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SEC Filings

10-Q
GRAHAM HOLDINGS CO filed this Form 10-Q on 05/03/2017
Entire Document
 


6. FAIR VALUE MEASUREMENTS
The Company’s financial assets and liabilities measured at fair value on a recurring basis were as follows:
 
As of March 31, 2017
(in thousands)
Level 1
 
Level 2
 
Level 3
 
Total
Assets
  
 
  
 
 
 
  
Money market investments (1) 
$

 
$
442,864

 
$

 
$
442,864

Marketable equity securities (3) 
433,787

 

 

 
433,787

Other current investments (4) 
5,702

 
17,069

 

 
22,771

Total Financial Assets
$
439,489

 
$
459,933

 
$

 
$
899,422

Liabilities
  
 
  
 
 
 
  
Deferred compensation plan liabilities (5) 
$

 
$
43,949

 
$

 
$
43,949

Interest rate swap (6) 

 
488

 

 
488

Mandatorily redeemable noncontrolling interest (7)

 

 
12,584

 
12,584

Total Financial Liabilities
$

 
$
44,437

 
$
12,584

 
$
57,021

 
As of December 31, 2016
(in thousands)
Level 1
 
Level 2
 
Level 3
 
Total
Assets
  
 
  
 
 
 
  
Money market investments (1) 
$

 
$
435,258

 
$

 
$
435,258

Commercial paper (2)
49,882

 

 

 
49,882

Marketable equity securities (3) 
424,229

 

 

 
424,229

Other current investments (4) 
6,957

 
17,055

 

 
24,012

Total Financial Assets
$
481,068

 
$
452,313

 
$

 
$
933,381

Liabilities
  
 
  
 
 
 
  
Deferred compensation plan liabilities (5) 
$

 
$
46,300

 
$

 
$
46,300

Interest rate swap (6) 

 
365

 

 
365

Mandatorily redeemable noncontrolling interest (7)

 

 
12,584

 
12,584

Total Financial Liabilities
$

 
$
46,665

 
$
12,584

 
$
59,249

____________
(1)
The Company’s money market investments are included in cash, cash equivalents and restricted cash and the value considers the liquidity of the counterparty.
(2)
The Company's commercial paper investments with original maturities of three months or less are included in cash and cash equivalents.
(3)
The Company’s investments in marketable equity securities are classified as available-for-sale.
(4)
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 valuation hierarchy.
(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 an EBITDA multiple, adjusted for working capital and other items, which approximates fair value.
7. EARNINGS PER SHARE
The Company's unvested restricted stock awards contain nonforfeitable rights to dividends and, therefore, are considered participating securities for purposes of computing earnings per share pursuant to the two-class method. The diluted earnings per share computed under the two-class method is lower than the diluted earnings per share computed under the treasury stock method, resulting in the presentation of the lower amount in diluted earnings per share. The computation of the earnings per share under the two-class method excludes the income attributable to the unvested restricted stock awards from the numerator and excludes the dilutive impact of those underlying shares from the denominator.

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