|
|
(104
|
)
|
|
|
104
|
|
—
|
|
|
|
|||||||||||||
Net income attributable to redeemable noncontrolling interests
|
|
|
(10
|
)
|
|
|
|
(10
|
)
|
|
10
|
|
|||||||||||||
Dividends on common stock
|
|
|
(7,388
|
)
|
|
|
|
(7,388
|
)
|
|
|
||||||||||||||
Amortization of unearned stock compensation and stock option expense
|
|
1,616
|
|
|
|
|
|
1,616
|
|
|
|
||||||||||||||
Other comprehensive loss, net of income taxes
|
|
|
|
(12,095
|
)
|
|
|
(12,095
|
)
|
|
|
||||||||||||||
As of June 30, 2019
|
$
|
20,000
|
|
$
|
378,255
|
|
$
|
6,352,787
|
|
$
|
200,024
|
|
$
|
(3,918,254
|
)
|
$
|
6,042
|
|
$
|
3,038,854
|
|
|
$
|
3,876
|
|
Net income for the period
|
|
|
42,965
|
|
|
|
|
42,965
|
|
|
|
||||||||||||||
Issuance of noncontrolling interest
|
|
|
|
|
|
536
|
|
536
|
|
|
|
||||||||||||||
Net loss attributable to noncontrolling interest
|
|
|
207
|
|
|
|
(207
|
)
|
—
|
|
|
|
|||||||||||||
Acquisition of noncontrolling interest
|
|
|
|
|
|
530
|
|
530
|
|
|
|
||||||||||||||
Net income attributable to redeemable noncontrolling interests
|
|
|
(27
|
)
|
|
|
|
(27
|
)
|
|
27
|
|
|||||||||||||
Dividends on common stock
|
|
|
(7,386
|
)
|
|
|
|
(7,386
|
)
|
|
|
||||||||||||||
Issuance of Class B common stock, net of restricted stock award forfeitures
|
|
(1
|
)
|
|
|
(143
|
)
|
|
(144
|
)
|
|
|
|||||||||||||
Amortization of unearned stock compensation and stock option expense
|
|
1,669
|
|
|
|
|
|
1,669
|
|
|
|
||||||||||||||
Other comprehensive loss, net of income taxes
|
|
|
|
(18,086
|
)
|
|
|
(18,086
|
)
|
|
|
||||||||||||||
As of September 30, 2019
|
$
|
20,000
|
|
$
|
379,923
|
|
$
|
6,388,546
|
|
$
|
181,938
|
|
$
|
(3,918,397
|
)
|
$
|
6,901
|
|
$
|
3,058,911
|
|
|
$
|
3,903
|
|
(in thousands)
|
Common
Stock |
Capital in
Excess of Par Value |
Retained
Earnings |
Accumulated Other Comprehensive Income
|
Treasury
Stock |
Noncontrolling
Interest |
Total Equity
|
|
Redeemable Noncontrolling Interest
|
||||||||||||||||
As of December 31, 2017
|
$
|
20,000
|
|
$
|
370,700
|
|
$
|
5,791,724
|
|
$
|
535,555
|
|
$
|
(3,802,834
|
)
|
$
|
—
|
|
$
|
2,915,145
|
|
|
$
|
4,607
|
|
Net income for the period
|
|
|
42,965
|
|
|
|
|
42,965
|
|
|
|
||||||||||||||
Net income attributable to redeemable noncontrolling interests
|
|
|
(73
|
)
|
|
|
|
(73
|
)
|
|
73
|
|
|||||||||||||
Dividends on common stock
|
|
|
(14,638
|
)
|
|
|
|
(14,638
|
)
|
|
|
||||||||||||||
Repurchase of Class B common stock
|
|
|
|
|
(79,001
|
)
|
|
(79,001
|
)
|
|
|
||||||||||||||
Issuance of Class B common stock, net of restricted stock award forfeitures
|
|
(189
|
)
|
|
|
119
|
|
|
(70
|
)
|
|
|
|||||||||||||
Amortization of unearned stock compensation and stock option expense
|
|
2,325
|
|
|
|
|
|
2,325
|
|
|
|
||||||||||||||
Other comprehensive income, net of income taxes
|
|
|
|
10,812
|
|
|
|
10,812
|
|
|
|
||||||||||||||
Cumulative effect of accounting change
|
|
|
201,812
|
|
(194,889
|
)
|
|
|
6,923
|
|
|
|
|||||||||||||
As of March 31, 2018
|
$
|
20,000
|
|
$
|
372,836
|
|
$
|
6,021,790
|
|
$
|
351,478
|
|
$
|
(3,881,716
|
)
|
$
|
—
|
|
$
|
2,884,388
|
|
|
$
|
4,680
|
|
Net income for the period
|
|
|
46,635
|
|
|
|
|
46,635
|
|
|
|
||||||||||||||
Net income attributable to redeemable noncontrolling interests
|
|
|
(70
|
)
|
|
|
|
(70
|
)
|
|
70
|
|
|||||||||||||
Dividends on common stock
|
|
|
(6,949
|
)
|
|
|
|
(6,949
|
)
|
|
|
||||||||||||||
Repurchase of Class B common stock
|
|
|
|
|
(15,091
|
)
|
|
(15,091
|
)
|
|
|
||||||||||||||
Issuance of Class B common stock, net of restricted stock award forfeitures
|
|
(496
|
)
|
|
|
(494
|
)
|
|
(990
|
)
|
|
|
|||||||||||||
Amortization of unearned stock compensation and stock option expense
|
|
2,162
|
|
|
|
|
|
2,162
|
|
|
|
||||||||||||||
Other comprehensive loss, net of income taxes
|
|
|
|
(33,221
|
)
|
|
|
(33,221
|
)
|
|
|
||||||||||||||
As of June 30, 2018
|
$
|
20,000
|
|
$
|
374,502
|
|
$
|
6,061,406
|
|
$
|
318,257
|
|
$
|
(3,897,301
|
)
|
$
|
—
|
|
$
|
2,876,864
|
|
|
$
|
4,750
|
|
Net income for the period
|
|
|
125,070
|
|
|
|
|
125,070
|
|
|
|
||||||||||||||
Net income attributable to redeemable noncontrolling interests
|
|
|
(6
|
)
|
|
|
|
(6
|
)
|
|
6
|
|
|||||||||||||
Dividends on common stock
|
|
|
(7,048
|
)
|
|
|
|
(7,048
|
)
|
|
|
||||||||||||||
Repurchase of Class B common stock
|
|
|
|
|
(16,757
|
)
|
|
(16,757
|
)
|
|
|
||||||||||||||
Issuance of Class B common stock, net of restricted stock award forfeitures
|
|
(27
|
)
|
|
|
|
|
(27
|
)
|
|
|
||||||||||||||
Amortization of unearned stock compensation and stock option expense
|
|
1,937
|
|
|
|
|
|
1,937
|
|
|
|
||||||||||||||
Other comprehensive loss, net of income taxes
|
|
|
|
(5,202
|
)
|
|
|
(5,202
|
)
|
|
|
||||||||||||||
Other
|
|
|
|
|
|
|
—
|
|
|
(50
|
)
|
||||||||||||||
As of September 30, 2018
|
$
|
20,000
|
|
$
|
376,412
|
|
$
|
6,179,422
|
|
$
|
313,055
|
|
$
|
(3,914,058
|
)
|
$
|
—
|
|
$
|
2,974,831
|
|
|
$
|
4,706
|
|
|
Balance as of December 31, 2018
|
Adjustments
|
Balance as of January 1, 2019
|
||||||
Assets
|
|
|
|
||||||
Other current assets
|
$
|
82,723
|
|
$
|
(5,595
|
)
|
$
|
77,128
|
|
Lease Right-of-Use Assets
|
—
|
|
369,333
|
|
369,333
|
|
|||
Liabilities
|
|
|
|
||||||
Accounts payable and accrued liabilities
|
$
|
486,578
|
|
$
|
(14,029
|
)
|
$
|
472,549
|
|
Current portion of lease liabilities
|
—
|
|
86,747
|
|
86,747
|
|
|||
Other Liabilities
|
57,901
|
|
(40,500
|
)
|
17,401
|
|
|||
Lease Liabilities
|
—
|
|
331,520
|
|
331,520
|
|
|
|
Purchase Price Allocation
|
|||||
|
|
Nine Months Ended
|
Year Ended
|
||||
(in thousands)
|
|
September 30, 2019
|
December 31, 2018
|
||||
Accounts receivable
|
|
$
|
4,697
|
|
$
|
2,344
|
|
Inventory
|
|
31,750
|
|
1,268
|
|
||
Property, plant and equipment
|
|
52,577
|
|
1,518
|
|
||
Lease Right-of-Use Assets
|
|
100,933
|
|
—
|
|
||
Goodwill
|
|
63,387
|
|
41,840
|
|
||
Indefinite-lived intangible assets
|
|
46,900
|
|
—
|
|
||
Amortized intangible assets
|
|
21,291
|
|
78,427
|
|
||
Other assets
|
|
8,352
|
|
5,198
|
|
||
Floor plan payables
|
|
(25,755
|
)
|
—
|
|
||
Other liabilities
|
|
(38,828
|
)
|
(7,678
|
)
|
||
Deferred income taxes
|
|
(2,191
|
)
|
(4,900
|
)
|
||
Current and noncurrent lease liabilities
|
|
(97,996
|
)
|
—
|
|
||
Noncontrolling interest
|
|
(530
|
)
|
—
|
|
||
Aggregate purchase price, net of cash acquired
|
|
$
|
164,587
|
|
$
|
118,017
|
|
|
Three Months Ended
September 30 |
|
Nine Months Ended
September 30 |
||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Operating revenues
|
$
|
750,076
|
|
|
$
|
787,808
|
|
|
$
|
2,267,502
|
|
|
$
|
2,349,342
|
|
Net income
|
43,849
|
|
|
125,761
|
|
|
178,551
|
|
|
217,589
|
|
(in thousands)
|
Three Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2018
|
||||
Revenue
|
$
|
—
|
|
|
$
|
91,526
|
|
Operating income
|
—
|
|
|
213
|
|
|
As of
|
||||||
|
September 30,
2019 |
|
December 31,
2018 |
||||
(in thousands)
|
|
||||||
Total cost
|
$
|
282,349
|
|
|
$
|
282,563
|
|
Gross unrealized gains
|
253,215
|
|
|
216,111
|
|
||
Gross unrealized losses
|
—
|
|
|
(2,284
|
)
|
||
Total Fair Value
|
$
|
535,564
|
|
|
$
|
496,390
|
|
|
Three Months Ended
September 30 |
|
Nine Months Ended
September 30 |
||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Gain on marketable equity securities, net
|
$
|
17,404
|
|
|
$
|
44,962
|
|
|
$
|
49,261
|
|
|
$
|
28,306
|
|
Less: Net losses (gains) in earnings from marketable equity securities sold and donated
|
61
|
|
|
—
|
|
|
(2,919
|
)
|
|
4,271
|
|
||||
Net unrealized gains in earnings from marketable equity securities still held at the end of the period
|
$
|
17,465
|
|
|
$
|
44,962
|
|
|
$
|
46,342
|
|
|
$
|
32,577
|
|
|
As of
|
||||||
|
September 30,
2019 |
|
December 31,
2018 |
||||
(in thousands)
|
|
||||||
Receivables from contracts with customers, less doubtful accounts of $13,060 and $14,775
|
$
|
582,944
|
|
|
$
|
538,021
|
|
Other receivables
|
29,197
|
|
|
44,259
|
|
||
|
$
|
612,141
|
|
|
$
|
582,280
|
|
|
As of
|
||||||
|
September 30,
2019 |
|
December 31,
2018 |
||||
(in thousands)
|
|
||||||
Raw materials
|
$
|
35,776
|
|
|
$
|
37,248
|
|
Work-in-process
|
11,176
|
|
|
11,633
|
|
||
Finished goods
|
62,451
|
|
|
17,861
|
|
||
Contracts in progress
|
3,793
|
|
|
2,735
|
|
||
|
$
|
113,196
|
|
|
$
|
69,477
|
|
(in thousands)
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||
Operating lease cost
|
$
|
26,242
|
|
|
$
|
75,531
|
|
Short-term and month-to-month lease cost
|
4,502
|
|
|
14,275
|
|
||
Variable lease cost
|
5,601
|
|
|
15,563
|
|
||
Sublease income
|
(5,222
|
)
|
|
(14,915
|
)
|
||
Total net lease cost
|
$
|
31,123
|
|
|
$
|
90,454
|
|
(in thousands)
|
Nine Months Ended September 30, 2019
|
||
Cash Flow Information:
|
|
||
Operating cash flows from operating leases (payments)
|
$
|
88,369
|
|
Right-of-use assets obtained in exchange for new operating lease liabilities (noncash)
|
205,455
|
|
|
|
|
||
|
As of September 30, 2019
|
|
|
Balance Sheet Information:
|
|
||
Lease right-of-use assets
|
$
|
503,830
|
|
|
|
||
Current lease liabilities
|
$
|
78,114
|
|
Noncurrent lease liabilities
|
462,868
|
|
|
Total lease liabilities
|
$
|
540,982
|
|
|
|
||
Weighted average remaining lease term (years)
|
10.8
|
|
|
Weighted average discount rate
|
4.3
|
%
|
(in thousands)
|
September 30, 2019
|
||
2019
|
$
|
20,271
|
|
2020
|
103,515
|
|
|
2021
|
86,245
|
|
|
2022
|
71,147
|
|
|
2023
|
62,384
|
|
|
Thereafter
|
358,758
|
|
|
Total payments
|
702,320
|
|
|
Less: Imputed interest
|
(161,338
|
)
|
|
Total
|
$
|
540,982
|
|
(in thousands)
|
December 31, 2018
|
||
2019
|
$
|
101,009
|
|
2020
|
84,945
|
|
|
2021
|
72,031
|
|
|
2022
|
53,709
|
|
|
2023
|
47,091
|
|
|
Thereafter
|
115,948
|
|
|
|
$
|
474,733
|
|
(in thousands)
|
Education
|
|
Television
Broadcasting
|
|
Manufacturing
|
|
Healthcare
|
|
SocialCode
|
|
Other
Businesses
|
|
Total
|
||||||||||||||
Balance as of December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Goodwill
|
$
|
1,128,699
|
|
|
$
|
190,815
|
|
|
$
|
231,479
|
|
|
$
|
69,626
|
|
|
$
|
15,860
|
|
|
$
|
7,685
|
|
|
$
|
1,644,164
|
|
Accumulated impairment losses
|
(331,151
|
)
|
|
—
|
|
|
(7,616
|
)
|
|
—
|
|
|
—
|
|
|
(7,685
|
)
|
|
(346,452
|
)
|
|||||||
|
797,548
|
|
|
190,815
|
|
|
223,863
|
|
|
69,626
|
|
|
15,860
|
|
|
—
|
|
|
1,297,712
|
|
|||||||
Acquisitions
|
6,391
|
|
|
—
|
|
|
2,714
|
|
|
8,283
|
|
|
—
|
|
|
45,999
|
|
|
63,387
|
|
|||||||
Foreign currency exchange rate changes
|
(15,706
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,706
|
)
|
|||||||
Balance as of September 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
1,119,384
|
|
|
190,815
|
|
|
234,193
|
|
|
77,909
|
|
|
15,860
|
|
|
53,684
|
|
|
1,691,845
|
|
|||||||
Accumulated impairment losses
|
(331,151
|
)
|
|
—
|
|
|
(7,616
|
)
|
|
—
|
|
|
—
|
|
|
(7,685
|
)
|
|
(346,452
|
)
|
|||||||
|
$
|
788,233
|
|
|
$
|
190,815
|
|
|
$
|
226,577
|
|
|
$
|
77,909
|
|
|
$
|
15,860
|
|
|
$
|
45,999
|
|
|
$
|
1,345,393
|
|
(in thousands)
|
Kaplan
International
|
|
Higher
Education
|
|
Test
Preparation
|
|
Professional (U.S.)
|
|
Total
|
||||||||||
Balance as of December 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
$
|
583,424
|
|
|
$
|
174,564
|
|
|
$
|
166,920
|
|
|
$
|
203,791
|
|
|
$
|
1,128,699
|
|
Accumulated impairment losses
|
—
|
|
|
(111,324
|
)
|
|
(102,259
|
)
|
|
(117,568
|
)
|
|
(331,151
|
)
|
|||||
|
583,424
|
|
|
63,240
|
|
|
64,661
|
|
|
86,223
|
|
|
797,548
|
|
|||||
Acquisitions
|
6,391
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,391
|
|
|||||
Foreign currency exchange rate changes
|
(15,760
|
)
|
|
—
|
|
|
—
|
|
|
54
|
|
|
(15,706
|
)
|
|||||
Balance as of September 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Goodwill
|
574,055
|
|
|
174,564
|
|
|
166,920
|
|
|
203,845
|
|
|
1,119,384
|
|
|||||
Accumulated impairment losses
|
—
|
|
|
(111,324
|
)
|
|
(102,259
|
)
|
|
(117,568
|
)
|
|
(331,151
|
)
|
|||||
|
$
|
574,055
|
|
|
$
|
63,240
|
|
|
$
|
64,661
|
|
|
$
|
86,277
|
|
|
$
|
788,233
|
|
|
|
|
As of September 30, 2019
|
|
As of December 31, 2018
|
||||||||||||||||||||
(in thousands)
|
Useful Life
Range
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying
Amount
|
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Net
Carrying Amount |
||||||||||||
Amortized Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Student and customer relationships
|
2–10 years
|
|
$
|
291,662
|
|
|
$
|
136,319
|
|
|
$
|
155,343
|
|
|
$
|
282,761
|
|
|
$
|
114,429
|
|
|
$
|
168,332
|
|
Trade names and trademarks
|
2–10 years
|
|
92,568
|
|
|
46,204
|
|
|
46,364
|
|
|
87,285
|
|
|
39,825
|
|
|
47,460
|
|
||||||
Network affiliation agreements
|
10 years
|
|
17,400
|
|
|
4,712
|
|
|
12,688
|
|
|
17,400
|
|
|
3,408
|
|
|
13,992
|
|
||||||
Databases and technology
|
3–6 years
|
|
30,274
|
|
|
12,221
|
|
|
18,053
|
|
|
27,041
|
|
|
8,471
|
|
|
18,570
|
|
||||||
Noncompete agreements
|
2–5 years
|
|
1,353
|
|
|
931
|
|
|
422
|
|
|
1,088
|
|
|
838
|
|
|
250
|
|
||||||
Other
|
1–8 years
|
|
24,890
|
|
|
12,367
|
|
|
12,523
|
|
|
24,530
|
|
|
9,873
|
|
|
14,657
|
|
||||||
|
|
|
$
|
458,147
|
|
|
$
|
212,754
|
|
|
$
|
245,393
|
|
|
$
|
440,105
|
|
|
$
|
176,844
|
|
|
$
|
263,261
|
|
Indefinite-Lived Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Trade names and trademarks
|
|
|
$
|
97,527
|
|
|
|
|
|
|
|
|
$
|
80,102
|
|
|
|
|
|
|
|
||||
Franchise agreements
|
|
|
28,000
|
|
|
|
|
|
|
—
|
|
|
|
|
|
||||||||||
FCC licenses
|
|
|
18,800
|
|
|
|
|
|
|
18,800
|
|
|
|
|
|
||||||||||
Licensure and accreditation
|
|
|
150
|
|
|
|
|
|
|
|
|
150
|
|
|
|
|
|
|
|
||||||
|
|
|
$
|
144,477
|
|
|
|
|
|
|
$
|
99,052
|
|
|
|
|
|
|
As of
|
||||||
|
September 30,
2019 |
|
December 31,
2018 |
||||
(in thousands)
|
|
||||||
5.75% unsecured notes due June 1, 2026 (1)
|
$
|
395,212
|
|
|
$
|
394,675
|
|
U.K. credit facility (2)
|
73,683
|
|
|
82,366
|
|
||
Commercial note
|
28,250
|
|
|
—
|
|
||
USD revolving credit facility
|
5,000
|
|
|
—
|
|
||
Other indebtedness
|
87
|
|
|
96
|
|
||
Total Debt
|
$
|
502,232
|
|
|
$
|
477,137
|
|
Less: current portion
|
(81,697
|
)
|
|
(6,360
|
)
|
||
Total Long-Term Debt
|
$
|
420,535
|
|
|
$
|
470,777
|
|
(1)
|
The carrying value is net of $4.8 million and $5.3 million of unamortized debt issuance costs as of September 30, 2019 and December 31, 2018, respectively.
|
(2)
|
The carrying value is net of $0.1 million and $0.2 million of unamortized debt issuance costs as of September 30, 2019 and December 31, 2018, respectively.
|
|
As of September 30, 2019
|
||||||||||
(in thousands)
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Assets
|
|
|
|
|
|
||||||
Marketable equity securities (1)
|
$
|
535,564
|
|
|
$
|
—
|
|
|
$
|
535,564
|
|
Other current investments (2)
|
13,601
|
|
|
5,045
|
|
|
18,646
|
|
|||
Interest rate swap (3)
|
—
|
|
|
162
|
|
|
162
|
|
|||
Total Financial Assets
|
$
|
549,165
|
|
|
$
|
5,207
|
|
|
$
|
554,372
|
|
Liabilities
|
|
|
|
|
|
||||||
Deferred compensation plan liabilities (4)
|
$
|
—
|
|
|
$
|
33,195
|
|
|
$
|
33,195
|
|
Interest rate swap (5)
|
—
|
|
|
706
|
|
|
706
|
|
|||
Total Financial Liabilities
|
$
|
—
|
|
|
$
|
33,901
|
|
|
$
|
33,901
|
|
|
As of December 31, 2018
|
||||||||||
(in thousands)
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Assets
|
|
|
|
|
|
||||||
Money market investments (6)
|
$
|
—
|
|
|
$
|
75,500
|
|
|
$
|
75,500
|
|
Marketable equity securities (1)
|
496,390
|
|
|
—
|
|
|
496,390
|
|
|||
Other current investments (2)
|
11,203
|
|
|
6,988
|
|
|
18,191
|
|
|||
Interest rate swap (3)
|
—
|
|
|
369
|
|
|
369
|
|
|||
Total Financial Assets
|
$
|
507,593
|
|
|
$
|
82,857
|
|
|
$
|
590,450
|
|
Liabilities
|
|
|
|
|
|
||||||
Deferred compensation plan liabilities (4)
|
$
|
—
|
|
|
$
|
36,080
|
|
|
$
|
36,080
|
|
(1)
|
The Company’s investments in marketable equity securities are held in common shares of U.S. corporations that are actively traded on U.S. stock exchanges. Price quotes for these shares are readily available.
|
(2)
|
Includes U.S. Government Securities, corporate bonds, mutual funds and time deposits. These investments are valued using a market approach based on the quoted market prices of the security or inputs that include quoted market prices for similar instruments and are classified as either Level 1 or Level 2 in the fair value hierarchy.
|
(3)
|
Included in Other Current Assets. The Company utilized a market approach model using the notional amount of the interest rate swap multiplied by the observable inputs of time to maturity and market interest rates.
|
(4)
|
Includes Graham Holdings Company’s Deferred Compensation Plan and supplemental savings plan benefits under the Graham Holdings Company’s Supplemental Executive Retirement Plan, which are included in accrued compensation and related benefits. These plans measure the market value of a participant’s balance in a notional investment account that is comprised primarily of mutual funds, which are based on observable market prices. However, since the deferred compensation obligations are not exchanged in an active market, they are classified as Level 2 in the fair value hierarchy. Realized and unrealized gains (losses) on deferred compensation are included in operating income.
|
(5)
|
Included in Other Liabilities. The Company utilized a market approach model using the notional amount of the interest rate swap multiplied by the observable inputs of time to maturity and market interest rates.
|
(6)
|
The Company’s money market investments are included in Cash and Cash Equivalents and the value considers the liquidity of the counterparty.
|
|
As of
|
|
||||||
|
September 30,
2019 |
|
December 31,
2018 |
%
|
||||
(in thousands)
|
|
Change
|
||||||
Deferred revenue
|
$
|
341,682
|
|
|
$
|
311,214
|
|
10
|
(in thousands)
|
Balance at
Beginning
of Period
|
|
Costs associated with new contracts
|
|
Less: Costs amortized during the period
|
|
Other
|
|
Balance
at
End of
Period
|
||||||||||
2019
|
$
|
21,311
|
|
|
$
|
29,381
|
|
|
$
|
(34,729
|
)
|
|
$
|
(312
|
)
|
|
$
|
15,651
|
|
|
Three Months Ended
September 30 |
|
Nine Months Ended
September 30 |
||||||||||||
(in thousands, except per share amounts)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Numerator for basic earnings per share:
|
|
|
|
|
|
|
|
||||||||
Net income attributable to Graham Holdings Company common stockholders
|
$
|
43,145
|
|
|
$
|
125,064
|
|
|
$
|
181,974
|
|
|
$
|
214,521
|
|
Less: Dividends paid-common stock outstanding and unvested restricted shares
|
(7,386
|
)
|
|
(7,048
|
)
|
|
(29,554
|
)
|
|
(28,635
|
)
|
||||
Undistributed earnings
|
35,759
|
|
|
118,016
|
|
|
152,420
|
|
|
185,886
|
|
||||
Percent allocated to common stockholders
|
99.44
|
%
|
|
99.34
|
%
|
|
99.44
|
%
|
|
99.34
|
%
|
||||
|
35,559
|
|
|
117,235
|
|
|
151,570
|
|
|
184,657
|
|
||||
Add: Dividends paid-common stock outstanding
|
7,345
|
|
|
7,001
|
|
|
29,389
|
|
|
28,447
|
|
||||
Numerator for basic earnings per share
|
$
|
42,904
|
|
|
$
|
124,236
|
|
|
$
|
180,959
|
|
|
$
|
213,104
|
|
Add: Additional undistributed earnings due to dilutive stock options
|
2
|
|
|
5
|
|
|
7
|
|
|
8
|
|
||||
Numerator for diluted earnings per share
|
$
|
42,906
|
|
|
$
|
124,241
|
|
|
$
|
180,966
|
|
|
$
|
213,112
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
||||||
Denominator for basic earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding
|
5,285
|
|
|
5,302
|
|
|
5,285
|
|
|
5,354
|
|
||||
Add: Effect of dilutive stock options
|
44
|
|
|
35
|
|
|
43
|
|
|
36
|
|
||||
Denominator for diluted earnings per share
|
5,329
|
|
|
5,337
|
|
|
5,328
|
|
|
5,390
|
|
||||
Graham Holdings Company Common Stockholders:
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share
|
$
|
8.12
|
|
|
$
|
23.43
|
|
|
$
|
34.24
|
|
|
$
|
39.81
|
|
Diluted earnings per share
|
$
|
8.05
|
|
|
$
|
23.28
|
|
|
$
|
33.96
|
|
|
$
|
39.54
|
|
|
Three Months Ended
September 30 |
|
Nine Months Ended
September 30 |
||||||||
(in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Weighted average restricted stock
|
14
|
|
|
21
|
|
|
12
|
|
|
23
|
|
|
Three Months Ended September 30
|
|
Nine Months Ended September 30
|
||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Service cost
|
$
|
5,142
|
|
|
$
|
4,473
|
|
|
$
|
15,326
|
|
|
$
|
13,730
|
|
Interest cost
|
11,743
|
|
|
11,844
|
|
|
35,078
|
|
|
34,943
|
|
||||
Expected return on assets
|
(30,832
|
)
|
|
(31,969
|
)
|
|
(91,955
|
)
|
|
(97,251
|
)
|
||||
Amortization of prior service cost
|
824
|
|
|
36
|
|
|
2,058
|
|
|
114
|
|
||||
Recognized actuarial gain
|
—
|
|
|
(2,974
|
)
|
|
—
|
|
|
(6,994
|
)
|
||||
Net Periodic Benefit
|
(13,123
|
)
|
|
(18,590
|
)
|
|
(39,493
|
)
|
|
(55,458
|
)
|
||||
Curtailment gain
|
—
|
|
|
—
|
|
|
—
|
|
|
(806
|
)
|
||||
Special separation benefit expense
|
(175
|
)
|
|
—
|
|
|
6,432
|
|
|
—
|
|
||||
Total Benefit
|
$
|
(13,298
|
)
|
|
$
|
(18,590
|
)
|
|
$
|
(33,061
|
)
|
|
$
|
(56,264
|
)
|
|
Three Months Ended September 30
|
|
Nine Months Ended September 30
|
||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Service cost
|
$
|
214
|
|
|
$
|
205
|
|
|
$
|
643
|
|
|
$
|
614
|
|
Interest cost
|
1,079
|
|
|
967
|
|
|
3,236
|
|
|
2,899
|
|
||||
Amortization of prior service cost
|
85
|
|
|
77
|
|
|
254
|
|
|
233
|
|
||||
Recognized actuarial loss
|
579
|
|
|
600
|
|
|
1,736
|
|
|
1,802
|
|
||||
Net Periodic Cost
|
$
|
1,957
|
|
|
$
|
1,849
|
|
|
$
|
5,869
|
|
|
$
|
5,548
|
|
|
As of
|
||||
|
September 30,
2019 |
|
December 31,
2018 |
||
|
|
||||
U.S. equities
|
55
|
%
|
|
53
|
%
|
U.S. stock index fund
|
21
|
%
|
|
28
|
%
|
U.S. fixed income
|
17
|
%
|
|
13
|
%
|
International equities
|
7
|
%
|
|
6
|
%
|
|
100
|
%
|
|
100
|
%
|
|
Three Months Ended September 30
|
|
Nine Months Ended September 30
|
||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Service cost
|
$
|
—
|
|
|
$
|
267
|
|
|
$
|
—
|
|
|
$
|
803
|
|
Interest cost
|
72
|
|
|
170
|
|
|
216
|
|
|
509
|
|
||||
Amortization of prior service credit
|
(1,841
|
)
|
|
(44
|
)
|
|
(5,522
|
)
|
|
(132
|
)
|
||||
Recognized actuarial gain
|
(1,090
|
)
|
|
(921
|
)
|
|
(3,270
|
)
|
|
(2,764
|
)
|
||||
Net Periodic Benefit
|
$
|
(2,859
|
)
|
|
$
|
(528
|
)
|
|
$
|
(8,576
|
)
|
|
$
|
(1,584
|
)
|
|
Three Months Ended
September 30 |
|
Nine Months Ended
September 30 |
||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Gain on sale of an equity affiliate
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28,994
|
|
|
$
|
—
|
|
Gain on cost method investments
|
3,669
|
|
|
8,487
|
|
|
5,080
|
|
|
8,487
|
|
||||
Foreign currency gain (loss), net
|
661
|
|
|
(116
|
)
|
|
1,284
|
|
|
(2,205
|
)
|
||||
Impairment of a cost method investment
|
—
|
|
|
(2,500
|
)
|
|
—
|
|
|
(2,500
|
)
|
||||
Gain on sales of businesses
|
486
|
|
|
916
|
|
|
907
|
|
|
8,157
|
|
||||
Gain on sale of cost method investments
|
259
|
|
|
—
|
|
|
259
|
|
|
2,845
|
|
||||
(Loss) gain on sale of property, plant and equipment
|
(38
|
)
|
|
—
|
|
|
(82
|
)
|
|
2,542
|
|
||||
Other gain (loss), net
|
519
|
|
|
(3,645
|
)
|
|
(307
|
)
|
|
(2,664
|
)
|
||||
Total Other Non-Operating Income
|
$
|
5,556
|
|
|
$
|
3,142
|
|
|
$
|
36,135
|
|
|
$
|
14,662
|
|
|
Three Months Ended September 30
|
||||||||||||||||||||||
|
2019
|
|
2018
|
||||||||||||||||||||
|
Before-Tax
|
|
Income
|
|
After-Tax
|
|
Before-Tax
|
|
Income
|
|
After-Tax
|
||||||||||||
(in thousands)
|
Amount
|
|
Tax
|
|
Amount
|
|
Amount
|
|
Tax
|
|
Amount
|
||||||||||||
Foreign currency translation adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Translation adjustments arising during the period
|
$
|
(16,684
|
)
|
|
$
|
—
|
|
|
$
|
(16,684
|
)
|
|
$
|
(2,844
|
)
|
|
$
|
—
|
|
|
$
|
(2,844
|
)
|
Pension and other postretirement plans:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amortization of net prior service (credit) cost included in net income
|
(932
|
)
|
|
252
|
|
|
(680
|
)
|
|
69
|
|
|
(18
|
)
|
|
51
|
|
||||||
Amortization of net actuarial gain included in net income
|
(511
|
)
|
|
138
|
|
|
(373
|
)
|
|
(3,295
|
)
|
|
891
|
|
|
(2,404
|
)
|
||||||
|
(1,443
|
)
|
|
390
|
|
|
(1,053
|
)
|
|
(3,226
|
)
|
|
873
|
|
|
(2,353
|
)
|
||||||
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loss for the period
|
(477
|
)
|
|
128
|
|
|
(349
|
)
|
|
(6
|
)
|
|
1
|
|
|
(5
|
)
|
||||||
Other Comprehensive Loss
|
$
|
(18,604
|
)
|
|
$
|
518
|
|
|
$
|
(18,086
|
)
|
|
$
|
(6,076
|
)
|
|
$
|
874
|
|
|
$
|
(5,202
|
)
|
|
Nine Months Ended September 30
|
||||||||||||||||||||||
|
2019
|
|
2018
|
||||||||||||||||||||
|
Before-Tax
|
|
Income
|
|
After-Tax
|
|
Before-Tax
|
|
Income
|
|
After-Tax
|
||||||||||||
(in thousands)
|
Amount
|
|
Tax
|
|
Amount
|
|
Amount
|
|
Tax
|
|
Amount
|
||||||||||||
Foreign currency translation adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Translation adjustments arising during the period
|
$
|
(17,755
|
)
|
|
$
|
—
|
|
|
$
|
(17,755
|
)
|
|
$
|
(22,447
|
)
|
|
$
|
—
|
|
|
$
|
(22,447
|
)
|
Pension and other postretirement plans:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amortization of net prior service (credit) cost included in net income
|
(3,210
|
)
|
|
867
|
|
|
(2,343
|
)
|
|
215
|
|
|
(58
|
)
|
|
157
|
|
||||||
Amortization of net actuarial gain included in net income
|
(1,534
|
)
|
|
414
|
|
|
(1,120
|
)
|
|
(7,956
|
)
|
|
2,148
|
|
|
(5,808
|
)
|
||||||
|
(4,744
|
)
|
|
1,281
|
|
|
(3,463
|
)
|
|
(7,741
|
)
|
|
2,090
|
|
|
(5,651
|
)
|
||||||
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(Loss) gain for the period
|
(904
|
)
|
|
231
|
|
|
(673
|
)
|
|
601
|
|
|
(114
|
)
|
|
487
|
|
||||||
Other Comprehensive Loss
|
$
|
(23,403
|
)
|
|
$
|
1,512
|
|
|
$
|
(21,891
|
)
|
|
$
|
(29,587
|
)
|
|
$
|
1,976
|
|
|
$
|
(27,611
|
)
|
(in thousands, net of taxes)
|
Cumulative
Foreign
Currency
Translation
Adjustment
|
|
Unrealized Gain
on Pensions
and Other
Postretirement
Plans
|
|
Cash Flow
Hedges
|
|
Accumulated
Other
Comprehensive
Income
|
||||||||
Balance as of December 31, 2018
|
$
|
(29,270
|
)
|
|
$
|
232,836
|
|
|
$
|
263
|
|
|
$
|
203,829
|
|
Other comprehensive loss before reclassifications
|
(17,755
|
)
|
|
—
|
|
|
(562
|
)
|
|
(18,317
|
)
|
||||
Net amount reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
(3,463
|
)
|
|
(111
|
)
|
|
(3,574
|
)
|
||||
Other comprehensive loss, net of tax
|
(17,755
|
)
|
|
(3,463
|
)
|
|
(673
|
)
|
|
(21,891
|
)
|
||||
Balance as of September 30, 2019
|
$
|
(47,025
|
)
|
|
$
|
229,373
|
|
|
$
|
(410
|
)
|
|
$
|
181,938
|
|
|
Three Months Ended
September 30 |
|
Nine Months Ended
September 30 |
|
Affected Line Item in the Condensed Consolidated Statements of Operations
|
||||||||||||
|
|
|
|||||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|||||||||
Pension and Other Postretirement Plans:
|
|
|
|
|
|
|
|
|
|
||||||||
Amortization of net prior service (credit) cost
|
$
|
(932
|
)
|
|
$
|
69
|
|
|
$
|
(3,210
|
)
|
|
$
|
215
|
|
|
(1)
|
Amortization of net actuarial gain
|
(511
|
)
|
|
(3,295
|
)
|
|
(1,534
|
)
|
|
(7,956
|
)
|
|
(1)
|
||||
|
(1,443
|
)
|
|
(3,226
|
)
|
|
(4,744
|
)
|
|
(7,741
|
)
|
|
Before tax
|
||||
|
390
|
|
|
873
|
|
|
1,281
|
|
|
2,090
|
|
|
Provision for Income Taxes
|
||||
|
(1,053
|
)
|
|
(2,353
|
)
|
|
(3,463
|
)
|
|
(5,651
|
)
|
|
Net of Tax
|
||||
Cash Flow Hedges
|
|
|
|
|
|
|
|
|
|
||||||||
|
(24
|
)
|
|
(59
|
)
|
|
(151
|
)
|
|
(101
|
)
|
|
Interest expense
|
||||
|
11
|
|
|
11
|
|
|
40
|
|
|
19
|
|
|
Provision for Income Taxes
|
||||
|
(13
|
)
|
|
(48
|
)
|
|
(111
|
)
|
|
(82
|
)
|
|
Net of Tax
|
||||
Total reclassification for the period
|
$
|
(1,066
|
)
|
|
$
|
(2,401
|
)
|
|
$
|
(3,574
|
)
|
|
$
|
(5,733
|
)
|
|
Net of Tax
|
(1)
|
These accumulated other comprehensive income components are components of net periodic pension and postretirement plan cost (see Note 12) and are included in non-operating pension and postretirement benefit income in the Company’s Condensed Consolidated Statements of Operations.
|
|
|
Three Months Ended
|
||||||||||
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
||||||
(in thousands)
|
|
2019
|
|
2019
|
|
2019
|
||||||
Operating Revenues
|
|
|
|
|
|
|
||||||
Education
|
|
$
|
372,454
|
|
|
$
|
367,763
|
|
|
$
|
357,319
|
|
Television broadcasting
|
|
108,223
|
|
|
116,628
|
|
|
115,161
|
|
|||
Manufacturing
|
|
115,157
|
|
|
114,873
|
|
|
111,676
|
|
|||
Healthcare
|
|
37,728
|
|
|
40,641
|
|
|
40,688
|
|
|||
SocialCode
|
|
13,447
|
|
|
16,382
|
|
|
15,975
|
|
|||
Other businesses
|
|
45,230
|
|
|
81,359
|
|
|
98,225
|
|
|||
Corporate office
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Intersegment elimination
|
|
(40
|
)
|
|
(44
|
)
|
|
(224
|
)
|
|||
|
|
$
|
692,199
|
|
|
$
|
737,602
|
|
|
$
|
738,820
|
|
Income (Loss) from Operations
|
|
|
|
|
|
|
||||||
Education
|
|
$
|
25,595
|
|
|
$
|
26,305
|
|
|
$
|
(7,161
|
)
|
Television broadcasting
|
|
35,540
|
|
|
44,494
|
|
|
36,813
|
|
|||
Manufacturing
|
|
3,274
|
|
|
4,692
|
|
|
6,845
|
|
|||
Healthcare
|
|
2,329
|
|
|
2,598
|
|
|
1,208
|
|
|||
SocialCode
|
|
(4,018
|
)
|
|
(975
|
)
|
|
(378
|
)
|
|||
Other businesses
|
|
(8,493
|
)
|
|
(5,913
|
)
|
|
(9,029
|
)
|
|||
Corporate office
|
|
(14,224
|
)
|
|
(13,238
|
)
|
|
(12,030
|
)
|
|||
|
|
$
|
40,003
|
|
|
$
|
57,963
|
|
|
$
|
16,268
|
|
Equity in Earnings of Affiliates, Net
|
|
1,679
|
|
|
1,467
|
|
|
4,683
|
|
|||
Interest Expense, Net
|
|
(5,725
|
)
|
|
(6,807
|
)
|
|
(5,302
|
)
|
|||
Non-Operating Pension and Postretirement Benefit Income, Net
|
|
19,928
|
|
|
12,253
|
|
|
19,556
|
|
|||
Gain on Marketable Equity Securities, Net
|
|
24,066
|
|
|
7,791
|
|
|
17,404
|
|
|||
Other Income, Net
|
|
29,351
|
|
|
1,228
|
|
|
5,556
|
|
|||
Income Before Income Taxes
|
|
$
|
109,302
|
|
|
$
|
73,895
|
|
|
$
|
58,165
|
|
Depreciation of Property, Plant and Equipment
|
|
|
|
|
|
|
||||||
Education
|
|
$
|
6,201
|
|
|
$
|
6,137
|
|
|
$
|
6,258
|
|
Television broadcasting
|
|
3,239
|
|
|
3,293
|
|
|
3,307
|
|
|||
Manufacturing
|
|
2,433
|
|
|
2,384
|
|
|
2,671
|
|
|||
Healthcare
|
|
610
|
|
|
607
|
|
|
566
|
|
|||
SocialCode
|
|
152
|
|
|
384
|
|
|
356
|
|
|||
Other businesses
|
|
648
|
|
|
837
|
|
|
1,974
|
|
|||
Corporate office
|
|
240
|
|
|
242
|
|
|
219
|
|
|||
|
|
$
|
13,523
|
|
|
$
|
13,884
|
|
|
$
|
15,351
|
|
Amortization of Intangible Assets and Impairment of Long-Lived Assets
|
|
|
|
|
|
|
||||||
Education
|
|
$
|
3,567
|
|
|
$
|
4,070
|
|
|
$
|
3,944
|
|
Television broadcasting
|
|
1,408
|
|
|
1,408
|
|
|
1,408
|
|
|||
Manufacturing
|
|
6,530
|
|
|
6,528
|
|
|
6,522
|
|
|||
Healthcare
|
|
1,398
|
|
|
1,410
|
|
|
1,914
|
|
|||
SocialCode
|
|
157
|
|
|
157
|
|
|
156
|
|
|||
Other businesses
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Corporate office
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
|
$
|
13,060
|
|
|
$
|
13,573
|
|
|
$
|
13,944
|
|
Pension Service Cost
|
|
|
|
|
|
|
||||||
Education
|
|
$
|
2,664
|
|
|
$
|
2,522
|
|
|
$
|
2,603
|
|
Television broadcasting
|
|
731
|
|
|
780
|
|
|
762
|
|
|||
Manufacturing
|
|
25
|
|
|
15
|
|
|
20
|
|
|||
Healthcare
|
|
183
|
|
|
63
|
|
|
123
|
|
|||
SocialCode
|
|
248
|
|
|
191
|
|
|
219
|
|
|||
Other businesses
|
|
201
|
|
|
161
|
|
|
215
|
|
|||
Corporate office
|
|
1,169
|
|
|
1,231
|
|
|
1,200
|
|
|||
|
|
$
|
5,221
|
|
|
$
|
4,963
|
|
|
$
|
5,142
|
|
|
Three Months Ended
|
||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
(in thousands)
|
2018
|
|
2018
|
|
2018
|
|
2018
|
||||||||
Operating Revenues
|
|
|
|
|
|
|
|
||||||||
Education
|
$
|
375,499
|
|
|
$
|
370,005
|
|
|
$
|
358,601
|
|
|
$
|
346,910
|
|
Television broadcasting
|
108,802
|
|
|
114,086
|
|
|
130,014
|
|
|
152,647
|
|
||||
Manufacturing
|
117,406
|
|
|
126,462
|
|
|
126,028
|
|
|
117,723
|
|
||||
Healthcare
|
37,621
|
|
|
38,208
|
|
|
35,486
|
|
|
37,960
|
|
||||
SocialCode
|
13,299
|
|
|
14,770
|
|
|
13,781
|
|
|
16,878
|
|
||||
Other businesses
|
6,833
|
|
|
9,167
|
|
|
10,856
|
|
|
17,024
|
|
||||
Corporate office
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Intersegment elimination
|
(24
|
)
|
|
(21
|
)
|
|
—
|
|
|
(55
|
)
|
||||
|
$
|
659,436
|
|
|
$
|
672,677
|
|
|
$
|
674,766
|
|
|
$
|
689,087
|
|
Income (Loss) from Operations
|
|
|
|
|
|
|
|
||||||||
Education
|
$
|
22,700
|
|
|
$
|
37,554
|
|
|
$
|
22,262
|
|
|
$
|
14,620
|
|
Television broadcasting
|
40,542
|
|
|
41,118
|
|
|
55,453
|
|
|
73,420
|
|
||||
Manufacturing
|
8,628
|
|
|
8,665
|
|
|
5,146
|
|
|
6,412
|
|
||||
Healthcare
|
(1,391
|
)
|
|
764
|
|
|
(8,702
|
)
|
|
928
|
|
||||
SocialCode
|
(3,781
|
)
|
|
(1,742
|
)
|
|
5,124
|
|
|
(682
|
)
|
||||
Other businesses
|
(8,542
|
)
|
|
(7,977
|
)
|
|
(5,657
|
)
|
|
(5,840
|
)
|
||||
Corporate office
|
(13,942
|
)
|
|
(12,756
|
)
|
|
(12,887
|
)
|
|
(13,276
|
)
|
||||
|
$
|
44,214
|
|
|
$
|
65,626
|
|
|
$
|
60,739
|
|
|
$
|
75,582
|
|
Equity in Earnings of Affiliates, Net
|
2,579
|
|
|
931
|
|
|
9,537
|
|
|
1,426
|
|
||||
Interest Expense, Net
|
(6,699
|
)
|
|
(15,264
|
)
|
|
(5,524
|
)
|
|
(5,062
|
)
|
||||
Debt Extinguishment Costs
|
—
|
|
|
(11,378
|
)
|
|
—
|
|
|
—
|
|
||||
Non-Operating Pension and Postretirement Benefit Income
|
21,386
|
|
|
23,041
|
|
|
22,214
|
|
|
53,900
|
|
||||
(Loss) Gain on Marketable Equity Securities, Net
|
(14,102
|
)
|
|
(2,554
|
)
|
|
44,962
|
|
|
(44,149
|
)
|
||||
Other Income (Loss), Net
|
9,187
|
|
|
2,333
|
|
|
3,142
|
|
|
(12,559
|
)
|
||||
Income from Continuing Operations Before Income Taxes
|
$
|
56,565
|
|
|
$
|
62,735
|
|
|
$
|
135,070
|
|
|
$
|
69,138
|
|
Depreciation of Property, Plant and Equipment
|
|
|
|
|
|
|
|
||||||||
Education
|
$
|
7,606
|
|
|
$
|
6,839
|
|
|
$
|
6,685
|
|
|
$
|
6,969
|
|
Television broadcasting
|
3,071
|
|
|
2,974
|
|
|
3,198
|
|
|
3,961
|
|
||||
Manufacturing
|
2,451
|
|
|
2,331
|
|
|
2,333
|
|
|
2,400
|
|
||||
Healthcare
|
653
|
|
|
647
|
|
|
648
|
|
|
629
|
|
||||
SocialCode
|
233
|
|
|
200
|
|
|
187
|
|
|
177
|
|
||||
Other businesses
|
375
|
|
|
375
|
|
|
345
|
|
|
428
|
|
||||
Corporate office
|
253
|
|
|
253
|
|
|
252
|
|
|
249
|
|
||||
|
$
|
14,642
|
|
|
$
|
13,619
|
|
|
$
|
13,648
|
|
|
$
|
14,813
|
|
Amortization of Intangible Assets and Impairment of Long-lived Assets
|
|
|
|
|
|
|
|
|
|
|
|||||
Education
|
$
|
1,149
|
|
|
$
|
1,663
|
|
|
$
|
2,682
|
|
|
$
|
3,868
|
|
Television broadcasting
|
1,408
|
|
|
1,408
|
|
|
1,408
|
|
|
1,408
|
|
||||
Manufacturing
|
5,936
|
|
|
5,935
|
|
|
6,345
|
|
|
6,530
|
|
||||
Healthcare
|
1,808
|
|
|
1,809
|
|
|
9,839
|
|
|
1,399
|
|
||||
SocialCode
|
83
|
|
|
584
|
|
|
104
|
|
|
157
|
|
||||
Other businesses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Corporate office
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
10,384
|
|
|
$
|
11,399
|
|
|
$
|
20,378
|
|
|
$
|
13,362
|
|
Pension Service Cost
|
|
|
|
|
|
|
|
|
|
|
|||||
Education
|
$
|
2,664
|
|
|
$
|
1,878
|
|
|
$
|
2,107
|
|
|
$
|
2,104
|
|
Television broadcasting
|
493
|
|
|
601
|
|
|
544
|
|
|
550
|
|
||||
Manufacturing
|
17
|
|
|
19
|
|
|
18
|
|
|
18
|
|
||||
Healthcare
|
122
|
|
|
165
|
|
|
143
|
|
|
143
|
|
||||
SocialCode
|
156
|
|
|
205
|
|
|
181
|
|
|
181
|
|
||||
Other businesses
|
116
|
|
|
154
|
|
|
147
|
|
|
161
|
|
||||
Corporate office
|
1,372
|
|
|
1,295
|
|
|
1,333
|
|
|
1,334
|
|
||||
|
$
|
4,940
|
|
|
$
|
4,317
|
|
|
$
|
4,473
|
|
|
$
|
4,491
|
|
|
Nine months ended
|
|
Year Ended
|
||||||||||||
|
September 30
|
|
December 31
|
||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
2018
|
|
2017
|
||||||||
Operating Revenues
|
|
|
|
|
|
|
|
||||||||
Education
|
$
|
1,097,536
|
|
|
$
|
1,104,105
|
|
|
$
|
1,451,015
|
|
|
$
|
1,516,776
|
|
Television broadcasting
|
340,012
|
|
|
352,902
|
|
|
505,549
|
|
|
409,916
|
|
||||
Manufacturing
|
341,706
|
|
|
369,896
|
|
|
487,619
|
|
|
414,193
|
|
||||
Healthcare
|
119,057
|
|
|
111,315
|
|
|
149,275
|
|
|
154,202
|
|
||||
SocialCode
|
45,804
|
|
|
41,850
|
|
|
58,728
|
|
|
62,077
|
|
||||
Other businesses
|
224,814
|
|
|
26,856
|
|
|
43,880
|
|
|
34,733
|
|
||||
Corporate office
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Intersegment elimination
|
(308
|
)
|
|
(45
|
)
|
|
(100
|
)
|
|
(51
|
)
|
||||
|
$
|
2,168,621
|
|
|
$
|
2,006,879
|
|
|
$
|
2,695,966
|
|
|
$
|
2,591,846
|
|
Income (Loss) from Operations
|
|
|
|
|
|
|
|
||||||||
Education
|
$
|
44,739
|
|
|
$
|
82,516
|
|
|
$
|
97,136
|
|
|
$
|
77,687
|
|
Television broadcasting
|
116,847
|
|
|
137,113
|
|
|
210,533
|
|
|
139,258
|
|
||||
Manufacturing
|
14,811
|
|
|
22,439
|
|
|
28,851
|
|
|
14,947
|
|
||||
Healthcare
|
6,135
|
|
|
(9,329
|
)
|
|
(8,401
|
)
|
|
(2,569
|
)
|
||||
SocialCode
|
(5,371
|
)
|
|
(399
|
)
|
|
(1,081
|
)
|
|
(3,674
|
)
|
||||
Other businesses
|
(23,435
|
)
|
|
(22,176
|
)
|
|
(28,016
|
)
|
|
(30,536
|
)
|
||||
Corporate office
|
(39,492
|
)
|
|
(39,585
|
)
|
|
(52,861
|
)
|
|
(58,710
|
)
|
||||
|
$
|
114,234
|
|
|
$
|
170,579
|
|
|
$
|
246,161
|
|
|
$
|
136,403
|
|
Equity in Earnings (Losses) of Affiliates, Net
|
7,829
|
|
|
13,047
|
|
|
14,473
|
|
|
(3,249
|
)
|
||||
Interest Expense, Net
|
(17,834
|
)
|
|
(27,487
|
)
|
|
(32,549
|
)
|
|
(27,305
|
)
|
||||
Debt Extinguishment Costs
|
—
|
|
|
(11,378
|
)
|
|
(11,378
|
)
|
|
—
|
|
||||
Non-Operating Pension and Postretirement Benefit Income, Net
|
51,737
|
|
|
66,641
|
|
|
120,541
|
|
|
72,699
|
|
||||
Gain (Loss) on Marketable Equity Securities, Net
|
49,261
|
|
|
28,306
|
|
|
(15,843
|
)
|
|
—
|
|
||||
Other Income, Net
|
36,135
|
|
|
14,662
|
|
|
2,103
|
|
|
4,241
|
|
||||
Income Before Income Taxes
|
$
|
241,362
|
|
|
$
|
254,370
|
|
|
$
|
323,508
|
|
|
$
|
182,789
|
|
Depreciation of Property, Plant and Equipment
|
|
|
|
|
|
|
|
||||||||
Education
|
$
|
18,596
|
|
|
$
|
21,130
|
|
|
$
|
28,099
|
|
|
$
|
32,906
|
|
Television broadcasting
|
9,839
|
|
|
9,243
|
|
|
13,204
|
|
|
12,179
|
|
||||
Manufacturing
|
7,488
|
|
|
7,115
|
|
|
9,515
|
|
|
9,173
|
|
||||
Healthcare
|
1,783
|
|
|
1,948
|
|
|
2,577
|
|
|
4,583
|
|
||||
SocialCode
|
892
|
|
|
620
|
|
|
797
|
|
|
1,004
|
|
||||
Other businesses
|
3,459
|
|
|
1,095
|
|
|
1,523
|
|
|
1,546
|
|
||||
Corporate office
|
701
|
|
|
758
|
|
|
1,007
|
|
|
1,118
|
|
||||
|
$
|
42,758
|
|
|
$
|
41,909
|
|
|
$
|
56,722
|
|
|
$
|
62,509
|
|
Amortization of Intangible Assets and Impairment of Goodwill and Other Long-Lived Assets
|
|
|
|
|
|
|
|
|
|||||||
Education
|
$
|
11,581
|
|
|
$
|
5,494
|
|
|
$
|
9,362
|
|
|
$
|
5,162
|
|
Television broadcasting
|
4,224
|
|
|
4,224
|
|
|
5,632
|
|
|
6,349
|
|
||||
Manufacturing
|
19,580
|
|
|
18,216
|
|
|
24,746
|
|
|
31,052
|
|
||||
Healthcare
|
4,722
|
|
|
13,456
|
|
|
14,855
|
|
|
7,905
|
|
||||
SocialCode
|
470
|
|
|
771
|
|
|
928
|
|
|
333
|
|
||||
Other businesses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Corporate office
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
40,577
|
|
|
$
|
42,161
|
|
|
$
|
55,523
|
|
|
$
|
50,801
|
|
Pension Service Cost
|
|
|
|
|
|
|
|
|
|||||||
Education
|
$
|
7,789
|
|
|
$
|
6,649
|
|
|
$
|
8,753
|
|
|
$
|
9,720
|
|
Television broadcasting
|
2,273
|
|
|
1,638
|
|
|
2,188
|
|
|
1,942
|
|
||||
Manufacturing
|
60
|
|
|
54
|
|
|
72
|
|
|
79
|
|
||||
Healthcare
|
369
|
|
|
430
|
|
|
573
|
|
|
665
|
|
||||
SocialCode
|
658
|
|
|
542
|
|
|
723
|
|
|
593
|
|
||||
Other businesses
|
577
|
|
|
417
|
|
|
578
|
|
|
453
|
|
||||
Corporate office
|
3,600
|
|
|
4,000
|
|
|
5,334
|
|
|
5,235
|
|
||||
|
$
|
15,326
|
|
|
$
|
13,730
|
|
|
$
|
18,221
|
|
|
$
|
18,687
|
|
Capital Expenditures
|
|
|
|
|
|
|
|
||||||||
Education
|
|
|
|
|
$
|
54,159
|
|
|
$
|
27,520
|
|
||||
Television broadcasting
|
|
|
|
|
27,013
|
|
|
16,802
|
|
||||||
Manufacturing
|
|
|
|
|
14,806
|
|
|
8,012
|
|
||||||
Healthcare
|
|
|
|
|
1,741
|
|
|
2,987
|
|
||||||
SocialCode
|
|
|
|
|
113
|
|
|
756
|
|
||||||
Other businesses
|
|
|
|
|
235
|
|
|
1,003
|
|
||||||
Corporate office
|
|
|
|
|
—
|
|
|
—
|
|
||||||
|
|
|
|
|
$
|
98,067
|
|
|
$
|
57,080
|
|
|
As of
|
||||||
(in thousands)
|
September 30, 2019
|
|
December 31, 2018
|
||||
Identifiable Assets
|
|
|
|
||||
Education
|
$
|
1,925,819
|
|
|
$
|
1,568,747
|
|
Television broadcasting
|
470,915
|
|
|
452,853
|
|
||
Manufacturing
|
577,244
|
|
|
593,111
|
|
||
Healthcare
|
132,068
|
|
|
108,596
|
|
||
SocialCode
|
238,253
|
|
|
213,394
|
|
||
Other businesses
|
333,720
|
|
|
20,608
|
|
||
Corporate office
|
71,501
|
|
|
162,971
|
|
||
|
$
|
3,749,520
|
|
|
$
|
3,120,280
|
|
Investments in Marketable Equity Securities
|
535,564
|
|
|
496,390
|
|
||
Investments in Affiliates
|
163,986
|
|
|
143,813
|
|
||
Prepaid Pension Cost
|
1,038,676
|
|
|
1,003,558
|
|
||
Total Assets
|
$
|
5,487,746
|
|
|
$
|
4,764,041
|
|
|
Three Months Ended
|
|
Nine months ended
|
||||||||||||
|
September 30
|
|
September 30
|
||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Operating Revenues
|
|
|
|
|
|
|
|
||||||||
Kaplan international
|
$
|
178,169
|
|
|
$
|
167,668
|
|
|
$
|
552,505
|
|
|
$
|
535,553
|
|
Higher education
|
78,712
|
|
|
89,269
|
|
|
237,780
|
|
|
275,080
|
|
||||
Test preparation
|
64,710
|
|
|
67,749
|
|
|
191,533
|
|
|
195,504
|
|
||||
Professional (U.S.)
|
33,820
|
|
|
34,302
|
|
|
110,181
|
|
|
98,715
|
|
||||
Kaplan corporate and other
|
2,450
|
|
|
143
|
|
|
7,121
|
|
|
870
|
|
||||
Intersegment elimination
|
(542
|
)
|
|
(530
|
)
|
|
(1,584
|
)
|
|
(1,617
|
)
|
||||
|
$
|
357,319
|
|
|
$
|
358,601
|
|
|
$
|
1,097,536
|
|
|
$
|
1,104,105
|
|
Income (Loss) from Operations
|
|
|
|
|
|
|
|
|
|
|
|||||
Kaplan international
|
$
|
(14,226
|
)
|
|
$
|
8,375
|
|
|
$
|
35,596
|
|
|
$
|
52,966
|
|
Higher education
|
5,177
|
|
|
6,042
|
|
|
9,813
|
|
|
18,616
|
|
||||
Test preparation
|
4,959
|
|
|
10,572
|
|
|
8,794
|
|
|
17,213
|
|
||||
Professional (U.S.)
|
4,939
|
|
|
6,768
|
|
|
20,943
|
|
|
20,863
|
|
||||
Kaplan corporate and other
|
(8,011
|
)
|
|
(9,452
|
)
|
|
(30,405
|
)
|
|
(27,110
|
)
|
||||
Intersegment elimination
|
1
|
|
|
(43
|
)
|
|
(2
|
)
|
|
(32
|
)
|
||||
|
$
|
(7,161
|
)
|
|
$
|
22,262
|
|
|
$
|
44,739
|
|
|
$
|
82,516
|
|
Depreciation of Property, Plant and Equipment
|
|
|
|
|
|
|
|
|
|
|
|
||||
Kaplan international
|
$
|
3,600
|
|
|
$
|
3,759
|
|
|
$
|
11,198
|
|
|
$
|
11,497
|
|
Higher education
|
840
|
|
|
915
|
|
|
2,066
|
|
|
4,047
|
|
||||
Test preparation
|
774
|
|
|
1,033
|
|
|
2,358
|
|
|
2,984
|
|
||||
Professional (U.S.)
|
978
|
|
|
859
|
|
|
2,802
|
|
|
2,171
|
|
||||
Kaplan corporate and other
|
66
|
|
|
119
|
|
|
172
|
|
|
431
|
|
||||
|
$
|
6,258
|
|
|
$
|
6,685
|
|
|
$
|
18,596
|
|
|
$
|
21,130
|
|
Amortization of Intangible Assets
|
$
|
3,944
|
|
|
$
|
2,682
|
|
|
$
|
10,888
|
|
|
$
|
5,494
|
|
Impairment of Long-lived Assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
693
|
|
|
$
|
—
|
|
Pension Service Cost
|
|
|
|
|
|
|
|
|
|
|
|
||||
Kaplan international
|
$
|
114
|
|
|
$
|
66
|
|
|
$
|
341
|
|
|
$
|
233
|
|
Higher education
|
1,136
|
|
|
1,050
|
|
|
3,401
|
|
|
3,260
|
|
||||
Test preparation
|
847
|
|
|
577
|
|
|
2,534
|
|
|
2,035
|
|
||||
Professional (U.S.)
|
340
|
|
|
291
|
|
|
1,017
|
|
|
871
|
|
||||
Kaplan corporate and other
|
166
|
|
|
123
|
|
|
496
|
|
|
250
|
|
||||
|
$
|
2,603
|
|
|
$
|
2,107
|
|
|
$
|
7,789
|
|
|
$
|
6,649
|
|
|
As of
|
||||||
(in thousands)
|
September 30, 2019
|
|
December 31, 2018
|
||||
Identifiable assets
|
|
|
|
||||
Kaplan international
|
$
|
1,336,238
|
|
|
$
|
1,101,040
|
|
Higher education
|
202,553
|
|
|
126,752
|
|
||
Test preparation
|
165,471
|
|
|
145,308
|
|
||
Professional (U.S.)
|
154,568
|
|
|
166,916
|
|
||
Kaplan corporate and other
|
66,989
|
|
|
28,731
|
|
||
|
$
|
1,925,819
|
|
|
$
|
1,568,747
|
|
•
|
a $20.4 million provision recorded at Kaplan International related to a Value Added Tax (VAT) receivable at UK Pathways (after-tax impact of $16.5 million, or $3.09 per share);
|
•
|
a $1.1 million reduction to operating expenses from property, plant and equipment gains in connection with the spectrum repacking mandate of the FCC (after-tax impact of $0.9 million, or $0.16 per share);
|
•
|
$17.4 million in net gains on marketable equity securities (after-tax impact of $13.1 million, or $2.44 per share);
|
•
|
non-operating gain of $3.7 million from write-ups of cost method investments (after-tax impact of $2.8 million or $0.51 per share); and
|
•
|
$0.7 million in non-operating foreign currency gains (after-tax impact of $0.5 million, or $0.09 per share).
|
•
|
a $7.9 million intangible asset impairment charge at the healthcare business (after-tax impact of $5.8 million, or $1.08 per share);
|
•
|
a $1.0 million reduction to operating expenses from property, plant and equipment gains in connection with the spectrum repacking mandate of the FCC (after-tax impact of $0.8 million, or $0.14 per share);
|
•
|
$45.0 million in net gains on marketable equity securities (after-tax impact of $33.6 million, or $6.26 per share);
|
•
|
non-operating gain, net, of $10.1 million from sales, write-ups and impairments of cost method and equity method investments, and related to sales of businesses (after-tax impact of $8.0 million, or $1.48 per share);
|
•
|
$0.1 million in non-operating foreign currency losses (after-tax impact of $0.1 million, or $0.02 per share); and
|
•
|
a nonrecurring discrete $17.8 million deferred state tax benefit related to the release of valuation allowances ($3.31 per share).
|
•
|
a $17.1 million provision recorded at Kaplan International related to a VAT receivable at UK Pathways (after-tax impact of $13.9 million, or $2.59 per share);
|
•
|
a $10.7 million reduction to operating expenses from property, plant and equipment gains in connection with the spectrum repacking mandate of the FCC (after-tax impact of $8.3 million, or $1.55 per share);
|
•
|
$6.6 million in expenses related to a second quarter non-operating Separation Incentive Program (SIP) at the education division (after-tax impact of $5.1 million, or $0.95 per share);
|
•
|
$49.3 million in net gains on marketable equity securities (after-tax impact of $36.9 million, or $6.90 per share);
|
•
|
non-operating gain of $5.1 million from write-ups of cost method investments (after-tax impact of $3.9 million or $0.73 per share);
|
•
|
$29.0 million gain from the sale of Gimlet Media (after-tax impact of $21.7 million, or $4.06 per share);
|
•
|
$1.3 million in non-operating foreign currency gains (after-tax impact of $1.0 million, or $0.18 per share); and
|
•
|
$1.7 million in income tax benefits related to stock compensation ($0.32 per share).
|
•
|
a $7.9 million intangible asset impairment charge at the healthcare business (after-tax impact of $5.8 million, or $1.08 per share);
|
•
|
a $2.1 million reduction to operating expenses from property, plant and equipment gains in connection with the spectrum repacking mandate of the FCC (after-tax impact of $1.6 million, or $0.29 per share);
|
•
|
$6.2 million in interest expense related to the settlement of a mandatorily redeemable noncontrolling interest ($1.14 per share);
|
•
|
$11.4 million in debt extinguishment costs (after-tax impact of $8.6 million, or $1.60 per share);
|
•
|
$28.3 million in net losses on marketable equity securities (after-tax impact of $20.9 million, or $3.86 per share);
|
•
|
non-operating gain, net, of $17.0 million from sales, write-ups and impairments of cost method and equity method investments, and related to sales of land and businesses (after-tax impact of $13.4 million, or $2.46 per share);
|
•
|
a $4.3 million gain on the Kaplan University Transaction (after-tax impact of $1.8 million, or $0.33 per share);
|
•
|
$2.2 million in non-operating foreign currency losses (after-tax impact of $1.7 million, or $0.31 per share);
|
•
|
a nonrecurring discrete $17.8 million deferred state tax benefit related to the release of valuation allowances ($3.31 per share); and
|
•
|
$1.8 million in income tax benefits related to stock compensation ($0.33 per share).
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
||||||||||||||
|
September 30
|
|
|
|
September 30
|
|
|
||||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Kaplan international
|
$
|
178,169
|
|
|
$
|
167,668
|
|
|
6
|
|
|
$
|
552,505
|
|
|
$
|
535,553
|
|
|
3
|
|
Higher education
|
78,712
|
|
|
89,269
|
|
|
(12
|
)
|
|
237,780
|
|
|
275,080
|
|
|
(14
|
)
|
||||
Test preparation
|
64,710
|
|
|
67,749
|
|
|
(4
|
)
|
|
191,533
|
|
|
195,504
|
|
|
(2
|
)
|
||||
Professional (U.S.)
|
33,820
|
|
|
34,302
|
|
|
(1
|
)
|
|
110,181
|
|
|
98,715
|
|
|
12
|
|
||||
Kaplan corporate and other
|
2,450
|
|
|
143
|
|
|
—
|
|
|
7,121
|
|
|
870
|
|
|
—
|
|
||||
Intersegment elimination
|
(542
|
)
|
|
(530
|
)
|
|
—
|
|
|
(1,584
|
)
|
|
(1,617
|
)
|
|
—
|
|
||||
|
$
|
357,319
|
|
|
$
|
358,601
|
|
|
0
|
|
|
$
|
1,097,536
|
|
|
$
|
1,104,105
|
|
|
(1
|
)
|
Operating Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Kaplan international
|
$
|
(14,226
|
)
|
|
$
|
8,375
|
|
|
—
|
|
|
$
|
35,596
|
|
|
$
|
52,966
|
|
|
(33
|
)
|
Higher education
|
5,177
|
|
|
6,042
|
|
|
(14
|
)
|
|
9,813
|
|
|
18,616
|
|
|
(47
|
)
|
||||
Test preparation
|
4,959
|
|
|
10,572
|
|
|
(53
|
)
|
|
8,794
|
|
|
17,213
|
|
|
(49
|
)
|
||||
Professional (U.S.)
|
4,939
|
|
|
6,768
|
|
|
(27
|
)
|
|
20,943
|
|
|
20,863
|
|
|
0
|
|
||||
Kaplan corporate and other
|
(4,067
|
)
|
|
(6,770
|
)
|
|
40
|
|
|
(18,824
|
)
|
|
(21,616
|
)
|
|
13
|
|
||||
Amortization of intangible assets
|
(3,944
|
)
|
|
(2,682
|
)
|
|
(47
|
)
|
|
(10,888
|
)
|
|
(5,494
|
)
|
|
(98
|
)
|
||||
Impairment of long-lived assets
|
—
|
|
|
—
|
|
|
—
|
|
|
(693
|
)
|
|
—
|
|
|
—
|
|
||||
Intersegment elimination
|
1
|
|
|
(43
|
)
|
|
—
|
|
|
(2
|
)
|
|
(32
|
)
|
|
—
|
|
||||
|
$
|
(7,161
|
)
|
|
$
|
22,262
|
|
|
—
|
|
|
$
|
44,739
|
|
|
$
|
82,516
|
|
|
(46
|
)
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
||||||||||||||
|
September 30
|
|
|
|
September 30
|
|
|
||||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
||||||||||
Revenue
|
$
|
115,161
|
|
|
$
|
130,014
|
|
|
(11
|
)
|
|
$
|
340,012
|
|
|
$
|
352,902
|
|
|
(4
|
)
|
Operating Income
|
36,813
|
|
|
55,453
|
|
|
(34
|
)
|
|
116,847
|
|
|
137,113
|
|
|
(15
|
)
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
||||||||||||||
|
September 30
|
|
|
|
September 30
|
|
|
||||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
||||||||||
Revenue
|
$
|
111,676
|
|
|
$
|
126,028
|
|
|
(11
|
)
|
|
$
|
341,706
|
|
|
$
|
369,896
|
|
|
(8
|
)
|
Operating Income
|
6,845
|
|
|
5,146
|
|
|
33
|
|
|
14,811
|
|
|
22,439
|
|
|
(34
|
)
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
||||||||||||
|
September 30
|
|
|
|
September 30
|
|
|
||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
||||||||
Revenue
|
$
|
40,688
|
|
|
$
|
35,486
|
|
|
15
|
|
$
|
119,057
|
|
|
$
|
111,315
|
|
|
7
|
Operating Income (Loss)
|
1,208
|
|
|
(8,702
|
)
|
|
—
|
|
6,135
|
|
|
(9,329
|
)
|
|
—
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
||||||||||||
|
September 30
|
|
|
|
September 30
|
|
|
||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
||||||||
Revenue
|
$
|
15,975
|
|
|
$
|
13,781
|
|
|
16
|
|
$
|
45,804
|
|
|
$
|
41,850
|
|
|
9
|
Operating Income (Loss)
|
(378
|
)
|
|
5,124
|
|
|
—
|
|
(5,371
|
)
|
|
(399
|
)
|
|
—
|
•
|
Regulatory Changes and Developments Could Negatively Impact Kaplan’s Results of Operations.
|
•
|
Compliance Reviews, Program Review, Audits and Investigations Could Result in Findings of Non-Compliance With Statutory and Regulatory Requirements and Result in Liabilities, Sanctions and Fines.
|
•
|
Changes in U.K. Tax Laws Could Have a Material Adverse Effect on KI.
|
Exhibit
Number
|
Description
|
|
|
3.1
|
|
|
|
3.2
|
|
|
|
3.3
|
|
|
|
4.1
|
|
|
|
4.2
|
|
|
|
10.1
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
32
|
|
|
|
101.INS
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Furnished herewith.
|
+
|
Select portions of this exhibit have been omitted as permitted by SEC rules regarding confidential information.
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GRAHAM HOLDINGS COMPANY
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(Registrant)
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Date: October 30, 2019
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/s/ Timothy J. O’Shaughnessy
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Timothy J. O’Shaughnessy,
President & Chief Executive Officer
(Principal Executive Officer)
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Date: October 30, 2019
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/s/ Wallace R. Cooney
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Wallace R. Cooney,
Chief Financial Officer
(Principal Financial Officer)
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A.
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The Parties successfully closed the transactions contemplated by the Transfer Agreement concurrently with their execution and delivery of the TOSA on the Effective Date, with the effect that New University formally commenced operations shortly thereafter.
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B.
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As memorialized in the TOSA’s recitals and as reflected in its terms, the TOSA and the Transfer Agreement provided financial guarantees and priority payments to New University that entailed significant economic risk to Contributor.
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C.
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Contributor was nonetheless willing to irrevocably transfer the Institutional Assets to New University in reliance on New University’s agreement to perform pursuant to the terms of the TOSA, which provided that Contributor would be compensated, albeit on a deeply subordinated basis, in the form of a services fee for its Support Functions and deferred consideration for the Institutional Assets it transferred at closing for only $1.00.
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D.
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For their part, Purdue and New University determined, following extensive due diligence of Contributor and its Institutional Assets, that the economic terms reflected in the TOSA represented fair market value for: (1) the Support Functions that New University would receive thereunder, (2) the Institutional Assets being contributed to New University under the Transfer Agreement, and (3) the financial guarantees provided to New University in the TOSA-a determination supported by a recognition that the total consideration payable to Contributor under the TOSA in an upside scenario is effectively capped by virtue of New University’s ability to terminate after the sixth anniversary of the Effective Date.
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E.
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In the course of obtaining regulatory approvals for the Transfer, Purdue and New University drew attention to the foregoing factors-including the deeply subordinated nature of Contributor’s ability to receive any compensation under the TOSA-all of which provided New University with significant financial protection, ensured it would have the funds necessary to serve students successfully over the long term, and protected Purdue University and Indiana taxpayers from financial risk.
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F.
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Although their intentions concerning the structure of the TOSA have, as described above, been previously articulated, the Parties desire to reflect more clearly, among other things, how compensation to be paid to Contributor under the TOSA represents both (1) a services fee for the Support Functions it is providing, and (2) deferred purchase price for the Institutional Assets it contributed to New University.
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(a)
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The following definitions in Exhibit A of the TOSA are hereby changed or amended to read as follows:
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1.
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The reference to the term “Contributor Fee” (as defined in Section 2 of Exhibit F) is hereby changed to a new term to be called “Contributor Compensation”.
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2.
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The reference to the term “Unpaid Contributor Fee” (as defined in Section 2 of Exhibit F) is hereby changed to a new term to be called “Unpaid Contributor Compensation”.
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3.
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The last sentence in the definition of “Revenue” or “Revenues” in Exhibit A is hereby amended and restated to read in its entirety as follows:
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4.
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A new defined term, “GDPR”, is hereby added to Exhibit A to read as follows:
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(b)
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The following definitions in Exhibit F of the TOSA are hereby changed or amended to read as follows:
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1.
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The defined term “Contributor Fee” is hereby changed to “Contributor Compensation,” [***]
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3.
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[***] amount equal to (i) 12.5% of actual Revenues for the quarter just-ended through June 30, 2022, and thereafter 13% of actual Revenues for the quarter just-ended through the Fiscal Year ending June 30, 2027, and thereafter 12.5% of actual Revenues for the quarter just-ended for the remainder of the Term, [***]
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(c)
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The references to “Contributor Fee” or “Contributor Fees” in the following sections shall be changed to “Contributor Compensation” each place such term appears:
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1.
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Section 9
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2.
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Section 11.2
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3.
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Section 13.2 (two references)
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4.
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Section 14.5(b)(iv)
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5.
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Section 14.6(b)
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6.
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Section 14.9(a)
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7.
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Section 15 (two references)
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8.
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Section 1(d) of Exhibit F
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9.
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Sections 4(a)(i) and 4(a)(ii) of Exhibit F
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(d)
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Sections 3.2(c) and 3.2(d) are hereby amended and restated to read in their entirety as follows:
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(i)
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an annual plan that will include New University’s key objectives and the Annual New University Budget (the “Annual Plan”), including amounts budgeted for Academic Functions and Support Functions thereunder;
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(ii)
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the Marketing Plan to support the objectives, and in compliance with the NewU Budget, as set forth in the Annual Plan;
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(iii)
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updating the Service Levels consistent with and in accordance with Section 2.5;
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(iv)
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success metrics for New University and Contributor that support and track performance against the Annual Plan and the New University Budget;
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(v)
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increase or decrease in the tuition or fees, or changes in grants or relationship discounts, for any of the Academic Programs; provided that the Parties shall develop an expedited review process for proposed discounts in connection with strategic business opportunities and will seek to develop pre-approved frameworks under which Contributor can offer discounts to secure strategic business relationships for New University;
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(vi)
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the increase of any Cost in, or the implementation or roll out of, any Academic Programs, or the reduction or elimination of any Academic Program;
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(vii)
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material changes to the NU Policy Guide, including policies relating to New University admissions standards, student advancement or academic term structure; and
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(viii)
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any defense, settlement or prosecution of any legal action against or in the name of or on behalf of New University that could: (1) result in financial liability to either Party or (2) reasonably be expected to adversely affect: (A) the Support Functions, (B) the respective rights or expectations of the Parties under this Agreement, or (C) in any material respect, the tax liabilities or tax and financial reporting position of either Party.
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(e)
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The first sentence of Section 11.1 is hereby amended and restated as follows:
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(f)
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Section 11.3 is hereby amended and restated to ready in its entirety as follows:
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(g)
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Sections 2(f) through 2(h) of Exhibit F are hereby amended and restated, with a new subsection inserted thereto, such that they now read (as re-lettered) in their entirety as follows:
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(h)
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As a technical correction, the previously omitted word “with” is hereby added to Section 4.2(e) as follows: “(e) costs incurred by Contributor in connection with performing its obligations hereunder in the line item categories set forth on Exhibit E-2 (Contributor Support Cost Line Items);”
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(i)
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Section 6.1 is hereby amended and restated to read in its entirety as follows:
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KAPLAN HIGHER EDUCATION, LLC
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by:
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/S/ David J. Adams
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Name: David J. Adams
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Title: Secretary and General Counsel
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IOWA COLLEGE ACQUISITION, LLC
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by:
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/S/ David J. Adams
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Name: David J. Adams
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Title: Secretary and General Counsel
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PURDUE University global, INC. (f/k/a purdue newu, inc.)
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by:
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/S/ Christopher A. Ruh
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Name: Christopher A. Ruhl
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Title: CFO
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THE TRUSTEES OF PURDUE UNIVERSITY, solely for the purpose of continuing to be bound by the Purdue Provisions
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by:
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/S/ Steven R. Schultz
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Name: Steven R. Schultz
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Title: General Counsel
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
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/s/ Timothy J. O’Shaughnessy
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
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/s/ Wallace R. Cooney
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Timothy J. O’Shaughnessy
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/s/ Wallace R. Cooney
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