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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
| | | | | |
☒ | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the Quarterly Period Ended September 30, 2022
or
| | | | | |
☐ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Commission File Number 001-06714
GRAHAM HOLDINGS COMPANY
| | |
(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) |
(703) 345-6300
(Registrant’s telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
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 |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒. No ☐.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒. No ☐.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Large Accelerated Filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐. No ☒.
Shares outstanding at October 28, 2022:
Class A Common Stock – 964,001 Shares
Class B Common Stock – 3,837,643 Shares
GRAHAM HOLDINGS COMPANY
Index to Form 10-Q
| | | | | | | | |
PART I. FINANCIAL INFORMATION | |
| | |
Item 1. | Financial Statements | |
| | |
| Condensed Consolidated Statements of Operations | |
| | |
| Condensed Consolidated Statements of Comprehensive (Loss) Income | |
| | |
| Condensed Consolidated Balance Sheets | |
| | |
| Condensed Consolidated Statements of Cash Flows | |
| | |
| Condensed Consolidated Statements of Changes in Common Stockholders' Equity | |
| | |
| Notes to Condensed Consolidated Financial Statements | |
| | |
| Organization, Basis of Presentation and Recent Accounting Pronouncements | |
| Acquisitions and Dispositions of Businesses | |
| Investments | |
| Accounts Receivable, Accounts Payable and Accrued Liabilities | |
| Inventories, Contracts in Progress and Vehicle Floor Plan Payable | |
| | |
| Goodwill and Other Intangible Assets | |
| Debt | |
| Fair Value Measurements | |
| | |
| Revenue From Contracts With Customers | |
| Earnings Per Share | |
| Pension and Postretirement Plans | |
| Other Non-Operating Income | |
| Accumulated Other Comprehensive Income (Loss) | |
| Contingencies | |
| Business Segments | |
| | |
Item 2. | Management’s Discussion and Analysis of Results of Operations and Financial Condition | |
| | |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | |
| | |
Item 4. | Controls and Procedures | |
| |
PART II. OTHER INFORMATION | |
| | |
| | |
| | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
| | |
Item 6. | Exhibits | |
| |
Signatures | |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
GRAHAM HOLDINGS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30 | | Nine Months Ended September 30 |
| |
(in thousands, except per share amounts) | 2022 | | 2021 | | 2022 | | 2021 |
Operating Revenues | | | | | | | |
Sales of services | $ | 588,166 | | | $ | 515,280 | | | $ | 1,708,848 | | | $ | 1,509,986 | |
Sales of goods | 424,272 | | | 294,156 | | | 1,151,613 | | | 813,057 | |
| 1,012,438 | | | 809,436 | | | 2,860,461 | | | 2,323,043 | |
Operating Costs and Expenses | | | | | | | |
Cost of services sold (exclusive of items shown below) | 342,138 | | | 307,138 | | | 996,821 | | | 906,555 | |
Cost of goods sold (exclusive of items shown below) | 352,619 | | | 241,539 | | | 945,265 | | | 647,218 | |
Selling, general and administrative | 223,857 | | | 215,891 | | | 676,563 | | | 587,181 | |
Depreciation of property, plant and equipment | 19,657 | | | 18,741 | | | 58,545 | | | 51,886 | |
Amortization of intangible assets | 14,635 | | | 15,981 | | | 44,436 | | | 43,807 | |
Impairment of goodwill and other long-lived assets | — | | | 26,753 | | | — | | | 31,568 | |
| 952,906 | | | 826,043 | | | 2,721,630 | | | 2,268,215 | |
Income (Loss) from Operations | 59,532 | | | (16,607) | | | 138,831 | | | 54,828 | |
Equity in (losses) earnings of affiliates, net | (1,111) | | | 12,964 | | | 2,920 | | | 28,168 | |
Interest income | 803 | | | (79) | | | 2,214 | | | 2,687 | |
Interest expense | (11,579) | | | (9,343) | | | (38,969) | | | (25,144) | |
Non-operating pension and postretirement benefit income, net | 50,687 | | | 27,561 | | | 152,063 | | | 81,564 | |
(Loss) gain on marketable equity securities, net | (54,250) | | | 14,069 | | | (172,878) | | | 176,981 | |
Other income, net | 2,358 | | | 5,218 | | | 6,410 | | | 27,660 | |
Income Before Income Taxes | 46,440 | | | 33,783 | | | 90,591 | | | 346,744 | |
Provision for (Benefit from) Income Taxes | 12,600 | | | (5,900) | | | 26,800 | | | 78,500 | |
Net Income | 33,840 | | | 39,683 | | | 63,791 | | | 268,244 | |
Net Income Attributable to Noncontrolling Interests | (1,060) | | | (97) | | | (2,872) | | | (850) | |
Net Income Attributable to Graham Holdings Company Common Stockholders | $ | 32,780 | | | $ | 39,586 | | | $ | 60,919 | | | $ | 267,394 | |
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Per Share Information Attributable to Graham Holdings Company Common Stockholders | | | | | | | |
Basic net income per common share | $ | 6.78 | | | $ | 7.93 | | | $ | 12.51 | | | $ | 53.49 | |
Basic average number of common shares outstanding | 4,808 | | | 4,961 | | | 4,841 | | | 4,966 | |
Diluted net income per common share | $ | 6.76 | | | $ | 7.90 | | | $ | 12.48 | | | $ | 53.33 | |
Diluted average number of common shares outstanding | 4,820 | | | 4,977 | | | 4,853 | | | 4,980 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
GRAHAM HOLDINGS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)
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| Three Months Ended September 30 | | Nine Months Ended September 30 |
(in thousands) | 2022 | | 2021 | | 2022 | | 2021 |
Net Income | $ | 33,840 | | | $ | 39,683 | | | $ | 63,791 | | | $ | 268,244 | |
Other Comprehensive Loss, Before Tax | | | | | | | |
Foreign currency translation adjustments: | | | | | | | |
Translation adjustments arising during the period | (44,260) | | | (16,033) | | | (86,926) | | | (15,352) | |
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Pension and other postretirement plans: | | | | | | | |
Amortization of net prior service cost included in net income | 716 | | | 793 | | | 2,148 | | | 2,377 | |
Amortization of net actuarial gain included in net income | (18,083) | | | (1,066) | | | (53,939) | | | (4,419) | |
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| (17,367) | | | (273) | | | (51,791) | | | (2,042) | |
Cash flow hedges gains | 2,202 | | | 169 | | | 4,935 | | | 803 | |
Other Comprehensive Loss, Before Tax | (59,425) | | | (16,137) | | | (133,782) | | | (16,591) | |
Income tax benefit related to items of other comprehensive loss | 3,970 | | | 11 | | | 12,213 | | | 342 | |
Other Comprehensive Loss, Net of Tax | (55,455) | | | (16,126) | | | (121,569) | | | (16,249) | |
Comprehensive (Loss) Income | (21,615) | | | 23,557 | | | (57,778) | | | 251,995 | |
Comprehensive income attributable to noncontrolling interests | (1,060) | | | (97) | | | (2,872) | | | (850) | |
Total Comprehensive (Loss) Income Attributable to Graham Holdings Company | $ | (22,675) | | | $ | 23,460 | | | $ | (60,650) | | | $ | 251,145 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
GRAHAM HOLDINGS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
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| As of |
(in thousands) | September 30, 2022 | | December 31, 2021 |
| (Unaudited) | | |
Assets | | | |
Current Assets | | | |
Cash and cash equivalents | $ | 149,773 | | | $ | 145,886 | |
Restricted cash | 20,436 | | | 12,175 | |
Investments in marketable equity securities and other investments | 610,756 | | | 824,445 | |
Accounts receivable, net | 537,561 | | | 607,471 | |
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Inventories and contracts in progress | 209,804 | | | 141,471 | |
Prepaid expenses | 87,166 | | | 81,741 | |
Income taxes receivable | 21,934 | | | 32,744 | |
Other current assets | 1,943 | | | 1,241 | |
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Total Current Assets | 1,639,373 | | | 1,847,174 | |
Property, Plant and Equipment, Net | 468,173 | | | 468,126 | |
Lease Right-of-Use Assets | 421,303 | | | 437,969 | |
Investments in Affiliates | 169,422 | | | 155,444 | |
Goodwill, Net | 1,631,440 | | | 1,649,582 | |
Indefinite-Lived Intangible Assets | 174,915 | | | 142,180 | |
Amortized Intangible Assets, Net | 202,260 | | | 247,120 | |
Prepaid Pension Cost | 2,392,746 | | | 2,306,514 | |
Deferred Income Taxes | 6,896 | | | 7,900 | |
Deferred Charges and Other Assets (includes $646 and $782 of restricted cash) | 170,603 | | | 163,516 | |
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Total Assets | $ | 7,277,131 | | | $ | 7,425,525 | |
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Liabilities and Equity | | | |
Current Liabilities | | | |
Accounts payable and accrued liabilities | $ | 556,646 | | | $ | 583,629 | |
Deferred revenue | 362,351 | | | 358,720 | |
Income taxes payable | 2,551 | | | 4,585 | |
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Current portion of lease liabilities | 70,100 | | | 77,655 | |
Current portion of long-term debt | 141,802 | | | 141,749 | |
Dividends declared | 7,606 | | | — | |
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Total Current Liabilities | 1,141,056 | | | 1,166,338 | |
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Accrued Compensation and Related Benefits | 155,966 | | | 175,391 | |
Other Liabilities | 33,741 | | | 36,497 | |
Deferred Income Taxes | 668,964 | | | 676,706 | |
Mandatorily Redeemable Noncontrolling Interest | 27,142 | | | 13,661 | |
Lease Liabilities | 387,142 | | | 405,200 | |
Long-Term Debt | 568,534 | | | 525,752 | |
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Total Liabilities | 2,982,545 | | | 2,999,545 | |
Commitments and Contingencies (Note 14) | | | |
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Redeemable Noncontrolling Interests | 17,625 | | | 14,311 | |
Preferred Stock | — | | | — | |
Common Stockholders’ Equity | | | |
Common stock | 20,000 | | | 20,000 | |
Capital in excess of par value | 394,609 | | | 389,456 | |
Retained earnings | 7,156,952 | | | 7,126,761 | |
Accumulated other comprehensive income, net of taxes | | | |
Cumulative foreign currency translation adjustment | (93,224) | | | (6,298) | |
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Unrealized gain on pensions and other postretirement plans | 940,714 | | | 979,157 | |
Cash flow hedges | 2,329 | | | (1,471) | |
Cost of Class B common stock held in treasury | (4,161,672) | | | (4,108,022) | |
Total Common Stockholders’ Equity | 4,259,708 | | | 4,399,583 | |
Noncontrolling Interests | 17,253 | | | 12,086 | |
Total Equity | 4,276,961 | | | 4,411,669 | |
Total Liabilities and Equity | $ | 7,277,131 | | | $ | 7,425,525 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
GRAHAM HOLDINGS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| | | | | | | | | | | |
| Nine Months Ended September 30 |
(in thousands) | 2022 | | 2021 |
Cash Flows from Operating Activities | | | |
Net Income | $ | 63,791 | | | $ | 268,244 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | |
Depreciation, amortization and goodwill and other long-lived asset impairments | 102,981 | | | 127,261 | |
Amortization of lease right-of-use asset | 51,344 | | | 55,246 | |
Net pension benefit and special separation benefit expense | (136,411) | | | (68,644) | |
Loss (gain) on marketable equity securities and cost method investments, net | 172,318 | | | (179,737) | |
Gain on disposition of businesses, property, plant and equipment and investments, net | (2,177) | | | (14,406) | |
Provision for doubtful trade receivables | 2,831 | | | 4,171 | |
Stock-based compensation expense, net of forfeitures | 4,552 | | | 4,686 | |
Foreign exchange loss (gain) | 1,973 | | | (674) | |
Equity in earnings of affiliates, net of distributions | 5,167 | | | (11,364) | |
Provision for deferred income taxes | 9,189 | | | 43,580 | |
Accretion expense and change in fair value of contingent consideration liabilities | (3,898) | | | (4,325) | |
Change in operating assets and liabilities: | | | |
Accounts receivable | 58,940 | | | (27,350) | |
Inventories | (47,486) | | | 21,117 | |
Accounts payable and accrued liabilities | (33,994) | | | (7,979) | |
Deferred revenue | 36,676 | | | 33,561 | |
Income taxes receivable/payable | (7,495) | | | 10,724 | |
Lease liabilities | (59,612) | | | (61,775) | |
Other assets and other liabilities, net | (19,698) | | | 3,192 | |
Other | 4,674 | | | 1,743 | |
Net Cash Provided by Operating Activities | 203,665 | | | 197,271 | |
Cash Flows from Investing Activities | | | |
Investments in certain businesses, net of cash acquired | (130,177) | | | (272,428) | |
Proceeds from sales of marketable equity securities | 74,233 | | | 38,308 | |
Purchases of property, plant and equipment | (57,097) | | | (140,935) | |
Purchases of marketable equity securities | (35,070) | | | (48,036) | |
Investments in equity affiliates, cost method and other investments | (30,075) | | | (6,610) | |
Net proceeds from disposition of businesses, property, plant and equipment, and investments | 5,580 | | | 8,771 | |
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Other | 961 | | | 474 | |
Net Cash Used in Investing Activities | (171,645) | | | (420,456) | |
Cash Flows from Financing Activities | | | |
Issuance of borrowings | 77,299 | | | 22,684 | |
Common shares repurchased | (54,581) | | | (21,840) | |
Dividends paid | (23,122) | | | (22,659) | |
Net proceeds from (repayments of) vehicle floor plan payable | 11,688 | | | (15,035) | |
Net (payments) borrowings under revolving credit facilities | (11,000) | | | 37,696 | |
Repayments of borrowings | (10,564) | | | (16,878) | |
Deferred payments of acquisitions | (4,731) | | | (30,866) | |
Proceeds from bank overdrafts | 4,391 | | | 1,137 | |
Proceeds from exercise of stock options | 1,531 | | | — | |
Purchase of noncontrolling interest | — | | | (3,508) | |
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Other | 905 | | | 1,244 | |
Net Cash Used in Financing Activities | (8,184) | | | (48,025) | |
Effect of Currency Exchange Rate Change | (11,824) | | | (2,908) | |
Net Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash | 12,012 | | | (274,118) | |
Beginning Cash and Cash Equivalents and Restricted Cash | 158,843 | | | 423,054 | |
Ending Cash and Cash Equivalents and Restricted Cash | $ | 170,855 | | | $ | 148,936 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
GRAHAM HOLDINGS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS’ EQUITY (UNAUDITED)
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(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, 2021 | $ | 20,000 | | $ | 389,456 | | $ | 7,126,761 | | $ | 971,388 | | $ | (4,108,022) | | $ | 12,086 | | $ | 4,411,669 | | | $ | 14,311 | |
Net income for the period | | | 96,566 | | | | | 96,566 | | | |
Net income attributable to noncontrolling interests | | | (986) | | | | 986 | | — | | | |
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Net loss attributable to redeemable noncontrolling interests | | | 44 | | | | | 44 | | | (44) | |
Change in redemption value of redeemable noncontrolling interests | | | | | | 64 | | 64 | | | 64 | |
Distribution to noncontrolling interest | | | | | | (357) | | (357) | | | |
Dividends on common stock | | | (15,497) | | | | | (15,497) | | | |
Repurchase of Class B common stock | | | | | (9,527) | | | (9,527) | | | |
Issuance of Class B common stock | | | | | 1,437 | | | 1,437 | | | |
Amortization of unearned stock compensation and stock option expense | | 1,677 | | | | | | 1,677 | | | |
Other comprehensive loss, net of income taxes | | | | (13,135) | | | | (13,135) | | | |
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As of March 31, 2022 | $ | 20,000 | | $ | 391,133 | | $ | 7,206,888 | | $ | 958,253 | | $ | (4,116,112) | | $ | 12,779 | | $ | 4,472,941 | | | $ | 14,331 | |
Net loss for the period | | | (66,615) | | | | | (66,615) | | | |
Noncontrolling interest capital contribution | | | | | | 140 | | 140 | | | |
Acquisition of noncontrolling interest | | | | | | 512 | | 512 | | | |
Net income attributable to noncontrolling interests | | | (929) | | | | 929 | | — | | | |
Acquisition of redeemable noncontrolling interest | | | | | | | — | | | 2,164 | |
Net loss attributable to redeemable noncontrolling interests | | | 59 | | | | | 59 | | | (59) | |
Change in redemption value of redeemable noncontrolling interests | | | | | | 64 | | 64 | | | 64 | |
Distribution to noncontrolling interest | | | | | | (872) | | (872) | | | |
Dividends on common stock | | | (7,656) | | | | | (7,656) | | | |
Repurchase of Class B common stock | | | | | (24,776) | | | (24,776) | | | |
Forfeiture of restricted stock awards, net of Class B common stock issuances | | (462) | | | | (415) | | | (877) | | | |
Amortization of unearned stock compensation and stock option expense | | 2,302 | | | | | | 2,302 | | | |
Other comprehensive loss, net of income taxes | | | | (52,979) | | | | (52,979) | | | |
As of June 30, 2022 | $ | 20,000 | | $ | 392,973 | | $ | 7,131,747 | | $ | 905,274 | | $ | (4,141,303) | | $ | 13,552 | | $ | 4,322,243 | | | $ | 16,500 | |
Net income for the period | | | 33,840 | | | | | 33,840 | | | |
Noncontrolling interest capital contribution | | | | | | 2,960 | | 2,960 | | | |
Redeemable noncontrolling interest capital contribution | | | | | | | — | | | 1,050 | |
Net income attributable to noncontrolling interest | | | (1,049) | | | | 1,049 | | — | | | |
Net income attributable to redeemable noncontrolling interests | | | (11) | | | | | (11) | | | 11 | |
Change in redemption value of redeemable noncontrolling interests | | | | | | 61 | | 61 | | | 64 | |
Distribution to noncontrolling interest | | | | | | (369) | | (369) | | | |
Dividends on common stock | | | (7,575) | | | | | (7,575) | | | |
Repurchase of Class B common stock | | | | | (20,278) | | | (20,278) | | | |
Forfeiture of restricted stock awards, net of Class B common stock issuances | | (112) | | | | (91) | | | (203) | | | |
Amortization of unearned stock compensation and stock option expense | | 1,748 | | | | | | 1,748 | | | |
Other comprehensive loss, net of income taxes | | | | (55,455) | | | | (55,455) | | | |
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As of September 30, 2022 | $ | 20,000 | | $ | 394,609 | | $ | 7,156,952 | | $ | 849,819 | | $ | (4,161,672) | | $ | 17,253 | | $ | 4,276,961 | | | $ | 17,625 | |
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(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, 2020 | $ | 20,000 | | $ | 388,159 | | $ | 6,804,822 | | $ | 603,314 | | $ | (4,056,993) | | $ | 7,091 | | $ | 3,766,393 | | | $ | 11,928 | |
Net income for the period | | | 112,635 | | | | | 112,635 | | | |
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Net income attributable to noncontrolling interests | | | (185) | | | | 185 | | — | | | |
Change in redemption value of redeemable noncontrolling interests | | 697 | | | | | 64 | | 761 | | | (634) | |
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Distribution to noncontrolling interest | | | | | | (126) | | (126) | | | |
Dividends on common stock | | | (15,106) | | | | | (15,106) | | | |
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Issuance of Class B common stock, net of restricted stock forfeitures | | (5,188) | | | | 5,084 | | | (104) | | | |
Amortization of unearned stock compensation and stock option expense | | 1,589 | | | | | | 1,589 | | | |
Other comprehensive loss, net of income taxes | | | | (1,203) | | | | (1,203) | | | |
Purchase of redeemable noncontrolling interest | | | | | | | — | | | (3,508) | |
As of March 31, 2021 | $ | 20,000 | | $ | 385,257 | | $ | 6,902,166 | | $ | 602,111 | | $ | (4,051,909) | | $ | 7,214 | | $ | 3,864,839 | | | $ | 7,786 | |
Net income for the period | | | 115,926 | | | | | 115,926 | | | |
Net income attributable to noncontrolling interests | | | (699) | | | | 699 | | — | | | |
Net loss attributable to redeemable noncontrolling interests | | | 131 | | | | | 131 | | | (131) | |
Change in redemption value of redeemable noncontrolling interests | | | | | | 65 | | 65 | | | 65 | |
Distribution to noncontrolling interest | | | | | | (152) | | (152) | | | |
Dividends on common stock | | | (7,553) | | | | | (7,553) | | | |
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Forfeiture of restricted stock awards, net of Class B common stock issuances | | (47) | | | | (49) | | | (96) | | | |
Amortization of unearned stock compensation and stock option expense | | 1,672 | | | | | | 1,672 | | | |
Other comprehensive income, net of income taxes | | | | 1,080 | | | | 1,080 | | | |
As of June 30, 2021 | $ | 20,000 | | $ | 386,882 | | $ | 7,009,971 | | $ | 603,191 | | $ | (4,051,958) | | $ | 7,826 | | $ | 3,975,912 | | | $ | 7,720 | |
Net income for the period | | | 39,683 | | | | | 39,683 | | | |
Noncontrolling interest capital contribution | | | | | | 1,750 | | 1,750 | | | |
Net income attributable to noncontrolling interest | | | (469) | | | | 469 | | — | | | |
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Net loss attributable to redeemable noncontrolling interests | | | 372 | | | | | 372 | | | (372) | |
Change in redemption value of redeemable noncontrolling interests | | | | | | 64 | | 64 | | | 64 | |
Distribution to noncontrolling interest | | | | | | (206) | | (206) | | | |
Dividends on common stock | | | (7,496) | | | | | (7,496) | | | |
Repurchase of Class B common stock | | | | | (21,840) | | | (21,840) | | | |
Issuance of Class B common stock, net of restricted stock forfeitures | | (188) | | | | 121 | | | (67) | | | |
Amortization of unearned stock compensation and stock option expense | | 1,692 | | | | | | 1,692 | | | |
Other comprehensive loss, net of income taxes | | | | (16,126) | | | | (16,126) | | | |
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As of September 30, 2021 | $ | 20,000 | | $ | 388,386 | | $ | 7,042,061 | | $ | 587,065 | | $ | (4,073,677) | | $ | 9,903 | | $ | 3,973,738 | | | $ | 7,412 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
GRAHAM HOLDINGS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION, BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS
Graham Holdings Company (the Company), is a diversified education and media company. The Company’s Kaplan subsidiary provides a wide variety of educational services, both domestically and outside the United States (U.S.). The Company’s media operations comprise the ownership and operation of seven television broadcasting stations, several websites and print publications, podcast content and a marketing solutions provider. The Company’s other business operations include manufacturing, automotive dealerships, consumer internet brands, restaurants and entertainment venues, custom framing services and home health and hospice services.
Basis of Presentation – The accompanying condensed consolidated financial statements have been prepared in accordance with: (i) generally accepted accounting principles in the United States of America (GAAP) for interim financial information; (ii) the instructions to Form 10-Q; and (iii) the guidance of Rule 10-01 of Regulation S-X under the Securities and Exchange Act of 1934, as amended, for financial statements required to be filed with the Securities and Exchange Commission (SEC). They include the assets, liabilities, results of operations and cash flows of the Company, including its domestic and foreign subsidiaries that are more than 50% owned or otherwise controlled by the Company. As permitted under such rules, certain notes and other financial information normally required by GAAP have been condensed or omitted. Management believes the accompanying condensed consolidated financial statements reflect all normal and recurring adjustments necessary for a fair statement of the Company’s financial position, results of operations, and cash flows as of and for the periods presented herein. The Company’s results of operations for the three and nine months ended September 30, 2022 and 2021 may not be indicative of the Company’s future results. These condensed consolidated financial statements are unaudited and should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.
Use of Estimates in the Preparation of the Condensed Consolidated Financial Statements – The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported herein. Management bases its estimates and assumptions on historical experience and on various other factors that are believed to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in those estimates.
2. ACQUISITIONS AND DISPOSITIONS OF BUSINESSES
Acquisitions