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10-K
GRAHAM HOLDINGS CO filed this Form 10-K on 03/29/1994
Entire Document
 
<PAGE>   36
                          THE WASHINGTON POST COMPANY
                          ---------------------------


    The following table sets forth the amounts included in "Other liabilities"
in the Consolidated Balance Sheets at January 2, 1994, and January 3, 1993 (in
thousands):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
                                                      1993                 1992
- ---------------------------------------------------------------------------------
<S>                                                <C>                 <C>
Accumulated postretirement benefit
  obligation:
    Retirees  . . . . . . . . . . . . . . . .      $   46,988          $   46,329
    Fully eligible active plan
      participants  . . . . . . . . . . . . .           6,423               5,880
    Other active plan participants  . . . . .          40,926              35,184
                                                   ----------          ----------
                                                       94,337              87,393
Unrecognized prior service costs
  arising from plan amendments  . . . . . . .           2,357               2,571
Unrecognized net gain from past
  experience different from
  that assumed. . . . . . . . . . . . . . . .             739                 739
                                                   ----------          ----------
Accrued postretirement benefit cost . . . . .      $   97,433          $   90,703
                                                   ==========          ==========
</TABLE>


    Net periodic postretirement benefit cost for the years ended January 2,
1994, January 3, 1993, and December 29, 1991, includes the following components
(in thousands):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
                                   1993               1992                 1991
- ---------------------------------------------------------------------------------
<S>                               <C>                 <C>                 <C>
Service cost for benefits
  earned during the
  period  . . . . . . . . . .     $ 2,894             $3,029              $ 2,948
Interest cost on
  accumulated post-
  retirement benefit
  obligation  . . . . . . . .       6,880              6,853                6,404
Amortization of prior
  service costs . . . . . . .        (214)               (61)
Curtailment gain  . . . . . .          --             (5,963)                  --
                                  -------             ------              -------
Net periodic postretirement
  benefit cost  . . . . . . .     $ 9,560             $3,858              $ 9,352
                                  =======             ======              =======
</TABLE>


    The curtailment gain of $6,000,000 relates to the termination in December
1992 of one of the company's health care plans at The Washington Post
newspaper. The terminated plan has been replaced by a deferred payment
arrangement and a related expense of $8,300,000 was recognized as a result of
this change (see Note H).
    For 1993, 1992 and 1991 the accumulated postretirement benefit obligation
was determined using a discount rate of 8 percent and a health care cost trend
rate of approximately 14 percent for pre-age-65 benefits, decreasing to 6.5
percent in the year 2022 and thereafter; and rates of approximately 11 to 14
percent for post-age-65 benefits, decreasing to 6.5 percent in the year 2022
and thereafter.
    The company's policy is to fund the above-mentioned benefits as claims and
premiums are paid.  The effect on the accumulated postretirement benefit
obligation at January 4, 1993, of a 1 percent increase each year in the
health care cost trend rate used would result in increases of approximately
$16,500,000 in the obligation and $2,000,000 in the aggregate service and
interest components of the 1993 expense.
    The cash expenditures for postretirement benefits were $2,830,000 in 1993,
$2,560,000 in 1992 and $2,222,000 in 1991.

J.  LEASE COMMITMENTS

The company leases primarily real property under operating agreements. Many of
the leases contain renewal options and escalation clauses that require payments
of additional rent to the extent of increases in the related operating costs.
At January 2, 1994, future minimum rental payments under noncancelable
operating leases are as follows (in thousands):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
<S>                                                                    <C>
1994  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $   18,058
1995  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            17,500
1996  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            14,332
1997  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            11,739
1998  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             8,998
Thereafter  . . . . . . . . . . . . . . . . . . . . . . . . . .            42,844
                                                                       ----------
                                                                       $  113,471
                                                                       ==========
</TABLE>


    Minimum payments have not been reduced by minimum sublease rentals of
$3,000,000 due in the future under noncancelable subleases.
    Rent expense under operating leases included in operating costs and
expenses was approximately $22,200,000 in 1993, $21,500,000 in 1992 and
$20,000,000 in 1991. Sublease income was approximately $1,300,000 in 1993, 1992
and 1991.
    In 1993 the company entered into a lease agreement under which certain
costs are paid for through a restricted funding mechanism. At January 2, 1994,
$6,900,000 included in "Cash and cash equivalents" is restricted under the
provisions of this funding arrangement.

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