|
|
☒
|
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
March 31 |
||||||
|
|||||||
(in thousands, except per share amounts)
|
2020
|
|
2019
|
||||
Operating Revenues
|
$
|
732,257
|
|
|
$
|
692,199
|
|
Operating Costs and Expenses
|
|
|
|
||||
Operating
|
497,427
|
|
|
451,355
|
|
||
Selling, general and administrative
|
179,475
|
|
|
174,258
|
|
||
Depreciation of property, plant and equipment
|
16,704
|
|
|
13,523
|
|
||
Amortization of intangible assets
|
14,165
|
|
|
13,060
|
|
||
Impairment of goodwill and intangible assets
|
16,401
|
|
|
—
|
|
||
|
724,172
|
|
|
652,196
|
|
||
Income from Operations
|
8,085
|
|
|
40,003
|
|
||
Equity in (losses) earnings of affiliates, net
|
(1,547
|
)
|
|
1,679
|
|
||
Interest income
|
1,151
|
|
|
1,700
|
|
||
Interest expense
|
(7,678
|
)
|
|
(7,425
|
)
|
||
Non-operating pension and postretirement benefit income, net
|
18,403
|
|
|
19,928
|
|
||
(Loss) gain on marketable equity securities, net
|
(100,393
|
)
|
|
24,066
|
|
||
Other income, net
|
2,688
|
|
|
29,351
|
|
||
(Loss) Income Before Income Taxes
|
(79,291
|
)
|
|
109,302
|
|
||
(Benefit from) Provision for Income Taxes
|
(45,400
|
)
|
|
27,600
|
|
||
Net (Loss) Income
|
(33,891
|
)
|
|
81,702
|
|
||
Net Loss Attributable to Noncontrolling Interests
|
646
|
|
|
46
|
|
||
Net (Loss) Income Attributable to Graham Holdings Company Common Stockholders
|
$
|
(33,245
|
)
|
|
$
|
81,748
|
|
Per Share Information Attributable to Graham Holdings Company Common Stockholders
|
|
|
|
|
|
||
Basic net (loss) income per common share
|
$
|
(6.32
|
)
|
|
$
|
15.38
|
|
Basic average number of common shares outstanding
|
5,274
|
|
|
5,284
|
|
||
Diluted net (loss) income per common share
|
$
|
(6.32
|
)
|
|
$
|
15.26
|
|
Diluted average number of common shares outstanding
|
5,274
|
|
|
5,326
|
|
|
Three Months Ended
March 31 |
||||||
(in thousands)
|
2020
|
|
2019
|
||||
Net (Loss) Income
|
$
|
(33,891
|
)
|
|
$
|
81,702
|
|
Other Comprehensive (Loss) Income, Before Tax
|
|
|
|
||||
Foreign currency translation adjustments:
|
|
|
|
||||
Translation adjustments arising during the period
|
(37,376
|
)
|
|
10,033
|
|
||
Pension and other postretirement plans:
|
|
|
|
||||
Amortization of net prior service cost (credit) included in net (loss) income
|
671
|
|
|
(1,347
|
)
|
||
Amortization of net actuarial loss (gain) included in net (loss) income
|
220
|
|
|
(548
|
)
|
||
|
891
|
|
|
(1,895
|
)
|
||
Cash flow hedges loss
|
(1,578
|
)
|
|
(467
|
)
|
||
Other Comprehensive (Loss) Income, Before Tax
|
(38,063
|
)
|
|
7,671
|
|
||
Income tax benefit related to items of other comprehensive (loss) income
|
120
|
|
|
619
|
|
||
Other Comprehensive (Loss) Income, Net of Tax
|
(37,943
|
)
|
|
8,290
|
|
||
Comprehensive (Loss) Income
|
(71,834
|
)
|
|
89,992
|
|
||
Comprehensive loss attributable to noncontrolling interests
|
646
|
|
|
46
|
|
||
Total Comprehensive (Loss) Income Attributable to Graham Holdings Company
|
$
|
(71,188
|
)
|
|
$
|
90,038
|
|
|
As of
|
||||||
(in thousands)
|
March 31,
2020 |
|
December 31,
2019 |
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
178,646
|
|
|
$
|
200,165
|
|
Restricted cash
|
22,993
|
|
|
13,879
|
|
||
Investments in marketable equity securities and other investments
|
451,380
|
|
|
599,967
|
|
||
Accounts receivable, net
|
514,564
|
|
|
624,216
|
|
||
Income taxes receivable
|
55,812
|
|
|
10,735
|
|
||
Inventories and contracts in progress
|
117,440
|
|
|
108,928
|
|
||
Prepaid expenses
|
96,407
|
|
|
92,289
|
|
||
Other current assets
|
11,783
|
|
|
13,306
|
|
||
Total Current Assets
|
1,449,025
|
|
|
1,663,485
|
|
||
Property, Plant and Equipment, Net
|
382,408
|
|
|
384,670
|
|
||
Lease Right-of-Use Assets
|
486,820
|
|
|
526,417
|
|
||
Investments in Affiliates
|
167,628
|
|
|
162,249
|
|
||
Goodwill, Net
|
1,362,191
|
|
|
1,388,279
|
|
||
Indefinite-Lived Intangible Assets
|
116,172
|
|
|
140,197
|
|
||
Amortized Intangible Assets, Net
|
235,008
|
|
|
233,481
|
|
||
Prepaid Pension Cost
|
1,306,843
|
|
|
1,292,350
|
|
||
Deferred Income Taxes
|
11,062
|
|
|
11,629
|
|
||
Deferred Charges and Other Assets
|
128,668
|
|
|
128,479
|
|
||
Total Assets
|
$
|
5,645,825
|
|
|
$
|
5,931,236
|
|
|
|
|
|
||||
Liabilities and Equity
|
|
|
|
|
|
||
Current Liabilities
|
|
|
|
|
|
||
Accounts payable and accrued liabilities
|
$
|
433,666
|
|
|
$
|
507,701
|
|
Deferred revenue
|
327,830
|
|
|
355,156
|
|
||
Income taxes payable
|
615
|
|
|
4,121
|
|
||
Current portion of lease liabilities
|
89,107
|
|
|
92,714
|
|
||
Current portion of long-term debt
|
78,575
|
|
|
82,179
|
|
||
Dividends declared
|
7,586
|
|
|
—
|
|
||
Total Current Liabilities
|
937,379
|
|
|
1,041,871
|
|
||
Accrued Compensation and Related Benefits
|
179,574
|
|
|
193,836
|
|
||
Other Liabilities
|
31,430
|
|
|
27,223
|
|
||
Deferred Income Taxes
|
406,943
|
|
|
427,372
|
|
||
Mandatorily Redeemable Noncontrolling Interest
|
829
|
|
|
829
|
|
||
Lease Liabilities
|
440,732
|
|
|
477,004
|
|
||
Long-Term Debt
|
430,317
|
|
|
430,650
|
|
||
Total Liabilities
|
2,427,204
|
|
|
2,598,785
|
|
||
Redeemable Noncontrolling Interest
|
5,781
|
|
|
5,655
|
|
||
Preferred Stock
|
—
|
|
|
—
|
|
||
Common Stockholders’ Equity
|
|
|
|
|
|
||
Common stock
|
20,000
|
|
|
20,000
|
|
||
Capital in excess of par value
|
383,237
|
|
|
381,669
|
|
||
Retained earnings
|
6,485,893
|
|
|
6,534,427
|
|
||
Accumulated other comprehensive income, net of tax
|
|
|
|
|
|||
Cumulative foreign currency translation adjustment
|
(59,264
|
)
|
|
(21,888
|
)
|
||
Unrealized gain on pensions and other postretirement plans
|
326,571
|
|
|
325,921
|
|
||
Cash flow hedges
|
(1,955
|
)
|
|
(738
|
)
|
||
Cost of Class B common stock held in treasury
|
(3,948,427
|
)
|
|
(3,920,152
|
)
|
||
Total Common Stockholders’ Equity
|
3,206,055
|
|
|
3,319,239
|
|
||
Noncontrolling Interest
|
6,785
|
|
|
7,557
|
|
||
Total Equity
|
3,212,840
|
|
|
3,326,796
|
|
||
Total Liabilities and Equity
|
$
|
5,645,825
|
|
|
$
|
5,931,236
|
|
|
Three Months Ended
March 31 |
||||||
(in thousands)
|
2020
|
|
2019
|
||||
Cash Flows from Operating Activities
|
|
|
|
||||
Net (Loss) Income
|
$
|
(33,891
|
)
|
|
$
|
81,702
|
|
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation, amortization and goodwill and intangible asset impairments
|
47,270
|
|
|
26,583
|
|
||
Amortization of lease right-of-use asset
|
23,749
|
|
|
20,353
|
|
||
Net pension benefit
|
(13,784
|
)
|
|
(13,653
|
)
|
||
Loss (gain) on marketable equity securities and cost method investments, net
|
102,970
|
|
|
(25,357
|
)
|
||
Loss (gain) on disposition of businesses, property, plant and equipment and investments, net
|
184
|
|
|
(29,204
|
)
|
||
Provision for doubtful trade receivables
|
2,429
|
|
|
171
|
|
||
Stock-based compensation expense, net
|
1,568
|
|
|
1,611
|
|
||
Foreign exchange gain
|
(4,290
|
)
|
|
(514
|
)
|
||
Equity in earnings of affiliates, net of distributions
|
1,547
|
|
|
1,021
|
|
||
(Benefit from) provision for deferred income taxes
|
(21,550
|
)
|
|
5,892
|
|
||
Change in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
100,732
|
|
|
30,385
|
|
||
Inventories
|
(8,512
|
)
|
|
(8,807
|
)
|
||
Accounts payable and accrued liabilities
|
(97,476
|
)
|
|
(84,663
|
)
|
||
Deferred revenue
|
(12,790
|
)
|
|
(16,459
|
)
|
||
Income taxes receivable
|
(27,774
|
)
|
|
17,964
|
|
||
Other assets and other liabilities, net
|
(47,483
|
)
|
|
(45,327
|
)
|
||
Other
|
(496
|
)
|
|
380
|
|
||
Net Cash Provided by (Used in) Operating Activities
|
12,403
|
|
|
(37,922
|
)
|
||
Cash Flows from Investing Activities
|
|
|
|
||||
Investments in certain businesses, net of cash acquired
|
(6,011
|
)
|
|
(83,721
|
)
|
||
Purchases of property, plant and equipment
|
(25,235
|
)
|
|
(28,252
|
)
|
||
Net proceeds from disposition of businesses, property, plant and equipment and investments
|
218
|
|
|
34,718
|
|
||
Investments in equity affiliates, cost method and other investments
|
(7,427
|
)
|
|
(3,401
|
)
|
||
Proceeds from sales of marketable equity securities
|
48,016
|
|
|
17,162
|
|
||
Purchases of marketable equity securities
|
—
|
|
|
(7,499
|
)
|
||
Loan to related party
|
—
|
|
|
(3,500
|
)
|
||
Return of investment in equity affiliates
|
—
|
|
|
615
|
|
||
Net Cash Provided by (Used in) Investing Activities
|
9,561
|
|
|
(73,878
|
)
|
||
Cash Flows from Financing Activities
|
|
|
|
||||
Common shares repurchased
|
(33,610
|
)
|
|
—
|
|
||
Issuance of borrowings
|
1,023
|
|
|
30,000
|
|
||
Net proceeds from vehicle floor plan payable
|
2,478
|
|
|
9,529
|
|
||
Dividends paid
|
(7,703
|
)
|
|
(7,391
|
)
|
||
Issuance of noncontrolling interest
|
—
|
|
|
6,000
|
|
||
Proceeds from exercise of stock options
|
5,335
|
|
|
—
|
|
||
Deferred payments of acquisition
|
(2,423
|
)
|
|
—
|
|
||
Other
|
8,215
|
|
|
(1,104
|
)
|
||
Net Cash (Used in) Provided by Financing Activities
|
(26,685
|
)
|
|
37,034
|
|
||
Effect of Currency Exchange Rate Change
|
(7,684
|
)
|
|
1,776
|
|
||
Net Decrease in Cash and Cash Equivalents and Restricted Cash
|
(12,405
|
)
|
|
(72,990
|
)
|
||
Beginning Cash and Cash Equivalents and Restricted Cash
|
214,044
|
|
|
264,115
|
|
||
Ending Cash and Cash Equivalents and Restricted Cash
|
$
|
201,639
|
|
|
$
|
191,125
|
|
(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, 2019
|
$
|
20,000
|
|
$
|
381,669
|
|
$
|
6,534,427
|
|
$
|
303,295
|
|
$
|
(3,920,152
|
)
|
$
|
7,557
|
|
$
|
3,326,796
|
|
|
$
|
5,655
|
|
Net loss for the period
|
|
|
(33,891
|
)
|
|
|
|
(33,891
|
)
|
|
|
||||||||||||||
Net loss attributable to noncontrolling interest
|
|
|
772
|
|
|
|
(772
|
)
|
—
|
|
|
|
|||||||||||||
Net income attributable to redeemable noncontrolling interests
|
|
|
(126
|
)
|
|
|
|
(126
|
)
|
|
126
|
|
|||||||||||||
Dividends on common stock
|
|
|
(15,289
|
)
|
|
|
|
(15,289
|
)
|
|
|
||||||||||||||
Repurchase of Class B common stock
|
|
|
|
|
(33,610
|
)
|
|
(33,610
|
)
|
|
|
||||||||||||||
Issuance of Class B common stock
|
|
|
|
|
5,335
|
|
|
5,335
|
|
|
|
||||||||||||||
Amortization of unearned stock compensation and stock option expense
|
|
1,568
|
|
|
|
|
|
1,568
|
|
|
|
||||||||||||||
Other comprehensive loss, net of income taxes
|
|
|
|
(37,943
|
)
|
|
|
(37,943
|
)
|
|
|
||||||||||||||
As of March 31, 2020
|
$
|
20,000
|
|
$
|
383,237
|
|
$
|
6,485,893
|
|
$
|
265,352
|
|
$
|
(3,948,427
|
)
|
$
|
6,785
|
|
$
|
3,212,840
|
|
|
$
|
5,781
|
|
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
|
|
|
|
Purchase Price Allocation
|
||
|
|
Year Ended
|
||
(in thousands)
|
|
December 31, 2019
|
||
Accounts receivable
|
|
$
|
6,762
|
|
Inventory
|
|
34,134
|
|
|
Property, plant and equipment
|
|
56,391
|
|
|
Lease right-of-use assets
|
|
98,505
|
|
|
Goodwill
|
|
84,515
|
|
|
Indefinite-lived intangible assets
|
|
46,900
|
|
|
Amortized intangible assets
|
|
21,291
|
|
|
Other assets
|
|
8,308
|
|
|
Floor plan payables
|
|
(25,755
|
)
|
|
Other liabilities
|
|
(42,555
|
)
|
|
Deferred income taxes
|
|
(2,703
|
)
|
|
Current and noncurrent lease liabilities
|
|
(99,131
|
)
|
|
Redeemable noncontrolling interest
|
|
(1,715
|
)
|
|
Noncontrolling interest
|
|
(1,154
|
)
|
|
Aggregate purchase price, net of cash acquired
|
|
$
|
183,793
|
|
|
As of
|
||||||
|
March 31,
2020 |
|
December 31,
2019 |
||||
(in thousands)
|
|
||||||
Total cost
|
$
|
232,096
|
|
|
$
|
282,349
|
|
Gross unrealized gains
|
204,108
|
|
|
302,731
|
|
||
Total Fair Value
|
$
|
436,204
|
|
|
$
|
585,080
|
|
|
Three Months Ended
March 31 |
||||||
(in thousands)
|
2020
|
|
2019
|
||||
(Loss) gain on marketable equity securities, net
|
$
|
(100,393
|
)
|
|
$
|
24,066
|
|
Less: Net losses (gains) in earnings from marketable equity securities sold and donated
|
8,774
|
|
|
(2,982
|
)
|
||
Net unrealized (losses) gains in earnings from marketable equity securities still held at the end of the period
|
$
|
(91,619
|
)
|
|
$
|
21,084
|
|
|
As of
|
||||||
|
March 31,
2020 |
|
December 31,
2019 |
||||
(in thousands)
|
|
||||||
Receivables from contracts with customers, less estimated credit losses of $15,127 and $14,276
|
$
|
485,229
|
|
|
$
|
595,321
|
|
Other receivables
|
29,335
|
|
|
28,895
|
|
||
|
$
|
514,564
|
|
|
$
|
624,216
|
|
|
As of
|
||||||
|
March 31,
2020 |
|
December 31,
2019 |
||||
(in thousands)
|
|
||||||
Raw materials
|
$
|
34,331
|
|
|
$
|
35,119
|
|
Work-in-process
|
11,105
|
|
|
10,775
|
|
||
Finished goods
|
68,400
|
|
|
58,696
|
|
||
Contracts in progress
|
3,604
|
|
|
4,338
|
|
||
|
$
|
117,440
|
|
|
$
|
108,928
|
|
(in thousands)
|
Education
|
|
Television
Broadcasting
|
|
Manufacturing
|
|
Healthcare
|
|
SocialCode
|
|
Other
Businesses
|
|
Total
|
||||||||||||||
Balance as of December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Goodwill
|
$
|
1,140,958
|
|
|
$
|
190,815
|
|
|
$
|
234,993
|
|
|
$
|
98,421
|
|
|
$
|
15,860
|
|
|
$
|
53,684
|
|
|
$
|
1,734,731
|
|
Accumulated impairment losses
|
(331,151
|
)
|
|
—
|
|
|
(7,616
|
)
|
|
—
|
|
|
—
|
|
|
(7,685
|
)
|
|
(346,452
|
)
|
|||||||
|
809,807
|
|
|
190,815
|
|
|
227,377
|
|
|
98,421
|
|
|
15,860
|
|
|
45,999
|
|
|
1,388,279
|
|
|||||||
Acquisitions
|
13,151
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,151
|
|
|||||||
Impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,878
|
)
|
|
(6,878
|
)
|
|||||||
Foreign currency exchange rate changes
|
(32,361
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32,361
|
)
|
|||||||
Balance as of March 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
1,121,748
|
|
|
190,815
|
|
|
234,993
|
|
|
98,421
|
|
|
15,860
|
|
|
53,684
|
|
|
1,715,521
|
|
|||||||
Accumulated impairment losses
|
(331,151
|
)
|
|
—
|
|
|
(7,616
|
)
|
|
—
|
|
|
—
|
|
|
(14,563
|
)
|
|
(353,330
|
)
|
|||||||
|
$
|
790,597
|
|
|
$
|
190,815
|
|
|
$
|
227,377
|
|
|
$
|
98,421
|
|
|
$
|
15,860
|
|
|
$
|
39,121
|
|
|
$
|
1,362,191
|
|
(in thousands)
|
Kaplan
International
|
|
Higher
Education
|
|
Test
Preparation
|
|
Professional (U.S.)
|
|
Total
|
||||||||||
Balance as of December 31, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
$
|
595,604
|
|
|
$
|
174,564
|
|
|
$
|
166,920
|
|
|
$
|
203,870
|
|
|
$
|
1,140,958
|
|
Accumulated impairment losses
|
—
|
|
|
(111,324
|
)
|
|
(102,259
|
)
|
|
(117,568
|
)
|
|
(331,151
|
)
|
|||||
|
595,604
|
|
|
63,240
|
|
|
64,661
|
|
|
86,302
|
|
|
809,807
|
|
|||||
Acquisitions
|
9,889
|
|
|
—
|
|
|
—
|
|
|
3,262
|
|
|
13,151
|
|
|||||
Foreign currency exchange rate changes
|
(32,221
|
)
|
|
—
|
|
|
—
|
|
|
(140
|
)
|
|
(32,361
|
)
|
|||||
Balance as of March 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Goodwill
|
573,272
|
|
|
174,564
|
|
|
166,920
|
|
|
206,992
|
|
|
1,121,748
|
|
|||||
Accumulated impairment losses
|
—
|
|
|
(111,324
|
)
|
|
(102,259
|
)
|
|
(117,568
|
)
|
|
(331,151
|
)
|
|||||
|
$
|
573,272
|
|
|
$
|
63,240
|
|
|
$
|
64,661
|
|
|
$
|
89,424
|
|
|
$
|
790,597
|
|
|
|
|
As of March 31, 2020
|
|
As of December 31, 2019
|
||||||||||||||||||||
(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
|
|
$
|
292,305
|
|
|
$
|
152,705
|
|
|
$
|
139,600
|
|
|
$
|
291,626
|
|
|
$
|
144,625
|
|
|
$
|
147,001
|
|
Trade names and trademarks
|
2–10 years
|
|
99,989
|
|
|
45,176
|
|
|
54,813
|
|
|
87,190
|
|
|
42,770
|
|
|
44,420
|
|
||||||
Network affiliation agreements
|
10 years
|
|
17,400
|
|
|
5,583
|
|
|
11,817
|
|
|
17,400
|
|
|
5,148
|
|
|
12,252
|
|
||||||
Databases and technology
|
3–6 years
|
|
31,881
|
|
|
14,096
|
|
|
17,785
|
|
|
30,623
|
|
|
12,850
|
|
|
17,773
|
|
||||||
Noncompete agreements
|
2–5 years
|
|
1,150
|
|
|
804
|
|
|
346
|
|
|
1,313
|
|
|
929
|
|
|
384
|
|
||||||
Other
|
1–8 years
|
|
24,800
|
|
|
14,153
|
|
|
10,647
|
|
|
24,800
|
|
|
13,149
|
|
|
11,651
|
|
||||||
|
|
|
$
|
467,525
|
|
|
$
|
232,517
|
|
|
$
|
235,008
|
|
|
$
|
452,952
|
|
|
$
|
219,471
|
|
|
$
|
233,481
|
|
Indefinite-Lived Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Trade names and trademarks
|
|
|
$
|
83,164
|
|
|
|
|
|
|
|
|
$
|
100,491
|
|
|
|
|
|
|
|
||||
Franchise agreements
|
|
|
21,858
|
|
|
|
|
|
|
28,556
|
|
|
|
|
|
||||||||||
FCC licenses
|
|
|
11,000
|
|
|
|
|
|
|
11,000
|
|
|
|
|
|
||||||||||
Licensure and accreditation
|
|
|
150
|
|
|
|
|
|
|
|
|
150
|
|
|
|
|
|
|
|
||||||
|
|
|
$
|
116,172
|
|
|
|
|
|
|
$
|
140,197
|
|
|
|
|
|
|
As of
|
||||||
|
March 31,
2020 |
|
December 31,
2019 |
||||
(in thousands)
|
|
||||||
5.75% unsecured notes due June 1, 2026 (1)
|
$
|
395,572
|
|
|
$
|
395,393
|
|
U.K. credit facility (2)
|
74,358
|
|
|
78,650
|
|
||
Commercial note
|
26,750
|
|
|
27,500
|
|
||
Pinnacle Bank term loan
|
11,109
|
|
|
11,203
|
|
||
Pinnacle Bank line of credit
|
500
|
|
|
—
|
|
||
Other indebtedness
|
603
|
|
|
83
|
|
||
Total Debt
|
$
|
508,892
|
|
|
$
|
512,829
|
|
Less: current portion
|
(78,575
|
)
|
|
(82,179
|
)
|
||
Total Long-Term Debt
|
$
|
430,317
|
|
|
$
|
430,650
|
|
(1)
|
The carrying value is net of $4.4 million and $4.6 million of unamortized debt issuance costs as of March 31, 2020 and December 31, 2019, respectively.
|
(2)
|
The carrying value is net of $0.1 million of unamortized debt issuance costs as of December 31, 2019.
|
|
As of March 31, 2020
|
||||||||||||||
(in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Money market investments (1)
|
$
|
—
|
|
|
$
|
93,685
|
|
|
$
|
—
|
|
|
$
|
93,685
|
|
Marketable equity securities (2)
|
436,204
|
|
|
—
|
|
|
—
|
|
|
436,204
|
|
||||
Other current investments (3)
|
11,129
|
|
|
4,047
|
|
|
—
|
|
|
15,176
|
|
||||
Interest rate swap (4)
|
—
|
|
|
32
|
|
|
—
|
|
|
32
|
|
||||
Total Financial Assets
|
$
|
447,333
|
|
|
$
|
97,764
|
|
|
$
|
—
|
|
|
$
|
545,097
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan liabilities (5)
|
$
|
—
|
|
|
$
|
24,313
|
|
|
$
|
—
|
|
|
$
|
24,313
|
|
Interest rate swap (6)
|
—
|
|
|
2,619
|
|
|
—
|
|
|
2,619
|
|
||||
Mandatorily redeemable noncontrolling interest (7)
|
—
|
|
|
—
|
|
|
829
|
|
|
829
|
|
||||
Total Financial Liabilities
|
$
|
—
|
|
|
$
|
26,932
|
|
|
$
|
829
|
|
|
$
|
27,761
|
|
|
As of December 31, 2019
|
||||||||||||||
(in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Money market investments (1)
|
$
|
—
|
|
|
$
|
45,150
|
|
|
$
|
—
|
|
|
$
|
45,150
|
|
Marketable equity securities (2)
|
585,080
|
|
|
—
|
|
|
—
|
|
|
585,080
|
|
||||
Other current investments (3)
|
8,843
|
|
|
6,044
|
|
|
—
|
|
|
14,887
|
|
||||
Interest rate swap (4)
|
—
|
|
|
131
|
|
|
—
|
|
|
131
|
|
||||
Total Financial Assets
|
$
|
593,923
|
|
|
$
|
51,325
|
|
|
$
|
—
|
|
|
$
|
645,248
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan liabilities (5)
|
$
|
—
|
|
|
$
|
34,674
|
|
|
$
|
—
|
|
|
$
|
34,674
|
|
Interest rate swap (6)
|
—
|
|
|
1,119
|
|
|
—
|
|
|
1,119
|
|
||||
Foreign exchange swap (8)
|
—
|
|
|
273
|
|
|
—
|
|
|
273
|
|
||||
Mandatorily redeemable noncontrolling interest (7)
|
—
|
|
|
—
|
|
|
829
|
|
|
829
|
|
||||
Total Financial Liabilities
|
$
|
—
|
|
|
$
|
36,066
|
|
|
$
|
829
|
|
|
$
|
36,895
|
|
(1)
|
The Company’s money market investments are included in cash and cash equivalents and the value considers the liquidity of the counterparty.
|
(2)
|
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.
|
(3)
|
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.
|
(4)
|
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.
|
(5)
|
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.
|
(6)
|
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.
|
(7)
|
The fair value of the mandatorily redeemable noncontrolling interest is based on the fair value of the underlying subsidiaries owned by GHC One (see Note 2), after taking into account any debt and other noncontrolling interests of its subsidiary investments. The fair value of the owned subsidiaries is determined by reference to either a discounted cash flow or EBITDA multiple, which approximates fair value.
|
(8)
|
Included in Accounts payable and accrued liabilities, and valued based on a valuation model that calculates the differential between the contract price and the market-based forward rate.
|
|
As of
|
|
||||||
|
March 31,
2020 |
|
December 31,
2019 |
%
|
||||
(in thousands)
|
|
Change
|
||||||
Deferred revenue
|
$
|
332,659
|
|
|
$
|
359,048
|
|
(7)
|
(in thousands)
|
Balance at
Beginning
of Period
|
|
Costs associated with new contracts
|
|
Less: Costs amortized during the period
|
|
Other
|
|
Balance
at
End of
Period
|
||||||||||
2020
|
$
|
31,020
|
|
|
$
|
13,237
|
|
|
$
|
(16,869
|
)
|
|
$
|
(1,819
|
)
|
|
$
|
25,569
|
|
|
Three Months Ended
March 31 |
||||||
(in thousands, except per share amounts)
|
2020
|
|
2019
|
||||
Numerator:
|
|
|
|
||||
Numerator for basic (loss) earnings per share:
|
|
|
|
||||
Net (loss) income attributable to Graham Holdings Company common stockholders
|
$
|
(33,245
|
)
|
|
$
|
81,748
|
|
Less: Dividends paid-common stock outstanding and unvested restricted shares
|
(15,289
|
)
|
|
(14,779
|
)
|
||
Undistributed (loss) earnings
|
(48,534
|
)
|
|
66,969
|
|
||
Percent allocated to common stockholders (1)
|
100.00
|
%
|
|
99.43
|
%
|
||
|
(48,534
|
)
|
|
66,588
|
|
||
Add: Dividends paid-common stock outstanding
|
15,205
|
|
|
14,695
|
|
||
Numerator for basic (loss) earnings per share
|
$
|
(33,329
|
)
|
|
$
|
81,283
|
|
Add: Additional undistributed earnings due to dilutive stock options
|
—
|
|
|
3
|
|
||
Numerator for diluted (loss) earnings per share
|
$
|
(33,329
|
)
|
|
$
|
81,286
|
|
Denominator:
|
|
|
|
||||
Denominator for basic (loss) earnings per share:
|
|
|
|
|
|
||
Weighted average shares outstanding
|
5,274
|
|
|
5,284
|
|
||
Add: Effect of dilutive stock options
|
—
|
|
|
42
|
|
||
Denominator for diluted (loss) earnings per share
|
5,274
|
|
|
5,326
|
|
||
Graham Holdings Company Common Stockholders:
|
|
|
|
||||
Basic (loss) earnings per share
|
$
|
(6.32
|
)
|
|
$
|
15.38
|
|
Diluted (loss) earnings per share
|
$
|
(6.32
|
)
|
|
$
|
15.26
|
|
(1)
|
Percent of undistributed losses allocated to common stockholders is 100% in the first three months of 2020 as participating securities are not contractually obligated to share in losses.
|
|
Three Months Ended
March 31 |
||||
(in thousands)
|
2020
|
|
2019
|
||
Weighted average restricted stock
|
12
|
|
|
10
|
|
Weighted average stock options
|
27
|
|
|
—
|
|
|
Three Months Ended
March 31 |
||||||
(in thousands)
|
2020
|
|
2019
|
||||
Service cost
|
$
|
5,783
|
|
|
$
|
5,221
|
|
Interest cost
|
8,169
|
|
|
11,592
|
|
||
Expected return on assets
|
(28,444
|
)
|
|
(30,838
|
)
|
||
Amortization of prior service cost
|
708
|
|
|
409
|
|
||
Recognized actuarial gain
|
—
|
|
|
(37
|
)
|
||
Net Periodic Benefit
|
$
|
(13,784
|
)
|
|
$
|
(13,653
|
)
|
|
Three Months Ended
March 31 |
||||||
(in thousands)
|
2020
|
|
2019
|
||||
Service cost
|
$
|
238
|
|
|
$
|
214
|
|
Interest cost
|
919
|
|
|
1,078
|
|
||
Amortization of prior service cost
|
83
|
|
|
85
|
|
||
Recognized actuarial loss
|
1,317
|
|
|
579
|
|
||
Net Periodic Cost
|
$
|
2,557
|
|
|
$
|
1,956
|
|
|
As of
|
||||
|
March 31,
2020 |
|
December 31,
2019 |
||
|
|
||||
U.S. equities
|
61
|
%
|
|
62
|
%
|
Private investment fund
|
13
|
%
|
|
7
|
%
|
U.S. fixed income
|
10
|
%
|
|
10
|
%
|
U.S. stock index fund
|
9
|
%
|
|
14
|
%
|
International equities
|
7
|
%
|
|
7
|
%
|
|
100
|
%
|
|
100
|
%
|
|
Three Months Ended
March 31 |
||||||
(in thousands)
|
2020
|
|
2019
|
||||
Interest cost
|
$
|
62
|
|
|
$
|
72
|
|
Amortization of prior service credit
|
(120
|
)
|
|
(1,841
|
)
|
||
Recognized actuarial gain
|
(1,097
|
)
|
|
(1,090
|
)
|
||
Net Periodic Benefit
|
$
|
(1,155
|
)
|
|
$
|
(2,859
|
)
|
|
Three Months Ended
March 31 |
||||||
(in thousands)
|
2020
|
|
2019
|
||||
Foreign currency gain, net
|
$
|
4,290
|
|
|
$
|
514
|
|
Impairment of cost method investments
|
(2,577
|
)
|
|
—
|
|
||
Gain on sale of a cost method investment
|
518
|
|
|
—
|
|
||
Gain on sales of businesses
|
107
|
|
|
189
|
|
||
(Loss) gain on sale of an equity affiliate
|
(103
|
)
|
|
28,994
|
|
||
Gain on cost method investments
|
—
|
|
|
1,411
|
|
||
Other gain (loss), net
|
453
|
|
|
(1,757
|
)
|
||
Total Other Non-Operating Income
|
$
|
2,688
|
|
|
$
|
29,351
|
|
|
|
Three Months Ended March 31
|
||||||||||||||||||||||
|
2020
|
|
2019
|
||||||||||||||||||||
|
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
|
$
|
(37,376
|
)
|
|
$
|
—
|
|
|
$
|
(37,376
|
)
|
|
$
|
10,033
|
|
|
$
|
—
|
|
|
$
|
10,033
|
|
Pension and other postretirement plans:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amortization of net prior service cost (credit) included in net (loss) income
|
671
|
|
|
(181
|
)
|
|
490
|
|
|
(1,347
|
)
|
|
364
|
|
|
(983
|
)
|
||||||
Amortization of net actuarial loss (gain) included in net (loss) income
|
220
|
|
|
(60
|
)
|
|
160
|
|
|
(548
|
)
|
|
147
|
|
|
(401
|
)
|
||||||
|
891
|
|
|
(241
|
)
|
|
650
|
|
|
(1,895
|
)
|
|
511
|
|
|
(1,384
|
)
|
||||||
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loss for the period
|
(1,578
|
)
|
|
361
|
|
|
(1,217
|
)
|
|
(467
|
)
|
|
108
|
|
|
(359
|
)
|
||||||
Other Comprehensive (Loss) Income
|
$
|
(38,063
|
)
|
|
$
|
120
|
|
|
$
|
(37,943
|
)
|
|
$
|
7,671
|
|
|
$
|
619
|
|
|
$
|
8,290
|
|
(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, 2019
|
$
|
(21,888
|
)
|
|
$
|
325,921
|
|
|
$
|
(738
|
)
|
|
$
|
303,295
|
|
Other comprehensive loss before reclassifications
|
(37,376
|
)
|
|
—
|
|
|
(1,253
|
)
|
|
(38,629
|
)
|
||||
Net amount reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
650
|
|
|
36
|
|
|
686
|
|
||||
Other comprehensive (loss) income, net of tax
|
(37,376
|
)
|
|
650
|
|
|
(1,217
|
)
|
|
(37,943
|
)
|
||||
Balance as of March 31, 2020
|
$
|
(59,264
|
)
|
|
$
|
326,571
|
|
|
$
|
(1,955
|
)
|
|
$
|
265,352
|
|
|
Three Months Ended
March 31 |
|
Affected Line Item in the Condensed Consolidated Statements of Operations
|
||||||
|
|
||||||||
(in thousands)
|
2020
|
|
2019
|
|
|||||
Pension and Other Postretirement Plans:
|
|
|
|
|
|
||||
Amortization of net prior service cost (credit)
|
$
|
671
|
|
|
$
|
(1,347
|
)
|
|
(1)
|
Amortization of net actuarial loss (gain)
|
220
|
|
|
(548
|
)
|
|
(1)
|
||
|
891
|
|
|
(1,895
|
)
|
|
Before tax
|
||
|
(241
|
)
|
|
511
|
|
|
(Benefit from) Provision for Income Taxes
|
||
|
650
|
|
|
(1,384
|
)
|
|
Net of Tax
|
||
Cash Flow Hedges
|
|
|
|
|
|
||||
|
29
|
|
|
(69
|
)
|
|
Interest expense
|
||
|
7
|
|
|
15
|
|
|
(Benefit from) Provision for Income Taxes
|
||
|
36
|
|
|
(54
|
)
|
|
Net of Tax
|
||
Total reclassification for the period
|
$
|
686
|
|
|
$
|
(1,438
|
)
|
|
Net of Tax
|
(1)
|
These accumulated other comprehensive income components are included in the computation 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
|
||||||
(in thousands)
|
2020
|
|
2019
|
||||
Operating Revenues
|
|
|
|
||||
Education
|
$
|
356,378
|
|
|
$
|
372,454
|
|
Television broadcasting
|
115,448
|
|
|
108,223
|
|
||
Manufacturing
|
113,458
|
|
|
115,157
|
|
||
Healthcare
|
45,994
|
|
|
37,728
|
|
||
SocialCode
|
12,023
|
|
|
13,447
|
|
||
Other businesses
|
89,268
|
|
|
45,230
|
|
||
Corporate office
|
—
|
|
|
—
|
|
||
Intersegment elimination
|
(312
|
)
|
|
(40
|
)
|
||
|
$
|
732,257
|
|
|
$
|
692,199
|
|
Income (Loss) from Operations
|
|
|
|
||||
Education
|
$
|
4,692
|
|
|
$
|
25,595
|
|
Television broadcasting
|
35,776
|
|
|
35,540
|
|
||
Manufacturing
|
6,501
|
|
|
3,274
|
|
||
Healthcare
|
3,169
|
|
|
2,329
|
|
||
SocialCode
|
(3,789
|
)
|
|
(4,018
|
)
|
||
Other businesses
|
(29,692
|
)
|
|
(8,493
|
)
|
||
Corporate office
|
(8,572
|
)
|
|
(14,224
|
)
|
||
|
$
|
8,085
|
|
|
$
|
40,003
|
|
Equity in (Losses) Earnings of Affiliates, Net
|
(1,547
|
)
|
|
1,679
|
|
||
Interest Expense, Net
|
(6,527
|
)
|
|
(5,725
|
)
|
||
Non-Operating Pension and Postretirement Benefit Income, Net
|
18,403
|
|
|
19,928
|
|
||
(Loss) Gain on Marketable Equity Securities, Net
|
(100,393
|
)
|
|
24,066
|
|
||
Other Income, Net
|
2,688
|
|
|
29,351
|
|
||
(Loss) Income Before Income Taxes
|
$
|
(79,291
|
)
|
|
$
|
109,302
|
|
Depreciation of Property, Plant and Equipment
|
|
|
|
||||
Education
|
$
|
7,329
|
|
|
$
|
6,201
|
|
Television broadcasting
|
3,343
|
|
|
3,239
|
|
||
Manufacturing
|
2,527
|
|
|
2,433
|
|
||
Healthcare
|
540
|
|
|
610
|
|
||
SocialCode
|
121
|
|
|
152
|
|
||
Other businesses
|
2,669
|
|
|
648
|
|
||
Corporate office
|
175
|
|
|
240
|
|
||
|
$
|
16,704
|
|
|
$
|
13,523
|
|
Amortization of Intangible Assets and Impairment of Goodwill and Intangible Assets
|
|
|
|
|
|||
Education
|
$
|
4,201
|
|
|
$
|
3,567
|
|
Television broadcasting
|
1,360
|
|
|
1,408
|
|
||
Manufacturing
|
7,137
|
|
|
6,530
|
|
||
Healthcare
|
1,310
|
|
|
1,398
|
|
||
SocialCode
|
157
|
|
|
157
|
|
||
Other businesses
|
16,401
|
|
|
—
|
|
||
Corporate office
|
—
|
|
|
—
|
|
||
|
$
|
30,566
|
|
|
$
|
13,060
|
|
Pension Service Cost
|
|
|
|
|
|||
Education
|
$
|
2,585
|
|
|
$
|
2,664
|
|
Television broadcasting
|
796
|
|
|
731
|
|
||
Manufacturing
|
394
|
|
|
25
|
|
||
Healthcare
|
159
|
|
|
183
|
|
||
SocialCode
|
237
|
|
|
248
|
|
||
Other businesses
|
226
|
|
|
201
|
|
||
Corporate office
|
1,386
|
|
|
1,169
|
|
||
|
$
|
5,783
|
|
|
$
|
5,221
|
|
|
|
|
As of
|
||||||
(in thousands)
|
March 31, 2020
|
|
December 31, 2019
|
||||
Identifiable Assets
|
|
|
|
||||
Education
|
$
|
1,893,250
|
|
|
$
|
2,032,425
|
|
Television broadcasting
|
457,048
|
|
|
463,689
|
|
||
Manufacturing
|
568,265
|
|
|
564,251
|
|
||
Healthcare
|
161,511
|
|
|
160,033
|
|
||
SocialCode
|
134,650
|
|
|
221,746
|
|
||
Other businesses
|
317,940
|
|
|
345,649
|
|
||
Corporate office
|
202,486
|
|
|
103,764
|
|
||
|
$
|
3,735,150
|
|
|
$
|
3,891,557
|
|
Investments in Marketable Equity Securities
|
436,204
|
|
|
585,080
|
|
||
Investments in Affiliates
|
167,628
|
|
|
162,249
|
|
||
Prepaid Pension Cost
|
1,306,843
|
|
|
1,292,350
|
|
||
Total Assets
|
$
|
5,645,825
|
|
|
$
|
5,931,236
|
|
|
Three months ended
|
||||||
|
March 31
|
||||||
(in thousands)
|
2020
|
|
2019
|
||||
Operating Revenues
|
|
|
|
||||
Kaplan international
|
$
|
199,615
|
|
|
$
|
185,756
|
|
Higher education
|
73,537
|
|
|
82,780
|
|
||
Test preparation
|
42,839
|
|
|
61,150
|
|
||
Professional (U.S.)
|
38,449
|
|
|
41,214
|
|
||
Kaplan corporate and other
|
3,205
|
|
|
2,302
|
|
||
Intersegment elimination
|
(1,267
|
)
|
|
(748
|
)
|
||
|
$
|
356,378
|
|
|
$
|
372,454
|
|
Income (Loss) from Operations
|
|
|
|
|
|
||
Kaplan international
|
$
|
18,980
|
|
|
$
|
24,285
|
|
Higher education
|
(2,020
|
)
|
|
1,915
|
|
||
Test preparation
|
(12,676
|
)
|
|
(454
|
)
|
||
Professional (U.S.)
|
6,126
|
|
|
11,259
|
|
||
Kaplan corporate and other
|
(5,723
|
)
|
|
(11,404
|
)
|
||
Intersegment elimination
|
5
|
|
|
(6
|
)
|
||
|
$
|
4,692
|
|
|
$
|
25,595
|
|
Depreciation of Property, Plant and Equipment
|
|
|
|
|
|
||
Kaplan international
|
$
|
4,578
|
|
|
$
|
3,882
|
|
Higher education
|
723
|
|
|
597
|
|
||
Test preparation
|
826
|
|
|
805
|
|
||
Professional (U.S.)
|
1,113
|
|
|
865
|
|
||
Kaplan corporate and other
|
89
|
|
|
52
|
|
||
|
$
|
7,329
|
|
|
$
|
6,201
|
|
Amortization of Intangible Assets
|
$
|
4,201
|
|
|
$
|
3,567
|
|
Pension Service Cost
|
|
|
|
|
|
||
Kaplan international
|
$
|
112
|
|
|
$
|
117
|
|
Higher education
|
1,070
|
|
|
1,163
|
|
||
Test preparation
|
823
|
|
|
866
|
|
||
Professional (U.S.)
|
262
|
|
|
348
|
|
||
Kaplan corporate and other
|
318
|
|
|
170
|
|
||
|
$
|
2,585
|
|
|
$
|
2,664
|
|
|
As of
|
||||||
(in thousands)
|
March 31, 2020
|
|
December 31, 2019
|
||||
Identifiable assets
|
|
|
|
||||
Kaplan international
|
$
|
1,316,435
|
|
|
$
|
1,455,122
|
|
Higher education
|
206,661
|
|
|
196,761
|
|
||
Test preparation
|
151,541
|
|
|
151,655
|
|
||
Professional (U.S.)
|
154,115
|
|
|
160,799
|
|
||
Kaplan corporate and other
|
64,498
|
|
|
68,088
|
|
||
|
$
|
1,893,250
|
|
|
$
|
2,032,425
|
|
•
|
$16.4 million in goodwill and intangible asset impairment charges;
|
•
|
$2.1 million in restructuring charges at the education division;
|
•
|
a $0.3 million reduction to operating expenses from property, plant and equipment gains in connection with the spectrum repacking mandate of the FCC;
|
•
|
$100.4 million in net losses on marketable equity securities;
|
•
|
non-operating losses of $6.1 million from impairments of cost method and equity method investments; and
|
•
|
$4.3 million in non-operating foreign currency gains.
|
•
|
a $1.8 million reduction to operating expenses from property, plant and equipment gains in connection with the spectrum repacking mandate of the FCC;
|
•
|
$24.1 million in net gains on marketable equity securities;
|
•
|
$29.0 million gain from the sale of Gimlet Media;
|
•
|
non-operating gain, net, of $1.4 million from the write-up of cost method investments; and
|
•
|
$0.5 million in non-operating foreign currency gains.
|
|
Three Months Ended
|
|
|
|||||||
|
March 31
|
|
|
|||||||
(in thousands)
|
2020
|
|
2019
|
|
% Change
|
|||||
Revenue
|
|
|
|
|
|
|||||
Kaplan international
|
$
|
199,615
|
|
|
$
|
185,756
|
|
|
7
|
|
Higher education
|
73,537
|
|
|
82,780
|
|
|
(11
|
)
|
||
Test preparation
|
42,839
|
|
|
61,150
|
|
|
(30
|
)
|
||
Professional (U.S.)
|
38,449
|
|
|
41,214
|
|
|
(7
|
)
|
||
Kaplan corporate and other
|
3,205
|
|
|
2,302
|
|
|
39
|
|
||
Intersegment elimination
|
(1,267
|
)
|
|
(748
|
)
|
|
—
|
|
||
|
$
|
356,378
|
|
|
$
|
372,454
|
|
|
(4
|
)
|
Operating Income (Loss)
|
|
|
|
|
|
|
|
|
||
Kaplan international
|
$
|
18,980
|
|
|
$
|
24,285
|
|
|
(22
|
)
|
Higher education
|
(2,020
|
)
|
|
1,915
|
|
|
—
|
|
||
Test preparation
|
(12,676
|
)
|
|
(454
|
)
|
|
—
|
|
||
Professional (U.S.)
|
6,126
|
|
|
11,259
|
|
|
(46
|
)
|
||
Kaplan corporate and other
|
(1,522
|
)
|
|
(7,837
|
)
|
|
81
|
|
||
Amortization of intangible assets
|
(4,201
|
)
|
|
(3,567
|
)
|
|
(18
|
)
|
||
Intersegment elimination
|
5
|
|
|
(6
|
)
|
|
—
|
|
||
|
$
|
4,692
|
|
|
$
|
25,595
|
|
|
(82
|
)
|
|
As of
|
||||||
(In thousands)
|
March 31, 2020
|
|
December 31, 2019
|
||||
Cash and cash equivalents
|
$
|
178,646
|
|
|
$
|
200,165
|
|
Restricted cash
|
$
|
22,993
|
|
|
$
|
13,879
|
|
Investments in marketable equity securities and other investments
|
$
|
451,380
|
|
|
$
|
599,967
|
|
Total debt
|
$
|
508,892
|
|
|
$
|
512,829
|
|
|
Moody’s
|
|
Standard & Poor’s
|
Long-term
|
Ba1
|
|
BB
|
|
Three Months Ended
March 31 |
||||||
(In thousands)
|
2020
|
|
2019
|
||||
Net cash provided by (used in) operating activities
|
$
|
12,403
|
|
|
$
|
(37,922
|
)
|
Net cash provided by (used in) investing activities
|
9,561
|
|
|
(73,878
|
)
|
||
Net cash (used in) provided by financing activities
|
(26,685
|
)
|
|
37,034
|
|
||
Effect of currency exchange rate change
|
(7,684
|
)
|
|
1,776
|
|
||
Net decrease in cash and cash equivalents and restricted cash
|
$
|
(12,405
|
)
|
|
$
|
(72,990
|
)
|
|
Three Months Ended
March 31 |
||||||
(In thousands)
|
2020
|
|
2019
|
||||
Net (Loss) Income
|
$
|
(33,891
|
)
|
|
$
|
81,702
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation, amortization and goodwill and intangible asset impairment
|
47,270
|
|
|
26,583
|
|
||
Amortization of lease right-of-use asset
|
23,749
|
|
|
20,353
|
|
||
Net pension benefit
|
(13,784
|
)
|
|
(13,653
|
)
|
||
Other non-cash activities
|
82,362
|
|
|
(46,000
|
)
|
||
Change in operating assets and liabilities
|
(93,303
|
)
|
|
(106,907
|
)
|
||
Net Cash Provided by (Used in) Operating Activities
|
$
|
12,403
|
|
|
$
|
(37,922
|
)
|
|
Three Months Ended
March 31 |
||||||
(In thousands)
|
2020
|
|
2019
|
||||
Investments in certain businesses, net of cash acquired
|
$
|
(6,011
|
)
|
|
$
|
(83,721
|
)
|
Purchases of property, plant and equipment
|
(25,235
|
)
|
|
(28,252
|
)
|
||
Net proceeds from sales of marketable equity securities
|
48,016
|
|
|
9,663
|
|
||
Investments in equity affiliates, cost method and other investments
|
(7,427
|
)
|
|
(3,401
|
)
|
||
Net proceeds from sales of businesses, property, plant and equipment and investments
|
218
|
|
|
34,718
|
|
||
Other
|
—
|
|
|
(2,885
|
)
|
||
Net Cash Provided by (Used in) Investing Activities
|
$
|
9,561
|
|
|
$
|
(73,878
|
)
|
|
Three Months Ended
March 31 |
||||||
(In thousands)
|
2020
|
|
2019
|
||||
Issuance of borrowings
|
$
|
1,023
|
|
|
$
|
30,000
|
|
Net proceeds from vehicle floor plan payable
|
2,478
|
|
|
9,529
|
|
||
Common shares repurchased
|
(33,610
|
)
|
|
—
|
|
||
Dividends paid
|
(7,703
|
)
|
|
(7,391
|
)
|
||
Other
|
11,127
|
|
|
4,896
|
|
||
Net Cash (Used in) Provided by Financing Activities
|
$
|
(26,685
|
)
|
|
$
|
37,034
|
|
•
|
The Company’s Business, Results of Operations and Cash Flows Will Be Adversely Impacted by the Effects of the COVID-19 Pandemic, the Significance of Which Will Depend on the Longevity and Severity of the Virus.
|
•
|
Changes in International Regulatory and Physical Environments and Failure to Comply with Regulations Applicable to International Operations Could Negatively Affect International Student Enrollments and Kaplan’s Business.
|
•
|
Noncompliance with Regulations by KHE’s Client Institutions May Adversely Impact Kaplan’s Results of Operations.
|
•
|
a reduction or loss in KHE’s revenues under the TOSA or other client agreements if Purdue Global or any other KHE client institution loses or has limits placed on its Title IV eligibility, accreditation or state licensure;
|
•
|
a reduction or loss in KHE’s revenues under the TOSA or other client agreements if Purdue Global or any other client institution is subject to fines, repayment obligations or other adverse actions owing to noncompliance by Purdue Global (or Kaplan) with Title IV, accreditor or state agency requirements;
|
•
|
the imposition on KHE of fines or repayment obligations to the ED or the termination or limitation on KHE’s eligibility to provide services to Purdue Global or other Title IV participating institutions if findings of noncompliance by Purdue Global or such other institution result in a determination that Kaplan failed to comply with statutory or regulatory requirements applicable to service providers; and
|
•
|
liability under the TOSA or other client agreements for noncompliance with federal, state or accreditation requirements arising from KHE’s conduct.
|
•
|
Changes in the Extent to Which Standardized Tests Are Used in the Admissions Process by Colleges or Graduate Schools and Increased Competition Could Reduce Demand for KTP Offerings.
|
•
|
Postponement of Examinations and Changes in the Extent to Which Licensing and Proficiency Examinations Are Used to Qualify Individuals to Pursue Certain Careers Could Reduce Demand for Kaplan’s Offerings.
|
•
|
The COVID-19 Pandemic, Food-Borne Illness Concerns and Damage to the Company’s Reputation Could Harm the Company’s Restaurant Business.
|
•
|
Changes in Business Conditions May Cause Goodwill and Other Intangible Assets to Become Impaired.
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plan*
|
|
Maximum Number of Shares that May Yet Be Purchased Under the Plan*
|
|||||
January
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
270,263
|
|
February
|
|
—
|
|
|
—
|
|
|
—
|
|
|
270,263
|
|
|
March
|
|
83,919
|
|
|
400.50
|
|
|
83,919
|
|
|
186,344
|
|
|
|
|
83,919
|
|
|
$
|
400.50
|
|
|
83,919
|
|
|
|
Exhibit
Number
|
Description
|
|
|
3.1
|
|
|
|
3.2
|
|
|
|
3.3
|
|
|
|
4.1
|
|
|
|
4.2
|
|
|
|
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
|
|
|
104
|
Cover Page Interactive Data File, formatted in Inline XBRL and included as Exhibit 101
|
*
|
Furnished herewith.
|
|
|
GRAHAM HOLDINGS COMPANY
|
|
|
(Registrant)
|
|
|
|
Date: May 5, 2020
|
|
/s/ Timothy J. O’Shaughnessy
|
|
|
Timothy J. O’Shaughnessy,
President & Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
Date: May 5, 2020
|
|
/s/ Wallace R. Cooney
|
|
|
Wallace R. Cooney,
Chief Financial Officer
(Principal Financial Officer)
|
(a)
|
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;
|
(b)
|
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;
|
(c)
|
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
|
(d)
|
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
|
(a)
|
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
|
(b)
|
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.
|
/s/ Timothy J. O’Shaughnessy
|
|
(a)
|
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;
|
(b)
|
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;
|
(c)
|
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
|
(d)
|
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
|
(a)
|
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
|
(b)
|
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.
|
/s/ Wallace R. Cooney
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Timothy J. O’Shaughnessy
|
|
/s/ Wallace R. Cooney
|
|