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GRAHAM HOLDINGS
1300 NORTH 17TH STREET
SUITE 1700
ARLINGTON, VA 22209
703 345 6300
GHCO.COM
Revenue by Principal Operations
16%
EDUCATION 43%
BROADCASTING 16%
43%
14%
MANUFACTURING 14%
AUTOMOTIVE 10%
10%
HEALTHCARE 7%
10%
7%
OTHER BUSINESSES 10%
Financial Highlights
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2021
2020
CHANGE
Operating revenues
Income from operations
$3,185,974
$2,889,121
10%
$ 77,375
$ 100,407
(23%)
Net income attributable to common shares
$ 352,075
$ 300,365
Diluted earnings per common share
Dividends per common share
$ 70.45
$ 58.13
$ 6.04
$ 5.80
Common stockholders’ equity per share
$ 896.76
$ 754.45
17%
21%
4%
19%
Diluted average number of common shares outstanding
4,965
5,139
(3%)
OPERATING REVENUES ($ in millions)
INCOME FROM OPERATIONS ($ in millions)
2021
2020
2019
2018
2017
3,186
2,889
2,932
2,696
2,592
2021
2020
2019
2018
2017
77
100
145
246
136
ADJUSTED OPERATING CASH FLOW(1) ($ in millions)
NET INCOME ATTRIBUTABLE TO COMMON SHARES ($ in millions)
2021
2020
2019
2018
2017
263
284
287
377
268
2021
2020
2019
2018
2017
RETURN ON AVERAGE COMMON STOCKHOLDERS’ EQUITY
DILUTED EARNINGS PER COMMON SHARE ($)
2021
2020
2019
2018
2017
8.6%
8.5%
10.5%
9.3%
1 1 .3%
2021
2020
2019
2018
2017
352
300
328
2 7 1
302
70.45
58. 1 3
61.2 1
50.20
53.89
(1)Adjusted Operating Cash Flow (non-GAAP)
(IN THOUSANDS)
Operating Income
2021
2020
2019
2018
2017
$ 77,375
$100,407
$144,546
$246,161
$136,403
Add: Amortization of Intangible Assets and Impairment
of Goodwill and Other Long-Lived Assets
Add: Depreciation Expense
Add: Pension Service Cost
90,810
71,415
22,991
86,950
74,257
22,656
62,395
59,253
20,422
55,523
56,722
18,221
50,801
62,509
18,687
Adjusted Operating Cash Flow (non-GAAP)
$262,591
$284,270
$286,616
$376,627
$268,400
(1)Adjusted Operating Cash Flow (non-GAAP) is calculated as Operating Income excluding Amortization of Intangible Assets and
Impair ment of Goodwill and Other Long-Lived Assets plus Depreciation Expense and Pension Service Cost.
To Our Shareholders
In 2021, the Company made steady progress
parent level (Leaf Group) to investing in build-
in our operating results, found more ways
ing new Framebridge stores, to the purchase
than usual to allocate capital and began
of a new London campus for Kaplan’s Mander
exploring additional new ways to leverage
Portman Woodward, our sixth form school.
our pension overfunding.
While every capital allocation decision is not
worthy of focus in this letter, a few are:
We did not participate in any SPACs, pur-
chase any crypto “currencies” or invest in
any meme stonks. If our lack of investment
LEAF GROUP
We completed one sizable transaction in 2021,
in these innovations bothers you, you’ve
the purchase of Leaf Group Ltd. Leaf is made
probably found the wrong annual letter. Our
up of three distinct digital businesses: Leaf
imagination may be too limited.
Media, a media business with brands such as
We’re not flashy, but we believe we have
print-on-demand retailer that matches artist
made steady progress on growing the value
designs with high-quality goods; and Saatchi
of the business for shareholders. 2021 lacked
Art, a marketplace for up-and-coming artists
eHow, Well+Good, and Hunker; Society6, a
the trauma several of our businesses abruptly
to sell original works.
experienced in 2020 and became a recovery
year for some, including Kaplan and Clyde’s
We acquired Leaf because each business has
Restaurant Group. Results in general, and
a strong, emerging brand in a large category.
among this group specifically, improved as
The categories are growing and we think with
the year progressed. We’re cautiously opti-
patient, stable ownership, our businesses can
mistic for our prospects in 2022.
get bigger pieces of the pie. Financially, incre-
mental revenue growth should generate more
Overall operating results were down from
cash flow over time.
2020, largely due to the absence of $95 mil-
lion of political advertising revenue at Graham
Media Group. Total adjusted operating income
“BOLT-ON” ACQUISITIONS
We were perhaps most pleased to complete
in 2021 was $168 million and adjusted operat-
five “bolt-on” acquisitions (two at Kaplan, two
ing cash flow was $263 million.
at Graham Healthcare Group and one in our
automotive division) that allowed us to allocate
Our balance sheet had a few modest changes,
capital to existing operations. Collectively, we
but remains in a strong position with cash and
spent about $80 million on these transactions.
securities of $983 million against $668 million
of debt as of the end of 2021. We continue
We love finding this class of acquisition. If we
to be in a position to spend on opportunities
can invest in our existing businesses to make
that may arise.
them stronger while generating good returns
on capital, we’ll do so as often as we can. In
A broad set of capital allocation opportunities
2021, we think we’ve accomplished both: Our
presented themselves over the course of the
acquisitions filled business gaps and/or enabled
year. These ranged from an acquisition at the
us to increase our operating leverage. Each
2 | GRAHAM HOLDINGS
“ We’re not flashy, but we believe we have
made steady progress on growing the value
of the business for shareholders.”
of these businesses should help us improve
of the gap between share price and intrinsic
profit margins in 2022.
value increased. We don’t repurchase all the
time. We buy when the price of our stock cre-
I am hopeful we’ll be able to do more bolt-ons
ates value for our shareholders.
in the future. The Company has several busi-
nesses that have developed into “platforms.”
In these instances, we believe we can pur-
sue smaller acquisitions with good returns
on invested capital. Over the coming years,
I suspect Kaplan, Graham Healthcare, our
Automotive Group and Leaf Media will all
Operating Results:
GRAHAM MEDIA GROUP
Graham Media Group (GMG) once again
have additional opportunities to bolster their
takes the top spot on the earnings podium.
businesses via bolt-ons.
SHARE REPURCHASES
We repurchased nearly 94,000 shares, or
Adjusted operating income at Graham Media
Group was $155 million. While supply chain
issues in the automotive industry resulted in
reduced advertising spend from the sector,
roughly 2% of the Company in 2021. Most of
robust advertising in a new category, sports
these purchases occurred in Q4, as our view
betting, offset that softness.
2021
(1)Adjusted Operating Income and Adjusted Operating Cash Flow (non-GAAP)
(IN THOUSANDS)
Operating Income
Less: Amortization of Intangible Assets and Impairment of
Goodwill and Other Long-Lived Assets
Adjusted Operating Income (non-GAAP)
Add: Depreciation Expense
Add: Pension Service Cost
Adjusted Operating Cash Flow (non-GAAP)
Television
Broadcasting
$149,422
5,440
$154,862
Total
Company
$ 77,375
90,810
$168,185
71,415
22,991
$262,591
(1)Adjusted Operating Income (non-GAAP) is calculated as Operating Income excluding Amortization of Intangible Assets and
Impair ment of Goodwill and Other Long-Lived Assets. Adjusted Operating Cash Flow (non-GAAP) is calculated as Adjusted
Operat ing Income, plus Depreciation Expense and Pension Service Cost.
2021 ANNUAL REPORT | 3
“ Kaplan had a good year. Our businesses
continued to prove their durability, even
as constantly changing COVID-related
restrictions were implemented worldwide.”
Industry publication TVNewsCheck (TVN)
named Graham Media Group its 2021 sta-
KAPLAN
Kaplan had a good year. Our businesses
tion group of the year, adding to the list of
continued to prove their durability, even as
accolades earned by the business. I encour-
constantly changing COVID-related restric-
age you to check out the coverage to learn
tions were implemented worldwide.
more about the people and operations at
Graham Media, and I thank the team at TVN
Our international results rebounded but con -
for providing such a thorough report on our
tinue to be hampered by losses at our
company.
Languages group. However, there are reasons
to believe the worst is behind us. The results
Our digital operations continue to grow profit-
at the Languages business improved over the
ably, with another year of double-digit growth
year, but this improvement was most pro-
in revenue and earnings. If Graham Digital
nounced in the latter part of the year. Demand
were a television station, it would be the
appears to be pent-up and ready to be
equivalent of one of our medium to large
unleashed as vaccinations continue their
market stations in terms of profitability.
global rollout and restrictions wane.
Early in 2022, shortly before the publication
Kaplan Pathways is a jewel at Kaplan. Our results
of this letter, Emily Barr, the CEO of GMG,
and the team leading it, Andrew Thick, Linda
announced her retirement, effective March
Cowan and Clare Rawlins, seem to get better
2022. By the time you read this, she will have
each year. This team has managed student lock-
been succeeded by Catherine Badalamente,
downs, students stuck in the wrong country, vac-
the longtime head of our digital operations
cination requirements that differ by geography
whose skill is only surpassed by her character.
and dozens of other challenges not men tioned
here. If it starts raining frogs in London, I’m
Emily has been a wonderful leader of Graham
pretty sure they’ll have a solution for that too.
Media Group for the past decade. Her ability
to navigate a changing industry and drive
We are very pleased with the progress of
great outcomes in both our content and
the merger of Kaplan’s three primary U.S.
our financial results has made her a revered
based business units to form Kaplan North
leader in the industry. Emily leaves a strong
America (KNA). The first phase of our internal
team with steady operations in place as she
merger created an operation with a centralized
passes the baton to Catherine. She is certain
structure instead of separate functions. This
to enter the Graham Holdings Hall of Fame
went better than we could have reasonably
as a first ballot shoo-in.
expected. Operating income at the businesses
4 | GRAHAM HOLDINGS
within KNA grew from $44 million in 2020 to
generated more operating income in the past
$61 million in 2021. The next phase will be even
two years than all the previous years of own-
harder: to help students who’ve benefited from
ership combined.
one Kaplan course (say SAT Prep) later return
for another (say a Law School Admission Test).
We continue to look for opportunities to grow
Greg Marino and his team are making great
the business both organically and inorgani-
strides in this area and believe we can continue
cally. In 2021, we made two small acquisitions
to improve our operations and results.
late in the year. One such business gives us
KNA’s higher education unit is doing well, with its
Florida, and the second is adjacent to our
a foothold in home health in the state of
largest client, Purdue University Global, continu-
infusion business.
ing to show progress. Purdue Global’s learning
outcomes are stronger, its graduation rates are
The biggest challenge for Graham Healthcare
up and its student enrollment is growing since
was and remains the ability to recruit, train
Purdue took control. Meanwhile, Kaplan added
and retain high-quality nurses. An accelera-
a number of new university clients, expanded
tion of retirements during the pandemic has
the scope of existing ones, and added dozens
been exacerbated by a slowdown of nurses
of new programs in 2021. We helped our cli-
entering the field. Use of healthcare services
ents respond to the ever-increasing demand
has continued to increase, and this trifecta
for high-quality online education, embed new
has led to a severe staffing shortage in the
functionality, and achieve meaningful financial
sector. When staffing and training costs
benefits. Kaplan also teamed with Wake Forest
increase at high rates and you are a price
University to launch a “Career Core” support
taker, it’s reasonable to expect that margins
program for the university career offices at
for the sector may compress. Our aim is to do
eight inaugural partner schools.
better than average.
GRAHAM HEALTHCARE
Our healthcare business continued to navi-
We will do our best to manage through this
nursing shortage, for the good of Graham
gate choppy COVID waters while delivering
Healthcare, but more importantly, for the good
very good results. Our home-based care
of the country. We hope the industry and gov-
operations — home health, hospice and infu-
ernment can work together to increase the
sion — have come into their own. Our CMS
number of nurses entering the field and relieve
(Centers for Medicare & Medicaid Services)
some of the acute pressure many nurses are
star ratings remain very good and we’ve now
presently experiencing.
“ Our healthcare business continued to navigate choppy
COVID waters while delivering very good results. Our
home-based care operations — home health, hospice
and infusion — have come into their own.”
2021 ANNUAL REPORT | 5
“ … it’s easy to look at Graham Holdings and assume
you own a collection of businesses that we hope to
grow and cultivate over time. However, if shareholders
were to go no further in their evaluation… they would
be ignoring large, important assets in which they also
own a stake.”
OTHER BUSINESSES
Elsewhere at the Company, our operations
and importantly, they provide cash on a day in
day out basis that we can use to further grow
had mixed results. I have no intention of rival-
the value of Graham Holdings on your behalf.
ing the word count of War and Peace, so I
will refrain from summarizing operations at
Our next three buckets are not operating
some of our smaller units more extensively.
businesses; however, their increase or decrease
If notable updates transpire at other busi-
in value is usually tied to the operating perfor-
nesses, we will discuss them in future annual
mance of the businesses in these categories.
reports or investor days.
What do you own?
As a shareholder, it’s easy to look at Graham
These other three buckets are our pension
plan, our marketable securities, and our non-
operating assets and properties. Our operating
businesses are the largest and most important
source of value to the Company (and likely will
be for the foreseeable future). But do not inter-
Holdings and assume you own a collection of
pret my order of discussion as an importance
businesses that we hope to grow and cultivate
ranking. It is simply the order most logical for
over time. However, if shareholders were to
me to describe.
go no further in their evaluation of Graham
Holdings, they would be ignoring large, impor-
tant assets in which they also own a stake.
PENSION PLAN
At the end of 2021, our pension plan had assets
When thinking about the value you hold as an
of approximately $3.4 billion and liabilities of
investor in the Company, I’d encourage you to
approximately $1.1 billion. Prudent manage-
think in four main buckets.
OPERATING BUSINESSES
The first (and largest) bucket is our operating
ment over the course of decades has allowed
the Company to provide generous benefits to
employees, while also creating a substantial
overfunding of the plan. This overfunding has
businesses. Historically, the biggest earners
accelerated in recent years, moving from 1.8
have been Kaplan and Graham Media Group,
times in 2015 to 3.1 times as of the end of 2021.
although more recently we’ve reached mean-
Our position has allowed for more investments
ingful scale at Graham Healthcare Group and
in equities than you would see most pension
our Manufacturing segment as a group. While
managers typically choose. Our approach max-
a diverse collection, we expect our operating
imizes long-term returns even if year by year
businesses to grow in aggregate over time
volatility is higher. Because of this perspective,
6 | GRAHAM HOLDINGS
we’ve been able to avoid the atrocious recent
Let’s talk about why our Company owns mar-
results of the bond markets, resulting in an even
ketable securities. Shareholders have rightfully
greater level of overfunding. If we had followed
pointed out to me that over time, gains on
a traditional 60/40 equity vs. bond mix for our
these holdings are subject to double taxation
non-cash holdings in the last five years, we
under the current tax system. First, when we
estimate our pension assets at the end of 2021
sell an appreciated stock, we pay tax on the
would be approximately $900 million lower.
realized gains; second, when a shareholder
The pension overfunding is not available for
pays taxes on those realized gains, which
immediate use by the Company unless the
include the already taxed proceeds. This
plan were terminated and federal taxes, state
observation is absolutely correct and one that
taxes and a 50% excise tax were paid upon
requires us to have a high bar.
sells Graham Holdings stock the shareholder
withdrawal. The resulting tax payments leave
us with no desire to consider that route. This
So how do we think about this?
author finds it somewhat odd that previous
decades of prudent funding combined with
First, we must have an insight into a business
ongoing prudent management of assets is
or sector that we cannot reasonably act upon
rewarded with a 50% excise tax, but we play
except through the public markets. We think
the cards we’re dealt.
it would be foolish to avoid acting based on
taxation alone.
Nevertheless, we continue to find additional
ways to use the assets of the pension trust to
Second, deferred taxation. While we do sell our
provide benefits for employees that can also
positions from time to time if we’ve changed
benefit shareholders. For further information
our view on the future prospects of the busi-
on additional ways the Company is exploring
ness or believe capital can be better deployed
the use of the overfunded pension assets, I
elsewhere, we tend to buy and hold for the
encourage you to review the December 2021
long term. Taxes are deferred until we actually
Graham Holdings Investor Day presentation
realize the gain. We benefit from the interim
and remarks.
MARKETABLE SECURITIES
As of year-end, the Company’s balance of mar ket -
compounding associated with this deferral.
In certain unique circumstances, this deferral
may become permanent. In 2014, the Company
held appreciated shares of Berkshire Hathaway
able securities was approximately $810 million.
that were part of an asset swap transaction
“ While a diverse collection, we expect our operating
businesses to grow in aggregate over time and
importantly, they provide cash on a day in day out
basis that we can use to further grow the value of
Graham Holdings on your behalf.”
2021 ANNUAL REPORT | 7
that allowed for the appreciated Berkshire
Lastly, because of the immediate liquidity asso-
shares to be exchanged tax-free for a large
ciated with marketable securities, we may from
number of shares of Graham Holdings held
time to time carry a lower cash balance than we
by Berkshire. While this particular scenario is
would otherwise. Our cash has historically
unusual, it is one example of the benefits of
earned very little and more recently, been
deferred taxation. As of year-end, the Company
more quickly eroded by inflation. Shareholders
had $537 million of net unrealized gains.
are far better off with our investments in com-
mon stocks than they would be if we owned
Third, we aim to achieve adequate returns over
more cash.
meaningful time horizons. In 2021, our results
were good, but we think you should ignore
them. We don’t judge our returns on an annual
basis. We view our ownership like anything we
OTHER INVESTMENTS AND
PROPERTIES
We haven’t talked about non-operating assets
own and evaluate look-through earnings and
and properties in the past, but they’ll have
growth in intrinsic value. With this approach,
some importance to shareholders. These are
we hope to do pretty well over time.
holdings that contribute erratically to income,
but have meaningful value. We realized $39
The defensive nature of how we view the
million of income in 2021 from these holdings.
world makes it more likely that our holdings
There are three primary categories:
will trail a raging bull market. We don’t think
we’ll do as well when many stocks are priced
for perfection. However, we do expect we will
1) Minority stakes in businesses we operate,
but do not have enough ownership to
usually outperform the S&P index in a down
consolidate on our balance sheet. The
year more than we will trail in one that is up.
most notable example of this would be
With this in mind, I’d like to reiterate how much
our joint ventures at Graham Healthcare
we believe our 2021 results are an outlier.
Group. We have partnered with hospital
systems to build home health and hospice
The portfolio likely will continue to change
operations in the system’s geography. We
infrequently. We are usually able to gener-
are the operating partner, but tend to have
ate no more than one good idea per year.
a minority interest. Yet our share of these
Action on two good ideas in a year feels like
earnings can be substantive. In 2021, our
a bonanza.
share amounted to roughly $12 million.
“ Third, we aim to achieve adequate returns over
meaningful time horizons. In 2021, our results were
good, but we think you should ignore them. We don’t
judge our returns on an annual basis.”
8 | GRAHAM HOLDINGS
“ In 2021, two of our Directors retired from
Graham Holdings. Lee Bollinger and Larry
Thompson are owed deep rivers of gratitude
from shareholders.”
2) Minority stakes in businesses we do not
operate. We occasionally find an opportu-
nity where we believe we can ride alongside
With gratitude
In 2021, two of our Directors retired from Graham
someone else’s management. In 2021, we
Holdings. Lee Bollinger and Larry Thompson are
realized positive returns through an invest-
owed deep rivers of gratitude from sharehold-
ment in an automotive dealer software
ers. Lee joined in 2007; Larry in 2011. They each
company, Prodigy; and, in previous years,
participated in tremendous changes to the
investments such as Gimlet Media have led
Company including the sale of The Washington
to strong realized gains. This category also
Post, the spin-off of Cable ONE, and the transi-
includes meaningful investments in private
tion to a new CEO. And if only we could all have
investment funds. Our record will not be
their record: A shareholder who invested at
perfect in this category, but we believe our
the time they each joined the board and never
wins should outweigh our losses over the
sold would have realized tremendous returns.
long term.
3) Property. The Company owns a variety of
properties in valuable markets, ranging
In both cases, their tenures corresponded
with over a 229% total return to shareholders,
including Cable ONE. Both have been valu-
able counselors to Don and me, and we are
from New York City to London to Houston.
grateful for their guidance and wisdom.
While we do not set out to acquire real
estate, we will do so if it makes sense to
Barring an unknown variant or villain, this
purchase property to improve the eco-
year’s Annual Meeting of Shareholders will
nomics or increase the predictability of an
be held on May 5, 2022 at 8:30 a.m., live and
operating unit.
in-person in downtown Washington, D.C. at
The Hamilton Live. I look forward to seeing
Different shareholders will value the pieces
many familiar faces in person and showing off
of the business differently, but it’s important
one of the finest entertainment venues in D.C.
to understand management’s view of the
which is a part of Clyde’s Restaurant Group.
fundamental building blocks of value to most
I hope you can join us.
accurately assess your ownership interest. If
these fundamental building blocks change
meaningfully over time, we will be sure to
Timothy J. O’Shaughnessy
President and Chief Executive Officer
update you.
February 25, 2022
2021 ANNUAL REPORT | 9
Education
Kaplan is a global, diversified edu cation leader specializing in higher
education, test prepara tion, professional education, language training
and university pathway programs. Its leader ship in online learning, inter-
national student recruitment and improving student outcomes has also
made Kaplan a multi-purpose strategic part ner for a number of universi-
ties and businesses.
Television Broadcasting
Graham Media Group owns seven media hubs located in Houston, TX;
Detroit, MI; Orlando, FL; San Antonio, TX; Jacksonville, FL; and Roanoke,
VA, as well as SocialNewsDesk, a provider of social-media management
tools designed to connect newsrooms with their users.
Manufacturing
Hoover Treated Wood Products, Inc. is a supplier of pressure impreg-
nated kiln-dried lumber and plywood prod ucts for fire-retardant and
preservative applications.
Group Dekko Inc. is an elec trical solutions company that focuses on
innovative power-charging and data systems; industrial and commercial
indoor light ing solutions; and the manufacture of electrical components
and assemblies for medical equipment, transportation, industrial and
appliance products.
Joyce/Dayton Corporation is a leading manufacturer of screw jacks,
linear actuators and related linear motion products and lifting systems
in North America.
Forney Corporation is a global supplier of burners, igniters, damp ers and con-
trols for combustion processes in electric utility and industrial applications.
Automotive
The Company owns four dealerships: Ourisman Lexus of Rockville, Ourisman
Honda of Tysons Corner, Ourisman Jeep of Bethesda, and Ourisman Ford
of Manassas. The Company also owns CarCare To Go, which provides
valet service to and from a network of dealership service centers in the
Washington, D.C. area.
10 | GRAHAM HOLDINGS
Healthcare
Graham Healthcare Group provides home health, hospice and palliative ser-
vices to more than 50,000 patients annually in Michigan, Illinois, Pennsylvania
and Florida.
Other Businesses
Leaf Group is a consumer internet company that builds enduring, creator-driven
brands reaching passionate audiences in large and growing lifestyle categories,
including fitness and wellness (Well+Good, Livestrong.com and MyPlate App);
and home, art and design (Saatchi Art, Society6, Hunker and e-How).
Clyde’s Restaurant Group owns and operates 11 restaurants and entertain-
ment venues in the Washington, D.C. metropolitan area, including Old Ebbitt
Grill, The Hamilton, The Tombs, 1789 and seven Clyde’s locations.
Framebridge is a custom framing services company that provides high-quality,
affordable and fast custom framing of artwork, pictures and other personal
items directly to consumers through its website, app and retail locations.
Code3 (formerly SocialCode) is a performance marketing partner working
at the intersection of media, creative and commerce to help brands succeed
faster on every digital platform.
Decile LLC is a customer data and analytics software company that helps mar-
keters extract value from their proprietary first-party customer and sales data.
The FP Group produces Foreign Policy magazine and the ForeignPolicy.com
web site reaches an international audience of millions as a trusted source of
insight and analysis for gov ernment, business, finance and academic leaders.
Pinna is an audio-first children’s media company delivering the first and only
worldwide audio on-demand streaming service for kids ages 3-12 that includes
podcasts, music and audiobooks.
Slate is an online magazine of news, politics, technology and culture. The maga-
zine combines humor and insight in thought ful analyses of current events and
political news.
CyberVista is a cybersecurity workforce development com pany whose mis-
sion is to build and strengthen organizations by pro vid ing cyber security
profes sionals with the knowledge, skills and abilities needed to drive growth
and defense.
City Cast is a growing network of one-of-a-kind, daily local news podcasts accom-
panied by a daily email newsletter about what’s happening in local communities.
City Cast is currently in Chicago, Denver, Houston, Salt Lake and Pittsburgh.
2021 ANNUAL REPORT | 11
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
È Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE FISCAL YEAR ENDED December 31, 2021
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
(State or other jurisdiction of
incorporation or organization)
1300 North 17th Street, Arlington, Virginia
(Address of principal executive offices)
53-0182885
(I.R.S. Employer
Identification No.)
22209
(Zip Code)
Registrant’s Telephone Number, Including Area Code: (703) 345-6300
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class
Class B Common Stock, par value
$1.00 per share
Trading Symbol(s)
GHC
Name of each exchange
on which registered
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes È No ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes ‘ No È
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 È 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 È 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 È
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 has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes È No ‘
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘ No È
Aggregate market value of the registrant’s common equity held by non-affiliates on June 30, 2021, based on the closing price
for the Company’s Class B Common Stock on the New York Stock Exchange on such date: approximately $2,500,000,000.
Shares of common stock outstanding at February 18, 2022:
Class A Common Stock – 964,001 shares
Class B Common Stock – 3,939,977 shares
Documents partially incorporated by reference:
Definitive Proxy Statement for the registrant’s 2022 Annual Meeting of Stockholders
(incorporated in Part III to the extent provided in Items 10, 11, 12, 13 and 14 hereof).
GRAHAM HOLDINGS COMPANY 2021 FORM 10-K
Item 1.
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Television Broadcasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Human Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1A.
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B.
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management’s Discussion and Analysis of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . .
Item 8.
Item 9.
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9A.
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B.
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections . . . . . . . . . . . . . . . .
Item 10.
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . .
Item 11.
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 13.
Certain Relationships and Related Transactions and Director Independence . . . . . . . . . .
Item 14.
Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 15.
Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 16.
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INDEX TO EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
1
12
17
17
18
18
20
24
25
27
28
28
49
49
51
51
51
52
52
52
53
53
53
54
54
54
55
55
55
55
55
55
56
59
INDEX TO FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management’s Discussion and Analysis of Results of Operations and Financial Condition
(Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements:
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations for the Three Years Ended December 31, 2021 . . . . . . .
Consolidated Statements of Comprehensive Income for the Three Years Ended December 31,
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets at December 31, 2021 and 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for the Three Years Ended December 31, 2021 . . . . . . .
Consolidated Statements of Changes in Common Stockholders’ Equity for the Three Years
Ended December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60
61
83
86
87
88
89
90
91
Item 1.
Business.
PART I
Graham Holdings Company (the Company) is a diversified education and media company whose operations
include educational services; television broadcasting; online, podcast, print and local TV news; manufacturing;
home health and hospice care; and automotive dealerships. The Company’s Kaplan, Inc. (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 television broadcasting (through the
ownership and operation of seven television broadcast stations) plus Slate and Foreign Policy magazines; City
Cast, a daily local news podcast and newsletter company; and Pinna, an ad-free audio streaming service for
children. The Company’s manufacturing companies comprise the ownership of a supplier of pressure treated
wood, an electrical solutions company, a manufacturer of lifting solutions, and a supplier of certain parts used in
electric utilities and industrial systems. The Company’s home health and hospice operations provide home
health, hospice and palliative services. The Company’s automotive business comprise four dealerships. The
Company also owns restaurants, a custom framing company, a cybersecurity training company, a marketing
solutions provider, a customer data and analytics software company, and a consumer internet company that
builds creator-driven brands in lifestyle, home and art design categories.
Financial information concerning the principal segments of the Company’s business for the past three fiscal years
is contained in Note 19 to the Company’s Consolidated Financial Statements appearing elsewhere in this Annual
Report on Form 10-K. Revenues for each segment are shown in Note 19 gross of intersegment sales.
Consolidated revenues are reported net of intersegment sales, which did not exceed 0.1% of consolidated
operating revenues. The Company’s operations in geographic areas outside the U.S. consist primarily of Kaplan’s
non-U.S. operations. During each of the fiscal years 2021, 2020 and 2019, these operations accounted for
approximately 22%, 22% and 24%, respectively, of the Company’s consolidated revenues, and the identifiable
assets attributable to non-U.S. operations represented approximately 19% and 21% of the Company’s
consolidated assets at December 31, 2021 and 2020, respectively.
EDUCATION
Kaplan, a subsidiary of the Company, provides an extensive range of education and related services worldwide
for students and professionals. In 2021, Kaplan served approximately 700,000 students and professionals
worldwide and had associations with approximately 12,300 companies and commercial relationships with
approximately 4,000 universities, colleges, schools and school districts across the globe. Kaplan conducts its
operations through three segments: Kaplan North America Higher Education, Kaplan North America
Supplemental Education and Kaplan International. As more fully described below, Kaplan consolidated its
former Kaplan Higher Education, Kaplan Test Preparation and Kaplan Professional segments into one business,
Kaplan North America, operating through two segments, Higher Education and Supplemental Education. In
addition, the results of the Kaplan Corporate segment include results of Kaplan’s investment activities in
education technology companies. The following table presents revenues for each of Kaplan’s segments:
(in thousands)
Year Ended December 31
2021
2020
2019
Kaplan International
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kaplan North America Higher Education . . . . . . . . . . . . . . . . . . . . . . . . .
Kaplan North America Supplemental Education . . . . . . . . . . . . . . . . . . .
Kaplan Corporate and Intersegment Eliminations . . . . . . . . . . . . . . . . . .
$ 726,875
317,854
309,069
7,447
$ 653,892
316,095
327,087
8,639
$ 750,245
305,672
388,814
7,019
Total Kaplan Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,361,245
$1,305,713
$1,451,750
In 2020, Kaplan combined its three segments based in the United States (Kaplan Higher Education, Kaplan Test
Preparation and Kaplan Professional) into one business known as Kaplan North America. The combination
1 GRAHAM HOLDINGS COMPANY
reinforces Kaplan’s interconnected products and services, increases competitiveness in Kaplan’s markets and
drives efficiencies.
Kaplan International
Kaplan International (KI) operates businesses in Europe and the Middle East, North America and the Asia Pacific
region, each of which is discussed below.
Europe and the Middle East.
In Europe, KI operates the following businesses, all of which are based in the
United Kingdom (U.K.) and Ireland: Kaplan UK, KI Pathways, Kaplan Languages Group, Mander Portman
Woodward, Dublin Business School, Kaplan Open Learning and BridgeU. In the Middle East, Kaplan Middle
East is based in the United Arab Emirates.
The Kaplan UK business in Europe, through Kaplan Financial Limited, is a provider of apprenticeship training
and test preparation services for accounting and financial services professionals, including those studying for
ACCA, CIMA and ICAEW qualifications. In 2021, Kaplan UK provided courses to over 47,000 students in
accountancy and financial services. In addition, Kaplan UK has been the sole authorized assessment provider for
the Solicitors Regulation Authority of assessments under The Qualified Lawyers Transfer Scheme for candidates
seeking to become solicitors of England and Wales who are already qualified lawyers in certain recognized
jurisdictions. In 2021 Kaplan UK became the sole authorized assessment provider for the Solicitors Qualifying
Examination for all candidates seeking to become a solicitor in England and Wales. Kaplan UK is headquartered
in London, England, and has 19 training centers located throughout the U.K.
The KI Pathways business offers academic preparation programs especially designed for international students
who wish to study for degrees from universities in English-speaking countries. In 2021, university preparation
programs were delivered in Australia, Japan, Myanmar, Singapore and the U.K.
The Kaplan Languages Group business provides English-language training, academic preparation programs and
test preparation for English proficiency exams, principally for students wishing to study and travel in English-
speaking countries. As of December 31, 2021, the Kaplan Languages Group operated 19 English-language
schools, with 12 located in the U.K., Ireland and Canada and seven located in the U.S. In 2021, the Kaplan
Languages Group served approximately 10,300 students for in-class and online English-language instruction.
Through the Alpadia language schools located in France, Germany and Switzerland, Kaplan Languages Group
also offers adolescents (from 16+) and adults, French and German language training. Alpadia also operates
language camps for juniors (from 8+) and teens during the fall, spring and summer seasons in the U.K., France,
Germany and Switzerland.
Mander Portman Woodward (MPW) is a U.K. independent sixth-form college that prepares domestic and
international students for A-level examinations that are required for admission to U.K. universities. MPW
operates three colleges, in London, Cambridge and Birmingham.
KI also operates Dublin Business School in Ireland, a higher education institution, and Kaplan Open Learning in
the U.K., an online learning institution. At the end of 2021, these institutions enrolled an aggregate of
approximately 10,400 students.
In 2021, Kaplan Middle East, a financial training business operating in Dubai, United Arab Emirates and Saudi
Arabia, taught approximately 3,900 students.
U.K. Immigration Regulations. Certain KI businesses serve a significant number of international students;
therefore, the ability to sponsor international students to come to the U.K. is critical to these businesses. Pursuant
to regulations administered by the United Kingdom Visas and Immigration Department (UKVI), the KI Pathways
business is required to hold or operate Student Route sponsorship licenses for international students to be
2021 FORM 10-K 2
permitted to enter the U.K. to study the courses that KI Pathways delivers. One of the Kaplan Languages Group
schools also has a Student Route license to enable it to teach international students, although students at these
schools generally choose to enter the U.K. on a Visitor or Short Term Student visa as opposed to a Student Route
visa.
Each Student Route license holder is required to have passed the annual Basic Compliance Assessment (BCA)
and hold Educational Oversight accreditation, which requires a current and satisfactory full risk assessment, audit
or review by the appropriate academic standards body. For the tenth consecutive year, all KI institutions have
retained Educational Oversight accreditation, with high grades across colleges, and all Student Route annual
BCA renewals have been approved with high scores in the core measurable requirements. Kaplan Languages
Group has one U.K. English-language school listed on the Kaplan Student master license. The MPW schools
each hold current Student and Child Student Route licenses and have performed well consistently, with good
records in their Office for Standards in Education, Children’s Services and Skills (OFSTED) and Independent
Schools Inspectorate (ISI) Educational Oversight inspections.
The Higher Education and Research Act 2017 (HERA) significantly reformed the regulation of the higher
education sector in the U.K., including the formation of a new regulator for England, the Office for Students
(OfS). Students enrolled at Pathways institutions registered with the OfS are, subject to the institution meeting
certain compliance requirements, given many of the same student privileges as students of universities in the
U.K. All of KI’s other higher education businesses in the U.K., excluding Glasgow International College and
University of York International Pathway College, retained registration with the OfS in 2021 to ensure that they
could continue operating and retain their Student Route sponsor licenses and/or continue to accept students
funded by U.K. student loans. Glasgow International College, which is located in Scotland, is not regulated by
the OfS and remains overseen by the Quality Assurance Agency for Higher Education (QAA). The University of
York International Pathway College forms part of the University of York’s OfS registration. No assurance can be
given that each KI business in the U.K. will be able to maintain its Student Route or Child Student route license
and Educational Oversight or OfS/QAA registration. Maintenance of each of these approvals requires
compliance with several core metrics that may be difficult to sustain. The loss by one or more institutions of
either the Student Route or Child Student route license or Educational Oversight or OfS/QAA registration would
have a material adverse effect on KI Europe’s operating results.
Impact of Brexit. On June 23, 2016, the U.K. held a referendum in which voters approved a proposal that the
U.K. leave the European Union (EU), commonly referred to as “Brexit.” The U.K.’s withdrawal became
effective on December 31, 2020. The impact of Brexit on KI over time will depend on the long-term effects of
the terms of the U.K.’s withdrawal from the EU. If the U.K. is no longer viewed as a favorable study destination,
KI’s ability to recruit international students will be adversely impacted, which would materially adversely affect
KI’s results of operations and cash flows. In November 2021, the EU granted the U.K. an adequacy decision
under the General Data Protection Regulation (GDPR) for an initial period of four years.
Revised U.K. immigration rules became effective on January 1, 2021, as the Brexit transition was completed. All
international students, including EEA and Swiss students studying in the U.K. for more than six months, are
required to obtain a Student Route visa unless they are undertaking an English language course in which case
they can apply for a Visit Visa for up to six months or a Short Term Study visa of up to 11 months. Free
movement ceased between the EEA (together with Switzerland) and the U.K.; students from these countries
entering the U.K. are now subject to the same U.K. immigration rules as students from outside the EEA and
Switzerland. EEA and Swiss nationals commencing a higher education course in England from August 2021 no
longer qualify for home fee status or have access to financial support from Student Finance England. It is unclear
how international student recruitment agents and prospective international students view the U.K. as a study
destination after the introduction of any new immigration requirements, and the U.K.’s exit from the EU. The
introduction of revised immigration rules has historically increased, and may continue to increase, KI’s operating
costs in the U.K. The introduction of new visa and other administrative requirements for entry into the U.K.,
Brexit and the perception of the U.K. as a less favorable study destination may have a materially adverse impact
on KI’s ability to recruit international students and KI’s results of operations and cash flows.
3 GRAHAM HOLDINGS COMPANY
Asia Pacific.
In the Asia Pacific region, Kaplan operates businesses primarily in Singapore, Australia, New
Zealand and the People’s Republic of China, including the Hong Kong Special Administrative Region (Hong
Kong).
In Singapore, Kaplan operates two business units: Kaplan Higher Education and KHEA-Genesis (which
comprises the former Kaplan Financial and Kaplan Professional business units). During 2021, the Kaplan Higher
Education and KHEA-Genesis (Financial) divisions served more than 9,100 students from Singapore and
approximately 3,400 students from other countries throughout Asia and Western Europe. KHEA-Genesis
(Professional) provided short courses
to approximately 400 professionals, managers, executives and
businesspeople in 2021.
Kaplan Singapore’s Higher Education business provides students with the opportunity to earn bachelor’s and
postgraduate degrees in various fields on either a part-time or full-time basis. Kaplan Singapore’s students
receive degrees from affiliated educational institutions in Australia, Ireland and the U.K. In addition, this division
offers pre-university and diploma programs.
Kaplan Singapore’s KHEA-Genesis (Financial) business provides preparatory courses for professional
qualifications in accountancy and finance, such as the Association of Chartered Certified Accountants (ACCA)
and Chartered Financial Analyst (CFA). Kaplan Singapore’s Professional business, through Kaplan Learning
Institute, an authorized SkillsFuture Singapore (SSG) Approved Training Organization (ATO), provided
professionals with various skills training through workforce skills qualifications (WSQ) courses. Kaplan
Learning Institute ceased offering such courses and voluntarily deregistered Kaplan Learning Institute as a
private education institution on March 9, 2020, following a notice in June 2019 from SSG suspending Kaplan
Singapore Professional’s WSQ ATO status and revoking accreditation and funding for all WSQ courses effective
July 1, 2019. These actions have adversely affected and will continue to adversely affect Kaplan Singapore’s
revenues and operating results.
On October 7, 2020, Kaplan Higher Education Academy (KHEA) was granted approval by SSG to deliver WSQ
courses as an ATO for a period of two years. KHEA-Genesis (Professional) started offering WSQ courses in the
second quarter of 2021.
In June 2021, the Committee for Private Education (CPE) in Singapore instructed Kaplan Singapore to cease new
enrollments for three marketing diploma programs on both a full and part-time basis due to noncompliance with
minimum entry level requirements for admission and to teach out existing students in these programs. On
August 23, 2021, the CPE issued the same instructions with respect to the Kaplan Foundation diploma and four
information technology diploma programs on both a full and part-time basis. In November 2021, the CPE issued
the same instructions with respect to a further 23 full-time or part-time diploma programs. Post regulatory action,
Kaplan Singapore is currently still able to offer 449 programs that are registered with the CPE, out of which there
are 16 diplomas, 361 bachelors and the balance of which are certificate and postgraduate courses. Kaplan
Singapore will apply for re-registration of diploma programs in 2022. The impact from regulatory actions by the
CPE will have a significant adverse impact on Kaplan Singapore’s revenues, operating results and cash flows in
the future. No assurance can be given that applications for re-registration of the impacted programs will be
successful. An inability to re-register one or more impacted programs could have a further material adverse effect
on Kaplan Singapore’s revenues, operating results and cash flows.
In Australia, Kaplan delivers a broad range of financial services programs from certificate level through master’s
level, together with professional development offerings through Kaplan Professional, as well as higher education
programs in business, accounting, business analytics, hospitality, and tourism and management through Kaplan
Business School. In 2021,
these businesses provided courses to approximately 4,500 students through
face-to-face and online or hybrid classroom programs (within Kaplan Business School) and approximately
30,000 students through online or distance-learning programs offered by Kaplan Professional. In 2021, Kaplan
Professional also had approximately 34,000 subscribers for Ontrack, its continuing professional development
platform for financial services professionals.
2021 FORM 10-K 4
Kaplan Australia’s English-language business, which operates across five locations in Australia and one location
in New Zealand, taught approximately 300 students in 2021. In July 2021, after the last student completed their
course, the New Zealand English language business suspended its operations indefinitely. During 2021, due to
the ongoing border closure, the Australian English businesses faced significant falls in student numbers leading
to a consolidation of the four schools into one, with just the Sydney school offering online classes to a small
number of remaining students. The Kaplan Australia Pathways business is also part of KI Pathways. In 2021, it
consisted of Murdoch Institute of Technology, the University of Newcastle College of International Education
and the University of Adelaide College, and offered face-to-face pathways and foundational education in 2021 to
approximately 1,000 students wishing to enter Murdoch University, the University of Newcastle and the
University of Adelaide. The contract with Murdoch University to run the Murdoch Institute of Technology
expired in June 2021. In January 2021, Kaplan Australia launched the University of Newcastle College of
International Education, as part of a seven-year collaboration with the University of Newcastle. In March 2021,
the University of Adelaide College commenced delivery of teaching. In October 2021, Kaplan International New
Zealand obtained approval to establish a new pathways college, Massey University College, which is scheduled
to begin diploma and graduate diploma courses in July and October 2022, respectively. Kaplan Australia also
owns Red Marker Pty Ltd., a machine learning and artificial intelligence-based provider of legal risk detection
for digital, advertising and marketing content. Red Marker supports a wide variety of industries, including
financial services, telecoms, automotive, pharmaceutical, food and beverage, media and government bodies. Red
Marker’s Artemis product detects potentially noncompliant content as it is being created, helping advisers and
licensees to identify and remediate compliance risks.
In Hong Kong, Kaplan operates three main business units: Kaplan Financial, Kaplan Language Training and
Kaplan Higher Education, serving approximately 10,600 students annually.
Kaplan Hong Kong’s Financial division delivers preparatory courses to approximately 8,900 students and
business executives wishing to earn professional qualifications in accountancy, financial markets designations
and other professional fields.
Hong Kong’s Language Training division offers test preparation for both overseas study and college applications,
including TOEFL, IELTS, SAT and GMAT, to approximately 500 students.
Kaplan Hong Kong’s Higher Education division offers both full-time and part-time programs to approximately
1,200 students studying for degrees from leading Western universities. Students earn doctorate, master’s and
bachelor’s degrees in Hong Kong. Kaplan also offers a proprietary pre-college diploma program through the
Kaplan Business and Accountancy School.
In 2014, Kaplan Holdings Limited (Hong Kong) signed a joint venture agreement with CITIC Press Corporation.
Under the terms of the agreement, the parties incorporated a joint venture company, Kaplan CITIC Education Co.
Limited, 49% of which is owned by Kaplan Holdings Limited. The joint venture company is carrying out
publishing and distribution of Kaplan Financial training products in the People’s Republic of China.
Each of Kaplan’s international businesses is subject to unique and often complex regulatory environments in the
countries in which they operate, and the degree of consistency in the application and interpretation of such
regulations can vary significantly in certain jurisdictions.
Kaplan North America
As previously discussed, in 2020 Kaplan combined its segments into one business named Kaplan North America
(KNA), comprised of two segments, Kaplan North America Higher Education (comprising primarily former
Kaplan Higher Education (KHE) products and services) and Kaplan North America Supplemental Education
(comprising primarily former Kaplan Test Preparation (KTP) and former Kaplan Professional (KP) products and
services).
5 GRAHAM HOLDINGS COMPANY
Kaplan North America Higher Education
Until March 22, 2018, through the KHE segment, Kaplan provided postsecondary education services to students
through Kaplan University’s (KU) online and fixed-facility colleges. KU provided a wide array of certificate,
diploma and degree programs designed to meet the needs of students seeking to advance their education and
career goals. On March 22, 2018, certain subsidiaries of Kaplan contributed the institutional assets and
operations of KU to a new university: an Indiana nonprofit, public-benefit corporation affiliated with Purdue
University, known as Purdue University Global (Purdue Global). As part of the transfer to Purdue Global, KU
transferred students, academic personnel, faculty and operations, property leases for KU’s campuses and learning
centers, and Kaplan-owned academic curricula and content related to KU courses. Kaplan also indemnified
Purdue for certain pre-closing liabilities. At the same time, KU and Purdue Global entered into a Transition and
Operations Support Agreement, which was amended on July 29, 2019 (TOSA), pursuant to which KNA provides
key non-academic operations support to Purdue Global. Kaplan received nominal upfront cash consideration
upon the transfer of the institutional assets and operations of KU. The combination of the KHE, KTP and KP
segments into one KNA business did not change Kaplan’s or Purdue Global’s obligations under the TOSA.
The transfer of KU did not include any of the assets of the KU School of Professional and Continuing Education
(now managed by KNA), which provides professional
training and exam preparation for professional
certifications and licensures. The transfer also did not include the transfer of other Kaplan businesses.
KNA also provides non-academic operations support services for online pre-college, certificate, undergraduate
and graduate programs to institutions such as Purdue University, Wake Forest University, and Lynn University.
These are the same types of services and operations previously provided by the KHE segment which is now a
part of the KNA business.
Transition and Operations Support Agreement (TOSA). Purdue Global operates largely online as an Indiana
public university affiliated with Purdue University. The operations support activities that KNA provides
to Purdue Global (and other institutions of higher education, including Purdue University) include technology
support, help-desk functions, human resources support for transferred faculty and employees, admissions
support, financial aid processing, marketing and advertising, back-office business functions, certain test
preparation, and domestic and international student recruiting services.
Pursuant to the TOSA, KNA is not entitled to receive any reimbursement of costs incurred in providing support
functions, or any fee, unless and until Purdue Global has first covered all of its operating costs (subject to a cap).
If Purdue Global achieves cost efficiencies in its operations, KNA may be entitled to an additional payment equal
to 20% of such cost efficiencies (Purdue Efficiency Payment). In addition, during each of Purdue Global’s first
five years, prior to any payment to KNA, Purdue Global is entitled to a priority payment of $10 million per year
beyond costs (Purdue Priority Payment). To the extent that Purdue Global’s revenue is insufficient to pay the
Purdue Priority Payment, KNA is required to advance an amount to Purdue Global to cover such insufficiency.
Upon closing of the transaction, Kaplan paid to Purdue Global an advance in the amount of $20 million,
representing, and in lieu of, a Purdue Priority Payment for each of the fiscal years ending June 30, 2019, and
June 30, 2020.
To the extent that there is sufficient revenue to pay the Purdue Efficiency Payment, Purdue Global will be
reimbursed for its operating costs (subject to a cap) and will be paid the Purdue Priority Payment. To the extent
that there is remaining revenue, KNA will then be reimbursed for its operating costs (subject to a cap) of
providing the support activities. If KNA achieves cost efficiencies in its operations, then KNA may be entitled to
an additional payment equal to 20% of such cost efficiencies (KNA Efficiency Payment). The TOSA, as
amended, reflects the parties’ intent that, subject to available cash (calculated as cash balance minus cash
deficiencies, if any, projected for the next six-month period based on applicable budget), KNA is entitled to
receive a fee equal to 12.5% (increasing to 13% from June 30, 2023, through June 30, 2027) of Purdue Global’s
revenue, which served as the deferred purchase price for the transfer of KU (Deferred Purchase Price).
2021 FORM 10-K 6
Separately, KNA is entitled to a fee for services provided equal to 8% of KNA’s costs of providing such services
to Purdue Global (Contributor Service Fee). KNA’s Contributor Service Fee is deducted from any amounts owed
to KNA for the Deferred Purchase Price. Together these payments are known as “Contributor Compensation.” In
each case, the Contributor Compensation remains subject to available cash and the limitations of payment carry
over from year to year.
After the first five years of the TOSA, KNA and Purdue Global will be entitled to payments in a manner
consistent with the structure described above, except that (i) Purdue Global will no longer be entitled to the
Purdue Priority Payment and (ii) to the extent that there are sufficient revenues after payment of the KNA
Efficiency Payment (if any), Purdue Global will be entitled to an annual payment equal to 10% of the remaining
revenue after the KNA Efficiency Payment (if any) is paid, subject to certain other adjustments.
The TOSA has a 30-year initial term, which will automatically renew for five-year periods unless terminated.
After the sixth year, Purdue Global has the right to terminate the agreement upon payment of an early
termination fee equal to 125% of Purdue Global’s total revenue earned during the preceding 12-month period,
which payment would be made pursuant to a 10-year note, and at the election of Purdue Global, it may receive
for no additional consideration certain tangible assets used by KNA exclusively to provide the support activities
pursuant to the TOSA. At the end of the 30-year term, if Purdue Global does not renew the TOSA, Purdue Global
will be obligated to make a final payment of 75% of its total revenue earned during the preceding 12-month
period, which payment will be made pursuant to a 10-year note, and at the election of Purdue Global, it may
receive for no additional consideration certain assets used by KNA exclusively to provide the support activities
pursuant to the TOSA. Either party may terminate the TOSA at any time if Purdue Global generates (i)
$25 million in cash operating losses for three consecutive years or (ii) aggregate cash operating losses greater
than $75 million at any point during the initial term. Operating loss is defined as the amount by which the sum of
(1) Purdue Global’s and KNA’s respective costs in performing academic and support functions and (2) the
$10 million Purdue Priority Payment in each of the first five years following March 22, 2018, exceeds the
revenue Purdue Global generates for the applicable fiscal year. Upon termination for any reason, Purdue Global
will retain the assets that Kaplan contributed pursuant to the TOSA. Each party also has certain termination rights
in connection with a material default or material breach of the TOSA by the other party. Short of termination,
Purdue Global has the right to take over (in-source) certain back-office support functions at any time with nine-
months’ notice. Those include technology support, human resources, facility and property management, finance
and accounting, communications, and default management. In 2022 Purdue Global began working with KNA to
provide certain human resources, finance and accounting, facility management, and communications services
itself, in-house.
Regulatory Environment. KNA no longer owns or operates KU or any other institution participating in student
financial aid programs created under Title IV of the U.S. Federal Higher Education Act of 1965 (Higher
Education Act), as amended (Title IV). KNA provides services to Purdue Global, Purdue University, Wake
Forest University, Lynn University and other Title IV participating institutions that may require KNA to comply
with certain laws and regulations, including applicable statutory provisions of Title IV. KNA also provides
financial aid services to Purdue Global and, as such, meets the definition of a “third-party servicer” contained in
the Title IV regulations to Purdue Global (but no other institution as of the date of this report). As a third-party
servicer, KNA is subject to applicable statutory provisions of Title IV and U.S. Department of Education (ED)
regulations that, among other things, require KNA to be jointly and severally liable with its Title IV participating
client institution(s) to the ED for any violation by such client institution of any Title IV statute or ED regulation
or requirement. KNA is also subject to other federal and state laws, including, but not limited to, federal and state
consumer protection laws and rules prohibiting unfair or deceptive marketing practices, data privacy, data
protection and information security requirements established by federal state and foreign governments, including
for example the Federal Trade Commission and the applicable provisions of the Family Educational Rights and
7 GRAHAM HOLDINGS COMPANY
Privacy Act regarding the privacy of student records. KNA’s failure to comply with these and other federal and
state laws and regulations could result in adverse consequences to KNA’s business, including, for example:
• The imposition on KNA and/or Kaplan of fines, other sanctions or liabilities, including, without
limitation, repayment obligations for Title IV funds to the ED or the termination or limitation on
Kaplan’s eligibility to provide services as a third-party servicer to any Title IV participating institution;
• Adverse effects on KNA’s business and results of operations from a reduction or loss in KNA’s
revenues under the TOSA or any other agreement with any Title IV participating institution if a client
institution loses or has limits placed on its Title IV eligibility, accreditation, operations or state
licensure, or is subject to fines, repayment obligations or other adverse actions due to noncompliance
by KNA (or the institution) with Title IV, accreditor, federal or state agency requirements;
• Liability under the TOSA or any other agreement with any Title IV participating institution for
noncompliance with federal, state or accreditation requirements arising from KNA’s conduct; and
• Liability for noncompliance with Title IV or other federal or state laws and regulations occurring prior
to the transfer of KU to Purdue.
The laws, regulations and other requirements applicable to KNA or any KNA client institutions are subject to
change and to interpretation. For example, a Negotiated Rulemaking began in October 2021 that covered, in part,
rules related to the borrower defense to repayment adjudication process and recovery from institutions, closed
school loan discharges, disability loan discharges, public loan forgiveness, income driven repayment plans and
arbitration agreements. As part of this current Rulemaking, in a session that began in January 2022, the ED also
proposed a change to the Title IV definition of “Nonprofit” institution to generally exclude from that definition
any institution that is an obligor on a debt owed to a former owner of the institution or maintains a revenue-based
service agreement with a former owner of the institution. Such regulatory changes as well as those described
above could subject Purdue Global to additional regulatory requirements. Any resulting new rules or changes to
existing rules are not likely to be effective until July 1, 2023.
Incentive compensation. Under the ED’s incentive compensation rule, an institution participating in Title IV
programs may not provide any commission, bonus or other incentive payment to any person or entity engaged in
any student recruiting or admission activities or in making decisions regarding the awarding of Title IV funds if
such payment is based directly or indirectly on success in securing enrollments or financial aid. KNA is a third
party providing bundled services to Title IV participating institutions that include recruiting and, in the case of
Purdue Global, financial aid services. As such, KNA is also subject to the incentive compensation rules as
applied to the institutions it serves and cannot provide any commission, bonus or other incentive payment to any
covered employees, subcontractors or other parties engaged in certain student recruiting, admission or financial
aid activities based on success in securing enrollments or financial aid. In addition, tuition revenue sharing
payments to KNA under the TOSA (as well as any other agreement with any Title IV participating institution)
must comply with revenue sharing guidance provided by the ED related to bundled services agreements. For
more information, see Item 1A. Risk Factors. Failure to Comply with the ED’s Title IV Incentive Compensation
Rule Could Subject Kaplan to Liabilities, Sanctions and Fines.
Misrepresentations. A Title IV participating institution is required to comply with the ED regulations related to
misrepresentations and with related federal and state laws. These laws and regulations are broad in scope and
may extend to statements by servicers, such as KNA, that provide marketing or certain other services to such
institutions. The laws and regulations may also apply to KNA’s employees and agents, with respect to statements
addressing the nature of an institution’s programs, financial charges or the employability of its graduates.
Additionally, failure to comply with these and other federal and state laws and regulations regarding
misrepresentations and marketing practices could result in the imposition on KNA or its client institutions of
fines, other sanctions or liabilities, including, without limitation, federal student aid repayment obligations to the
ED, the termination or limitation on KNA’s eligibility to provide services as a third-party servicer to Title IV
participating institutions, the termination or limitation of a client institution’s eligibility to participate in the Title
2021 FORM 10-K 8
IV programs, or legal action by students or other third parties. A violation of misrepresentation regulations or
other federal or state laws and regulations applicable to the services KNA provides to its client institutions
arising out of statements by KNA, its employees or agents could require KNA to pay the costs associated with
indemnifying its client institutions from applicable losses resulting from the violation and could result in fines,
other sanctions or liabilities imposed on KNA.
Compliance by client institutions with Title IV program requirements and other federal, state and accreditation
requirements. KNA currently provides services to education institutions that are heavily regulated by federal
and state laws and regulations and subject to extensive accrediting body requirements. Presently, a material
portion of KNA’s revenues are attributable to deferred purchase and service fees it receives under the TOSA,
which are dependent upon revenues generated by Purdue Global and dependent upon Purdue Global’s eligibility
to participate in the Title IV federal student aid program. To maintain Title IV eligibility, Purdue Global and
KNA’s other client institutions must be certified by the ED as eligible institutions, maintain authorizations by
applicable state education agencies and be accredited by an accrediting commission recognized by the ED.
Purdue Global and KNA’s other client institutions must also comply with the extensive statutory and regulatory
requirements of the Higher Education Act and other state and federal laws and accrediting standards relating to
their financial aid management, educational programs, financial strength, disbursement and return of Title IV
funds, facilities, recruiting practices, representations made by the school and other parties, and various other
matters. Additionally, Purdue Global and other client institutions are subject to laws and regulations that, among
other things, limit student default rates on the repayment of Title IV loans, permit borrower defenses to
repayment of Title IV loans based on certain conduct of the institution, establish specific measures of financial
responsibility and administrative capability, regulate the addition of new campuses and programs and other
institutional changes; require compliance with state professional licensure board requirements to the extent
applicable to institutional programs and require state authorization and institutional and programmatic
accreditation. If the ED finds that Purdue Global or other client institutions have failed to comply with Title IV
requirements or improperly disbursed or retained Title IV program funds, it may take one or more of a number of
actions, including, but not limited to:
•
•
•
•
•
•
•
•
fining the school;
requiring the school to repay Title IV program funds;
limiting or terminating the school’s eligibility to participate in Title IV programs;
initiating an emergency action to suspend the school’s participation in Title IV programs without prior
notice or opportunity for a hearing;
transferring the school to a method of Title IV payment that would adversely affect the timing of the
institution’s receipt of Title IV funds;
requiring the school to submit a letter of credit;
denying or refusing to consider the school’s application for renewal of its certification to participate in
the Title IV programs or for approval to add a new campus or educational program; and
referring the matter for possible civil or criminal investigation.
If Purdue Global or other client institutions lose or have limits placed on their Title IV eligibility, accreditation or
state licensure, or if they are subject to fines, repayment obligations or other adverse actions due to their or
KNA’s noncompliance with Title IV regulations, accreditor or state agency requirements or other state or federal
laws, KNA’s financial results of operations could be adversely affected. After acquiring KU, on August 3, 2018,
Purdue Global received an updated Provisional Program Participation Agreement (PPPA) from the ED which is
necessary for continued participation in the federal Title IV programs after the change in ownership from Kaplan
to Purdue. The PPPA expired on June 30, 2021, but continues in effect until the ED issues the final approved
Program Participation Agreement. On October 15, 2021, Purdue Global received from the ED a new PPPA
granting provisional certification until June 30, 2022. Under this PPPA, Purdue Global must apply for and
9 GRAHAM HOLDINGS COMPANY
receive approval for expansion or any substantial change before it may award, disburse or distribute Title IV
funds based on the substantial change. Substantial changes generally include, but are not
limited to:
(a) establishment of an additional location; (b) increase in the level of academic offering beyond those listed in
the institution’s Eligibility and Certification Approval Report (ECAR); (c) addition of any educational program
(including degree, non-degree or short-term training programs), or (d) the addition of any new degree program.
In addition, the institution must pay any liabilities found in a currently open program review prior to the
expiration of the PPPA. The provisional certification ends upon the ED’s notification to the institution of the
ED’s decision to grant or deny a six-year certification to participate in the Title IV, Higher Education Act (HEA)
programs.
Compliance, regulatory actions, reviews and litigation. KNA and its client institutions are subject to reviews,
audits, investigations and other compliance reviews conducted by various regulatory agencies and auditors,
including, among others, the ED, the ED’s Office of the Inspector General, accrediting bodies and state and
various other federal agencies. These compliance reviews could result in findings of noncompliance with
statutory and regulatory requirements that could, in turn, result in the imposition of fines, liabilities, civil or
criminal penalties or other sanctions against KNA and its client institutions. Separately, if KNA provides
financial aid services to more than one Title IV participating institution (i.e., one or more participating
institutions in addition to Purdue Global), it will be required to arrange for an independent auditor to conduct an
annual Title IV compliance audit of KNA’s compliance with applicable ED requirements. KNA’s client
institutions are also required to arrange for an independent auditor to conduct an annual Title IV compliance
audit of their compliance with applicable ED requirements, including requirements related to services provided
by KNA.
On May 6, 2021, Kaplan received a notice from the ED that it would be conducting a fact-finding process
pursuant to the borrower defense to repayment (BDTR) regulations to determine the validity of more than 800
BDTR claims and a request for documents related to several of Kaplan’s previously owned schools. Beginning in
July 2021, Kaplan started receiving the claims and related information requests. In total, Kaplan received 1,449
borrower defense applications that seek discharge of approximately $35 million in loans. Most claims received
are from former KU students. The ED’s process for adjudicating these claims is subject to the borrower defense
regulations but it is not clear to what extent the ED will exclude claims based on the underlying statutes of
limitations, evidence provided by Kaplan, or any prior investigation related to schools attended by the student
applicants. Kaplan believes it has defenses that would bar any student discharge or school liability including that
the claims are barred by the applicable statute of limitations, unproven, incomplete and fail to meet regulatory
filing requirements. Kaplan expects to vigorously defend any attempt by the ED to hold Kaplan liable for any
ultimate student discharges and is responding to all claims with documentary and narrative evidence to refute the
allegations, demonstrate their lack of merit, and support the denial of all such claims by the ED. If the claims are
successful, the ED may seek reimbursement for the amount discharged from Kaplan. If the ED initiates a
reimbursement action against Kaplan following approval of former students’ BDTR applications, Kaplan may be
subject to significant liability.
On September 3, 2015, Kaplan sold to Education Corporation of America (ECA) substantially all of the assets of
the prior KHE Campuses. The transaction included the transfer of certain real estate leases that were guaranteed
or purportedly guaranteed by Kaplan. ECA is currently in receivership, has terminated all of its higher education
operations and has sold most, if not all, of its remaining assets (including New England College of Business).
Additionally, the receiver has repudiated all of ECA’s real estate leases. Although ECA is required to indemnify
Kaplan for any amounts Kaplan must pay due to ECA’s failure to fulfill its obligations under the real estate
leases guaranteed by Kaplan, ECA’s current financial condition and the amount of secured and unsecured
creditor claims outstanding against ECA make it unlikely that Kaplan will recover from ECA. In the second half
of 2018, the Company recorded an estimated $17.5 million in losses on guarantor lease obligations in connection
with this transaction in other non-operating expense. The Company recorded an additional estimated $1.1 million
2021 FORM 10-K 10
in non-operating expense in 2019, $1 million in non-operating expense in 2020, and $1.1 million in
non-operating expense in 2021; in each case consisting of legal fees and lease costs. The Company continues to
monitor the status of these obligations.
In addition, Kaplan could be the subject of future compliance reviews or lawsuits related to formerly owned KU
and KHE schools in connection with the pre-sale conduct of such schools that could result in monetary liabilities
or fines or other sanctions against Kaplan.
Kaplan North America Supplemental Education
In 2021, KNA’s supplemental education included all products of the former KTP and KP segments, including
exam preparation, professional licensure and certification, and corporate training and continuing education. KNA
offers a wide array of programs and services across various markets focusing on lifetime value creation and
professional lifecycles. These markets are discussed below.
Precollege and Social Sciences. KNA provides exam preparation for high school and graduate students under
the Kaplan Test Prep, Manhattan Prep and Barron’s Educational Series brands for a broad range of standardized,
high-stakes tests, including the SAT, ACT, GMAT and GRE. KNA also provides admissions consulting, tutoring
and other advisory services.
Healthcare. KNA provides exam preparation for the medical college admissions test (MCAT) and professional
licensure exam preparation for physicians (USMLE), nurses (NCLEX), pharmacists (NAPLEX), dentists
(NBDE) and physician assistants (PANCE). Under the brand i-Human Patients, KNA offers online, simulated
patient interaction training for medical health professionals, which is typically purchased by medical, nursing and
physician assistant schools. KNA’s USMLE in-person programs are accredited and Student and Exchange
Visitor Program (SEVP) approved for F-1 students and operate under the Kaplan Prep & Achieve brand. In 2021,
KNA acquired a continuing medical education business for physicians, nurses and pharmacists which is
accredited by Joint Accreditation for Interprofessional Continuing Education and operated under the brand
Projects in Knowledge.
Legal, Government and Social Justice. KNA offers exam preparation for the law school admissions test
(LSAT) and state bar licensure exam preparation for lawyers in 50 jurisdictions through Kaplan Bar Review and
Preliminary Multistate Bar Review (PMBR). For the military, KNA offers the Armed Services Vocational
Aptitude Battery (ASVAB) that measures developed abilities and helps predict future academic and occupational
success in the military and in 2021, Kaplan acquired Bluejacketeer which offers practice test questions for Navy
advancement exams on a subscription basis.
Business and Financial. Professional licensure products are operated under the brands Dearborn Real Estate
Education, Kaplan Real Estate Education, Bob Hogue School of Real Estate, Kaplan Financial Education, and
Kaplan Schweser. KNA helps professionals obtain certifications, licenses and designations to enable them to
advance their careers. Additionally, KNA collaborates with organizations to solve their talent management
challenges through customized corporate learning and development solutions. Through live and online
instruction, KNA provides professional license test preparation, licensing and continuing education, as well as
leadership and professional development programs to businesses and individuals in the accounting, insurance,
securities, real estate, financial services and wealth management areas.
Technology and Engineering. KNA offers data science and analytics online courses and training for
corporations under the brand name Metis. In 2022, Metis expects to focus on providing courses and programs to
educational institutions for their students rather than direct to student sales. KNA also offers licensing exam
preparation for engineers, architects and designers under the brand name PPI.
11 GRAHAM HOLDINGS COMPANY
Publishing. Kaplan Publishing focuses on Kaplan Test Prep, Barron’s, and Manhattan Prep test preparation
and reference resources sold through retail channels. At the end of 2021, Kaplan Publishing had 1,182 products
available in print and digital formats, including 368 digital products. In total, KNA test prep prepares students for
more than 233 standardized tests, the large majority of which are U.S. focused.
In 2021, KNA served over 220,000 students through its exam preparation programs and related products (such as
tutoring, online question banks and online practice tests), excluding sales of test prep books by third-party
retailers. KNA exam preparation programs are taught online and at Kaplan-branded locations and at numerous
other locations, such as hotels, high schools, universities and companies throughout the U.S., including Puerto
Rico, as well as in Canada, Mexico and the U.K. KNA also licenses material for certain programs to third parties.
Since the end of the first quarter of 2020, virtually all KNA exam preparation programs have been offered online,
typically in a live online classroom or a self-study format, while some programs have continued in person.
Private tutoring services are provided online and, in select markets, in person. In 2022, KNA expects to offer
more in-person courses for select exam preparation offerings.
In 2021, KNA served approximately 2,700 business-to-business clients including approximately 120 Fortune 500
companies. In 2021, approximately 218,000 students used KNA’s professional licensure exam preparation
offerings.
TELEVISION BROADCASTING
Graham Media Group, Inc. (GMG), a subsidiary of the Company, owns seven television stations located in
Houston, TX; Detroit, MI; Orlando, FL; San Antonio, TX; Jacksonville, FL; and Roanoke, VA, as well as
SocialNewsDesk, a provider of social media management tools designed to connect newsrooms with their users.
The following table sets forth certain information with respect to each of the Company’s television stations:
Station, Location and
Year Commercial
Operation
Commenced
National
Market
Ranking (a)
Primary
Network
Affiliation
Expiration
Date of FCC
License
Expiration Date
of Network
Agreement
Total
Commercial
Stations
in DMA (b)
KPRC, Houston, TX, 1949 . . . . . . . . . . . . .
WDIV, Detroit, MI, 1947 . . . . . . . . . . . . . .
WKMG, Orlando, FL, 1954 . . . . . . . . . . . .
KSAT, San Antonio, TX, 1957 . . . . . . . . . .
WJXT, Jacksonville, FL, 1947 . . . . . . . . . .
WCWJ, Jacksonville, FL, 1966 . . . . . . . . .
WSLS, Roanoke, VA, 1952 . . . . . . . . . . . .
9th
15th
17th
31st
43rd
43rd
71st
NBC
NBC
CBS
ABC
None
Dec. 31, 2022
Aug. 1, 2022
Dec. 31, 2022
Oct. 1, 2029
Feb. 1, 2029
June 30, 2022
Aug. 1, 2022 March 31, 2026
Feb. 1, 2029
CW Feb. 1, 2029
Oct. 1, 2028
NBC
Aug. 31, 2025
Dec. 31, 2022
—
17
10
18
15
9
9
8
(a) Source: 2021/2022 Local Television Market Universe Estimates, the Nielsen Company, November 2021 and January 1, 2022, based on
television homes in DMA (see note (b) below).
(b) Full-power commercial TV stations, Designated Market Area (DMA) is a market designation of the Nielsen Company that defines each
television market exclusive of another, based on measured viewing patterns.
Revenue from broadcasting operations is derived primarily from the sale of advertising time to local, regional
and national advertisers. In 2021, advertising revenue accounted for 57.7% of the total for GMG’s operations.
Advertising revenue is sensitive to a number of factors, some specific to a particular station or market and others
more general in nature. These factors include a station’s audience share and market ranking; seasonal fluctuations
in demand for airtime; annual or biannual events, such as sporting events and political elections; and broader
economic trends, among others.
Regulation of Broadcasting and Related Matters
GMG’s television broadcasting operations are subject to the jurisdiction of the U.S. Federal Communications
Commission (FCC) under the U.S. Federal Communications Act of 1934, as amended (the Communications
2021 FORM 10-K 12
Act). Each GMG television station holds an FCC license that is renewable upon application for an eight-year
period. As shown in the table above, the current terms of the GMG station licenses expire in 2022 through 2029.
GMG expects the FCC to grant future renewal applications for its stations in due course, but cannot provide any
assurances that the FCC will do so.
Digital Television (DTV) and Spectrum Issues. Each GMG station (and each full-power television station
nationwide) broadcasts only in a digital format, which allows transmission of HDTV programming and multiple
channels of standard-definition television programming (multicasting).
Television stations may receive interference from a variety of sources, including interference from other
broadcast stations, that is below a threshold established by the FCC. That interference could limit viewers’ ability
to receive television stations’ signals. The amount of interference to stations could increase in the future because
of the FCC’s decision to allow electronic devices, known as “white space” devices, to operate in the television
frequency band on an unlicensed basis on channels not used by nearby television stations.
In November 2017, the FCC voted to adopt rules authorizing broadcast television stations to voluntarily
transition to a new technical standard, called Next Generation TV or ATSC 3.0. The new standard is designed to
allow broadcasters to provide consumers with better sound and picture quality; hyper-localized programming,
including news and weather; enhanced emergency alerts and improved mobile reception. The standard allows for
the use of targeted advertising and more efficient use of spectrum, for example, by allowing for more multicast
streams to be aired on the same six-megahertz channel. ATSC 3.0 is not backward compatible with existing
television equipment, and the FCC’s rules require full-power television stations that transition to the new
standard to continue broadcasting a signal in the existing DTV standard until the FCC phases out the requirement
in a future order. A transitioning station’s DTV-formatted content must be substantially similar to the
programming aired on its ATSC 3.0 channel until July17, 2023, five years from the date the rules in the original
2017 FCC order were finalized. In June 2020, the FCC re-affirmed this sunset date, but stated that it would open
a proceeding one year prior to the sunset date to determine whether the date should be extended.
GMG launched its first ATSC 3.0 stream in December 2020 for station WDIV-TV in Detroit; prior to the launch,
WDIV-TV had applied for and was granted authority by the FCC to effectuate an ATSC 3.0 simulcasting
arrangement with WMYD (licensed to Scripps Broadcasting Holdings, LLC) in the Detroit area. In 2021, two
GMG stations each entered into simulcasting arrangements. First, in June 2021, GMG station WKMG-TV
(Orlando) applied for and was granted authority by the FCC to effectuate an ATSC 3.0 simulcasting arrangement
with another station in the Orlando area (WRBW-DT, licensed to Fox Television Stations, LLC). The station’s
ATSC 3.0 stream was then launched along with the rest of the market on June 30, 2021. Second, in November
2021, GMG station KPRC-TV (Houston) applied for and was granted authority by the FCC to effectuate an
ATSC 3.0 simulcasting arrangement with another station in the Houston area (KIAH, licensed to Tribune Media
Company). The station’s ATSC 3.0 stream was then launched on December 2, 2021. As required by the FCC
rules, each of the respective station’s stream is in addition to such station’s current DTV stream, which viewers
continue to be able to view.
In connection with the transition to ATSC 3.0, which is an internet protocol-based standard, the FCC has updated
its rules to reflect how broadcasters may use their spectrum in non-traditional ways (Broadcast Internet). In June
2020, the FCC issued a Declaratory Ruling clarifying that the television ownership rules would not apply to the
lease of broadcast spectrum for Broadcast Internet purposes, and in December 2020, the FCC voted to adopt rules
that specifically apply its existing framework regarding derogation of service and use of spectrum for ancillary
and supplementary purposes to Broadcast Internet; i.e., a broadcaster must continue to air at least one free,
over-the-air television signal in SDTV format, and if a broadcaster opts to use its spectrum for Broadcast Internet
services, it will incur a five percent fee based on the gross revenue received by the broadcaster. It is too soon to
predict how the use of broadcast spectrum for Broadcast Internet services could impact the industry.
In April 2017, the FCC announced the completion of an incentive auction in which certain broadcast television
stations bid to relinquish spectrum or move to a different spectrum band in exchange for a share of the revenues
13 GRAHAM HOLDINGS COMPANY
obtained by auctioning the reallocated broadcast spectrum for use by wireless broadband providers. None of
GMG’s stations participated in the incentive auction. However, certain GMG stations—specifically, WDIV,
WSLS, WCWJ and WJXT—were required to move to new channel allotments in order to free up a nationwide
block of spectrum for wireless broadband use. The FCC adopted rules requiring this “repacking” of broadcast
television stations to new channels to be completed within 39 months after the incentive auction closed, with
earlier deadlines set for particular stations in order to stagger the transition to new channels. The WSLS transition
was completed on September 11, 2019, the WCWJ and WJXT transitions were completed on January 16, 2020,
and the WDIV transition was completed on September 16, 2020 (following tolling of its assigned deadline due to
delays related to the COVID-19 pandemic).
GMG’s repacked stations have been eligible to seek reimbursement for repacking-related costs and have been
receiving reimbursement payments through the FCC’s process. Congress has capped the overall funds available
for repack-related reimbursements. The initial
legislation authorizing the incentive auction provided only
$1.75 billion in total for all such reimbursements. Congress later made available an additional $1 billion in
reimbursement funds, with $600 million in available funds allocated to 2018 and $400 million allocated to 2019.
To date, each repacked commercial television station, including each of the repacked GMG stations, has been
allocated a reimbursement amount equal to approximately 94% of the station’s estimated repacking costs, as
verified by the FCC’s fund administrator. Receipt of the allocated funds is subject to FCC approval of particular
requests for reimbursement of actual costs fully incurred. By October 8, 2021, stations that transitioned in the
first half of the 39-month post-auction repack had to submit all remaining invoices for incurred expenses. WSLS,
which transitioned in the first half of the post-auction repack, complied with this deadline. The remaining GMG
stations must submit all remaining invoices, to the extent there are any, in 2022. As of December 31, 2021, the
repacked GMG stations have received approximately $19.6 million in FCC reimbursements since 2018.
In March 2020, the FCC announced the reformation of the 3.7-4.2 GHz band (C-band) through a public auction
of the lower 280 megahertz of these frequencies (3.7-3.98 GHz). This auction, which concluded February 2021,
allows winning bidders to use the 3.7-3.98 GHz frequencies for wireless broadband services. However, this
spectrum reallocation requires the relocation of incumbent C-band satellite operations—including those used to
deliver programming to television stations—to a “repacked” 4.0-4.2 GHz band. In exchange for a portion of the
auction proceeds, satellite operators have chosen to relocate their operations pursuant to an “accelerated”
relocation timeline.
GMG’s television stations receive programming from the relocating satellite operators, and this requires the
transition of operations at GMG stations through the installation of antenna filters, repointing and retuning of
antennas, and other activities. Although GMG elected to have the satellite operators manage these transition
efforts, GMG coordinated with the satellite operators and submitted various filings to the FCC to confirm the
transition eligibility of its stations and ensure the stations remain protected from harmful interference post-
transition.
The first phase of the “accelerated” C-band transition concluded December 5, 2021, and the deadline for the
second phase is December 5, 2023. GMG anticipates that the satellite operators and the FCC may request
additional information about GMG’s stations to complete the second phase of the transition.
Carriage of Local Broadcast Signals. Congress has established, and periodically has extended or otherwise
modified, various statutory copyright licensing regimes governing the local and distant carriage of broadcast
television signals on cable and satellite systems. The Company cannot predict whether or how Congress may
maintain or modify these regimes in the future, or what net effect such decisions would have on the Company’s
broadcast operations or on the Company overall.
The Communications Act and the FCC rules allow a commercial television broadcast station, under certain
circumstances, to insist on mandatory carriage of its signal on cable systems serving the station’s market area
(must carry). Alternatively, stations may elect, at three-year intervals, to forgo must-carry rights and allow their
2021 FORM 10-K 14
signals to be carried by cable systems only pursuant to a “retransmission consent” agreement. Commercial
television stations also may elect either mandatory carriage or retransmission consent with respect to the carriage
of their signals on direct broadcast satellite (DBS) systems that provide “local-into-local” service (i.e., distribute
the signals of local television stations to viewers in the local market area). Stations that elect retransmission
consent may negotiate for compensation from cable or DBS systems in exchange for the right to carry their
signals. Each of GMG’s television stations has elected retransmission consent for both cable and DBS operators,
and each is carried on all of the major cable and DBS systems serving each station’s respective local market
pursuant to retransmission consent agreements. Retransmission consent elections must be made every three
years. The most recent election deadline was October 1, 2020; all GMG stations elected retransmission consent
for both cable and DBS operators. The 2020 election process was less time-intensive than prior processes, as the
FCC in July 2019 moved to an electronic election system that now allows broadcasters to post their carriage
elections online and to send notices to covered MVPDs electronically. The next election deadline is October 1,
2023 and will follow the same process.
Recent statutory changes have required the FCC to modify its rules governing retransmission consent
negotiations. The Television Viewer Protection Act, enacted on December 20, 2019, made changes to the “good
faith” standards for retransmission consent negotiations, calling for the FCC to implement regulations requiring
“large station groups” (groups of television broadcast stations that have a national audience reach of more than
20%) to negotiate in good faith with MVPD “buying groups” (entities that negotiate on behalf of multiple small
MVPDs). GMG does not qualify as a “large station group” under the statute and therefore will not be subject to
this obligation. While GMG does not anticipate that these recent changes will materially affect its bargaining
position in retransmission consent negotiations, if Congress or the FCC were to enact further changes to the
retransmission consent rules (such as by requiring small station groups like GMG to negotiate with MVPD
buying groups, or otherwise giving MVPDs heightened bargaining power), such changes could have a material
effect on retransmission consent revenues.
The FCC has also considered proposals to alter its rules governing network non-duplication and syndicated
exclusivity. In March 2014, the FCC solicited comments on a proposal to eliminate its network non-duplication
and syndicated exclusivity rules, which restrict the ability of cable operators, direct broadcast satellite systems
and other distributors classified by the FCC as MVPDs to import the signals of out-of-market television stations
with duplicate programming during retransmission consent disputes or otherwise. The FCC has not acted on that
proposal to date. If Congress or the FCC were to enact further changes to the exclusivity rules, such changes
could materially affect the GMG stations’ bargaining position in future retransmission consent negotiations.
Ownership Limits. The Communications Act and the FCC’s rules limit the number and types of media outlets
in which a single person or entity may have an attributable interest. The FCC is required by statute to review its
media ownership rules (with the exception of the national television ownership rule, discussed below) every four
years to determine whether those rules remain necessary in the public interest as the result of competition. This
process is referred to as the quadrennial review. In November 2017, the FCC conducted such a review and voted
to eliminate certain of its ownership limit restrictions and to modify others. This FCC decision was challenged in
court, and the Third Circuit Court of Appeals set aside the FCC’s decision in November 2019. However, the FCC
appealed the Third Circuit court’s decision, and on April 1, 2021, the U.S. Supreme Court reversed that decision.
This means that the media ownership rules now reflect the November 2017 changes. The current ownership rule
most relevant to GMG is the local television ownership rule. The rule prohibits one broadcaster from owning (or
having an attributable interest in) two full-power television stations licensed to the same Nielsen DMA if both of
them are ranked among the top four stations in the market, unless the broadcaster can demonstrate to the FCC
that the combination serves the public interest. Ownership of more than two full-power television stations is
generally prohibited.
The FCC’s most recent quadrennial review of its media ownership rules was initiated in December 2018. That
proceeding remains open. In June 2021, the FCC solicited comments to refresh the record, but no action has been
15 GRAHAM HOLDINGS COMPANY
taken in that proceeding to date. GMG’s ability to enter into certain transactions in the future may be affected by
the resolution of the current FCC quadrennial review proceeding.
Under the national television ownership rule, a single person or entity may have an attributable interest in an
unlimited number of television stations nationwide, as long as the aggregate audience reach of such stations does
not exceed 39% of nationwide television households and as long as such interest complies with the FCC’s other
ownership restrictions. In 2016, the FCC eliminated the 50% Ultra High Frequency (UHF) discount, under which
stations broadcasting on UHF channels are credited with only half the number of households in their market for
purposes of calculating compliance with the 39% cap. However, the FCC reversed that decision in early 2017,
concluding that the UHF discount should not be altered except in connection with a broader review of the
national ownership cap. The reinstatement of the UHF discount was upheld by the D.C. Circuit in the summer of
2018. In December 2017, the FCC initiated a rule making proceeding seeking comments regarding its authority
to modify or eliminate the national television ownership cap, which was set at 39% by statute, as well as the
potential elimination of the UHF discount. That proceeding remains open.
Programming. Six of GMG’s seven stations are affiliated with one or more of the national television networks
that provide a substantial amount of programming to their television station affiliates. The expiration dates of
GMG’s affiliation agreements are set forth at the beginning of this Television Broadcasting section. WJXT, one
of GMG’s Jacksonville stations, has operated as an independent station since 2002. In addition, each of the GMG
stations receives programming from syndicators and other
third-party programming providers. GMG’s
performance depends in part on the quality and availability of third-party programming, and any substantial
decline in the quality or availability of this programming could materially affect the ability of GMG and its
competitors to enter into certain transactions in the future.
Public Interest Obligations. To satisfy FCC requirements, stations generally are expected to air a specified
number of hours of programming intended to serve the educational and informational needs of children and to
complete reports on a quarterly basis concerning children’s programming. In July 2019, the FCC modified these
rules to provide broadcasters with more flexibility in meeting the public interest obligations. Among other things,
these rules allow up to 52 hours per year of children’s programming to consist of educational specials and/or
short-form programming. The prior rules required all qualifying programming to be regularly scheduled and in
30-minute blocks. While stations are required to air the substantial majority of their educational and
informational children’s programming on their primary program stream, under the current rules they may now air
up to 13 hours per quarter of regularly scheduled weekly programming on a multicast stream. In addition, the
FCC requires stations to limit the amount of advertising that appears during certain children’s programs.
The FCC has other regulations and policies to ensure that broadcast licensees operate in the public interest,
including rules requiring the disclosure of certain information and documents in an online public inspection file;
rules requiring the closed-captioning of programming to assist television viewing by the hearing impaired; video
description rules to assist television viewing by the visually impaired; rules concerning the captioning of video
programming distributed via the internet; and rules concerning the volume of commercials. Compliance with
these rules imposes additional costs on the GMG stations that could affect GMG’s operations.
Political Advertising. The FCC regulates the sale of advertising by GMG’s stations to candidates for public
office and imposes other obligations regarding the broadcast of political announcements more generally,
including the disclosures of certain information related to such advertising in the station’s online public
inspection file. The application of these regulations may limit the advertising revenues of GMG’s television
stations during the periods preceding elections. Failure to comply with the political advertising rules may result
in enforcement actions by the FCC. The Company has procedures in place regarding compliance with the FCC’s
political advertising rules, but cannot predict how the FCC’s future application of these rules will affect GMG’s
stations.
2021 FORM 10-K 16
Broadcast Indecency. The FCC’s policies prohibit the broadcast of indecent and profane material during
certain hours of the day, and the FCC may impose monetary forfeitures when it determines that a television
station has violated that policy. Broadcasters have repeatedly challenged these rules in court, arguing, among
other things, that the FCC has failed to justify its indecency decisions adequately, that the FCC’s policy is too
subjective to guide broadcasters’ programming decisions and that its enforcement approach otherwise violates
the First Amendment. In June 2012, the U.S. Supreme Court held that certain fines against broadcasters for
“fleeting expletives” were unconstitutional because the FCC failed to provide advance notice to broadcasters of
what the FCC deemed to be indecent, but it also upheld the FCC’s authority to regulate broadcast decency. The
Company cannot predict how GMG’s stations may be affected by the FCC’s current or future interpretation and
enforcement of its indecency policies.
Other Matters.
In addition to the matters described above, the FCC is conducting proceedings concerning
various other matters, the outcome of which could adversely affect the profitability of GMG’s television
broadcasting operations.
MANUFACTURING
Hoover Treated Wood Products, Inc.
Hoover Treated Wood Products, Inc. (Hoover) is a supplier of pressure impregnated kiln-dried lumber and
plywood products for fire-retardant and preservative applications. Hoover, founded in 1955 and acquired by the
Company in 2017, is headquartered in Thomson, GA. It operates 10 facilities across the country and services a
stocking distributor network of more than 100 locations spanning the U.S. and Canada.
Group Dekko Inc.
Group Dekko Inc. (Dekko) is an electrical solutions company that focuses on innovative power charging and data
systems; industrial and commercial indoor lighting solutions; and the manufacture of electrical components and
assemblies for medical equipment, transportation, industrial and appliance products. Dekko, founded in 1952, is
headquartered in Fort Wayne, IN, and operates 13 facilities in five states and Mexico.
Joyce/Dayton Corp.
Joyce/Dayton Corp. (Joyce/Dayton) is a leading manufacturer of screw jacks, linear actuators and related linear
motion products and lifting systems in North America. Joyce/Dayton provides its lifting and positioning products
including renewable energy, metals and
to customers across a diverse range of industrial end markets,
metalworking, oil and gas, satellite antennae and material handling sectors.
Forney Corporation
Forney Corporation (Forney) is a global supplier of burners, igniters, dampers and controls for combustion
processes in electric utility and industrial applications. Forney is headquartered in Addison, TX, and its
manufacturing plant is in Monterrey, Mexico. Forney’s customers include power plants and industrial systems
around the world.
HEALTHCARE
Graham Healthcare Group
Graham Healthcare Group (GHG) provides home health, hospice and palliative services to more than 50,000
patients annually. GHG operates 13 home care, seven hospice and two palliative care operating units in
Michigan, Illinois, Pennsylvania and Florida. Six of GHG’s 19 operating units are operated through joint
ventures with health systems and physician groups. The remainder are wholly owned and operated under the
“Residential” brand name. Home health services include a wide range of health and social services delivered at
17 GRAHAM HOLDINGS COMPANY
home to recovering, disabled and chronically or terminally ill persons in need of medical, nursing, social or
therapeutic treatment and assistance with the essential activities of daily living. Hospice care focuses on relieving
symptoms and supporting patients with a life expectancy of six months or less. Hospice care involves an
interdisciplinary approach to the provision of medical care, pain management and emotional and spiritual
support, with an emphasis on comfort, not curing. Hospice services can be provided in the patient’s home, as
well as in free-standing hospice facilities, hospitals, nursing homes and other long-term care facilities. Palliative
care is a specialized form of medicine provided by nurse practitioners that aims to enhance the quality of life of
patients and their families who are faced with serious illness. It focuses on increasing comfort through prevention
and treatment of distressing symptoms. In addition to expert symptom management, palliative care focuses on
clear communication, advance planning and coordination of care. Each GHG operating unit offers care
coordination, healthcare solutions and clinical expertise. All home health and hospice operations are Medicare
certified and accredited by the Accreditation Commission for Health Care (ACHC) or are in the process of being
ACHC accredited. GHG derives 90% of its revenues for home health and hospice services from Medicare. The
remaining sources of revenue are from Medicaid, commercial insurance and private payers.
In 2019, GHG acquired two business units, Clinical Specialty Infusions, LLC (CSI Pharmacy) located in
Texarkana, Texas, and Clarus Care, LLC (Clarus) in Nashville, Tennessee. CSI Pharmacy is a nationwide
specialty pharmacy licensed in 38 states that serves patients suffering from chronic illness. CSI Pharmacy
specializes in treating rare diseases with biologics and plasma-derived therapies, with revenues derived primarily
from intravenous immunoglobulin (IVIG) therapy. CSI Pharmacy delivers products to patients’ houses and
employs nurses to provide specialized infusion therapies in the home on a monthly basis. Clarus provides call
management solutions to physician groups and hospitals. Clarus replaces traditional human-staffed answering
services with a SaaS-based solution. Clarus streamlines calls, eliminates patient hold times, and manages
referrals and new appointments. The solution eliminates delays, call routing errors and malpractice risk inherent
with traditional call centers.
In December 2021, GHG acquired two businesses, one of which expanded GHG’s home health operations into
Florida and Weiss Medical, a full service physician practice based in Riverdale, New Jersey. Weiss has expertise
in all allergic and immunologic conditions, and specializes in challenging cases. It is often able to help patients
even after they have seen numerous other specialists. The practice also offers infusion services.
AUTOMOTIVE
Graham Automotive LLC
The Company owns a 90% interest in four automotive dealerships. In January 2019, the Company acquired a
90% interest in two automobile dealerships in the Washington, D.C. area, Honda of Tysons Corner in Virginia
and Lexus of Rockville in Maryland. The two dealerships are established automotive retailers. In December
2019, the Company opened a new Jeep dealership in Bethesda, MD. In December 2021, the Company acquired a
90% interest in an automobile dealership, Ford of Manassas in Virginia. The Company has a management
services agreement with an entity affiliated with Christopher J. Ourisman, a member of the Ourisman
Automotive Group family of dealerships, to operate and manage the operations of the dealerships. The Company
also owns CarCare To Go, which provides valet repair services to and from a network of dealership service
centers in the Washington, D.C. area.
OTHER ACTIVITIES
Leaf Group Ltd.
In June 2021, the Company acquired Leaf Group Ltd. (Leaf), headquartered in Santa Monica, California. Leaf is
a diversified consumer internet company that builds creator-driven brands in lifestyle and home and art design
categories. Through its Society6 Group, Leaf operates leading art and design marketplaces where large
communities of artists and designers can market and sell their original art and designs printed on a wide variety
2021 FORM 10-K 18
of products. Its made-to-order marketplaces, consisting of Society6.com (Society6) and its wholesale channel
(collectively, Society6 Group), provide artists and designers with an online commerce platform to feature and
sell their original art and designs on an array of consumer products primarily in the home décor category.
Society6 Group’s wholesale channel sells products to trade and hospitality clients, as well as retail distribution
partners. Through Leaf’s Saatchi Art Group, including SaatchiArt.com (Saatchi Art) and its art fair event brand,
The Other Art Fair, Leaf provides an online art gallery where a global community of artists exhibit and sell their
original artwork directly to consumers through a curated online gallery, virtual reality or in-person at art fairs
hosted in the United Kingdom, Australia, Canada and the United States. Saatchi Art’s online art gallery features a
wide selection of original paintings, drawings, sculptures and photography. Leaf’s Media Group consists of a
diverse portfolio of media properties that educate and inform consumers across a wide variety of life topics,
including fitness and wellness brands such as Well+Good and Livestrong.com, Hunker in the home and design
space and Only In Your State in the travel sector. Together with these premium brands, Leaf owns and operates
or hosts and operates over 45 websites focused on specific categories or interests. Leaf generates the majority of
its media revenue from the sale of advertising.
Clyde’s Restaurant Group
In July 2019, the Company acquired Clyde’s Restaurant Group (Clyde’s). Clyde’s, founded in 1963, owns and
operates 11 restaurants and entertainment venues in the Washington, D.C. metropolitan area, including seven
Clyde’s locations, Old Ebbitt Grill, The Hamilton, 1789 Restaurant, and The Tombs.
Framebridge, Inc.
In May 2020, the Company acquired an additional interest in Framebridge, Inc. (Framebridge), a custom framing
service company, that resulted in the Company’s ownership of approximately 93% of Framebridge. The CEO of
Framebridge continues to hold an approximately 7% ownership stake in Framebridge. Framebridge provides
high-quality, affordable and fast custom framing directly to consumers. Through its website, app, and retail
locations, Framebridge offers consumers the option to drop off or ship artwork, pictures and other personal
objects directly to Framebridge to be custom framed and then delivered directly to a customer or a retail store for
in-store pick up. Framebridge is headquartered in Washington, D.C., has 5 retail locations in the Washington,
D.C./Maryland/Northern Virginia market, three locations in Manhattan and Brooklyn, NY, three in the Chicago
market, two locations in Atlanta, GA, one each in the Boston and Philadelphia markets, and two manufacturing
facilities in Kentucky and New Jersey.
Code3
Code3 is a marketing and insights company that manages digital advertising for global brands and early-stage
companies. It delivers media, creative, and data services to transform consumer and performance data into
planning, content, media activation and measurement to maximize ROI. Code3 works across platforms such as
Facebook, Instagram, Amazon, Google, Twitter, Pinterest, Snapchat and YouTube. The legacy business
surrounding the Audience Intelligence Platform (AIP) has been operated since the beginning of 2021 as a
separate software company under the name, Decile LLC. “Code3” is the trade name of Social Code, LLC and
Marketplace Strategy, LLC.
Decile LLC
Decile LLC (Decile) is a customer data and analytics software company that helps marketers extract value from
their proprietary first-party customer and sales data. Decile provides software and services to help its business
clients better understand customer acquisition costs, customer retention, unit economics and how to increase
profitable growth.
19 GRAHAM HOLDINGS COMPANY
The Slate Group LLC
The Slate Group LLC (Slate) publishes Slate, an online magazine. Slate features articles and podcasts analyzing
news, politics and contemporary culture and adds new material on a daily basis. Content is supplied by the
magazine’s own editorial staff, as well as by independent contributors. As measured by The Slate Group, Slate
had an average of more than 21 million unique visitors per month and averaged more than 55 million page views
per month across desktop and mobile platforms in 2021. The Slate Group owns an interest in E2J2 SAS, a
company incorporated in France that produces two French-language news magazine websites at slate.fr and
slateafrique.com. The Slate Group provides content, technology and branding support.
Pinna
Pinna is an audio-first children’s media company offering an on-demand subscription service that delivers
curated audio programming for children, all in one place, including podcasts, audio shows, audiobooks and
music. The service offers children an ad-free, screen-free way to play and listen. Pinna creates and produces
award-winning, original shows and partners with best-in-class brands and top creative talent
to deliver
age-appropriate, high-quality, highly entertaining audio experiences for three- to 12-year-olds.
The FP Group
The FP Group produces Foreign Policy magazine and the ForeignPolicy.com website, which cover
developments in national security, international politics, global economics and related issues. The site features
blogs, unique news content and specialized channels and newsletters focusing on regions and topics of interest.
The FP Group provides insight and analysis into global affairs for government, military, business, media and
academic leaders. FP Events also produces a growing number of live and virtual events, bringing together
government, military, business and investment leaders to discuss important regional and topical developments
and their implications.
CyberVista LLC
CyberVista LLC (CyberVista) is a cybersecurity training company headquartered in Arlington, VA. Its training
solutions span cyber protection, operations, cloud and hardware/software. Its Resolve executive training suite
helps large company boards and executives prepare for and mitigate cyber threats. Customers include Fortune
500 companies, leading cybersecurity providers and the defense industrial base.
City Cast LLC
City Cast LLC (City Cast) is a network of daily local news podcasts in cities around the country, accompanied by
a daily email newsletter about local communities, including local news, events and places. Currently City Cast is
available in Chicago, Denver, Houston, Salt Lake City and Pittsburgh.
COMPETITION
Kaplan
Kaplan’s businesses operate in fragmented and competitive markets. Each of KI businesses competes in
disaggregated markets with other for-profit institutions and companies (ranging in size from large for-profit
universities to small competitors offering English-language courses) and, in certain instances, with government-
supported schools and institutions that provide similar training and educational programs. Competitive factors
vary by business and include program offerings, ranking of university partners, convenience, quality of
instruction, reputation, placement rates, student services and cost. KI derives its competitive advantage from,
among other things, delivering high-quality education and training experiences to students, having name brand
recognition across multiple markets, developing strong relationships with corporate clients and recruitment
2021 FORM 10-K 20
partners and offering competitive pricing. KNA competes with companies that provide various education
technology solutions, consumer test and licensure preparation and course delivery, corporate training, university
administrative support for online programs and courses, curriculum development, overall online program
development and analytics for colleges and universities, as well as support for corporate, employer and employee
education programs. The market for KNA’s services and products, and especially its higher education services
and products, is dynamic and rapidly evolving, and several competitors offer a mix of some of the same products
and services or are seeking to move into the markets in which KNA operates. Competitive factors in these KNA
markets include the ability to deliver a wide range of educational services and programs to clients across all
levels of programs and administrative functions; cost effectiveness; expertise in marketing, recruitment and
program delivery; student outcomes and satisfaction; the ability to invest in start-up and scaling initiatives;
reputation; and compliance with laws and the ability to navigate complex regulatory requirements. KNA’s ability
to effectively compete in the higher education services markets will depend in large part on its successful
delivery and navigation of these factors. While the competitive landscape is expanding, KNA’s resources,
capabilities and experience are key differentiators in the market. Similarly, KNA’s supplemental education
products and services compete with a wide range of national, regional,
local, online and location-based
competitors. Competitors vary by test, with many focused on preparing students for a single high-stakes test. For
its curricular and assessment services, KNA has a number of national competitors as well as competitors focused
on preparation for particular tests. Competitive factors for the supplemental education products vary by product
line and include price, features, modality, schedule and reputation. Although KNA faces intense competition and
shifting consumer preferences in these areas, particularly with respect to online test preparation, where some new
competitors are offering lower-cost and free test preparation products, KNA, and particularly Kaplan Test Prep,
remains a leading name in test preparation owing in part to its technical expertise and capabilities, quality of
instructors, content, curricula, longevity and reputation in the industry. KNA’s professional licensure training and
preparation and corporate training products and services offer a broad portfolio of products, many within highly
regulated and mature industries, including securities, insurance, real estate and wealth management, where
competition includes a wide variety of national, regional and local companies seeking the same market share and
resulting in deep price discounting and commoditization of offerings.
Graham Media Group
GMG competes for audiences and advertising revenues with television and radio stations, cable systems, video
services offered by telephone and broadband companies serving the same or nearby areas, DBS services, digital
media services, and, to a lesser degree, with other media providers, such as newspapers and magazines. Cable
systems operate in substantially all of the areas served by the Company’s television stations, where they compete
for television viewers by importing out-of-market television signals; by distributing pay-cable, advertiser-
supported and other programming that is originated for cable systems; and by offering movies and other
programming on an on-demand, digital or pay-per-view basis. In addition, DBS services provide nationwide
distribution of television programming, including pay-per-view programming and programming packages unique
to DBS, using digital transmission technologies. Moreover, to the extent that competing television stations in the
Company’s television markets transition to ATSC 3.0, such stations may pose an increased competitive challenge
to the Company’s stations in the future, such as by offering an increased number of multicast channels or by
offering advanced features.
Competition continues to increase from established and emerging online distribution platforms. Movies and
television programming increasingly are available on an on-demand basis through a variety of online platforms,
which include free access on the websites of the major TV networks, ad-supported viewing on platforms such as
Hulu, and subscription-based access through services such as Netflix. In addition, online-only subscription
services offering live television services have been launched both by traditional pay-TV competitors (such as
DISH and DirecTV) and newer entrants (such as Fubo). The Company has entered into agreements for some of
its stations to be distributed via certain of these services, typically through opt-in agreements negotiated by the
stations’ affiliated networks. Participation in these services has given the Company’s stations access to new
distribution platforms. At the same time, competition from these various platforms could adversely affect the
21 GRAHAM HOLDINGS COMPANY
viewership of the Company’s television stations via traditional platforms and/or the Company’s strategic position
in negotiations with pay-TV services. In addition, the networks’ increased role in negotiating online distribution
arrangements for their affiliated stations, together with the networks’ imposition of higher fees on affiliated
stations in exchange for broadcast and traditional pay-TV retransmission rights, may have broader effects on the
overall network-affiliate relationship, which the Company cannot predict.
Hoover
Hoover’s predominant product line is fire-retardant treated wood products for building interior applications that
are specified by architects in accordance with building code requirements for multi-family residential,
commercial and institutional nonresidential buildings. Hoover’s fire-retardant product lines are sold through a
stocking distributor network of more than 100 locations spanning the U.S. and Canada. Hoover’s competitors are
licensees of other chemical suppliers to the wood treating industry who compete with Hoover’s stocking
distributors on a local basis. The primary areas of competition are product availability and price, although brand
loyalty due to product quality is significant. Wood products are commodities with volatile market pricing;
however, Hoover’s reputation for quality products and its unique distribution model, which provides superior
product availability, enable Hoover to maintain a leading position across the continent.
Dekko
Dekko has three distinct product families that compete in fragmented, competitive global markets: power and
data distribution for office and furniture products, lighting solutions, and electrical harness manufacturing. These
products are sold through dealer and distribution channels and original equipment manufacturer (OEM)
customers, focused primarily on the North American market. While all markets and products are price sensitive,
technology, engineering solutions, quality and delivery performance are critical in purchase decisions. Dekko’s
multiple long-term relationships, high-quality manufacturing facilities, engineering support and reputation as a
solutions provider, in addition to being a product supplier, all contribute to sustaining its competitive advantages.
Graham Healthcare Group
The home health and hospice industries are extremely competitive and fragmented, consisting of both for-profit
and nonprofit companies. According to the Medicare Payment Advisory Commission’s July 2021 Data Book,
there are approximately 11,456 Medicare-certified home health providers and approximately 4,840 hospice
providers in the U.S., with the number of active home healthcare providers rapidly increasing. GHG markets its
services to physicians, discharge planners and social workers at hospitals, nursing homes, senior living
communities and physicians’ offices through a direct sales model. GHG differentiates its offerings based on
response time, clinical programming, clinical outcomes and patient satisfaction. Throughout the three states in
which it operates, GHG competes primarily with both privately owned and hospital-operated home health and
hospice service providers.
Graham Automotive
The retail automotive industry is highly competitive and fragmented. Automobile dealerships compete with
dealerships offering the same brands as well as those offering other manufacturers’ brands. Competitors include
small
local dealerships and large national multi-franchise automotive dealership groups. In addition to
competition for vehicle sales, dealerships compete for parts and service business with other dealerships,
automotive parts retailers and independent mechanics. The principal competitive factors in vehicle sales are
price, selection of vehicles, location of dealerships and quality of customer service. The principal competitive
factors in parts and service sales are price, the use of factory-approved replacement parts, factory-trained
technicians and the quality of customer service.
2021 FORM 10-K 22
Leaf
Leaf operates in highly competitive and developing industries that are characterized by rapid technological
change, a variety of business models and frequent disruption of incumbents by innovative entrants. Its art and
design marketplaces, Society6 Group and Saatchi Art Group, compete with a wide variety of online and
brick-and-mortar companies selling comparable products. Its made-to-order marketplace business, Society6
Group, primarily competes with companies that also utilize a made-to-order business model whereby consumer
products featuring artist designs are produced by third-party fulfillment partners and shipped directly to
customers, such as Redbubble, Zazzle, Art.com, Shutterfly and Minted, as well as companies that offer broader
home décor and apparel products, such as Amazon, Etsy, Wayfair, Urban Outfitters and West Elm. Its online art
gallery and in-person art fair business, Saatchi Art Group, competes with traditional offline art galleries, art
consultants and online platforms selling original artwork, such as Artfinder, Artspace, Rise Art, Singulart, eBay
and Amazon Art, as well as various art fairs that feature reasonably priced artwork from emerging artists, such as
The Affordable Art Fair. Leaf’s marketplaces must successfully attract, retain and engage both buyers and sellers
to use our platforms and attend our fairs. The principal competitive factors for such marketplaces include the
quality, price and uniqueness of the products, artwork or services being offered; the selection of goods and artists
featured; the ability to source numerous products efficiently and cost-effectively with respect to its made-to-order
products; customer service; the convenience and ease of the shopping experience; and its reputation and brand
strength. Competition is expected to continue to intensify as online and offline businesses increasingly compete
with each other and the barriers to enter online channels are reduced. For properties within its Media Group, Leaf
faces intense competition from a wide range of competitors. These markets are rapidly evolving, highly
fragmented and competition could increase in the future as more companies enter the space. The Media Group
competes for advertisers on the basis of a number of factors, including return on marketing expenditures, price of
our offerings, and the ability to deliver large audiences or precise types of segmented audiences. Principal
competitors in this space currently include various online media companies ranging from large internet media
companies to specialized and enthusiast properties that focus on particular areas of consumer interest, as well as
social media outlets such as Facebook, TikTok, Snapchat, Instagram and Pinterest, where brands and advertisers
are focusing a significant portion of their online advertising spend in order to connect with their customers. Some
of its competitors have larger audiences and more financial resources and many of its competitors are making
significant investments in order to compete with various aspects of this business. Many of Leaf’s current
competitors have, and potential competitors may have, substantially greater financial, marketing and other
resources than Leaf; greater technical capabilities; greater brand recognition;
longer operating histories;
differentiated products and services; and larger customer bases. These resources may help some of these
competitors and potential competitors respond more quickly as the industry and technology evolves, focus more
on product innovation, adopt more aggressive pricing policies and devote substantially more resources to website
and system development.
Clyde’s
The restaurant
industry is highly competitive. Clyde’s competes with national and regional chains and
independent, locally owned restaurants for customers and personnel. The principal basis for competition are
types of food and service, quality, price, location, brand and attractiveness of facilities.
Framebridge
Framebridge operates in a highly fragmented market. Competitors include small local retail operations and a few
national retail chains. The competitive factors in the framing industry are price, selection and convenience.
Framebridge’s centralized manufacturing, clear and transparent pricing, retail stores that are optimized for foot
traffic and a curated buying experience rather than framing workshops, and strong e-commerce and digital
capabilities contribute to its competitive advantages.
23 GRAHAM HOLDINGS COMPANY
Code3
The business of managed digital advertising is highly competitive. Public multinational advertising agencies may
exacerbate price competition in an attempt to protect existing relationships with advertising clients in traditional
media formats such as television. Public and private advertising technology companies, digital media agencies
and newer market entrants such as consulting firms also compete on price, service and technology offerings.
Code3 seeks to maintain a competitive advantage and maximize its clients’ return on advertising budgets by
utilizing a combination of the deep expertise of its employees, who manage media spending on the largest digital
platforms and a full-service creative team with a nuanced understanding of digital media.
Decile
Decile faces competition from lower-cost providers that provide a narrower data analytics offering. In addition,
at higher price points aimed at larger marketers ($50M+ annual revenue), there are several large customer data
platform (CDP) competitors that attempt to unify many disparate sources of data to improve omnichannel
advertising outcomes. Decile seeks to maintain a competitive advantage by simplifying the connection between
data and marketing and bridging the gap between financial and marketing analytics to help marketers extract the
most value out of their customer and sales data, all at a competitive price. Decile’s additional third-party data
enrichment capabilities and data science analytics serve as key differentiators in the mid-market space where
those capabilities are not available at a competitive price.
Slate
As a digital media company, Slate operates in highly competitive markets for subscribers, audiences and
advertisers. For written work, Slate faces competition from other online publishers, especially magazines and
newspapers. In podcasting, Slate faces competition from other podcast networks, as well as traditional radio
networks. In the face of stiff competition, Slate is able to attract and retain a large educated, affluent audience
and subscriber base by creating high-quality content, and is then able to compete for advertisers who wish to
reach that audience on trusted, brand-safe properties.
Pinna
Pinna is currently the only ad-free, audio on-demand streaming service designed just for children that offers
multiple audio formats in one space that complies with the Children’s Online Privacy Protection Act (COPPA).
The market for children’s subscription digital media entertainment is large. It includes media subscription
services for families, subscription services for children, online learning/gaming destinations, audiobooks and
podcasts for children, gaming subscriptions and free digital content. Key differentiators for Pinna include its
access to multiple formats and its offering of curated best-in-class brands and original shows all in one ad-free
COPPA-compliant place.
EXECUTIVE OFFICERS
The executive officers of the Company, each of whom is elected annually by the Board of Directors, are as
follows:
Donald E. Graham, age 76, has been Chairman of the Board of the Company since September 1993 and served as
Chief Executive Officer of the Company from May 1991 until November 2015. Mr. Graham served as President
of the Company from May 1991 until September 1993 and prior to that had been a Vice President of the
Company for more than five years. Mr. Graham also served as Publisher of The Washington Post (the Post) from
1979 until September 2000 and as Chairman of the Post from September 2000 to February 2008.
Timothy J. O’Shaughnessy, age 40, became Chief Executive Officer of the Company in November 2015. From
November 2014 until November 2015, he served as President of the Company. He was elected to the Board of
2021 FORM 10-K 24
Directors in November 2014. From 2007 to August 2014, Mr. O’Shaughnessy served as chief executive officer
of LivingSocial, an e-commerce and marketing company that he co-founded in 2007. Mr. O’Shaughnessy is the
son-in-law of Donald E. Graham, Chairman of the Company.
Andrew S. Rosen, age 61, became Executive Vice President of the Company in April 2014. He became
Chairman of Kaplan, Inc. in November 2008 and served as Chief Executive Officer of Kaplan, Inc. from
November 2008 to April 2014 and from August 2015 to the present. Mr. Rosen has spent nearly 36 years at the
Company and its affiliates. He joined the Company in 1986 as a staff attorney with the Post and later served as
assistant counsel at Newsweek. He moved to Kaplan in 1992 and held numerous leadership positions there before
being named Chairman and Chief Executive Officer of Kaplan, Inc.
Wallace R. Cooney, age 59, became Senior Vice President–Finance and Chief Financial Officer of the Company
in April 2017. Mr. Cooney served as the Company’s Vice President–Finance and Chief Accounting Officer from
2008 to 2017. He joined the Company in 2001 as Controller.
Jacob M. Maas, age 45, became Executive Vice President of the Company in January 2022, prior to which he
served as Senior Vice President–Planning and Development beginning October 2015. Prior to joining the
Company, he served as executive vice president of operations and head of corporate development at
LivingSocial, an e-commerce and marketing company that he joined as chief financial officer in 2008.
Nicole M. Maddrey, age 57, became Senior Vice President, General Counsel and Secretary of the Company in
April 2015. Ms. Maddrey joined the Company in 2007 as Associate General Counsel. Prior to joining the
Company, Ms. Maddrey served as Special Counsel in the Division of Corporation Finance at the U.S. Securities
and Exchange Commission.
Marcel A. Snyman, age 47, became Vice President and Chief Accounting Officer of the Company in January
2018. Mr. Snyman served as Controller of the Company from 2016 to 2018, prior to which he served as Assistant
Controller beginning in April 2014 and Director of Accounting Policy beginning in July 2008.
Sandra M. Stonesifer, age 37, became Vice President–Chief Human Resources Officer of the Company in
January 2021. Prior to joining the Company, Ms. Stonesifer was a consultant with S-Squared Consulting, an
organization development consulting company.
HUMAN CAPITAL
The Company employs approximately 18,000 people worldwide, of which approximately 12,350 were employed
in the United States and approximately 5,650 were employed outside the United States. Employment across each
of the Company’s businesses is further discussed below.
Kaplan employs approximately 6,100 people on a full-time basis in 27 countries. Kaplan also employs
substantial numbers of part-time employees who serve in instructional and administrative capacities. Kaplan’s
part-time workforce comprises approximately 4,000 individuals in 17 countries. Collectively, in the U.S. and
Canada, 52 Kaplan employees are represented by a union. In countries where Kaplan has a presence but union
membership is not disclosed to the employer – the U.K., Australia and Singapore – there may be union
represented employees as well.
Graham Media Group has approximately 1,012 employees, including 968 full-time employees and 44 part-time
employees, of whom approximately 105 are represented by a union.
In the Manufacturing segment, Hoover has approximately 356 full-time employees, of whom 15 are represented
by a union, and one part-time employee. Dekko has approximately 1,185 full-time employees, none of whom is
represented by a union. Joyce/Dayton has approximately 165 full-time employees, none of whom is represented
by a union. Forney has approximately 109 full-time employees, of whom 43 are represented by a union.
25 GRAHAM HOLDINGS COMPANY
In the Healthcare segment, Graham Healthcare Group has approximately 1,159 full-time employees and 243
part-time employees. None of these employees is represented by a union.
Graham Automotive employs approximately 412 full-time employees. None of these employees is represented
by a union.
In the Other Businesses segment, Leaf Group employs 390 full-time employees, none of whom is represented by
a union. Clyde’s has approximately 148 full-time employees and 1,342 part-time employees, none of whom is
represented by a union. Framebridge has approximately 782 employees, including 243 seasonal employees, none
of whom is represented by a union. Code3 has approximately 236 full-time employees, none of whom is
represented by a union. Decile has 34 full-time employees and two part-time employees, none of whom is
represented by a union. Slate employs 123 full-time employees and seven part-time employees, of whom
approximately 57 are represented by a union. Pinna employs 10 full-time employees, none of whom is
represented by a union. The FP Group has 56 full-time employees and four part-time employees. CyberVista
employs 37 full-time employees and 11 part-time employees, none of whom is represented by a union.
The parent Company has approximately 72 full-time employees and one part-time employee, none of whom is
represented by a union.
The Company recognizes the importance of attracting, developing and retaining highly qualified employees
throughout each of its businesses. The following is a description of the Company’s efforts to manage and
promote human capital within its organization.
Oversight and Management. The Company’s human resources organization and the human resource
organizations of its various businesses manage employment-related matters, including recruiting and hiring,
training, compensation, workplace safety, performance management, support for specific needs including
supporting employees who are caregivers or working remotely, and creating diversity, equity and inclusion
strategies. The Compensation Committee of the Board of Directors provides oversight of certain human capital
matters,
including compensation and benefits, executive development, workforce diversity and inclusion
initiatives, and succession planning.
Compensation and Benefits. The Company offers strong compensation and benefits programs to its
employees. In 2021 the Company utilized a market pay tool to ensure all our units have access to high-quality
market compensation data that enables them to set fair and equitable compensation rates. Depending on the
business unit, employee benefits may include healthcare and insurance benefits, health savings and flexible
spending accounts, paid time off, family leave, employee assistance programs, tuition assistance programs,
bonuses, long-term incentive compensation plans, pension and a 401(k) Plan. The Company also offers a small
group of eligible employees certain equity-based grants under the Company’s incentive compensation plan with
vesting and performance conditions to facilitate the attraction, retention, motivation and reward of key employees
and to align their interests with those of the Company’s stockholders.
Health and Safety. The health and safety of the Company’s employees is paramount. The Company’s health
and safety programs are designed to address multiple jurisdictions and regulations as well as the specific risks
and unique working environments of each of the Company’s businesses. In response to the COVID-19 pandemic,
the Company’s businesses have adopted return to office and vaccination policies and procedures that are most
appropriate for their businesses based on their industry and health risks as well as federal, state and local
guidance and regulation. At this time the majority of our workforce is required to be vaccinated against
COVID-19 for in-person work.
Training and Talent Development. The Company is committed to the continued growth and development of
its employees across all businesses. While development opportunities vary across the Company’s businesses, the
Company seeks to offer a variety of learning opportunities including virtual learning as well as on-the-job
2021 FORM 10-K 26
mentoring and coaching. All employees complete core harassment and discrimination training and ethics training
and are offered specific skills training designed to support the growth and advancement of their professional
skills. For example, CyberVista conducts web-based leadership management training for first-time managers.
Leaf Group has deployed several continuous learning platforms, including a diversity and inclusion learning
platform; an eLearning and development platform; and a performance management platform. Leaf Group’s
leadership development program includes personal assessments and one-on-one coaching for senior leadership.
Joyce/Dayton conducted leadership assessments for executives and managers as well as a personal assessment
tool to improve organizational communication. GMG has established learning and development opportunities to
support its mission to be the authentic, local voice in the communities they serve. GMG proudly offers in-house
leadership programs such as ‘Boss School’ which focuses on key skills and knowledge for new managers and a
continuing development program for experienced producers.
Diversity and Inclusion. Diversity and inclusion remains a high priority within the Company and in 2021
several new initiatives were launched at both the corporate level and at our business units. These initiatives are
focused on supporting the retention and training of a diverse workforce across the Company. The Company
encourages all business units to promote policies prioritizing diversity, equity and inclusion (DEI), and offers
courses on inclusive leadership and unconscious bias as part of Company-wide training options. In 2021, the
Company chose to focus its global efforts on learning and strategy-building. The Company’s business units
participated in a corporate-funded training program to establish DEI goals focused on attracting, retaining,
developing and engaging underrepresented talent. The outcomes of the exercise were reported to the Board in
November 2021. Following the completion of the program, a GHC Diversity, Equity and Inclusion Council was
formed to support ongoing progress at each individual business and collectively across the Company.
The Company is committed to a culture in which its diverse employee base can thrive in an inclusive and
respectful environment. As of December 2021, the diversity of the Company’s employees in the U.S. was: 54%
female; 46% male; 63% White; 14% Black or African American; 14% Hispanic or Latino; 7% Asian; and 2%
Other.
The Company’s businesses have launched various initiatives to support their individual DEI efforts. For example,
GMG launched a strategy that included the adoption of new training tools, the creation of employee resource
groups, virtual employee learning activities around Juneteenth and other celebration events, and talent sourcing
focused on attracting underrepresented talent. At Kaplan,
they have prioritized educating managers and
employees on DEI best practices and expectations, including creation of a Global Inclusive Leader and Inclusive
Colleague training for all current and new employees. Kaplan also sponsors diversity appreciation months that
topics that raise awareness and increase
include social activities and discussion forums around relevant
understanding of diversity. Kaplan continues to be the primary donor and supporter of The Kaplan Educational
Foundation (KEF), an independent public charity founded by Kaplan executives to help promote racial equality
through higher education. Other business units have established strategic diversity and inclusion initiatives in
ways that speak to their unique environment and human capital needs. For example, GHG has committed to
building a career pathing and mentorship program for all field-based positions to help employees, especially
underrepresented talent, achieve their career advancement goals. Most of the Company’s businesses have
incorporated diversity, equity and inclusion related questions in their engagement surveys and are beginning to
gather and analyze their human capital data to better understand existing conditions, set goals, and measure
progress moving forward.
FORWARD-LOOKING STATEMENTS
All public statements made by the Company and its representatives that are not statements of historical fact,
including certain statements in this Annual Report on Form 10-K and elsewhere in the Company’s 2021 Annual
Report to Stockholders, are “forward-looking statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include comments about expectations related to the duration
and severity of the COVID-19 pandemic and its effects on the Company’s operations, financial results, liquidity
27 GRAHAM HOLDINGS COMPANY
and cash flows. Other forward-looking statements include comments about expectations related to acquisitions or
dispositions or related business activities, including the TOSA, the Company’s business strategies and objectives,
anticipated results of license renewal applications, the prospects for growth in the Company’s various business
operations and the Company’s future financial performance. As with any projection or forecast, forward-looking
statements are subject to various risks and uncertainties, including the risks and uncertainties described in
Item 1A of this Annual Report on Form 10-K, that could cause actual results or events to differ materially from
those anticipated in such statements. Accordingly, undue reliance should not be placed on any forward-looking
statement made by or on behalf of the Company. The Company assumes no obligation to update any forward-
looking statement after the date on which such statement is made, even if new information subsequently becomes
available.
AVAILABLE INFORMATION
The Company’s internet address is www.ghco.com. The Company makes available free of charge through its
website its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K,
definitive proxy statements on Schedule 14A and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (Exchange Act) as soon as reasonably practicable
after such documents are electronically filed with the Securities and Exchange Commission (SEC). In addition,
the Company’s Certificate of Incorporation, its Corporate Governance Guidelines, the Charters of the Audit and
Compensation Committees of the Company’s Board of Directors and the codes of conduct adopted by the
Company and referred to in Item 10 of this Annual Report on Form 10-K are all available on the Company’s
website; printed copies of such documents may be obtained by any stockholder upon written request to the
Secretary, Graham Holdings Company at 1300 North 17th Street, Arlington, VA 22209. The contents of the
Company’s website are not incorporated by reference into this Form 10-K and shall not be deemed “filed” under
the Exchange Act.
The SEC website, www.sec.gov, contains the reports, proxy statements and information statements and other
information regarding issuers that file electronically with the SEC.
Item 1A. Risk Factors.
SUMMARY RISK FACTORS
This risk factor summary does not contain all of the information that may be important to you, and you should
read this risk factor summary together with the more detailed discussion of risks and uncertainties set forth
following this section under the heading “Risk Factors,” as well as elsewhere in this Annual Report on Form
10-K. Additional risks, beyond those summarized below or discussed elsewhere in this Annual Report on Form
10-K, may apply to the Company’s business, activities or operations as currently conducted or as may be
conducted in the future. These risks include, but are not limited to, the following:
Risks Related to the COVID-19 Pandemic
•
The Company’s Business, Results of Operations and Cash Flows Have Been and Will Continue to Be
Adversely Impacted by the Effects of the COVID-19 Pandemic.
Risks Related to the Company’s Education Business
•
•
•
•
Changes in International Regulations, Travel Restrictions and Sanctions.
Difficulties of Managing Foreign Operations and Failure to Comply with Foreign Regulatory Requirements.
Changes in U.K. Tax Laws.
Failure to Comply with Statutory and Regulatory Requirements as a Third-Party Servicer to Title IV
Participating Institutions.
2021 FORM 10-K 28
•
•
•
•
•
•
•
•
•
Failure to Comply with the ED’s Title IV Incentive Compensation Rule.
Failure to Comply with the ED’s Title IV Misrepresentation Regulations.
Compliance Reviews, Program Reviews, Audits and Investigations, Including in Connection with Borrower
Defense to Repayment Claims.
Noncompliance with Regulations by KNA’s Client Institutions.
Kaplan May Fail to Realize the Anticipated Benefits of the Purdue Global Transaction.
Regulatory Changes and Developments.
Changes in the Extent to Which Standardized Tests Are Used in the Admissions Process by Colleges or
Graduate Schools and Increased Competition.
Postponement and Cancellation of Examinations and Changes in the Extent to Which Licensing and
Proficiency Examinations Are Used to Qualify Individuals to Pursue Certain Careers.
Liability under Real Estate Lease Guarantees for Certain Real Estate Leases that were Assigned to
Education Corporation of America.
Risks Related to the Company’s Television Broadcasting and Media Businesses
•
•
•
•
•
Changing Perceptions about the Effectiveness of Television Broadcasting in Delivering Advertising.
Increased Competition Resulting from Technological Innovations in News, Information and Video
Programming Distribution Systems and Changing Consumer Behavior.
Changes in the Nature and Extent of Government Regulations.
Transition to New Technical Standards for Broadcast Television Stations.
Potential Liability for Intellectual Property Infringement.
Risks Related to the Company’s Manufacturing Businesses
•
•
•
Failure to Comply with Environmental, Health, Safety and Other Laws Applicable to the Company’s
Manufacturing Operations.
The Company May Be Subject to Liability Claims.
Failure to Recruit and Retain Production Staff Needed to Meet Customer Demand.
Risks Related to the Company’s Healthcare Business
•
•
Extensive Regulation of the Healthcare Industry.
Continued Nursing Staffing Shortages.
Risks Related to the Company’s Automotive Businesses
•
•
•
•
Termination or Non-renewal of a Dealership Agreement by an Automobile Manufacturer and Limitations on
the Company’s Ability to Acquire Additional Dealerships.
Changes Affecting Automobile Manufacturers.
Changes to State Dealer Franchise Laws to Permit Manufacturers to Enter the Retail Market Directly and
Technological Innovations.
Changes in a Manufacturer’s Incentive Programs.
29 GRAHAM HOLDINGS COMPANY
•
•
Changes in Environmental Regulations Governing the Operations of the Automotive Business.
Changes in Economic Conditions and Vehicle Inventories.
Risks Related to the Company’s Other Businesses
•
•
•
•
•
•
Failure to Successfully Drive Traffic to Leaf’s Marketplaces and Media Properties and Expand its Customer
Base for its Marketplaces.
Failure to Effectively Distribute Leaf’s Media Content on Social Media Platforms or Effectively Optimize
its Mobile Solutions in Order to Improve User Experience or Comply with Requirements of Leaf’s
Advertising Partners.
Leaf’s Businesses Face Significant Competition.
Failure to Recruit and Retain Employees in the Company’s Restaurants.
Food-Borne Illness Concerns and Damage to the Company’s Reputation.
Concentration of the Company’s Restaurants in the Washington, D.C. Region.
Risks Related to Cybersecurity, Information Technology and Data Management
•
•
System Disruptions and Security Threats to the Company’s Information Technology Infrastructure.
Failure to Comply with Privacy Laws or Regulations.
Financial Risks
•
•
Failure to Successfully Integrate Acquired Businesses.
Changes in Business Conditions.
RISK FACTORS
The Company faces a number of risks and uncertainties in connection with its operations. Described below are
the most material risks faced by the Company. These risks and uncertainties may not be the only ones faced by
the Company. Additional risks and uncertainties not presently known, or currently deemed immaterial, may
adversely affect the Company in the future. In addition to the other information included in this Annual Report
on Form 10-K,
investors should carefully consider the following risk factors. If any of the events or
developments described below occurs, it could have a material adverse effect on the Company’s business,
financial condition or results of operations.
Risks Related to the COVID-19 Pandemic
•
The Company’s Business, Results of Operations and Cash Flows Have Been and Will Continue to Be
Adversely Impacted by the Effects of the COVID-19 Pandemic, the Significance of Which Will
Depend on the Longevity and Severity of the Pandemic.
The COVID-19 pandemic and measures taken to prevent its spread, such as travel restrictions, shelter in place
orders and mandatory closures, have materially affected the Company’s businesses, including the demand for its
products and services. Travel restrictions and school closures have impeded and will continue to impede the
ability of students to travel to undertake overseas study or to accept a place or remain in their student halls of
residence as long as they remain in place, and have reduced student applications for programs offered by Kaplan
International’s (KI) operations and halls of residence, including Kaplan Languages Group, KI Pathways, Kaplan
Australia, Kaplan Singapore, MPW and certain KNA preparation programs that recruit foreign students.
Instruction moving online reduced demand for halls of residence for international students and where such
2021 FORM 10-K 30
demand continued to exist in the first half of 2021, students sought discounts for periods they had not been able
to stay in their accommodations due to COVID-19 travel restrictions. Further lockdowns or other measures in
response to COVID-19 variants could negatively affect demand for housing and may result in residents again
seeking discounts for periods they had not been able to stay in their accommodations. Travel restrictions,
decreased enrollments and delays and cancellations of standardized tests have, and are expected to continue to,
the Company’s revenues, operating results and cash flows. Manufacturing
materially adversely affect
restrictions, including plant closures and disruptions in the Company’s supply chains, declines in demand for
products and advertising, restaurant and live art fair closures, competition for labor and COVID-19 absenteeism,
and other developments related to the COVID-19 pandemic have also adversely impacted the Company’s media,
manufacturing, healthcare, automotive and other businesses. For example, at certain periods during the
pandemic, the Company had to temporarily close all of its restaurants and entertainment venues pursuant to
government orders, before later obtaining permission to resume indoor dining services. The long-term impact of
the pandemic on public demand for crowded dining facilities cannot be predicted. Moreover, the Company
cannot predict the duration or scope of the COVID-19 pandemic and what actions will be taken by governmental
authorities and other third parties in response to the pandemic and new variants. On January 13, 2022, the U.S.
Supreme Court blocked the Occupational Safety and Health Administration (OSHA) emergency temporary
standard (ETS) requiring all employers with at least 100 employees to mandate vaccination or weekly testing for
unvaccinated employees. In a separate decision, the U.S. Supreme Court allowed the federal Centers for
Medicare & Medicaid Services (CMS) to enforce a vaccination mandate for healthcare employees at facilities
receiving Medicare or Medicaid payments. Additional vaccine mandates may be announced in jurisdictions in
which the Company’s businesses operate. Vaccination mandates and other government mandated restrictions,
such as density limitations and travel restrictions, may result in employee attrition and difficulty in meeting labor
needs. The Company expects the COVID-19 pandemic and related developments to negatively impact its
financial results and such impact is expected to be material to the Company’s financial results, operations and
cash flows. Additionally, to the extent the COVID-19 pandemic adversely affects the Company’s business
operations, financial condition or operating results, it may also have the effect of heightening many of the other
risks described in this “Risk Factors” section.
Risks Related to the Company’s Education Business
•
Changes in International Regulations and Travel Restrictions Have Materially Adversely Affected
and Together with Changes in Sanctions Could Continue to Materially Adversely Affect International
Student Enrollments and Kaplan’s Business.
Kaplan is subject to a wide range of laws and regulations relating to its international operations. These include
domestic laws with extraterritorial reach, such as the U.S. Foreign Corrupt Practices Act, international laws, such
as the U.K. Bribery Act, as well as the local regulatory regimes of the countries in which Kaplan operates. These
laws and regulations change frequently. Failure to comply with these laws and regulations could result in
significant penalties or the revocation of Kaplan’s authority to operate in the applicable jurisdiction, each of
which could have a material adverse effect on Kaplan’s operating results.
In response to the COVID-19 pandemic, many governments have imposed student travel restrictions (applicable
to exit and entry), made recommendations for their students to return home and closed physical campus
locations, and many state and professional bodies have postponed or canceled examination dates related to state
examinations and professional education programs, all of which have materially adversely affected Kaplan
International’s operations and resulted in significant losses at Kaplan Languages Group. The emergence of new
variants of COVID-19, and consequential changes to travel and study arrangements could further negatively
affect Kaplan International and its operating results. Further changes to the regulatory environment, including
changes to government policy or practice in oversight and enforcement, or other factors, including geopolitical
instability, imposition or extension of international sanctions, a natural disaster or pandemic in either the
students’ countries of origin or countries in which they desire to study, could continue to negatively affect
Kaplan’s ability to attract and retain students and negatively affect Kaplan’s operating results. Additionally,
increasingly, governments have begun imposing sales taxes on digital services, such as education, offered in their
31 GRAHAM HOLDINGS COMPANY
jurisdictions by foreign providers. Any significant changes to availability of government funding for education,
visa policies or other administrative immigration requirements, or the tax environment, including changes to tax
laws, policies and practices, in any one or more countries in which KI operates or makes its services available
could negatively affect its operating results.
KI’s operations, institutions and programs in the U.S. may be subject to state-level regulation and oversight by
state regulatory agencies, whose approval or exemption from approval is necessary to allow an institution to
operate in the state. These agencies may establish standards for instruction, qualifications of faculty, location and
nature of facilities, financial policies and responsibility and other operational matters. Institutions that seek to
admit international students are required to be federally certified and legally authorized to operate in the state in
which the institution is physically located in order to be allowed to issue the relevant documentation to permit
international students to obtain a visa.
A substantial portion of KI’s revenue comes from programs that prepare international students to study and travel
in English-speaking countries. In 2021, university preparation programs were principally delivered in Australia,
Singapore and the U.K. KI’s ability to enroll students in these programs is directly dependent on its ability to
comply with complex regulatory environments. For example, the impact of Brexit on KI over time will depend
on the agreed terms of the U.K.’s withdrawal from the EU. Uncertainty over the impact and terms of Brexit trade
deals may materially diminish interest in traveling to the U.K. for study. If the U.K. is no longer viewed as a
favorable study destination, KI’s ability to recruit international students would be adversely impacted, which
would materially adversely affect KI’s results of operations and cash flows.
Revised U.K. immigration rules became effective on January 1, 2021, as the Brexit transition was completed.
Effective January 1, 2021, all international students, including EEA and Swiss students studying in the U.K. for
more than six months, are included in the Student Route, unless they are undertaking an English language course
under a Short-Term Study visa of up to 11 months. Free movement ceased between the EEA (together with
Switzerland) and the U.K.; students from these countries entering the U.K. are now subject to the same U.K.
immigration rules as students from outside the EEA and Switzerland. EEA and Swiss nationals commencing a
higher education course in England from August 2021 will no longer qualify for home fee status or have access
to financial support from Student Finance England. It is unclear how international student recruitment agents and
prospective international students may view the U.K. as a study destination after the introduction of any new
immigration requirements and the U.K.’s exit from the EU. The introduction of revised immigration rules has
historically increased, and may continue to increase, KI’s operating costs in the U.K. The introduction of new
visa and other administrative requirements for entry into the U.K., Brexit and the perception of the U.K. as a less
favorable study destination may have a materially adverse impact on KI’s ability to recruit international students
and KI’s results of operations and cash flows.
Changes to levels of direct and indirect government funding for international education programs would also
materially affect the success of KI’s operations. For example, if access to student loans or other funding were to
be lost for KI operations that admit students who are entitled to receive the benefit of this funding, Kaplan’s
operating results could be materially adversely affected.
In January 2021, President Biden reversed a previously enacted ban on travel from certain counties to the U.S.
and directed the State Department to restart visa processing for individuals from the affected countries. There
have since been new, unrelated travel restrictions into the U.S. due to COVID-19, and those restrictions can be
expected to continue changing. On September 25, 2020, the previous U.S. presidential administration proposed
significant changes to the visa rules governing entry of non-immigrant academic students and exchange visitors.
In July 2021, the Biden administration formally withdrew the notice of proposed rulemaking regarding these
changes. Nevertheless, negative perceptions regarding travel to the U.S. could continue to have a significant
negative impact on KI’s ability to recruit international students, and Kaplan’s business could be adversely and
introduced legislation that requires higher-level
materially affected. In 2018,
education standards, a compulsory national exam and increased continuing professional development
the Australian government
2021 FORM 10-K 32
requirements for all financial advisers in Australia. It had been expected that the new requirements could result in
financial advisers leaving the industry, which would have resulted in a loss of those existing students for Kaplan
Professional Australia. Although advisers did leave the industry,
leading position of Kaplan
Professional meant that its student numbers actually increased. In 2021, the numbers of advisers pursuing
compulsory education upgrades slowed as advisers focused on completing the national exam requirement before
a year-end deadline. As predicted, there has been a loss of existing advisers as a result of their unwillingness to
meet the new standards. Although Kaplan Professional was able to increase its market share due, in part, to the
increased annual continuing education development requirements, the legislation has had a negative impact on
results of operations.
the market
•
Difficulties of Managing Foreign Operations and Failure to Comply with Foreign Regulatory
Requirements Have Negatively Impacted and Could Continue to Negatively Affect Kaplan’s Business.
Kaplan has operations and investments in a growing number of foreign countries and regions, including
Australia, Canada, the People’s Republic of China, Colombia, France, Germany, Hong Kong, India, Ireland,
Japan, Myanmar (in which operations are in the process of being closed), New Zealand, Nigeria, Saudi Arabia,
Singapore, the U.K. and the United Arab Emirates. Operating in foreign countries and regions presents a number
of inherent risks, including the difficulties of complying with unfamiliar laws and regulations, effectively
managing and staffing foreign operations, successfully navigating local customs and practices, preparing for
potential political and economic instability and adapting to currency exchange rate fluctuations. Failure to
effectively manage these risks could have a material adverse effect on Kaplan’s operating results.
In June 2021, the Committee for Private Education (CPE) in Singapore instructed Kaplan Singapore to cease new
enrollments for three marketing diploma programs on both a full and part-time basis due to noncompliance with
minimum entry level requirements for admission and to teach out existing students in these programs. On
August 23, 2021, the CPE issued the same instructions with respect to the Kaplan Foundation diploma and four
information technology diploma programs on both a full and part-time basis. In November 2021, the CPE issued
the same instructions with respect to a further 23 full-time or part-time diploma programs. Post regulatory action,
Kaplan Singapore is currently still able to offer 449 programs that are registered with the CPE, out of which there
are 16 diploma programs, 361 bachelors programs, with the balance comprising certificate and postgraduate
courses. Kaplan Singapore will apply for re-registration of diploma programs in 2022. The impact from
regulatory actions by the CPE will have a significant adverse impact on Kaplan Singapore’s revenues, operating
results and cash flows in the future. No assurance can be given that applications for re-registration of the
impacted programs will be successful. An inability to re-register one or more impacted programs could have a
further material adverse effect on Kaplan Singapore’s revenues, operating results and cash flows.
•
Changes in U.K. Tax Laws Could Have a Material Adverse Effect on Kaplan International.
The UK Pathways Colleges located in England were required to register with the Office for Students (OfS) to
ensure they could continue operating as English higher education providers. The UK Pathways Colleges
(excluding Glasgow and York) were entered on the OfS register of approved providers with Approved Fee Cap
Status in August 2020. These colleges now operate under the regulatory oversight of the OfS. Colleges registered
with the OfS under Approved Fee Cap status do not charge students Value Added Tax (VAT) on tuition fees
based on a statutory exemption available to Approved Fee Cap providers. The York College forms part of the
University of York’s Approved Fee Cap registration. If KI Pathways were to lose its Approved Fee Cap status
with the OfS, KI Pathways Colleges’ financial results may be materially adversely impacted.
The Glasgow College is not currently included in the OfS registration as it is located in Scotland. Under a
different statutory VAT exemption, bodies which qualify for VAT purposes as “colleges of a university” are able
to exempt their tuition fees from VAT, and UK Pathways Glasgow College applies this status. In 2019; a tax case
was determined by the U.K. Supreme Court on the meaning of “college of a university.” The U.K. Supreme
Court decided the case in the college’s favor. The result was more favorable to private providers working in
collaboration with a university. The U.K. Supreme Court emphasized five principal tests for a private provider to
33 GRAHAM HOLDINGS COMPANY
meet, for it to be sufficiently integrated with a university, to qualify as a “college of a university” even if it does
not have a constitutional link to the university. Although the focus on these five tests has now been incorporated
into official Her Majesty’s Revenue and Customs (HMRC) guidance, it is not yet clear how HMRC will apply
the Supreme Court judgment and the five key tests in practice. If the HMRC’s application of the Supreme Court
judgment and the five key tests deems Glasgow International College not to constitute a “college of a university”
and not entitled to a VAT exemption, KI Pathways Colleges’ financial results may be materially adversely
impacted if they are not able to meet any new requirements.
Following the departure of the U.K. from the EU on December 31, 2020, the U.K. may further develop its VAT
rules in this complex area separate from the EU rules. Kaplan is closely monitoring this area.
•
Failure to Comply with Statutory and Regulatory Requirements as a Third-Party Servicer to Title IV
Participating Institutions Could Result in Monetary Liabilities or Subject Kaplan to Other Material
Adverse Consequences.
KNA provides services to Purdue Global, Purdue University and other Title IV participating institutions. KNA
also provides financial aid services to Purdue Global, and as such, KNA meets the definition of a “third-party
servicer” for Purdue Global contained in Title IV regulations. As a result, KNA is subject to applicable statutory
provisions of Title IV and ED regulations that, among other things, require Kaplan to be jointly and severally
liable with its Title IV participating client institution(s) to the ED for any violation by such client institution(s) of
any Title IV statute or ED regulation or requirement. Separately, if KNA provides financial aid services to more
than one Title IV participating institution, it will be required to arrange for an independent auditor to conduct an
annual Title IV audit of KNA’s compliance with applicable ED requirements. KNA is also subject to other
federal and state laws, including federal and state consumer protection laws and rules prohibiting unfair or
deceptive marketing practices; data privacy, data protection and information security requirements established by
federal, state and foreign governments, including, for example, the Federal Trade Commission; and applicable
provisions of the Family Educational Rights and Privacy Act regarding the privacy of student records.
Failure to comply with these and other federal and state laws and regulations could result
consequences, including, for example:
in adverse
• The imposition on Kaplan of fines, other sanctions or liabilities, including repayment obligations for
Title IV funds to the ED or the termination or limitation of Kaplan’s eligibility to provide services as a
third-party servicer to any Title IV participating institution if KNA fails to comply with statutory or
regulatory requirements applicable to such service providers;
• Adverse effects on Kaplan’s business and operations from a reduction or loss in KNA’s revenues under
the TOSA or any other agreement with any Title IV participating institution if a client institution loses
or has limits placed on its Title IV eligibility, accreditation, operations or state licensure or is subject to
fines, repayment obligations or other adverse actions owing to noncompliance by KNA (or the
institution) with Title IV, accreditor, federal or state agency requirements;
• Liability under the TOSA or any other agreement with any Title IV participating institution for
noncompliance with federal, state or accreditation requirements arising from KNA’s conduct; and
• Liability for noncompliance with Title IV or other federal or state requirements occurring prior to the
transfer of KU to Purdue.
Although KNA endeavors to comply with all U.S. Federal and state laws and regulations, KNA cannot guarantee
that its implementation of the relevant rules will be upheld by the ED or other agencies or upon judicial review.
The laws, regulations and other requirements applicable to KNA and its client institutions are subject to change
and to interpretation. In addition, there are other factors related to KNA’s client institutions’ compliance with
federal, state and accrediting agency requirements, some of which are outside of KNA’s control, that could have
a material adverse effect on KNA’s client institutions’ revenues and, in turn, on KNA’s operating results.
2021 FORM 10-K 34
•
Failure to Comply with the ED’s Title IV Incentive Compensation Rule Could Subject Kaplan to
Liabilities, Sanctions and Fines.
Under the ED’s incentive compensation rule, an institution participating in Title IV programs may not provide
any commission, bonus or other incentive payment to any person or entity engaged in any student recruiting or
admission activities or in making decisions regarding the awarding of Title IV funds if such payment is based
directly or indirectly on success in securing enrollments or financial aid. KNA is a third party providing bundled
services to Title IV participating institutions, including recruiting and, in the case of Purdue Global, financial aid
services. As such, KNA is also subject to the incentive compensation rule and cannot provide any commission,
bonus or other incentive payment to any covered employees, subcontractors or other parties engaged in certain
student recruiting, admission or financial aid activities based on success in securing enrollments or financial aid.
In addition, Purdue Global’s payments to KNA under the TOSA (as well as any other agreement with any Title
IV participating institution) must comply with revenue sharing guidance provided by the ED related to bundled
services agreements. In 2011 guidance, the ED provided that in certain arrangements with Title IV participating
institutions where student recruiting services are “bundled” with other non-recruiting services, revenue sharing
may be allowable despite the incentive compensation rule’s general prohibition on such revenue sharing with
entities or individuals that provide recruiting services. Because this guidance is not codified in any rule or law,
but is instead an ED opinion on the applicability of the incentive compensation rule, such guidance can be
revoked at any time and without notice. Some lawmakers and states, such as California, have publicly called for
the revocation of this guidance or sought to introduce federal and state legislation seeking to prevent any such
revenue sharing. The change of control of the executive branch and Congress in 2021 could increase the
likelihood of changes to this guidance and to the incentive compensation rule. As previously described, the
TOSA revenue sharing fee provisions are defined as deferred purchase price payments rather than payments for
services. KNA’s services are paid for as a percentage of KNA’s costs of delivering those services to Purdue
Global. KNA cannot predict how the ED or a federal court will interpret, revise or enforce all aspects of the
incentive compensation rule or the bundled service revenue sharing guidance in the future or how they would be
applied to the TOSA or any of KNA’s agreements by the ED or in any litigation. Any revisions or changes in
interpretation or enforcement could require KNA and its client
institutions to change their practices or
renegotiate the tuition revenue sharing payment terms of KNA’s agreements with such client institutions and
could have a material adverse effect on Kaplan’s business and results of operations. Additionally, failure to
comply with the incentive compensation rule could result in litigation or enforcement actions against KNA or its
clients and could result in liabilities, fines or other sanctions against KNA or its clients, which could have a
material adverse effect on Kaplan’s business and results of operations.
•
Failure to Comply with the ED’s Title IV Misrepresentation Regulations Could Subject Kaplan to
Liabilities, Sanctions and Fines.
A Title IV participating institution is required to comply with the ED regulations related to misrepresentations
and with related federal and state laws. These laws and regulations are broad in scope and may extend to
statements by servicers, such as KNA, that provide marketing or certain other services to such institutions. These
laws and regulations may also apply to KNA’s employees and agents, with respect to statements addressing the
nature of an institution’s programs, financial charges or the employability of its graduates. KNA provides certain
marketing and other services to Title IV participating institutions. The failure to comply with these or other
federal and state laws and regulations regarding misrepresentation and marketing practices could result in the
imposition on KNA or its client institutions of fines, other sanctions or liabilities, including federal student aid
repayment obligations to the ED, the termination or limitation of Kaplan’s eligibility to provide services as a
third-party servicer to Title IV participating institutions, the termination or limitation of a client institution’s
eligibility to participate in the Title IV programs, or legal action by students or other third parties. A violation of
misrepresentation regulations or other federal or state laws and regulations applicable to the services KNA
provides to its client institutions arising out of statements by KNA, its employees or agents could require KNA to
pay the costs associated with indemnifying its client institutions from applicable losses resulting from the
violation or could result in termination by such client institutions of their services agreements with KNA.
35 GRAHAM HOLDINGS COMPANY
•
Compliance Reviews, Program Reviews, Audits and Investigations, Including in Connection with
Borrower Defense to Repayment Claims, Could Result in Findings of Noncompliance with Statutory
and Regulatory Requirements and Result in Liabilities, Sanctions and Fines.
KNA and its client institutions are subject to reviews, audits, investigations and other compliance reviews
conducted by various regulatory agencies and auditors, including, among others, the ED, the ED’s Office of the
Inspector General, accrediting bodies and state and various other federal agencies. These compliance reviews can
result in findings of noncompliance with statutory and regulatory requirements that can, in turn, result in the
imposition of fines,
liabilities, civil or criminal penalties or other sanctions against KNA and its client
institutions, which could have an adverse effect on Kaplan’s financial results and operations. Separately, if KNA
provides financial aid services to more than one Title IV participating institution, it will be required to arrange
for an independent auditor to conduct an annual Title IV compliance audit of KNA’s compliance with applicable
ED requirements. KNA’s client institutions are also required to arrange for an independent auditor to conduct an
annual Title IV audit of their compliance with applicable ED requirements, including requirements related to
services provided by KNA.
On September 3, 2015, Kaplan sold substantially all of the assets of the former Kaplan Higher Education
Campuses (KHE Campuses). As part of the transaction, similar to the transfer of KU, Kaplan retained liability
for the pre-sale conduct of the KHE schools. Although Kaplan no longer owns KU or the former KHE Campuses,
Kaplan may be liable to the current owners of KU and the former KHE Campuses, for the pre-sale conduct of the
schools, and the pre-sale conduct of the schools has been and could be the subject of future compliance reviews,
regulatory proceedings or lawsuits that could result in monetary liabilities or fines or other sanctions.
On May 6, 2021, Kaplan received a notice from the ED that it would be conducting a fact-finding process
pursuant to the borrower defense to repayment regulations to determine the validity of more than 800 borrower
defense to repayment claims and a request for documents related to several of Kaplan’s previously owned
schools. Beginning in July 2021, Kaplan started receiving the claims and related information requests. In total,
Kaplan received 1,449 borrower defense applications that seek discharge of approximately $35 million in loans.
Most claims received are from former KU students. The ED’s process for adjudicating these claims is subject to
the borrower defense regulations but it is not clear to what extent the ED will exclude claims based on the
underlying statutes of limitations, evidence provided by Kaplan, or any prior investigation related to schools
attended by the student applicants. Kaplan believes it has defenses that would bar any student discharge or school
liability including that the claims are barred by the applicable statute of limitations, unproven, incomplete and
fail to meet regulatory filing requirements. Kaplan expects to vigorously defend any attempt by the ED to hold
Kaplan liable for any ultimate student discharges and is responding to all claims with documentary and narrative
evidence to refute the allegations, demonstrate their lack of merit, and support the denial of all such claims by the
ED. If the claims are successful, the ED may seek reimbursement for the amount discharged from Kaplan. If the
ED initiates a reimbursement action against Kaplan following approval of former students’ borrower defense to
repayment applications, Kaplan may be subject to significant liability.
•
Noncompliance with Regulations by KNA’s Client Institutions May Adversely Impact Kaplan’s
Results of Operations.
KNA currently provides services to higher education institutions that are heavily regulated by federal and state
laws and regulations and by accrediting bodies. Currently, a substantial portion of KNA’s revenue is attributable
to service fees and deferred purchase price payments it receives under its agreement with Purdue Global, which
are dependent upon revenue generated by Purdue Global and upon Purdue Global’s eligibility to participate in
the Title IV federal student aid program. To maintain Title IV eligibility, Purdue Global and KNA’s other client
institutions must be certified by the ED as eligible institutions, maintain authorizations by applicable state
education agencies and be accredited by an accrediting commission recognized by the ED. Purdue Global and
KNA’s other client institutions must also comply with the extensive statutory and regulatory requirements of the
Higher Education Act and other state and federal laws and accrediting standards relating to their financial aid
management, educational programs, financial strength, disbursement and return of Title IV funds, facilities,
2021 FORM 10-K 36
representations made by the school and other parties, and various other matters.
recruiting practices,
Additionally, Purdue Global and other client institutions are subject to laws and regulations that, among other
things, limit student default rates on the repayment of Title IV loans; permit borrower defenses to repayment of
Title IV loans based on certain conduct of the institution; establish specific measures of financial responsibility
and administrative capability; regulate the addition of new campuses and programs and other institutional
changes; require compliance with state professional licensure board requirements to the extent applicable to
institutional programs; and require state authorization and institutional and programmatic accreditation. In
addition, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Consolidated Appropriations
Act of 2021, and subsequent guidance from the ED have created changes in the administration of federal
financial assistance programs, the interpretation of which may not yet be fully understood.
If the ED finds that Purdue Global or any other KNA client institution has failed to comply with Title IV
requirements or improperly disbursed or retained Title IV program funds, it may take one or more of a number of
actions, including fining the school, requiring the school to repay Title IV program funds, limiting or terminating
the school’s eligibility to participate in Title IV programs, initiating an emergency action to suspend the school’s
participation in the Title IV programs without prior notice or opportunity for a hearing, transferring the school to
a method of Title IV payment that would adversely affect the timing of the institution’s receipt of Title IV funds,
requiring the school to submit a letter of credit, denying or refusing to consider the school’s application for
renewal of its certification to participate in the Title IV programs or for approval to add a new campus or
educational program and referring the matter for possible civil or criminal investigation. There can be no
assurance that the ED will not take any of these or other actions in the future, whether as a result of lawsuits,
program reviews or otherwise. In addition, on October 15, 2021, Purdue Global received from the ED a new
PPPA granting provisional certification until June 30, 2022. Under this PPPA, Purdue Global must apply for and
receive approval for expansion or any substantial change before it may award, disburse or distribute Title IV
funds based on the substantial change. Substantial changes generally include, but are not
limited to:
(a) establishment of an additional location; (b) increase in the level of academic offering beyond those listed in
the institution’s Eligibility and Certification Approval Report (ECAR); (c) addition of any educational program
(including degree, non-degree or short-term training programs), or (d) the addition of any new degree program.
In addition, the institution must pay any liabilities found in a currently open program review prior to the
expiration of the PPPA. The provisional certification ends upon the ED’s notification to the institution of the
ED’s decision to grant or deny a six-year certification to participate in the Title IV, HEA programs. If Purdue
Global or another KNA client institution loses or has limits placed on its Title IV eligibility, accreditation or state
licensure, or if Purdue Global or another KNA client institution is subject to fines, repayment obligations or other
adverse actions owing to its or Kaplan’s noncompliance with Title IV regulations, accreditor or state agency
requirements, or other state or federal laws, Kaplan’s financial results of operations could be adversely affected.
Additionally, as a prior owner of Title IV institutions, KNA may retain certain liability for student loans related
to the current BDTR applications described above or future similar applications.
In turn, any of the aforementioned consequences could have a material adverse effect on Kaplan’s operating
results even though such institution’s compliance is affected by circumstances beyond Kaplan’s control,
including, for example:
•
•
•
a reduction or loss in KNA’s revenues under the TOSA or other client agreements if Purdue Global or
any other KNA client institution loses or has limits placed on its Title IV eligibility, accreditation or
state licensure;
a reduction or loss in KNA’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 KNA of fines or repayment obligations to the ED or the termination or limitation on
Kaplan’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
37 GRAHAM HOLDINGS COMPANY
•
liability under the TOSA or other client agreements for noncompliance with federal, state or
accreditation requirements arising from KNA’s conduct.
•
Kaplan May Fail to Realize the Anticipated Benefits of the Purdue Global Transaction.
Kaplan’s ability to realize the anticipated benefits of the Purdue Global transaction will depend, in part, on its
ability to successfully and efficiently provide services to Purdue Global. Achieving the anticipated benefits is
subject to a number of uncertainties, including whether the services can be provided in the manner and at the cost
Kaplan anticipated and whether Purdue Global is able to realize anticipated student enrollment levels. If Kaplan
is unable to effectively execute its post-transaction strategy, it may take longer than anticipated to achieve the
benefits of the transaction or it may not realize those benefits at all. In 2022 Purdue Global began working with
KNA to provide certain human resources, finance and accounting, facility management, and communications
services itself, in-house.
•
Regulatory Changes and Developments Could Negatively Impact Kaplan’s Results of Operations.
Any legislative, regulatory or other development that has the effect of materially reducing the amount of Title IV
financial assistance or other federal, state or private financial assistance available to the students of Purdue
Global or any other client institution could have a material adverse effect on Kaplan’s business and results of
operations. In addition, any development that has the effect of making the terms on which Title IV financial
assistance or other financial assistance funds are available to Purdue Global’s or other client institutions’ students
materially less attractive could have a material adverse effect on Kaplan’s business and results of operations.
The laws, regulations and other requirements applicable to KNA or any KNA client institutions are subject to
change and to interpretation. Regulatory activity in 2022 may include possible restrictions on revenue sharing
arrangements with universities, as discussed above, which could impact KNA Higher Education managed service
provider contracts with Purdue, Purdue Global, Wake Forest and other client institutions. Additional regulatory,
policy or legal changes could include imposing outcome metrics on universities, a form of free community
college, changes to the financial aid system, and the reinstatement of broader borrower defenses to loan
repayment. In addition, a Negotiated Rulemaking began in October 2021 that covered, in part, rules related to the
borrower defense to repayment adjudication process and recovery from institutions, closed school
loan
discharges, disability loan discharges, public loan forgiveness, income driven repayment plans and arbitration
agreements. As part of this current Rulemaking, in a session that began in January 2022, the ED also proposed a
change to the Title IV definition of “Nonprofit” institution to generally exclude from that definition any
institution that is an obligor on a debt owed to a former owner of the institution or maintains a revenue-based
service agreement with a former owner of the institution. Such regulatory changes as well as those described
above could subject Purdue Global to additional regulatory requirements. Any resulting new rules or changes to
existing rules are not likely to be effective until July 1, 2023. In addition, there are other factors related to Purdue
Global’s and other client institutions’ compliance with federal, state and accrediting agency requirements—many
of which are largely outside of Kaplan’s control—that could have a material adverse effect on Purdue Global’s
and other client institutions’ revenues and, in turn, on Kaplan’s operating results, including, for example:
Reduction in Title IV or other federal, state or private financial assistance: KNA receives revenue
based on its agreements with client institutions and particularly revenue from Purdue Global under the
TOSA. Purdue Global is expected to derive a significant percentage of its tuition revenues from its
participation in Title IV programs. Any legislative, regulatory or other development that materially
reduces the amount of Title IV, federal, state or private financial assistance available to the students of
Purdue Global and other client institutions could have a material adverse effect on Kaplan’s business and
results of operations. In addition, any development that makes the terms of such financial assistance less
attractive could have a material adverse effect on Kaplan’s business and results of operations.
Compliance reviews and litigation:
Institutions participating in the Title IV programs, including Purdue
Global and other client institutions, are subject to program reviews, audits, investigations and other
compliance reviews conducted by various regulatory agencies and auditors, including, among others, the
2021 FORM 10-K 38
ED, the ED’s Office of the Inspector General, accrediting bodies and state and various other federal
agencies, as well as annual audits by an independent certified public accountant of compliance with Title
IV statutory and regulatory requirements. Purdue Global and other client institutions also may be subject
to various lawsuits and claims related to a variety of matters, including but not limited to alleged
violations of federal and state laws and accrediting agency requirements. These compliance reviews and
litigation matters could extend to activities conducted by KNA on behalf of Purdue Global or other client
institutions and to KNA itself as a third-party servicer subject to Title IV regulations.
Legislative and regulatory change: Congress periodically revises the Higher Education Act and other
laws and enacts new laws governing the Title IV programs and annually determines the funding level for
each Title IV program and may make changes in the laws at any time. The ED and other federal and state
agencies also may issue new regulations and guidance or change their interpretation of regulations at any
time. For example, on September 23, 2019, the ED released new final regulations affecting the ability of
student borrowers to obtain discharges of their obligations to repay certain Title IV loans that were first
disbursed on or after July 1, 2020, and loans disbursed between July 2017 and July 1, 2020. The new
regulations, among other things, expand the ability of borrowers to obtain loan discharges based on
substantial misrepresentations. Application of these regulations to Purdue Global or other client
institutions could materially affect revenue and result in liabilities to the ED. In addition, application of
these regulations to KNA for loans disbursed between July 1, 2017, and March 22, 2018, the close of the
Purdue Global transaction, could materially affect Kaplan’s revenues. Additionally, changes to the ability
of students to discharge loans owing to prior school closures could impose liability on Kaplan for loans
made to students at institutions previously owned by Kaplan and closed during Kaplan’s ownership. ED
also published final regulations on September 2, 2020, regarding distance education and various other
matters. Any action by Congress or the ED that significantly reduces funding for Title IV programs or the
ability of Purdue Global or other client institutions to receive funding through these programs could
reduce Purdue Global’s or other client institutions’ enrollments and tuition revenues and, in turn, the
revenues KNA receives under the TOSA or other agreements. Any action by Congress or the ED that
impacts the ability of Purdue Global to contract with KNA to receive a share of revenue as deferred
payment for the sale of KU or the ability of KNA to contract with any client institution to provide bundled
services in exchange for a share of tuition revenue could require KNA to modify the TOSA, other
agreements or its practices and could impact the revenues KNA may receive under such agreements.
Congress, the ED and other federal and state regulators may create new laws or take actions that may
require Purdue Global, other client institutions or KNA to modify practices in ways that could have a
material adverse effect on Kaplan’s business and results of operations.
Increased regulatory scrutiny of postsecondary education and service providers: The increased
scrutiny of online schools that offer programs similar to those offered by Purdue Global or other client
institutions and of service providers that provide services similar to Kaplan’s has resulted, and may
continue to result, in additional enforcement actions, investigations and lawsuits by the ED, other federal
agencies, Congress, state Attorneys General and state licensing agencies. Recent enforcement actions
have resulted in substantial liabilities, restrictions and sanctions and in some cases have led to the loss of
Title IV eligibility and closure of institutions. The change of control of the executive branch and Congress
in 2021 could increase the amount of regulation and scrutiny of service companies like Kaplan and online
schools like Kaplan’s client institutions. This increased activity and other current and future activity may
result in further legislation, rulemaking and other governmental actions affecting the amount of student
financial assistance for which Purdue Global’s or other client institutions’ students are eligible, or
Kaplan’s participation in Title IV programs as a third-party servicer to Purdue Global or such other client
institutions. In addition, increased scrutiny and legislative proposals restricting the ability of entities like
KNA that provide certain admissions related services to Title IV participating institutions under revenue
sharing arrangements could impact KNA agreements. Such scrutiny could result in requests to Kaplan for
information or negative publicity that could adversely affect KNA and its client institutions.
39 GRAHAM HOLDINGS COMPANY
•
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 KNA Supplemental
Education Test Preparation Offerings.
KNA Supplemental Education Exam Preparation provides courses that prepare students for a broad range of
admissions examinations that are considered by colleges and graduate schools. Historically, colleges and
graduate schools have required standardized tests as part of the admissions process. As a result of the COVID-19
pandemic, a number of colleges and graduate schools have waived standardized tests as part of the admissions
process for the upcoming academic year or longer. These changes have had a negative impact on KNA’s results
of operations for the test preparation products. In addition, there had already been some movement away from
the historical reliance on standardized admissions tests among certain colleges, which have phased out
admissions tests, are in the process of phasing out admissions tests or have adopted “test-optional” admissions
policies. Moreover, as a part of a settlement in a lawsuit brought by students in 2019, a large public university
will no longer use the SAT and ACT for admissions or scholarship decisions for its system of 10 schools. Any
significant reduction in the use of standardized tests in the college or graduate school admissions processes could
have an adverse effect on Kaplan’s operating results.
Additionally, KNA faces increased competition from competitors offering lower-cost or free test prep products
that may be used by students to piece together alternatives to traditional comprehensive test prep programs.
Kaplan’s operating results may be adversely affected if student demand for KNA’s traditional comprehensive
programs shifts to KNA’s lower-cost, standalone offerings, or if competitors offer lower-cost, standalone
offerings or free test prep products that are more attractive to students than KNA’s products.
•
Postponement and Cancellation 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.
A material portion of KNA’s and KI’s revenue comes from preparing individuals for licensing or technical
proficiency examinations in various fields. Any significant relaxation or elimination of licensing or technical
proficiency requirements in those fields served by KNA’s and KI’s businesses could negatively affect Kaplan’s
operating results. As a result of the COVID-19 pandemic, a number of professional certification examinations
have been cancelled or permanently altered. While the impact of these changes on Kaplan’s operations improved
in 2021 relative to 2020, further changes and impacts on student timing due to the pandemic may impact
Kaplan’s results.
•
Liability under Real Estate Lease Guarantees for Certain Real Estate Leases that were Assigned to
Education Corporation of America Could Have a Material Adverse Effect on the Company’s Results.
On September 3, 2015, Kaplan sold to ECA substantially all of the assets of the KHE Campuses. The transaction
included the transfer of certain real estate leases that were guaranteed or purportedly guaranteed by Kaplan. ECA
is currently in receivership, has terminated all of its higher-education operations and has sold most, if not all, of
its remaining assets (including New England College of Business). Additionally, the receiver has repudiated all
of ECA’s real estate leases. Although ECA is required to indemnify Kaplan for any amounts Kaplan must pay
due to ECA’s failure to fulfill its obligations under the real estate leases guaranteed by Kaplan, ECA’s current
financial condition and the amount of secured and unsecured creditor claims outstanding against ECA make it
unlikely that Kaplan will recover from ECA. If Kaplan is not successful in mitigating these liabilities, the
Company’s results could be materially adversely impacted. In the second half of 2018, the Company recorded an
estimated $17.5 million in losses on guarantor lease obligations in connection with this transaction in other
non-operating expense. The Company recorded an additional estimated $1.1 million in non-operating expense in
2019 and $1 million in non-operating expense in 2020, and $1.1 million in non-operating expense in 2021, in
each case consisting of legal fees and lease costs. The Company continues to monitor the status of these
obligations.
2021 FORM 10-K 40
Risks Related to the Company’s Television Broadcasting and Media Businesses
•
Changing Perceptions about the Effectiveness of Television Broadcasting in Delivering Advertising
Could Adversely Affect the Profitability of Television Broadcasting.
Historically, television broadcasting has been viewed as a cost-effective method of delivering various forms of
advertising. There can be no guarantee that this historical perception will guide future decisions by advertisers.
To the extent that advertisers shift advertising expenditures away from television to other media outlets, the
profitability of the Company’s television broadcasting business could be adversely affected.
•
Increased Competition Resulting from Technological Innovations in News, Information and Video
Programming Distribution Systems and Changing Consumer Behavior Could Adversely Affect the
Company’s Operating Results.
The continuing growth and technological expansion of internet-based services has increased competitive pressure
on the Company’s media businesses. Examples of such developments include online delivery of programming,
technologies that enable users to fast-forward or skip advertisements and devices that allow users to consume
content on demand and in remote locations while avoiding traditional commercial advertisements or cable and
satellite subscriptions. Changing consumer behavior may also put pressure on the Company’s media businesses
to change traditional distribution methods. The Company obtains significant revenue from its retransmission
consent agreements with traditional cable and satellite distributors. These payments are on a per-subscriber basis
and payments to the Company may decrease as customers “cut the cord” and cancel their cable and satellite
subscriptions. The Company also receives payments for distribution of its stations’ signals on certain online
“over-the-top” services, however these revenues may be less than those from traditional cable and satellite
distribution. Anticipating and adapting to changes in technology and consumer behavior on a timely basis will
affect the Company’s media businesses’ ability to continue to increase their revenue. The development and
deployment of new technologies and changing consumer behavior have the potential
to negatively and
significantly affect the Company’s media businesses in ways that cannot now be reliably predicted and that may
have a material adverse effect on the Company’s operating results.
•
Changes in the Nature and Extent of Government Regulations Could Adversely Affect the Company’s
Television Broadcasting Business and Other Businesses.
The Company’s television broadcasting business operates in a highly regulated environment. Complying with
applicable regulations has significantly increased, and may continue to increase, the costs, and has reduced the
revenues, of the business. Changes in regulations have the potential
the television
broadcasting business, not only by increasing compliance costs and reducing revenues through restrictions on
certain types of advertising, limitations on pricing flexibility or other means, but also by possibly creating more
favorable regulatory environments for the providers of competing services. In addition, changes to the FCC’s
rules governing broadcast ownership may affect the Company’s ability to expand its television broadcasting
business and/or may enable the Company’s competitors to improve their market positions through consolidation.
More generally, all of the Company’s businesses could have their profitability or their competitive positions
adversely affected by significant changes in applicable regulations.
to negatively impact
•
Transition to New Technical Standards for Broadcast Television Stations May Alter the Competitive
Environment in the Company’s Stations’ Markets or Cause the Company to Incur Increased Costs.
The Company cannot predict how the market will react to the new broadcast television station technical standard,
ATSC 3.0, as the period for voluntary transition to the new standard has only recently begun, and some of the
market rollouts originally planned for 2020 or 2021 have been delayed by the COVID-19 pandemic. Equipment
manufacturers began releasing certain TV set models with built-in ATSC 3.0-capable receivers in 2020, but ATSC
3.0-capable consumer devices are not yet widely available in the U.S. As part of the voluntary transition, many
station groups are beginning to test ATSC 3.0 streams. Notably, there is a large consortium led by Pearl TV (of
which GMG is a member) that has been leading test trials in the Phoenix, Detroit, Portland and other markets.
ATSC 3.0 streams are now available in more than 40 markets across the country. Competing stations that transition
41 GRAHAM HOLDINGS COMPANY
to ATSC 3.0 may increase competition for the Company’s stations and/or create competitive pressure for the
Company’s stations to launch ATSC 3.0 streams. As noted above, GMG stations’ WDIV-TV, WKMG-TV and
KPRC-TV have begun broadcasting ATSC 3.0 streams over the course of 2020 and 2021. The transition to ATSC
3.0 may cause the Company to incur substantial costs over time. More generally, the deployment of ATSC 3.0 may
have other material effects on the Company’s media businesses that cannot now be reliably predicted and that may
have a material adverse effect on the Company’s operating results.
•
Potential Liability for Intellectual Property Infringement Could Adversely Affect the Company’s
Businesses.
The Company periodically receives claims from third parties alleging that the Company’s businesses infringe on the
intellectual property rights of others. It is likely that the Company will continue to be subject to similar claims,
particularly as they relate to its media businesses. Other parts of the Company’s business could also be subject to
such claims. Addressing intellectual product claims is a time-consuming and expensive endeavor, regardless of the
merits of the claims. In order to resolve such claims, the Company may have to change its method of doing
business, enter into licensing agreements or incur substantial monetary liability. It is also possible that one of the
Company’s businesses could be enjoined from using the intellectual property at issue, causing it to significantly
alter its operations. Although the Company cannot predict the impact at this time, if any such claim is successful,
the outcome would likely affect the business utilizing the intellectual property at issue and could have a material
adverse effect on that business’s operating results or prospects.
Risks Related to the Company’s Manufacturing Businesses
•
Failure to Comply with Environmental, Health, Safety and Other Laws Applicable to the Company’s
Manufacturing Operations Could Negatively Impact the Company’s Business.
The Company’s operations are subject to extensive federal, state and local laws and regulations relating to the
environment, as well as health and workplace safety, including those set forth by the OSHA, the Environmental
Protection Agency (EPA) and state and local regulatory authorities in the U.S. Such laws and regulations affect
operations and require compliance with various environmental registrations, licenses, permits, inspections and other
approvals. The Company incurs substantial costs to comply with these regulations, and any failure to comply may
expose the Company to civil, criminal and administrative fees, fines, penalties and interruptions in operations that
could have a material adverse impact on the Company’s results of operations, financial position or cash flows.
•
The Company May Be Subject to Liability Claims That Could Have a Material Adverse Effect on Its
Business.
The Company’s manufacturing operations are subject to hazards inherent in manufacturing and production-related
facilities. An accident involving these operations or equipment may result in losses due to personal injury; loss of
life; damage or destruction of property, equipment or the environment; or a suspension of operations. Insurance may
not protect the Company against liability for certain kinds of events, including those involving pollution or losses
resulting from business interruption. Any damages caused by the Company’s operations that are not covered by
insurance, or are in excess of policy limits, could materially adversely affect the Company’s results of operations,
financial position or cash flows.
•
Failure to Recruit and Retain Production Staff Needed to Meet Customer Demand Could Have a
Material Adverse Effect on the Company’s Manufacturing Businesses.
The Company’s manufacturing operations are experiencing a highly competitive market for production labor that
may limit its ability to meet customer demand. If staffing cannot be hired at a cost-efficient wage rate relative to
product pricing, volume will be impacted. In addition, COVID-19 absenteeism and potential vaccine mandates
announced in jurisdictions in which the Company’s manufacturing businesses operate, will result in employee
attrition and difficulty in meeting labor needs. Both factors impacting labor availability could have an adverse effect
on future revenues and costs, which could be material.
2021 FORM 10-K 42
Risks Related to the Company’s Healthcare Business
•
Extensive Regulation of the Healthcare Industry Could Adversely Affect the Company’s Healthcare
Businesses and Results of Operations.
The home health and hospice industries are subject to extensive federal, state and local laws, with regulations
affecting a wide range of matters, including licensure and certification, quality of services, qualifications of
personnel, confidentiality and security of medical records, relationships with physicians and other referral
sources, operating policies and procedures, and billing and coding practices. These laws and regulations change
frequently, and the manner in which they will be interpreted is subject to change in ways that cannot be
predicted.
Reimbursement for services by third-party payers, including Medicare, Medicaid and private health insurance
providers, may decline, while authorization, audit and compliance requirements continue to add to the cost of
providing those services.
Managed-care organizations, hospitals, physician practices and other third-party payers continue to consolidate in
response to the evolving regulatory environment, thereby enhancing their ability to influence the delivery of
healthcare services and decreasing the number of organizations serving patients. This consolidation could
adversely impact GHG’s businesses if they are unable to maintain their ability to participate in established
networks. In addition, CSI Pharmacy and Weiss Medical both face risks from manufacturer supply shortages,
competitive vertical integration and pricing power, and government intervention on drug pricing.
GHG is also subject to periodic and routine reviews, audits and investigations by federal and state government
agencies and private payers, which could result in negative findings that adversely impact the business. CMS
increasingly uses third-party, for-profit contractors to conduct these reviews, many of which share in the amounts
that CMS denies. These reviews, audits and investigations consume significant staff and financial resources and
may take years to resolve.
•
Continued Nursing Staffing Shortages Could Adversely Affect the Growth of the Company’s
Healthcare Businesses.
The country’s severe shortage of nurses could adversely affect GHG’s ability to meet customer demand and may
impact its ability to take on new business. In addition, competition to attract new nurses necessitates offering
increased wages and benefits, which increases costs.
Risks Related to the Company’s Automotive Businesses
•
Termination or Non-renewal of a Dealership Agreement by an Automobile Manufacturer and
Limitations on the Company’s Ability to Acquire Additional Dealerships Could Adversely Affect the
Company’s Automotive Business and Results of Operations.
The Company’s automobile dealerships are dependent on maintaining strong relationships with manufacturers,
and the Company’s ownership and operation of automobile dealerships is subject to its ability to comply with
various requirements established by automobile manufacturers. The Company’s dealerships operate under
separate agreements with each applicable automobile manufacturer. Manufacturers may terminate their
agreements for a variety of reasons, including a dealership’s failure to meet a manufacturer’s standards for
financial and sales performance, customer satisfaction, facilities and the quality of dealership management; and
any unapproved change in ownership or management. These agreements also limit the Company’s ability to
acquire multiple dealerships of the same brand within a particular market and preclude the Company from
establishing new dealerships within an area already served by another dealer of the same vehicle brand. In
addition, dealerships controlled by related parties of the management team operating the Company’s dealerships
may restrict the Company’s ability to acquire new dealerships within an area in which such dealerships operate.
Manufacturers also have the right of first refusal if the Company seeks to sell dealerships and may limit the
Company’s ability to transfer ownership of a dealership without the prior approval of the manufacturer. Failure
43 GRAHAM HOLDINGS COMPANY
to maintain ownership of the dealerships in compliance with manufacturer agreements could constitute a breach
of the agreements and could result in termination or non-renewal of existing dealer agreements. If one of the
Company’s manufacturers does not renew its dealer agreement or terminates the agreement, the Company’s
dealership would be unable to sell or distribute new vehicles or perform manufacturer authorized warranty
service, which would adversely affect the Company’s automotive business.
•
Changes Affecting Automobile Manufacturers Could Adversely Affect the Company’s Automotive
Business.
The Company’s dealerships are dependent on the products and services offered by the brand of automobiles that
its dealerships sell. The ability of the Company’s dealerships to sell and service these brands may be adversely
affected by negative conditions faced by manufacturers such as negative changes to a manufacturer’s financial
condition, negative publicity concerning a manufacturer or vehicle model, declines in consumer demand or brand
preferences, changes in consumer preferences driven by fuel price volatility, disruptions in production and
delivery, including those caused by natural disasters or labor strikes, new laws or regulations, including more
stringent fuel economy and greenhouse gas emission standards, and technological innovations in ride-sharing,
electric vehicles and autonomous driving. The ability of the Company’s dealerships to align with manufacturers
and adapt to evolving consumer demand for electric vehicles could adversely affect new and used vehicle sales
volumes, parts and service revenue and results of operations.
•
Changes to State Dealer Franchise Laws to Permit Manufacturers to Enter the Retail Market Directly
and Technological Innovations Could Adversely Impact the Company’s Traditional Dealership
Model.
Changes to state dealer franchise laws to permit the sale of new vehicles without the involvement of franchised
dealers could adversely affect the Company’s dealerships. Certain manufacturers have been challenging state
dealer franchise laws in many states and some have expressed interest in selling directly to customers. The
Company’s dealership model could be adversely affected if new vehicle sales are allowed to be conducted on the
internet without the involvement of franchised dealers.
•
Changes in a Manufacturer’s Incentive Programs Could Adversely Affect the Dealerships’ Sales
Volume and Profit Margins.
Automobile manufacturers offer various marketing and sales incentive programs to promote and support new
vehicle sales. These programs include customer rebates, dealer incentives on new vehicles, employee pricing,
manufacturer floor plan interest assistance, advertising assistance and product warranties. A reduction or
discontinuation of a manufacturer’s incentive programs could adversely affect vehicle demand and results of
operations.
•
Changes in Environmental Regulations Governing the Operations of the Automotive Business Could
Result in Increased Costs.
The Company is subject to a wide range of environmental laws and regulations, including those governing
discharges into the air and water, the operation and removal of above-ground and underground storage tanks, the
use, handling, storage and disposal of hazardous substances and other materials, and the investigation and
remediation of environmental contamination at facilities that are owned or operated. The business involves the
generation, use, handling and contracting for recycling or disposal of hazardous or toxic substances or wastes,
including environmentally sensitive materials such as motor oil, filters, transmission fluid, antifreeze, refrigerant,
batteries, solvents, lubricants, tires and fuel. The Company has incurred, and will continue to incur, capital and
operating expenditures and other costs in complying with such laws and regulations and changes to such
regulations could result in increased costs.
2021 FORM 10-K 44
•
Changes in Economic Conditions and Vehicle Inventories Are Difficult to Predict and May Adversely
Impact the Results of Operations of the Company’s Dealerships.
Sales of new and used vehicles are cyclical. Historically there have been periods of downturns characterized by
weak demand due to general economic conditions, excess supplies, consumer confidence, discretionary income
and credit availability. Recently, supply shortages have led to a period of higher average new and used selling
prices as a result of strong consumer demand and inventory shortages related to supply chain disruptions and
production delays at vehicle manufacturers. These conditions may deteriorate in the future. Changes in these
conditions could materially adversely impact sales and related margins of new and used vehicles, parts and repair
and maintenance services.
Risks Related to the Company’s Other Businesses
•
If Leaf is Unable to Successfully Drive Traffic to its Marketplaces and Media Properties and Expand
its Customer Base for its Marketplaces, its Business and Results of Operations Would be Adversely
Affected.
In order for Leaf’s businesses to grow, Leaf must attract new visitors and customers to its marketplaces and
media properties and retain its existing visitors and customers. Leaf’s success in attracting traffic to its media
properties and converting these visitors into repeat users depends, in part, upon Leaf’s ability to identify, create
and distribute high-quality and reliable content through engaging products and Leaf’s ability to meet rapidly
changing consumer demand. Leaf may not be able to identify and create the desired content or produce an
engaging user experience in a cost-effective or timely manner, if at all. Leaf depends on search engines, primarily
Google, to direct a significant amount of traffic to its media properties, and Leaf utilizes search engine
optimization efforts to help generate search referral
traffic to its media properties. If Leaf is unable to
successfully modify its search engine optimization practices in response to changes regularly implemented by
search engine algorithms and in search query trends, or if Leaf is unable to generate increased or diversified
traffic from other sources such as social media, email, direct navigation and online marketing activities, Leaf
could experience substantial declines in traffic to its media properties and to its partners’ media properties, which
would adversely impact Leaf’s business and results of operations. One of the key factors to growing the
marketplace platforms for Society6 Group and Saatchi Art Group is expanding their new and repeat customer
base. Their ability to attract new customers, some of whom may already purchase similar products from
competitors, depends in part on Leaf’s ability to successfully drive traffic to Leaf’s marketplaces using social
media platforms, email marketing campaigns and promotions, paid referrals and search engines.
•
If Leaf is Unable to Effectively Distribute its Media Content on Social Media Platforms or Effectively
Optimize its Mobile Solutions in Order to Improve User Experience or Comply with Requirements of
Leaf’s Advertising Partners, Leaf’s Business and Results of Operation Could Be Negatively Impacted.
The number of people who access the internet through mobile devices such as smartphones and tablets, rather than
through desktop or laptop computers, has increased substantially in recent years. Additionally, individuals are
increasingly consuming publisher content through social media platforms. If Leaf cannot effectively distribute its
media content, products and services on these devices or through these platforms, Leaf could experience a decline in
visits and traffic and a corresponding decline in revenue. The significant increase in consumption of Leaf’s media
content on mobile devices and through social media platforms depresses revenue per one thousand visits, or RPVs.
As a result of these factors, the increasing use of mobile devices and social media platforms to access Leaf’s content
could negatively impact its business and results of operations.
Further, consumers are increasingly conducting online shopping on mobile devices, including smartphones and
tablets, rather than on desktop or laptop computers. Although Leaf continually strives to improve the mobile
experience for users accessing its marketplaces through mobile devices, the smaller screen size and reduced
functionality associated with some mobile device interfaces may make the use of Leaf’s marketplace platforms more
difficult or less appealing to its members. Historically, visits to Leaf’s marketplaces on mobile devices have not
converted into purchases as often as visits made through desktop or laptop computers, and the average order value for
45 GRAHAM HOLDINGS COMPANY
mobile transactions has been lower than desktop transactions. If conversion rates and average order values for mobile
transactions on Leaf’s marketplaces do not increase, the revenue and results of operations of Society6 Group and
Saatchi Art Group may be adversely affected.
•
Leaf’s Businesses Face Significant Competition, Which Leaf Expects Will Continue to Intensify, and
Leaf May Not Be Able to Maintain or Improve its Competitive Position or Market Share.
Leaf’s Society6 Group and Saatchi Art Group businesses compete with a wide variety of online and brick-and-mortar
companies selling comparable products. Leaf expects competition to continue to intensify given the low barrier of
entry into online channels and the increase in conversion and competition between online and offline businesses.
Leaf’s Media Group faces intense competition from a wide range of competitors. Leaf’s current principal competitors
include online media properties, some of which have much larger audiences than Leaf, for online marketing budgets.
Leaf also competes with companies and individuals that provide specialized consumer information online, including
through enthusiast websites, message boards and blogs. Many of Leaf’s current and potential competitors enjoy
substantial competitive advantages, such as greater brand recognition, greater technical capabilities, access to larger
customer bases and, in some cases, the ability to combine their online marketing products with traditional offline
media such as newspapers or magazines. These companies may use these advantages to offer similar products and
services at a lower price, develop different products to compete with Leaf’s current offerings and respond more
quickly and effectively than Leaf can to new or changing opportunities, technologies, standards or customer
requirements. For example, if Google chose to compete more directly with Leaf as a publisher of similar content,
Leaf may face the prospect of the loss of business or other adverse financial consequences due to Google’s
significantly greater customer base, financial resources, distribution channels and patent portfolio.
•
Failure to Recruit and Retain Employees in the Company’s Restaurants Could Adversely Impact the
Company’s Restaurant Business.
Historically, competition among restaurant companies for qualified management and staff has been very high.
The Company’s ability to recruit and retain managers and staff to operate the Company’s restaurants is critical to
a customer’s dining experience. Failure to recruit and retain employees, low levels of unemployment or high
turnover levels could negatively affect the Company’s restaurant business.
•
Food-Borne Illness Concerns and Damage to the Company’s Reputation Could Harm the Company’s
Restaurant Business.
Historically, reports of food-borne illness or food safety issues, even if caused by food suppliers or distributors,
have had negative effects on restaurant sales. Because food safety issues could be experienced at the source by
food suppliers or distributors, food safety could, in part, be out of the Company’s control. Even instances of
food-borne illness at a location served by one of the Company’s competitors could result in negative publicity
regarding the food service industry generally and could negatively impact restaurant revenue. Regardless of the
source or cause, negative publicity about food-borne illness or other food safety issues could adversely impact
litigation, violence, complaints or government
the Company’s
investigations could have a negative effect on restaurant sales.
reputation. Similarly, publicity about
•
Concentration of
Company’s Restaurant Business to Regional Economic Conditions.
the Company’s Restaurants in the Washington, D.C. Region Subjects the
The concentration of the Company’s restaurants in the Washington, D.C. region subjects it to adverse economic
conditions and trends in the region that are out of the Company’s control. For example, increases in the level of
unemployment, a temporary government shutdown or a decrease in tourism would decrease customers’ disposable
income available for discretionary spending. These and other national, regional and local economic pressures could
result in decreases in customer traffic and lower sales and profits.
2021 FORM 10-K 46
Risks Related to Cybersecurity, Information Technology and Data Management
•
System Disruptions and Security Threats to the Company’s Information Technology Infrastructure
Could Have a Material Adverse Effect on Its Businesses and Results of Operations.
The Company relies extensively on information technology systems, networks and services, including internet sites,
data hosting and processing facilities and tools and other hardware, software and technical platforms, some of which
are managed, hosted, provided and/or used by third parties or their vendors, to assist in conducting the Company’s
business.
The Company’s systems and the third-party systems on which it relies are subject to damage or interruption from a
number of causes, including power outages; computer and telecommunications failures; computer viruses; security
breaches; cyberattacks, including the use of ransomware; catastrophic events such as fires, floods, earthquakes,
tornadoes and hurricanes; infectious disease outbreaks (such as COVID-19); acts of war or terrorism; and design or
usage errors by our employees, contractors or third-party service providers. Although the Company and the third-
party service providers seek to maintain their respective systems effectively and to successfully address the risk of
compromise of the integrity, security and consistent operations of these systems, such efforts may not be successful.
As a result, the Company or its service providers could experience errors, interruptions, delays or cessations of
service in key portions of the Company’s information technology infrastructure, which could significantly disrupt its
operations and be costly, time-consuming and resource-intensive to remedy. Any security breach or unauthorized
access also could result
in a misappropriation of the Company’s proprietary information or the proprietary
information of the Company’s users, customers or partners, which could result in significant legal and financial
exposure and damage to the Company’s reputation. If an actual or perceived breach of the Company’s security
occurs, or if the Company’s consumer facing sites become the subject of external attacks that affect or disrupt service
or availability, the market perception of the effectiveness of the Company’s security measures could be harmed and
the Company could lose users, customers, advertisers or partners, all of which could have a material adverse effect on
the Company’s business, financial condition and results of operations. Any security breach at a company providing
services to the Company or the Company’s users, including third-party payment processors, could have similar
effects and the Company may not be fully indemnified for the costs it may incur as a result of any such breach. To
the extent that such vulnerabilities require remediation, such remedial measures could require significant resources
and may not be implemented before such vulnerabilities are exploited. As the cybersecurity landscape evolves, the
Company may also find it necessary to make significant further investments to protect data and infrastructure,
including continuing to evaluate control changes and investments needed to support an increased remote workforce.
Any of these events could have a material adverse effect on the Company’s businesses and results of operations.
Sustained or repeated system failures or security breaches that interrupt the Company’s ability to process information
in a timely manner or that result in a breach of proprietary or personal information could have a material adverse
effect on the Company’s operations and reputation.
•
Failure to Comply with Privacy Laws or Regulations Could Have an Adverse Effect on the
Company’s Businesses.
Various U.S. federal, state and international laws and regulations govern the collection, use, retention, sharing and
security of consumer data. This area of the law is evolving, and interpretations of applicable laws and regulations
differ. Legislative activity in the privacy area may result in new laws that are relevant to the Company’s operations,
including restrictions on the collection, use and sharing of consumer data that could limit our ability to use the data
for marketing or advertising, and could result in exposure to material liability. For example, general data privacy
regulations adopted by the European Union known as the General Data Protection Regulation (GDPR), became
effective in May 2018. These regulations require certain of the Company’s operations to meet extensive requirements
regarding the handling of personal data, including its use, protection and transfer. In addition, the GDPR provides the
legal right for persons whose data is stored to request access to or correction or deletion of their personal data, among
other rights. Failure to meet the applicable requirements in the GDPR could result in fines of up to 4% of the
Company’s annual global revenues. In addition to the GDPR in Europe, new privacy laws and regulations are rapidly
developing elsewhere around the globe, including amendments to the scope, penalties and other provisions of
existing data protection laws. Failure to comply with these international data protection laws and regulations could
47 GRAHAM HOLDINGS COMPANY
have a negative impact on the Company’s reputation and subject the Company to significant fines, penalties or other
liabilities, all of which may increase the cost of operations, reduce customer growth, or otherwise harm the
Company’s business.
The California Consumer Privacy Act of 2018 (CCPA), which became effective on January 1, 2020, provided a
new private right of action for data breaches and requires companies that process personal information pertaining
to California residents to make disclosures to consumers about their data collection, use and sharing practices and
allows consumers to opt out of certain data sharing with third parties. The enforcement of the CCPA by the
California Attorney General commenced on July 1, 2020. In November 2020, the California Privacy Rights Act
(CPRA) was approved by California voters, and goes into effect on January 1, 2023. The CPRA includes new
requirements that are not in the CCPA. In 2020, Virginia and Colorado passed similar laws that are effective
January 1, 2023 and July 1, 2023, respectively. In addition, data privacy bills have been introduced in various
U.S state legislatures, including, but not limited to Washington, New York and Florida. There are also bills that
have been introduced at the U.S. federal level. The passage of any additional laws could result in further
uncertainty and cause the Company to incur additional costs and expenses in order to comply. Compliance with
the GDPR, the CCPA, the CPRA and other applicable international and U.S. privacy laws can be costly and time-
consuming. If the Company fails to properly respond to security breaches of its or its third-party’s information
technology systems or fails to properly respond to consumer requests under these laws, the Company could
experience damage to its reputation, adverse publicity, loss of consumer confidence, reduced sales and profits,
complications in executing the Company’s growth initiatives and regulatory and legal risk, including criminal
penalties or civil liabilities.
Claims of failure to comply with the Company’s privacy policies or applicable laws or regulations could form the
basis of governmental or private party actions against the Company and could result in significant penalties.
Additionally, evolving concerns regarding data privacy may cause the Company’s customers and potential
customers to resist providing the data necessary to allow the Company to deliver its solutions effectively. Even
the perception that personal information is not satisfactorily protected or does not meet regulatory requirements
could inhibit sales and any failure to comply with such laws and regulations could lead to significant fines,
penalties or other liabilities. Such claims and actions could cause damage to the Company’s reputation and could
have an adverse effect on the Company’s businesses.
Financial Risks
•
Failure to Successfully Integrate Acquired Businesses Could Negatively Affect the Company’s Business.
Acquisitions involve various inherent risks and uncertainties, including difficulties in efficiently integrating the
service offerings, accounting and other administrative systems of an acquired business; the challenges of
assimilating and retaining key personnel; the consequences of diverting the attention of senior management from
existing operations; the possibility that an acquired business does not meet or exceed the financial projections
that supported the purchase price; and the possible failure of the due diligence process to identify significant
business risks or liabilities associated with the acquired business. In June 2021, the Company acquired Leaf, a
diversified consumer internet company that builds creator-driven brands in lifestyle and home and art design
categories. A failure to effectively manage growth and integrate acquired businesses such as Leaf could have a
material adverse effect on the Company’s operating results.
•
Changes in Business Conditions Have Caused and May in the Future Cause Goodwill and Other
Intangible Assets to Become Impaired.
Goodwill generally represents the purchase price paid in excess of the fair value of net tangible and intangible
assets acquired in a business combination. Goodwill is not amortized and remains on the Company’s balance
sheet indefinitely unless there is an impairment or a sale of a portion of the business. Goodwill is subject to an
impairment test on an annual basis and when circumstances indicate that an impairment is more likely than not.
Such circumstances include an adverse change in the business climate for one of the Company’s businesses or a
decision to dispose of a business or a significant portion of a business. Each of the Company’s businesses faces
2021 FORM 10-K 48
including challenges in operating
uncertainty in its business environment due to a variety of factors,
environments created by the COVID-19 pandemic. In the first quarter of 2020, the Company recorded a goodwill
and indefinite-lived intangible asset impairment charge at Clyde’s and an indefinite-lived intangible asset
impairment charge at the auto dealerships. In the third quarter of 2021, the Company recorded a goodwill
impairment charge at Dekko. Additional COVID-19 disruptions could result in future adverse changes in
projections for future operating results or other key assumptions, such as projected revenue, profit margin, capital
expenditures or cash flows associated with fair value estimates and could lead to additional future impairments,
which could be material. The Company may experience other unforeseen circumstances that adversely affect the
value of the Company’s goodwill or intangible assets and trigger an evaluation of the amount of the recorded
goodwill and intangible assets. There also exists a reasonable possibility that changes to the discounted cash-flow
model used to perform the quantitative goodwill impairment review, including a decrease in the assumed
projected cash flows or long-term growth rate, or an increase in the discount rate assumption, could result in an
impairment charge. Future write-offs of goodwill or other intangible assets as a result of an impairment in the
business could materially adversely affect the Company’s results of operations and financial condition.
Item 1B. Unresolved Staff Comments.
Not applicable.
Item 2. Properties.
The Company leases space for its corporate offices in Arlington, VA. The lease expires in 2024, subject to an
option of the Company to extend.
Directly or through its subsidiaries, Kaplan owns a total of four commercial properties: a six-story building
located at 131 West 56th Street in New York City, used by KNA as an education center primarily for medical
students; an office condominium in Chapel Hill, NC, used by KNA; a three-story building in Berkeley, CA, used
for classroom space by KNA and KI North America; and, in August 2021, MPW purchased a building in South
Kensington, London intended for academic dormitory space. KI also entered into a 135-year lease of land in
Liverpool, U.K. on which it completed the construction of college and dormitory space that opened in January
2020.
In the U.S., KNA leases space in Fort Lauderdale, FL, for corporate offices, data and call centers and employee-
training facilities, which leases expire in 2024. In addition, KNA leases corporate offices in La Crosse, WI, under
a lease expiring in 2023 and in Pittsburgh under a lease expiring in 2024. KNA has 18 smaller leases in the U.S.
and also delivers classes at schools, colleges, hotels and other premises for which KNA is not a leaseholder.
Kaplan, Inc. leases office space in Alpharetta, GA, pursuant to a lease that expires in 2024. The Kaplan
Languages Group business maintains 14 leases for office and instructional space in the U.S.
Overseas, Dublin Business School’s facilities in Dublin, Ireland, are located in three buildings which are rented
under leases expiring between 2028 and 2029. Kaplan Publishing has an office and distribution warehouse in
Wokingham, Berkshire, U.K., under a lease expiring in 2027. Kaplan Financial’s largest leaseholds are office and
instructional spaces in London, U.K., expiring in 2033, and two leases, expiring in 2030; office and instructional
space in Birmingham, U.K., expiring in 2027; two locations in Manchester, U.K. comprising an office for central
support services expiring in 2027, and office and instructional space expiring in 2027; office and instructional
space in Singapore, comprising two separate leases and expiring between 2022 and 2023; and office and
instructional space in Hong Kong expiring in 2025. Palace House in London, U.K., is primarily occupied by the
KI Pathways business and KI corporate offices comprising several separate leases expiring in 2032. Kaplan has
leases expiring in 2027 for education space in Nottingham, U.K. It also leases dormitory space as the main tenant
of a student residential building in Nottingham, U.K. Kaplan has two separate leases in Glasgow, Scotland for
dormitory space that was constructed and opened to students in 2012 which leases expire in 2032. Kaplan has
further entered into a lease for a residential college in Bournemouth, England, and a lease in Brighton, U.K., for
49 GRAHAM HOLDINGS COMPANY
dormitory space which expires in 2040. In Australia, Kaplan leases one location in Melbourne, three locations in
Sydney, one location in Brisbane, and three locations in Adelaide under leases expiring between 2022 through
2031.
The operations of each of the Company’s television stations are owned by subsidiaries of the Company, as are
the related tower sites, except in Houston, Orlando and Jacksonville, where the tower sites are 50% owned.
Hoover owns nine U.S. properties: a 29-acre site in Thomson, GA; a 35-acre site in Pine Bluff, AR; a 60-acre site
in Milford, VA; a 15-acre site in Detroit, MI; a 14-acre site in Bakersfield, CA; a 17-acre site in Oxford, PA; a
15-acre site in Halifax, NC; an 11-acre site in Belington, WV; and a 65-acre site in Havana, FL. In addition,
Hoover leases a 10-acre site in Winston, OR, on a long-term lease with renewal terms available through
December 31, 2044. Hoover’s corporate, sales and accounting office, and research, engineering and development
offices are also located on the Thomson, GA, campus.
Dekko owns four U.S. properties: manufacturing buildings in Garrett, IN and Avilla, IN; a manufacturing and
warehouse space in Ardmore, AL; and a warehouse space in El Paso, TX. In addition, Dekko owns two buildings
in Juarez, Mexico, one of which consists of manufacturing and office space and the other consists of
manufacturing and office space. In the U.S., Dekko leases headquarters and innovation center space in Fort
Wayne, IN, under a lease that expires in 2029; manufacturing and warehouse space in North Webster, IN, under
a lease that expires in 2022; warehouse space in Kendallville, IN, under a lease that expires in 2022;
manufacturing, warehouse and office space in Shelton, CT and in Fallston, NC, under leases that expire 2022-
2024; and office space in Grand Rapids, MI, that expires in 2024.
Joyce/Dayton owns three properties: its corporate headquarters in Kettering, OH, and manufacturing facilities in
Portland, IN, and Clayton, OH. It also leases a manufacturing facility in Newington, CT.
Forney leases corporate office space in Addison, TX under a lease that expires in 2024, and leases a distribution
center in Laredo, TX, under a lease that expires in August 2022. Forney’s manufacturing facility in Monterrey,
Mexico, is in a building that contains office and manufacturing space under a lease that expires in 2022. Forney
also leases offices in Shanghai, China, under a lease that expires in December 2022.
The corporate office of GHG is located in leased office space in Troy, MI. GHG also leases a small office in
Nashville, TN. GHG leases small office spaces in Mechanicsburg, PA; Williamsport, PA; Harrisburg, PA;
Kingston, PA; Milford, PA; Stroudsburg, PA; New Castle, PA; Warrendale, PA; Shiloh, IL; Marion, IL; Glen
Carbon, IL; Troy, MI; Grand Rapids, MI; Lansing, MI; Lapeer, MI; Zephyrhills, FL; Osprey; FL; Palmetto, FL;
Downers Grove, IL; and Nashville, TN. In addition, GHG leases space for a hospice for nursing offices at
Edward and Elmhurst hospitals in northern Illinois. GHG leases office space for Weiss Medical in Riverdale, NJ.
GHG also has leased office space in Mars, PA, which expires in October 2022. GHG also owns property in
Benton, IL.
Graham Automotive owns the Honda dealership space in Tysons Corner, VA. Graham Automotive leases space
in Rockville, MD, for its Lexus dealership, Bethesda MD for its Jeep dealership, and Manassas, VA for its Ford
dealership. These leases expire between 2036 to 2060, including renewal options.
Leaf leases office space in Santa Monica, California that serves as its corporate headquarters. The lease for its
Santa Monica facility expires in July 2024. Leaf also leases additional facilities and purchase service
memberships in Denver, Colorado, New York, New York and London, United Kingdom.
Clyde’s leases restaurant facilities in Maryland, Virginia and Washington, D.C., under non-cancellable lease
agreements. The restaurant facilities average just over 15,000 square feet, ranging from 10,000 to 30,000 square
feet. Renewal options are available on many of the leases for one or more periods of five to 10 years each. Final
lease expiration dates range from 2022 to 2051.
2021 FORM 10-K 50
Framebridge leases retail locations in Washington, D.C. (2), Bethesda, MD (1), Northern Virginia, VA (2),
Chicago, IL (3), Brooklyn, NY (2), Atlanta, GA (2), Manhattan, NY (1), Boston suburb (1), Philadelphia suburb
(1) and two manufacturing facilities in Richmond, KY and Moorestown, NJ.
Code3 leases office space in New York, NY; Los Angeles, CA; and Cleveland, OH.
The Slate Group leases office space in Brooklyn, NY, and Washington, D.C.
Item 3. Legal Proceedings.
Information with respect
to legal proceedings may be found in Note 18, “Contingencies and other
commitments—Litigation, Legal and Other Matters” to the consolidated financial statements in Part II of this
Annual Report, which is incorporated herein by reference.
Item 4. Mine Safety Disclosures.
Not applicable.
PART II
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities.
Market Information and Holders
The Company’s Class B Common Stock is traded on the New York Stock Exchange under the symbol “GHC.”
The Company’s Class A Common Stock is not publicly traded.
At January 31, 2022, there were 27 holders of record of the Company’s Class A Common Stock and 339 holders
of record of the Company’s Class B Common Stock.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
During the quarter ended December 31, 2021, the Company purchased shares of its Class B Common Stock as
set forth in the following table:
Period
2021
. . . . . . . . . . . . . . . . . . . . .
October
November
. . . . . . . . . . . . . . . . . . .
December . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . .
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*
12,730
12,957
31,771
57,458
$601.02
597.04
580.93
$589.01
12,730
12,957
31,771
57,458
314,910
301,953
270,182
* On September 10, 2020, the Company’s Board of Directors authorized the Company to purchase, on the open market or otherwise, up to
500,000 shares of its Class B Common Stock. There is no expiration date for this authorization. All purchases made during the quarter
ended December 31, 2021, were open market transactions.
51 GRAHAM HOLDINGS COMPANY
Performance Graph
The following graph is a comparison of the yearly percentage change in the Company’s cumulative total
shareholder return with the cumulative total return of the Standard & Poor’s 500 Stock Index and a custom peer
group index comprised of a composite group of education and television broadcasting companies. The Standard &
Poor’s 500 Stock Index is comprised of 500 U.S. companies in the industrial, transportation, utilities and financial
industries and is weighted by market capitalization. The custom peer group of composite companies includes
Adtalem Global Education Inc., Chegg, Inc., The E.W. Scripps Company, Grand Canyon Education Inc., Nexstar
Media Group Inc., Gray Television Inc., New Oriental Education & Technology Group Inc., Pearson plc and Tegna
Inc. The graph reflects the investment of $100 on December 31, 2016, in the Company’s Class B Common Stock,
the Standard & Poor’s 500 Stock Index and the custom peer group index of composite companies. For purposes of
this graph, it has been assumed that dividends were reinvested on the date paid in the case of the Company, and on a
quarterly basis in the case of the Standard & Poor’s 500 Index and the custom peer group index of composite
companies.
COMPARISON OF CUMULATIVE FIVE YEAR TOTAL RETURN
$250
$200
$150
$100
$50
$0
12/31/16
12/31/17
12/31/18
12/31/19
12/31/20
12/31/21
Graham Holdings Company
S&P 500 Index
Peer Group
December 31
2016
2017
2018
2019
2020
2021
Graham Holdings Company . . . . . . . . . . . . . . . . . . . . . . .
S&P 500 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Composite Peer Group . . . . . . . . . . . . . . . . . . . . . . . . . . .
100.00
100.00
100.00
110.05
121.83
140.02
127.41
116.49
131.41
128.13
153.17
173.42
108.51
181.35
229.65
129.40
233.41
116.07
Item 6. Reserved.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
See the information contained under the heading “Management’s Discussion and Analysis of Results of
Operations and Financial Condition,” which is included in this Annual Report on Form 10-K and listed in the
index to financial information on page 60 hereof.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The Company is exposed to market risk in the normal course of its business due primarily to its ownership of
marketable equity securities, which are subject to equity price risk; to its borrowing and cash-management
activities, which are subject to interest rate risk; and to its non-U.S. business operations, which are subject to
foreign exchange rate risk.
2021 FORM 10-K 52
Equity Price Risk. The Company has common stock investments in several publicly traded companies (as
discussed in Note 4 to the Company’s Consolidated Financial Statements) that are subject to market price
volatility. The fair value of these common stock investments totaled $810.0 million at December 31, 2021.
Interest Rate Risk. The Company manages the risk associated with interest rate movements through the use of
a combination of variable and fixed-rate debt.
At December 31, 2021, the Company had $400 million principal amount of 5.75% unsecured fixed-rate notes due
June 1, 2026 (the Notes). At December 31, 2021, the aggregate fair value of the Notes, based upon quoted market
prices, was $417.5 million. There were no earnings or liquidity risks associated with the Company’s Notes. The
fair value of the Notes varies with fluctuations in market interest rates. A 100 basis point decrease in market
interest rates would increase the fair value of the Notes by $9.5 million at December 31, 2021 using a yield to par
call. A 100 basis point increase in market interest rates would decrease the fair value of the Notes by $9.3 million
at December 31, 2021, using a yield to par call. The Company also had approximately $13 million of other fixed-
rate debt, primarily relating to the healthcare business (as discussed in Note 11 to the Company’s Consolidated
Financial Statements).
At December 31, 2021, the Company had approximately $290 million of variable-rate debt, including floor plan
facility obligations. Approximately $24.6 million of this debt is hedged by an interest rate swap. The Company is
subject to earnings and liquidity risks for changes in the interest rate on the unhedged portion of this debt. A 100
basis point increase in the applicable floating rates for the unhedged portions of our variable-rate debt would
increase annual interest expense by approximately $2.6 million.
Foreign Exchange Rate Risk. The Company is exposed to foreign exchange rate risk primarily at its Kaplan
international operations, and the primary exposure relates to the exchange rate between the U.S. dollar and the
British pound, the Australian dollar, and the Singapore dollar. In 2021, 2020 and 2019 the Company reported net
foreign currency losses of $0.2 million, $2.2 million and $1.1 million, respectively.
If the values of the British pound, the Australian dollar, and the Singapore dollar relative to the U.S. dollar had
been 10% lower than the values that prevailed during 2021, the Company’s pre-tax income for 2021 would have
been approximately $13 million lower. Conversely, if such values had been 10% higher, the Company’s reported
pre-tax income for 2021 would have been approximately $13 million higher.
Item 8. Financial Statements and Supplementary Data.
See the Company’s Consolidated Financial Statements at December 31, 2021, and for the periods then ended,
together with the report of PricewaterhouseCoopers LLP thereon, which are included in this Annual Report on
Form 10-K and listed in the index to financial information on page 60 hereof.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
Not applicable.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
An evaluation was performed by the Company’s management, with the participation of the Company’s Chief
Executive Officer (principal executive officer) and the Company’s Chief Financial Officer (principal financial
officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)), as of December 31, 2021. Based on that evaluation, the Company’s Chief
Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and
53 GRAHAM HOLDINGS COMPANY
procedures, as designed and implemented, are effective in ensuring that information required to be disclosed by
the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and
is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial
Officer, in a manner that allows timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
Management of Graham Holdings Company is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). The Company’s
internal control over financial reporting is designed 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.
The Company’s management assessed the effectiveness of internal control over financial reporting as of
December 31, 2021. In making this assessment, management used the criteria set forth in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in 2013. Management has concluded that as of December 31, 2021, the Company’s internal control over
financial reporting was effective based on these criteria.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2021, has been
audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their
report included herein.
Changes in Internal Control Over Financial Reporting
There has been no change in the Company’s internal control over financial reporting during the quarter ended
December 31, 2021, that has materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.
Item 9B. Other Information.
Not applicable.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The information contained under the heading “Executive Officers” in Item 1 hereof and the information
contained under the headings “Nominees for Election by Class A Shareholders,” “Nominees for Election by
Class B Shareholders,” “Audit Committee” and “Section 16(a) Beneficial Ownership Reporting Compliance” in
the definitive Proxy Statement for the Company’s 2022 Annual Meeting of Stockholders is incorporated herein
by reference thereto.
The Company has adopted codes of conduct that constitute “codes of ethics” as that term is defined in paragraph
(b) of Item 406 of Regulation S-K and that apply to the Company’s principal executive officer, principal
financial officer, principal accounting officer or controller and to any persons performing similar functions. Such
codes of conduct are posted on the Company’s website, the address of which is ghco.com, and the Company
2021 FORM 10-K 54
intends to satisfy the disclosure requirements under Item 5.05 of Form 8-K with respect to certain amendments
to, and waivers of the requirements of, the provisions of such codes of conduct applicable to the officers and
persons referred to above by posting the required information on its website.
In addition to the certifications of the Company’s Chief Executive Officer and Chief Financial Officer filed as
exhibits to this Annual Report on Form 10-K, on May 20, 2021, the Company’s Chief Executive Officer
submitted to the New York Stock Exchange the annual certification regarding compliance with the NYSE’s
corporate governance listing standards required by Section 303A.12(a) of the NYSE Listed Company Manual.
Item 11. Executive Compensation.
The information contained under the headings “Director Compensation,” “Compensation Committee Interlocks
and Insider Participation,” “Executive Compensation” and “Compensation Committee Report” in the definitive
Proxy Statement for the Company’s 2022 Annual Meeting of Stockholders is incorporated herein by reference
thereto.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
The information contained under the heading “Stock Holdings of Certain Beneficial Owners and Management” in
the definitive Proxy Statement for the Company’s 2022 Annual Meeting of Stockholders is incorporated herein by
reference thereto.
Item 13. Certain Relationships and Related Transactions and Director Independence.
The information contained under the headings “Transactions With Related Persons, Promoters and Certain Control
Persons” and “Controlled Company” in the definitive Proxy Statement for the Company’s 2022 Annual Meeting of
Stockholders is incorporated herein by reference thereto.
Item 14. Principal Accounting Fees and Services.
The information contained under the heading “Audit Committee Report” in the definitive Proxy Statement for the
Company’s 2022 Annual Meeting of Stockholders is incorporated herein by reference thereto.
Item 15. Exhibits, Financial Statement Schedules.
The following documents are filed as part of this report:
PART IV
1. Financial Statements. As listed in the index to financial information on page 60 hereof.
2. Exhibits. As listed in the index to exhibits on page 56 hereof.
Item 16. Form 10-K Summary.
Not applicable.
55 GRAHAM HOLDINGS COMPANY
Exhibit
Number
INDEX TO EXHIBITS
Description
2.1
3.1
3.2
3.3
4.1
4.2
4.3
4.4
10.1
10.2
10.3
Contribution and Transfer Agreement, dated April 27, 2017, by and among Kaplan Higher
Education, LLC, Iowa College Acquisition, LLC, Purdue University and Purdue New U, Inc.
(incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed
April 27, 2017).**
Restated Certificate of Incorporation of the Company dated November 13, 2003 (incorporated by
reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended
December 28, 2003).
Certificate of Amendment, effective November 29, 2013, to the Restated Certificate of
Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current
Report on Form 8-K filed November 29, 2013).
By-Laws of the Company as amended and restated through November 29, 2013 (incorporated by
reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed November 29, 2013).
Senior Notes Indenture dated as of May 30, 2018, between the Company and The Bank of New
York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to the
Company’s Current Report on Form 8-K dated May 30, 2018).
First Supplemental Indenture, dated as of March 24, 2020, among Graham Healthcare Group, Inc.,
a Delaware corporation, a subsidiary of the Company, and The Bank of New York Mellon Trust
Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2020).
Second Supplemental Indenture, dated as of January 6, 2022, among Graham Automotive LLC, a
Delaware limited liability company, a subsidiary of Graham Holdings Company, a Delaware
corporation, and The Bank of New York Mellon Trust Company, N.A., as trustee.
Description of the Company’s Securities (incorporated by reference to Exhibit 4.2 to the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019).
Amended and Restated Five Year Credit Agreement, dated as of May 30, 2018, among the
Company, and the foreign borrowers from time to time party thereto, and certain of its domestic
subsidiaries as guarantors, the several lenders from time to time party thereto, Wells Fargo Bank,
National Association, as Administrative Agent and JPMorgan Chase Bank, N.A., as Syndication
Agent (incorporated by reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q
for the quarter ended June 30, 2018).
First Amendment, dated as of November 23, 2021, to Amended and Restated Five Year Credit
Agreement, dated as of May 30, 2018, among the Company, and the foreign borrowers from time
to time party thereto, and certain of its domestic subsidiaries as guarantors, the several lenders
from time to time party thereto, Wells Fargo Bank, National Association, as Administrative Agent
and JPMorgan Chase Bank, N.A., as Syndication Agent.
Transition and Operations Support Agreement, dated March 22, 2018, by and among Kaplan
Higher Education, LLC, Iowa College Acquisition, LLC and Purdue University Global, Inc., with
Purdue University as a party to the Transition and Operations Support Agreement solely for the
purposes of being bound by the Purdue Provisions (as defined therein) (incorporated by reference
to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 22, 2018).**+
2021 FORM 10-K 56
Exhibit
Number
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
21
23
24
31.1
31.2
32
Description
First Amendment, dated as of July 29, 2019, to the Transition and Operations Support Agreement,
dated March 22, 2018, by and among Kaplan Higher Education, LLC, Iowa College Acquisition,
LLC and Purdue University Global, Inc. (the “First Amendment”), with The Trustees of Purdue
University as a party to the First Amendment solely for the purposes of continuing to be bound by
the Purdue Provisions (as defined therein) (incorporated by reference to Exhibit 10.1 to the
Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019).+
Graham Holdings Company 2012 Incentive Compensation Plan, as amended and restated effective
November 29, 2013, as adjusted to reflect the spin-off of Cable ONE (incorporated by reference to
Exhibit 10.1 to Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2015)*
Graham Holdings Company Supplemental Executive Retirement Plan as amended and restated
effective December 10, 2013 (incorporated by reference to Exhibit 10.3 to the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2013).*
Amendment No. 1 to Graham Holdings Company Supplemental Executive Retirement Plan,
effective March 31, 2014 (incorporated by reference to Exhibit 10.4 to the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2014).*
Graham Holdings Company Deferred Compensation Plan as amended and restated effective
January 1, 2014 (incorporated by reference to Exhibit 10.4 to Company’s Annual Report on Form
10-K for the fiscal year ended December 31, 2013).*
Letter Agreement between the Company and Timothy J. O’Shaughnessy, dated October 20, 2014
(incorporated by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2014).*
Letter Agreement between the Company and Andrew S. Rosen, dated April 7, 2014 (incorporated
by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2015).*
Letter Agreement between the Company and Jacob M. Maas, dated August 24, 2015 (incorporated
by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2018).*
List of subsidiaries of the Company.
Consent of independent registered public accounting firm.
Power of Attorney dated February 15, 2022.
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer.
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer.
Section 1350 Certification of the Chief Executive Officer and the Chief Financial Officer.
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
57 GRAHAM HOLDINGS COMPANY
Exhibit
Number
Description
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
*
A management contract or compensatory plan or arrangement required to be included as an exhibit hereto pursuant to Item 15(b) of
Form 10-K.
** Graham Holdings Company hereby undertakes to furnish supplementally a copy of any omitted exhibit or schedule to such agreement to
+
the SEC upon request.
Select portions of this exhibit have been omitted pursuant to a request for confidential treatment and have been filed separately with the
SEC.
2021 FORM 10-K 58
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 25,
2022.
GRAHAM HOLDINGS COMPANY
(Registrant)
By
/s/ Wallace R. Cooney
Wallace R. Cooney
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities indicated on February 25, 2022:
Timothy J. O’Shaughnessy
Wallace R. Cooney
Marcel A. Snyman
Donald E. Graham
Tony Allen
Christopher C. Davis
Thomas S. Gayner
Anne M. Mulcahy
G. Richard Wagoner, Jr.
Katharine Weymouth
President, Chief Executive Officer
(Principal Executive Officer) and
Director
Chief Financial Officer
(Principal Financial Officer)
Principal Accounting Officer
Chairman of the Board
Director
Director
Director
Director
Director
Director
By
/s/ Wallace R. Cooney
Wallace R. Cooney
Attorney-in-Fact
An original power of attorney authorizing Timothy J. O’Shaughnessy, Wallace R. Cooney and Nicole M.
Maddrey, and each of them, to sign all reports required to be filed by the Registrant pursuant to the Securities
Exchange Act of 1934 on behalf of the above-named directors and officers has been filed with the Securities and
Exchange Commission.
59 GRAHAM HOLDINGS COMPANY
INDEX TO FINANCIAL INFORMATION
GRAHAM HOLDINGS COMPANY
Management’s Discussion and Analysis of Results of Operations and Financial Condition (Unaudited) . . . .
Financial Statements:
Report of Independent Registered Public Accounting Firm (PCAOB ID 238) . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations for the Three Years Ended December 31, 2021 . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income for the Three Years Ended December 31, 2021 . .
Consolidated Balance Sheets at December 31, 2021 and 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for the Three Years Ended December 31, 2021 . . . . . . . . . . . .
Consolidated Statements of Changes in Common Stockholders’ Equity for the Three Years Ended
December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Organization and Nature of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Summary of Significant Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions and Dispositions of Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts Receivable, Accounts Payable and Accrued Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories, Contracts in Progress and Vehicle Floor Plan Payable . . . . . . . . . . . . . . . . . . . . . . . . .
Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill and Other Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair Value Measurements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revenue From Contracts With Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital Stock, Stock Awards and Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pensions and Other Postretirement Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Non-Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated Other Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingencies and Other Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business Segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
61
83
86
87
88
89
90
91
91
91
102
105
108
109
110
110
111
114
118
121
122
124
128
137
138
140
141
All schedules have been omitted either because they are not applicable or because the required information is
included in the Consolidated Financial Statements or the notes thereto referred to above.
2021 FORM 10-K 60
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
This analysis should be read in conjunction with the Consolidated Financial Statements and the notes thereto.
Refer to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in the
Graham Holdings Company’s 2020 Annual Report on Form 10-K for management’s discussion and analysis of
financial condition and results of operations for the year ended December 31, 2020 compared to the year ended
December 31, 2019.
OVERVIEW
Graham Holdings Company (the Company) is a diversified education and media company whose operations
include educational services; television broadcasting; online, podcast, print and local TV news and other content;
social-media advertising services; manufacturing; automotive dealerships; restaurants and entertainment venues;
custom framing; home health and hospice care; and a consumer internet company. Education is the largest
business, and through its subsidiary Kaplan, Inc., the Company provides extensive worldwide education services
for individuals, schools and businesses. The Company’s second largest business is television broadcasting. In
2021, the Company completed an acquisition of a consumer internet company. The Company’s business units are
diverse and subject to different trends and risks.
The Company’s education division is the largest operating division of the Company, accounting for 43% of the
Company’s consolidated revenues in 2021. The Company has devoted significant resources and attention to this
division for many years, given its geographic and product diversity; the investment opportunities and growth
prospects during this time; and challenges related to government regulation. Kaplan is organized into the
following three operating segments: Kaplan International, Kaplan Higher Education (KHE) and Supplemental
Education.
Kaplan International reported revenue increases for 2021 due largely to growth at UK Professional and
Pathways, partially offset by declines at Languages. Kaplan International operating results improved in 2021 due
to a reduction in losses at Languages and improved results at Pathways and UK Professional.
KHE’s revenue grew in 2021, due to an increase in the Purdue University Global (Purdue Global) fee recorded
and an increase in revenue from other higher education institutions. KHE recorded $34.8 million and
in its Higher Education operating results in 2021 and 2020,
$31.6 million in fees from Purdue Global
respectively, based on an assessment of its collectability under the Transition and Operations Support Agreement
(TOSA).
Supplemental Education revenues decreased in 2021 due to a decline in retail comprehensive test preparation
demand and classroom-based course offerings, offset in part by growth in securities, insurance and real estate
programs. Supplemental Education operating income improved in 2021 due to savings from restructuring
activities implemented in 2020.
Kaplan made two acquisitions in 2021; two acquisitions in 2020; and one acquisition in 2019.
The Company’s television broadcasting division reported lower revenues and operating income in 2021, due to
significant decreases in political advertising, partially offset by increased local and national advertising revenues,
which were adversely impacted in 2020 by reduced demand related to the COVID-19 pandemic, increased
retransmission revenues, and increased revenue from summer Olympics-related advertising revenue at the
Company’s NBC affiliates. In recent years, the television broadcasting division has consistently generated
significantly higher operating income amounts and operating income margins than the education division and
other businesses.
61 GRAHAM HOLDINGS COMPANY
The Company’s manufacturing division has provided meaningful operating cash flow over the last few years,
despite reduced demand due to the COVID-19 pandemic at certain businesses. The Company’s healthcare
business has grown substantially over the last few years due to internal growth and acquisitions, with a
meaningful increase in operating results in the past two years.
With the recent acquisitions of Leaf, Framebridge, three automotive dealerships and Clyde’s Restaurant Group,
and recent acquisitions at healthcare and manufacturing, the Company has invested in new lines of business in
the last few years.
The Company generates a significant amount of cash from its businesses that is used to support its operations,
pay down debt and fund capital expenditures, share repurchases, dividends, acquisitions and other investments.
RESULTS OF OPERATIONS
income attributable to common shares was $352.1 million ($70.45 per share) for the year ended
Net
December 31, 2021, compared to $300.4 million ($58.13 per share) for the year ended December 31, 2020.
The COVID-19 pandemic and measures taken to prevent its spread significantly impacted the Company’s results
for 2020 and 2021, largely from reduced demand for the Company’s products and services. This significant
adverse impact is expected to continue into 2022, although at a reduced level. The Company’s management has
taken a variety of measures to reduce costs and to implement changes to business operations. The Company
cannot predict the severity or duration of the pandemic, the extent to which demand for the Company’s products
and services will be adversely affected or the degree to which financial and operating results will be negatively
impacted.
Items included in the Company’s net income for 2021 are listed below:
•
•
•
•
•
•
•
a $3.9 million net credit related to fair value changes in contingent consideration from prior
acquisitions ($0.78 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 Federal Communications Commission (FCC) (after-tax
impact of $0.8 million, or $0.16 per share);
$31.6 million in goodwill and other long-lived asset
$26.0 million, or $5.19 per share);
impairment charges (after-tax impact of
$12.6 million in net earnings of affiliates whose operations are not managed by the Company (after-tax
impact of $9.3 million, or $1.86 per share);
$4.1 million in interest expense to adjust the fair value of the mandatorily redeemable noncontrolling
interest (after-tax impact of $4.0 million, or $0.80 per share);
$1.1 million in expenses related to a non-operating Separation Incentive Program (SIP) at
manufacturing (after-tax impact of $0.8 million, or $0.16 per share);
$243.1 million in net gains on marketable equity securities (after-tax impact of $179.7 million, or
$35.96 per share);
• Non-operating gains, net, of $13.6 million from write-ups, sales and impairments of cost and equity
method investments (after-tax impact of $10.1 million, or $2.02 per share);
•
•
$0.2 million in non-operating foreign currency losses (after-tax impact of $0.1 million, or $0.03 per
share); and
a $17.2 million deferred tax benefit arising from a change in the estimated deferred state income tax
rate related to the Company’s pension and other postretirement plans ($3.45 per share).
2021 FORM 10-K 62
Items included in the Company’s net income for 2020 are listed below:
•
•
•
•
•
•
•
•
•
$27.9 million in goodwill and other long-lived asset
$20.2 million, or $3.92 per share);
impairment charges (after-tax impact of
$16.1 million in restructuring charges at the education division (after-tax impact of $11.9 million, or
$2.31 per share);
$5.7 million in accelerated depreciation at other businesses (after-tax impact of $4.1 million, or $0.80
per share);
a $2.9 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 $2.3 million, or $0.44 per share);
$2.1 million in net losses of affiliates whose operations are not managed by the Company (after-tax
impact of $1.6 million, or $0.31 per share);
$8.5 million in interest expense in the fourth quarter to adjust the fair value of the mandatorily
redeemable noncontrolling interest ($1.64 per share);
$11.5 million in expenses related to non-operating SIP activity at the education division and other
businesses (after-tax impact of $8.5 million, or $1.64 per share);
$60.8 million in net gains on marketable equity securities (after-tax impact of $44.7 million, or $8.64
per share);
a fourth quarter gain of $209.8 million on the sale of Megaphone (after-tax impact of $154.2 million, or
$29.84 per share);
• Non-operating losses, net, of $1.5 million from impairments, sales and write-ups of cost and equity
method investments (after-tax impact of $1.1 million, or $0.21 per share);
•
•
$2.2 million in non-operating foreign currency losses (after-tax impact of $1.6 million, or $0.31 per
share); and
$2.9 million in income tax expense related to stock compensation ($0.56 per share).
Revenue for 2021 was $3,186.0 million, up 10% from $2,889.1 million in 2020. Revenues increased at
education, manufacturing, healthcare, automotive and other businesses, partially offset by a decrease at television
broadcasting. Operating costs and expenses for the year increased to $3,108.6 million in 2021, from
$2,788.7 million in 2020. Expenses in 2021 increased across all divisions. The Company reported operating
income for 2021 of $77.4 million, compared to $100.4 million in 2020. Operating results declined at television
broadcasting and manufacturing, partially offset by improvements at education and automotive.
Division Results
Education
Education division revenue in 2021 totaled $1,361.2 million, up 4% from $1,305.7 million in 2020. Kaplan
reported operating income of $50.6 million for 2021, an increase from $11.6 million in 2020. The COVID-19
pandemic adversely impacted Kaplan’s operating results beginning in February 2020 and continued through
2021.
Kaplan serves a large number of students who travel to other countries to study a second language, prepare for
licensure, or pursue a higher education degree. Government-imposed travel restrictions and school closures
arising from COVID-19 had a significant negative impact on the ability of international students to travel and
attend Kaplan’s programs, particularly Kaplan International’s Language programs. In addition, most licensing
bodies and administrators of standardized exams postponed or canceled scheduled examinations due to
COVID-19, resulting in a significant number of students deciding to defer their studies, negatively impacting
63 GRAHAM HOLDINGS COMPANY
Kaplan’s exam preparation education businesses. Overall, if COVID-19 restrictions persist, then Kaplan’s
revenues and operating results in 2022 could be adversely impacted, particularly at Kaplan International
Languages.
To help mitigate the adverse impact of COVID-19, Kaplan implemented a number of cost reduction and
restructuring activities across its businesses. Related to these restructuring activities, for 2021, Kaplan recorded
$3.3 million in lease impairment charges (including $1.9 million in property, plant and equipment write-downs).
In 2020, Kaplan recorded $13.5 million in lease restructuring costs (including $3.6 million of accelerated
depreciation expense) and $6.2 million in severance restructuring costs. Kaplan also recorded $12.3 million in
lease impairment charges in connection with these plans in 2020 (including $2.2 million in property, plant and
equipment write-downs). Further, Kaplan recorded $12.8 million in non-operating pension expense in 2020
related to workforce reductions completed in the second and third quarters.
In 2020, Kaplan also accelerated the development and promotion of various online programs and solutions,
rapidly transitioned most of its classroom-based programs online and addressed the individual needs of its
students and partners, substantially reducing the disruption from COVID-19 while simultaneously adding
important new product offerings and operating capabilities. Further, in the fourth quarter of 2020, Kaplan
combined its three primary divisions based in the United States (Kaplan Test Prep, Kaplan Professional, and
Kaplan Higher Education) into one business known as Kaplan North America (KNA). This combination was
designed to enhance Kaplan’s competitiveness by better leveraging its diversified academic and professional
portfolio, as well as its relationships with students, universities and businesses. For financial reporting purposes,
KNA is reported in two segments: Higher Education and Supplemental Education (combining Kaplan Test Prep
and Kaplan Professional (U.S.) into one reporting segment).
A summary of Kaplan’s operating results is as follows:
(in thousands)
Revenue
Kaplan international . . . . . . . . . . . . . . . . . . . . . . . . .
Higher education . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplemental education . . . . . . . . . . . . . . . . . . . . . .
Kaplan corporate and other . . . . . . . . . . . . . . . . . . .
Intersegment elimination . . . . . . . . . . . . . . . . . . . . .
Operating Income (Loss)
Kaplan international . . . . . . . . . . . . . . . . . . . . . . . . .
Higher education . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplemental education . . . . . . . . . . . . . . . . . . . . . .
Kaplan corporate and other . . . . . . . . . . . . . . . . . . .
Amortization of intangible assets . . . . . . . . . . . . . . .
Impairment of long-lived assets . . . . . . . . . . . . . . . .
Intersegment elimination . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31
2021
2020
% Change
$ 726,875
317,854
309,069
14,759
(7,312)
$ 653,892
316,095
327,087
12,643
(4,004)
$1,361,245
$1,305,713
$
33,457
24,134
36,919
(24,715)
(16,001)
(3,318)
97
$
15,248
24,364
19,705
(18,266)
(17,174)
(12,278)
5
$
50,573
$
11,604
11
1
(6)
17
–
4
–
(1)
87
(35)
7
73
–
–
Kaplan International includes postsecondary education, professional training and language training businesses
largely outside the United States. Kaplan International revenue increased 11% in 2021 (5% on a constant
currency basis). The increase is due largely to growth at UK Professional and Pathways, partially offset by
declines at Languages. Kaplan International reported operating income of $33.5 million in 2021, compared to
$15.2 million in 2020. The increase in operating results is due to a reduction in losses at Languages and improved
2021 FORM 10-K 64
results at Pathways and UK Professional. Overall, Kaplan International’s operating results were negatively
impacted by $43 million and $55 million in losses, respectively,
incurred at Languages from continued
significant COVID-19 disruptions in 2021 and 2020. In addition, Kaplan International’s 2020 results include
$4.5 million of lease restructuring costs (including $1.6 million in accelerated depreciation expense) and
$4.4 million of severance restructuring costs. If a continuation of travel restrictions imposed as a result of
COVID-19 persists, Kaplan expects the disruption of its Languages business operating environment to continue
into 2022.
Higher Education primarily includes the results of Kaplan as a service provider to higher education institutions.
In 2021, Higher Education revenue increased 1% due to an increase in the Purdue Global fee recorded and an
increase in revenue from other higher education institutions. In 2021 and 2020, Kaplan recorded a portion of the
fee with Purdue Global based on an assessment of its collectability under the TOSA. The Company will continue
to assess the collectability of the fee with Purdue Global on a quarterly basis to make a determination as to
whether to record all or part of the fee in the future and whether to make adjustments to fee amounts recognized
in earlier periods. During 2021 and 2020, Kaplan recorded $34.8 million and $31.6 million, respectively, in fees
from Purdue Global in its Higher Education operating results. Kaplan Higher Education recorded $3.6 million in
lease restructuring costs in 2020, of which $0.2 million was accelerated depreciation expense.
Supplemental Education includes Kaplan’s standardized test preparation programs and domestic professional and
other continuing education businesses. In November 2021, Supplemental Education acquired two small
businesses. Supplemental Education revenue decreased 6% in 2021 due to a decline in retail comprehensive test
preparation demand and classroom-based course offerings, offset in part by growth in securities, insurance and
real estate programs. Operating results increased 87% in 2021 due to savings from restructuring activities
implemented in 2020, and $5.4 million of lease restructuring costs ($1.8 million of which was accelerated
depreciation) and $1.8 million in severance restructuring costs incurred in 2020.
Kaplan corporate and other represents unallocated expenses of Kaplan, Inc.’s corporate office, other minor
businesses and certain shared activities. Overall, Kaplan corporate and other expenses increased in 2021 due to
normalization of compensation costs compared to 2020, which included salary abatements and reduced incentive
compensation accruals.
Television Broadcasting
A summary of television broadcasting’s operating results is as follows:
(in thousands)
Year Ended December 31
2021
2020
% Change
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$494,177
149,422
$525,212
194,498
(6)
(23)
Revenue at the television broadcasting division decreased 6% to $494.2 million in 2021, from $525.2 million in
2020. The revenue decrease is due to an $89.0 million decline in political advertising revenue, partially offset by
increased local and national advertising revenues, which were adversely impacted in 2020 by reduced demand
related to the COVID-19 pandemic, a $12.3 million increase in retransmission revenues, and increased revenue
from summer Olympics-related advertising revenue at the Company’s NBC affiliates. The increase in local and
national television advertising was from growth in the home products, health and fitness, and sports betting
categories. In 2021 and 2020, the television broadcasting division recorded $1.0 million and $2.9 million,
respectively, in reductions to operating expenses related to property, plant and equipment gains due to new
equipment received at no cost in connection with the spectrum repacking mandate of the FCC. Operating income
for 2021 was down 23% to $149.4 million, from $194.5 million in 2020, due to reduced revenues and higher
network fees. While per subscriber rates from cable and satellite providers have grown, overall cable and satellite
subscribers are down due to cord cutting, resulting in low growth in retransmission revenue net of network fees
in 2021, which is expected to continue in the future.
65 GRAHAM HOLDINGS COMPANY
Operating margin at the television broadcasting division was 30% in 2021 and 37% in 2020.
Graham Media Group’s broadcast stations remained well-positioned and competitive in their markets, despite
overall viewing declines from a heightened 2020. On average for the year, KSAT in San Antonio and WJXT in
Jacksonville once again ranked number one in the key 6 a.m., 6 p.m. and late newscasts among the all-important
25 to 54 demographic. WDIV in Detroit ended the year as a dominant number one at 6 p.m. and in late news,
while number two in the mornings. KPRC wrapped up 2021 as a solid number two in evening and late newscasts,
third at 6 a.m. with minimal separation from competitors. WKMG grew market position in morning and late
news, finishing number two while remaining third at 6 p.m. WSLS remained third in key newscasts for the year,
while syndication remained a strength for WCWJ in daytime and early fringe. Our local station’s websites
finished another year as the number one media sites in their respective markets.
Manufacturing
A summary of manufacturing’s operating results is as follows:
(in thousands)
Year Ended December 31
2021
2020
% Change
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating (Loss) Income . . . . . . . . . . . . . . . . . . . . . . . .
$458,125
(16,048)
$416,137
12,328
10
–
Manufacturing includes four businesses: Hoover, a supplier of pressure impregnated kiln-dried lumber and
plywood products for fire retardant and preservative applications; Dekko, a manufacturer of electrical workspace
solutions, architectural lighting and electrical components and assemblies; Joyce/Dayton, a manufacturer of
screw jacks and other linear motion systems; and Forney, a global supplier of products and systems that control
and monitor combustion processes in electric utility and industrial applications.
Manufacturing revenues increased 10% in 2021 due to significantly increased revenues at Hoover from
substantially higher wood prices in 2021 and increased revenues at Joyce/Dayton, partially offset by lower
revenues at Forney and declines at Dekko from lower product demand, particularly in the commercial office
electrical products and hospitality sectors. Wood prices have been highly volatile in 2021 and 2020; overall,
Hoover results include gains on inventory sales in 2021 and 2020 from generally increasing wood prices during
these years. Manufacturing operating results declined in 2021 due to $28.0 million in goodwill and other long-
lived asset impairment charges; $26.7 million of this charge was recorded at Dekko in the third quarter of 2021,
due to continued weakness in demand for certain Dekko products related to the COVID-19 pandemic, increases
in labor and commodity costs and related supply chain challenges. Excluding these impairment charges,
manufacturing results were down modestly in 2021 due to declines at Dekko and Forney, partially offset by
overall
improved results at Hoover. The Company’s manufacturing businesses are operating in a highly
competitive market for production labor, resulting in substantial wage increases and higher labor costs in 2021.
In the second quarter of 2021, Dekko announced a plan to relocate its manufacturing operations in Shelton, CT to
other Dekko manufacturing facilities, which was substantially completed by the end of 2021. In connection with
this activity, Dekko implemented a SIP for the affected employees, resulting in $1.1 million in non-operating SIP
expense recorded in the second quarter of 2021, to be funded by the assets of the Company’s pension plan.
Healthcare
A summary of healthcare’s operating results is as follows:
(in thousands)
Year Ended December 31
2021
2020
% Change
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$223,030
26,806
$198,196
26,107
13
3
2021 FORM 10-K 66
The Graham Healthcare Group (GHG) provides home health and hospice services in four states. In December
2021, GHG acquired two small businesses, one of which expanded GHG’s home health operations into Florida.
GHG provides other healthcare services, including nursing care and prescription services for patients receiving
in-home infusion treatments through its 75% interest
in CSI Pharmacy Holding Company, LLC (CSI).
Healthcare revenues increased 13% in 2021, largely due to growth at CSI and home health services. The increase
in GHG operating results in 2021 is due to improved results from CSI and home health services, partially offset
by a decline in results from hospice services. GHG is operating in a highly competitive market for nurses and
clinical staffing, resulting in substantial compensation increases in 2021. In certain cases, this challenging
competitive market has adversely impacted GHG’s ability to meet existing customer demand.
In the second quarter of 2020, GHG received $7.4 million from the Federal Coronavirus Aid, Relief, and
Economic Security Act (CARES Act) Provider Relief Fund. GHG did not apply for these funds; they were
disbursed to GHG as a Medicare provider under the CARES Act. Under the Department of Health and Human
Services guidelines, these funds may be used to offset revenue reductions and expenses incurred in connection
with the COVID-19 pandemic. Of this amount, GHG recorded $5.7 million in revenue in the second and third
quarters of 2020, to partially offset the impact of revenue reductions due to the COVID-19 pandemic from the
curtailment of elective procedures by health systems and other factors. The remaining amount of $1.7 million
was recorded as a credit to operating costs in the second quarter of 2020 to partially offset the impact of costs
incurred to procure personal protective equipment for GHG employees and other COVID-19 related costs.
The Company also holds interests in four home health and hospice joint ventures managed by GHG, whose
results are included in equity in earnings of affiliates in the Company’s Consolidated Statements of Operations.
In 2021 and 2020, the Company recorded equity in earnings of $10.2 million and $9.7 million, respectively, from
these joint ventures.
Automotive
A summary of automotive’s operating results is as follows:
(in thousands)
Year Ended December 31
2021
2020
% Change
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . .
$327,069
11,771
$258,144
(6,196)
27
–
Automotive includes four automotive dealerships in the Washington, D.C. metropolitan area: Ourisman Lexus of
Rockville, Ourisman Honda of Tysons Corner, Ourisman Jeep Bethesda and Ourisman Ford of Manassas. On
December 28, 2021, the Company acquired Ford of Manassas located in Manassas, VA from the Battlefield
Automotive Group. Christopher J. Ourisman, a member of the Ourisman Automotive Group family of
dealerships, and his team of industry professionals operates and manages the dealerships; the Company holds a
90% stake.
Revenues for 2021 increased 27% due to sales growth at each of the three legacy dealerships, due partly to
significantly reduced demand for sales and service in the first half of 2020 at the onset of the COVID-19
pandemic in March 2020, and higher average new and used car selling prices as a result of strong consumer
demand and inventory shortages related to supply chain disruptions and production delays at vehicle
manufacturers. In the first quarter of 2020, the Company’s automotive dealerships recorded a $6.7 million
intangible asset impairment charge as a result of the pandemic and the related recessionary conditions. Operating
results for 2021 improved significantly from the prior year due to increased sales and margins, in addition to the
impairment charge recorded in the first quarter of 2020.
67 GRAHAM HOLDINGS COMPANY
Other Businesses
Leaf Group
On June 14, 2021, the Company closed on the acquisition of all outstanding shares of common stock of Leaf
Group Ltd. (Leaf) at $8.50 per share in an all cash transaction valued at approximately $322 million. Leaf Group,
headquartered in Santa Monica, CA, is a consumer internet company that builds enduring, creator-driven brands
that reach passionate audiences in large and growing lifestyle categories,
including fitness and wellness
(Well+Good, Livestrong.com and MyPlate App), and home, art and design (Saatchi Art, Society6 and Hunker).
The Leaf operating results for the period June 14, 2021 to December 31, 2021 are included in other businesses.
Leaf has three major operating divisions: Society6 Group and Saatchi Art Group (Marketplace businesses) and
the Media Group. Overall, Leaf reported an operating loss for the second half of 2021.
Clyde’s Restaurant Group
Clyde’s Restaurant Group (CRG) owns and operates eleven restaurants and entertainment venues in the
Washington, D.C. metropolitan area, including Old Ebbitt Grill and The Hamilton. As a result of the COVID-19
pandemic, CRG temporarily closed all of its restaurants and venues in March 2020 through mid-June 2020,
pursuant
to government orders, maintaining limited operations for delivery and pickup. CRG recorded a
$9.7 million goodwill and intangible assets impairment charge in the first quarter of 2020. In June 2020, CRG
made the decision to close its restaurant and entertainment venue in Columbia, MD effective July 19, 2020,
resulting in accelerated depreciation of property, plant and equipment totaling $5.7 million recorded in the
second and third quarters of 2020. In December 2020, CRG temporarily closed its restaurant dining rooms in
Maryland and the District of Columbia for the second time, reopening again for limited indoor dining service in
mid-February 2021. Dining restrictions from government orders were substantially lifted for all of CRG’s
operations by the end of the second quarter of 2021.
Overall, CRG incurred significant operating losses in 2021 and 2020 due to limited revenues and costs incurred
to maintain its facilities and support its employees; however, the losses incurred in 2021 were significantly lower
than the losses in 2020. While CRG operations have been adversely impacted as a result of the pandemic, both
revenues and operating results improved substantially in 2021 as the year progressed.
Framebridge
On May 15, 2020, the Company acquired Framebridge, Inc., a custom framing service company, headquartered
in Washington, D.C., with two retail locations in the D.C. metropolitan area and a manufacturing facility in
Richmond, KY. At the end of 2021, Framebridge had fifteen retail locations in the Washington, D.C., New York
City, Atlanta, GA, Philadelphia, PA, Boston, MA and Chicago, IL areas and three manufacturing facilities in
Kentucky and New Jersey. Framebridge expects to open four additional stores in the first half of 2022.
Framebridge revenues in 2021 increased from the prior year; however, revenues were down modestly in the
fourth quarter of 2021 due to limited production capacity related to the challenging labor market and COVID-19
related workforce absences. In the fourth quarter of 2021, Framebridge prioritized the production of holiday
guaranteed orders successfully and continue to manage a significant backlog of orders into the first quarter of
2022. Framebridge is an investment stage business and reported significant operating losses in 2021.
Code3
Code3 is a performance marketing agency focused on driving performance for brands through three core
elements of digital success: media, creative and commerce. Code3 revenues were relatively flat in 2021
compared to 2020, with strong growth in creative and commerce revenues, offset by a decline in marketing
spending by some advertising clients. Code3 reported overall operating losses in 2021 and 2020. In the second
quarter of 2021, Code3 recorded a $1.6 million lease impairment charge (including $0.4 million in property,
2021 FORM 10-K 68
plant and equipment write-downs). Excluding this impairment charge, Code3 reported operating income for
2021. In the second quarter of 2020, Code3 recorded a $1.5 million lease impairment charge (including
$0.1 million in property, plant and equipment write-downs) in connection with a restructuring plan that included
other cost reduction initiatives. These initiatives included the approval of a SIP that reduced the number of
employees at Code3, resulting in $1.0 million in non-operating pension expense in the second quarter of 2020.
Megaphone
Megaphone was sold by the Company to Spotify in December 2020.
Other
Other businesses also include Slate and Foreign Policy, which publish online and print magazines and websites;
and four investment stage businesses, CyberVista, Decile and Pinna, as well as City Cast, a local daily podcast
business that began operations in 2021. All of these businesses reported revenue increases in 2021. Losses from
each of these six businesses in 2021 adversely affected operating results.
Overall, for 2021, operating revenues for other businesses increased due largely to increases from the Leaf and
Framebridge acquisitions and increases at CRG, partially offset by declines due to the sale of Megaphone in
December 2020. Operating results declined in 2021 due to increased losses at Framebridge and losses at Leaf,
partially offset by improvements at CRG, in addition to the goodwill and other long-lived asset impairment
charges recorded in the first quarter of 2020 at CRG.
Corporate Office
Corporate office includes the expenses of the Company’s corporate office and certain continuing obligations
related to prior business dispositions. Corporate office expenses increased in 2021 due primarily to higher
compensation costs, offset by a credit related to the fair value change in contingent consideration related to the
Framebridge acquisition.
Equity in Earnings of Affiliates
the Company held an approximate 12% interest
At December 31, 2021,
in Intersection Holdings, LLC
(Intersection), a company that provides digital marketing and advertising services and products for cities, transit
systems, airports, and other public and private spaces. The Company also holds interests in several other
affiliates, including a number of home health and hospice joint ventures managed by GHG and two joint ventures
managed by Kaplan. The Company recorded equity in earnings of affiliates of $17.9 million and $6.7 million for
2021 and 2020, respectively. These amounts include $12.6 million in net earnings for 2021 and $2.1 million in
net losses for 2020 from affiliates whose operations are not managed by the Company; this includes losses from
the Company’s investment in Intersection for 2021. The Company also recorded $6.4 million in write-downs in
equity in earnings of affiliates related to one of its investments in the third quarter of 2021 and $3.6 million in
write-downs in equity in earnings of affiliates related to two of its investments in the first quarter of 2020.
The recessionary environment resulting from the COVID-19 pandemic adversely impacted the underlying
businesses of Intersection due to lower marketing spending by advertising clients. The decline in revenues
adversely impacted the operating results and liquidity of the business since the onset of the COVID-19 pandemic.
The Company concluded that these events are not indicative of an other than temporary decline in the value of its
investment to an amount less than its carrying value. Given the uncertain economic impact of the COVID-19
pandemic, it is possible that an other than temporary impairment charge could occur in the future should
Intersection fail to execute on its operating strategy to address the decline in revenues and operating results.
Further, the Company recorded a $30.5 million loss in equity earnings related to Intersection in 2021 and expects
to record additional losses in 2022.
69 GRAHAM HOLDINGS COMPANY
Net Interest Expense and Related Balances
In October 2021, the automotive subsidiary of the Company borrowed $24.75 million and entered into an interest
rate swap to fix the interest rate on the debt at 4.118% per annum; the proceeds from this borrowing were used to
repay the outstanding balance of the automotive subsidiary debt that was due on January 31, 2029. The
automotive subsidiary is required to repay the loan over a 10-year period by making monthly installment
payments and one final payment on October 1, 2031. Additionally, in connection with the Ford automotive
dealership acquisition, in December 2021, the automotive subsidiary borrowed $22.5 million, which bears
interest at SOFR plus 2.05% per annum. The automotive subsidiary is required to repay the loan over a 10-year
period by making monthly installment payments.
The Company incurred net interest expense of $30.5 million in 2021, compared to $34.4 million in 2020. The
Company recorded net interest expense of $4.1 million in 2021 to adjust the fair value of the mandatorily
redeemable noncontrolling interest at GHG. The Company recorded interest expense of $8.5 million to adjust the
fair value of the mandatorily redeemable noncontrolling interest at GHG in the fourth quarter of 2020.
At December 31, 2021, the Company had $667.5 million in borrowings outstanding at an average interest rate of
4.3%, and cash, marketable securities and other investments of $983.3 million. At December 31, 2021, the
Company had $209.6 million outstanding on its $300 million revolving credit facility. At December 31, 2020, the
Company had $512.6 million in borrowings outstanding at an average interest rate of 5.1%, and cash, marketable
securities and other investments of $1,010.6 million.
Non-Operating Pension and Postretirement Benefit Income, Net
The Company recorded net non-operating pension and postretirement benefit income of $109.2 million in 2021,
compared to $59.3 million in 2020.
In the second quarter of 2021, the Company recorded $1.1 million in expenses related to a non-operating SIP at
manufacturing. In the third quarter of 2020, the Company recorded $7.8 million in expenses related to a non-
operating SIP at the education division. In the second quarter of 2020, the Company recorded $6.0 million in
expenses related to a non-operating SIP at the education division and other businesses.
Gain on Marketable Equity Securities, Net
The Company recognized $243.1 million and $60.8 million in net gains on marketable equity securities in 2021
and 2020, respectively.
Other Non-Operating Income
The Company recorded total other non-operating income, net, of $32.6 million in 2021, compared to
$214.5 million in 2020. The 2021 amounts included $11.8 million in fair value increases on cost method
investments; $9.4 million in gains on sales of cost method investments; $3.8 million in gains related to sales of
businesses and contingent consideration and other items. The 2020 amounts included $213.3 million in net gains
related to sales of businesses and contingent consideration; $4.2 million in fair value increases on cost method
investments; $3.7 million gain on acquiring a controlling interest in an equity affiliate; $1.4 million net gain on
sales of equity affiliates and other items; partially offset by $7.3 million in impairments on cost method
investments; and $2.2 million in foreign currency losses.
Provision for Income Taxes
The Company’s effective tax rate for 2021 was 21.4%. The Company’s effective tax rate for 2021 was favorably
impacted by a $17.2 million deferred tax adjustment arising from a change in the estimated deferred state income
2021 FORM 10-K 70
tax rate attributable to the apportionment formula used in the calculation of deferred taxes related to the
Company’s pension and other postretirement plans. Excluding this $17.2 million benefit, the overall income tax
rate for 2021 was 25.2%.
The Company’s effective tax rate for 2020 was 26.3%. In 2020, the Company recorded income tax expense
related to stock compensation of $2.9 million. Excluding this $2.9 million expense, the overall income tax rate
for 2020 was 25.6%.
FINANCIAL CONDITION: LIQUIDITY AND CAPITAL RESOURCES
The Company considers the following when assessing its liquidity and capital resources:
(In thousands)
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in marketable equity securities and other
investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of December 31
2021
2020
$145,886
12,957
$413,991
9,063
824,445
667,501
587,582
512,555
Cash generated by operations is the Company’s primary source of liquidity. The Company maintains investments
in a portfolio of marketable equity securities, which is considered when assessing the Company’s sources of
liquidity. An additional source of liquidity includes the undrawn portion of the Company’s $300 million five-
year revolving credit facility, amounting to $90.4 million at December 31, 2021.
In March 2020, the U.S. government enacted legislation, including the CARES Act to provide stimulus in the
form of financial aid to businesses affected by the COVID-19 pandemic. Under the CARES Act, employers
could defer the payment of the employer share of FICA taxes due for the period beginning on March 27, 2020,
and ending December 31, 2020. The Company deferred $21.5 million of FICA payments under this program,
with $10.7 million of the deferred payments still payable at December 31, 2021. The remaining deferred balance
is due by December 31, 2022.
The CARES Act also included provisions to support healthcare providers in the form of grants and changes to
Medicare and Medicaid payments. In the second quarter of 2020, GHG received $7.4 million under the CARES
Act as a general distribution from the Provider Relief Fund to provide relief for lost revenues and expenses
incurred in connection with COVID-19. In addition to the above distribution, in April 2020, GHG applied for and
received $31.5 million under the expanded Medicare Accelerated and Advanced Payment Program, modified by
the CARES Act. The Department of Health and Human Services (HHS) started to recoup this advance in April
2021 by withholding a portion of the amount reimbursed for claims submitted for services provided after the
beginning of the recoupment period. During 2021, an amount of $18.9 million was withheld by HHS and the
Company expects the remaining balance of $12.6 million to be withheld from claims submitted in the first half of
2022.
Governments in other jurisdictions where the Company operates also provided relief to businesses affected by
the COVID-19 pandemic in the form of job retention schemes, payroll assistance, deferral of income and other
tax payments, and loans. For the years ended December 31, 2021, and 2020, Kaplan has recorded benefits
totaling $4.7 million and $12.2 million, respectively, related to job retention and payroll schemes, mostly at
Kaplan International.
During 2021, the Company’s cash and cash equivalents decreased by $268.1 million, due to the acquisition of
Leaf and several other businesses, the purchase of marketable equity securities, deferred payments on previous
71 GRAHAM HOLDINGS COMPANY
acquisitions, capital expenditures, dividend payments and share repurchases, which was partially offset by cash
generated from operations, the net proceeds from the sale of marketable equity securities and net issuance of
borrowings. In 2021, the Company’s borrowings increased by $154.9 million, due to additional borrowings under
the revolving credit facility and at the automotive subsidiary, which were partially offset by repayments.
The Company had no money market investments as of December 31, 2021, compared to $268.8 million at
December 31, 2020, which are included in cash and cash equivalents. At December 31, 2021, the Company held
approximately $119 million in cash and cash equivalents in businesses domiciled outside the U.S., of which
approximately $8 million is not available for immediate use in operations or for distribution. Additionally,
Kaplan’s business operations outside the U.S. retain cash balances to support ongoing working capital
requirements, capital expenditures, and regulatory requirements. As a result, the Company considers a significant
portion of the cash and cash equivalents balance held outside the U.S. as not readily available for use in U.S.
operations.
At December 31, 2021, the fair value of the Company’s investments in marketable equity securities was
$810.0 million, which includes investments in the common stock of seven publicly traded companies. The
Company purchased $48.0 million of marketable equity securities during 2021. During 2021, the Company sold
marketable equity securities that generated proceeds of $65.5 million. At December 31, 2021, the net unrealized
gain related to the Company’s investments totaled $536.8 million.
The Company had working capital of $680.8 million and $824.5 million at December 31, 2021 and 2020,
respectively. The Company maintains working capital levels consistent with its underlying business requirements
and consistently generates cash from operations in excess of required interest or principal payments.
At December 31, 2021 and 2020,
the Company had borrowings outstanding of $667.5 million and
$512.6 million, respectively. The Company’s borrowings at December 31, 2021 were mostly from $400.0 million
of 5.75% unsecured notes due June 1, 2026, $209.6 million in outstanding borrowings under the Company’s
revolving credit facility and commercial notes of $47.0 million at the Automotive subsidiary. The Company’s
borrowings at December 31, 2020 were mostly from $400.0 million of 5.75% unsecured notes due June 1, 2026,
£55 million in outstanding borrowings under the Company’s revolving credit facility and a commercial note of
$25.3 million at the Automotive subsidiary. The interest on $400.0 million of 5.75% unsecured notes is payable
semiannually on June 1 and December 1.
During 2021 and 2020, the Company had average borrowings outstanding of approximately $545.2 million and
$512.4 million, respectively, at average annual interest rates of approximately 4.8% and 5.1%, respectively. The
Company incurred net interest expense of $30.5 million and $34.4 million, respectively, during 2021 and 2020.
Included in the 2021 and 2020 interest expense is an amount of $4.1 million and $8.5 million, respectively, to
adjust the fair value of the mandatorily redeemable noncontrolling interest (see Note 11).
On June 3, 2021, Moody’s affirmed the Company’s credit rating and revised the outlook from Negative to Stable.
On April 27, 2021, Standard & Poor’s affirmed the Company’s credit rating and revised the outlook from
Negative to Stable.
The Company’s current credit ratings are as follows:
Long-term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ba1
Stable
BB
Stable
Moody’s
Standard & Poor’s
The Company expects to fund its estimated capital needs primarily through existing cash balances and internally
generated funds, and, as needed, from borrowings under its revolving credit facility. As of December, 31, 2021,
the Company had $209.6 million outstanding under the $300 million revolving credit facility, which borrowing
2021 FORM 10-K 72
was used to purchase land and buildings at Kaplan International’s sixth-form college in London, U.K. and at the
automotive division in the third quarter of 2021, to repay the £60 million Kaplan UK credit facility that matured
at the end of June 2020 and, to a lesser extent, to repurchase stock and fund various acquisitions during the fourth
quarter of 2021. In management’s opinion, the Company will have sufficient financial resources to meet its
business requirements in the next 12 months, including working capital requirements, capital expenditures,
interest payments, potential acquisitions and strategic investments, dividends and stock repurchases.
In summary, the Company’s cash flows for each period were as follows:
(In thousands)
Year Ended December 31
2021
2020
2019
Net cash provided by operating activities . . . . . . . . . . . . . . . .
Net cash (used in) provided by investing activities . . . . . . . . .
Net cash provided by (used in) financing activities . . . . . . . . .
Effect of currency exchange rate change . . . . . . . . . . . . . . . . .
$ 202,426
(494,635)
31,027
(3,029)
$ 210,663
199,371
(204,002)
2,978
$ 165,164
(236,735)
18,734
2,766
Net (decrease) increase in cash and cash equivalents and
restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(264,211)
$ 209,010
$ (50,071)
Operating Activities. Cash provided by operating activities is net income adjusted for certain non-cash items
and changes in assets and liabilities. The Company’s net cash flow provided by operating activities were as
follows:
(In thousands)
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation, amortization and goodwill and other long-
lived asset impairment . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . .
Amortization of lease right-of-use asset
Net pension benefit, settlement, and special separation
benefit expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-cash activities . . . . . . . . . . . . . . . . . . . . . . . . .
Change in operating assets and liabilities . . . . . . . . . . . .
Year Ended December 31
2021
2020
2019
$ 353,327
$ 299,968
$ 327,879
162,225
73,752
161,207
89,956
121,648
84,185
(91,898)
(183,742)
(111,238)
(41,573)
(229,134)
(69,761)
(137,909)
(34,714)
(195,925)
Net Cash Provided by Operating Activities . . . . . . . . . . . . .
$ 202,426
$ 210,663
$ 165,164
Net cash provided by operating activities consists primarily of cash receipts from customers, less disbursements
for costs, benefits, income taxes, interest and other expenses.
For 2021 compared to 2020, the decrease in net cash provided by operating activities is primarily due to changes
in operating assets and liabilities, partially offset by higher net income, net of non-cash adjustments. Changes in
operating assets and liabilities were driven by a decrease in the collection of accounts receivable and partial
repayment of advances related to the CARES Act, partially offset by other increases in accounts payable and
accrued liabilities and deferred revenue.
For 2020 compared to 2019, the increase in net cash provided by operating activities is primarily due to changes
in operating assets and liabilities. Changes in operating assets and liabilities were driven by the collection of
accounts receivable, the advance received by GHG under the expanded Medicare Accelerated and Advanced
Payment Program as modified by the CARES Act, and the deferral of FICA payments under the CARES Act.
73 GRAHAM HOLDINGS COMPANY
Investing Activities.
The Company’s net cash flow (used in) provided by investing activities were as follows:
(In thousands)
Investments in certain businesses, net of cash acquired . . . . . .
Purchases of property, plant and equipment . . . . . . . . . . . . . . .
Net proceeds from sales of marketable equity securities . . . . .
Investments in equity affiliates, cost method and other
Year Ended December 31
2021
2020
2019
$(351,882)
(162,537)
17,463
$ (20,080)
(69,591)
73,771
$(179,421)
(93,504)
11,804
investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8,531)
(12,367)
(27,529)
Net proceeds from sales of businesses, property, plant and
equipment and other assets . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,295
557
225,570
2,068
54,495
(2,580)
Net Cash (Used in) Provided by Investing Activities . . . . . .
$(494,635)
$199,371
$(236,735)
Acquisitions. During 2021, the Company acquired six businesses: two small businesses in its education
division, two small businesses in healthcare, one new auto dealership in automotive, and all the outstanding
shares of Leaf for cash and the assumption of $9.2 million in liabilities related to their pre-acquisition stock
compensation plan, which will be paid in the future. Leaf is included in other businesses. During 2020, the
Company acquired three businesses: two small businesses in its education division and an additional interest in
Framebridge, Inc., which is included in other businesses. The Framebridge purchase price included $54.3 million
in deferred payments and contingent consideration based on the acquiree achieving certain revenue milestones in
the future. During 2019, the Company acquired eight businesses: one in education, three in healthcare, one in
manufacturing, two in automotive, and one in other businesses for $211.8 million in cash and contingent
consideration and the assumption of $25.8 million in floor plan payables.
Capital Expenditures. The 2021 capital expenditures are higher than 2020 and 2019 primarily due to land and
building purchases at Kaplan International’s sixth-form college in London, U.K. and at the automotive division.
The 2020 and 2019 capital expenditures include spending in connection with spectrum repacking at the
Company’s television stations in Detroit, MI, Jacksonville, FL, and Roanoke, VA, as mandated by the FCC;
these spectrum repacking expenditures were largely reimbursed to the Company by the FCC. The 2020 capital
expenditures are lower than 2019 due to the completion of the construction of an academic and student
residential facility in connection with Kaplan’s Pathways program in Liverpool, U.K. The amounts reflected in
the Company’s Statements of Cash Flows are based on cash payments made during the relevant periods, whereas
the Company’s capital expenditures for 2021, 2020 and 2019 disclosed in Note 19 to the Consolidated Financial
Statements include assets acquired during the year. The Company estimates that its capital expenditures will be
in the range of $80 million to $90 million in 2022.
Net Proceeds from Sales of Investments and Businesses. During 2021, 2020 and 2019, the Company sold
marketable securities that generated proceeds of $65.5 million, $93.8 million and $19.3 million, respectively. The
Company purchased $48.0 million, $20.0 million and $7.5 million of marketable equity securities during 2021,
2020 and 2019, respectively. In December 2020, the Company completed the sale of Megaphone; the total net
proceeds from the sale were $223.0 million. In November 2019, Kaplan UK completed the sale of a small
business which was included in Kaplan International. The Company sold its interest in Gimlet Media during
February 2019; the total proceeds from the sale were $33.5 million.
2021 FORM 10-K 74
Financing Activities. The Company’s net cash flow provided by (used in) financing activities were as follows:
(In thousands)
Issuance (repayments) of borrowings . . . . . . . . . . . . .
Net borrowing under revolving credit facilities . . . . .
Net (repayments of) proceeds from vehicle floor plan
payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common shares repurchased . . . . . . . . . . . . . . . . . . . .
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Cash Provided by (Used in) Financing
Year Ended December 31
2021
2020
2019
$ 20,539
134,696
$ (81,276)
76,241
$ 32,548
–
(10,563)
(55,683)
(30,136)
(27,826)
(14,160)
(161,829)
(29,970)
6,992
14,384
(2,103)
(29,553)
3,458
Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 31,027
$(204,002)
$ 18,734
Borrowings and Vehicle Floor Plan Payable.
In 2021, the Company borrowed against the $300 million
revolving credit facility, which borrowing was used to purchase land and buildings at Kaplan International’s
sixth-form college in London, U.K. and at the automotive division and, to a lesser extent, to repurchase stock and
fund various acquisitions during the fourth quarter of 2021. In addition, the automotive subsidiary borrowed
$47.3 million, which was used to repay the outstanding balance of the term loan due on January 31, 2029 and
fund the acquisition of an automotive dealership in the fourth quarter. In 2020, the Company borrowed
£60 million against the $300 million revolving credit facility and used the proceeds to repay the £60 million
outstanding balance under the Kaplan Credit Agreement that matured at the end of June 2020. The Company
repaid £5 million of these borrowings in the fourth quarter of 2020. In 2019, the Company had cash inflows from
borrowings to fund the acquisition of two businesses at automotive and healthcare and used floor vehicle plan
financing to fund the purchase of new vehicles at its automotive subsidiary.
Common Stock Repurchases. During 2021, 2020, and 2019, the Company purchased a total of 93,969, 406,112,
and 3,392 shares, respectively, of its Class B common stock at a cost of approximately $55.7 million,
$161.8 million, and $2.1 million, respectively. On September 10, 2020, the Board of Directors authorized the
Company to acquire up to 500,000 shares of its Class B common stock. The Company did not announce a ceiling
price or time limit for the purchases. At December 31, 2021, the Company had remaining authorization from the
Board of Directors to purchase up to 270,182 shares of Class B common stock.
Dividends. The annual dividend rate per share was $6.04, $5.80 and $5.56 in 2021, 2020 and 2019,
respectively. The Company expects to pay a dividend of $6.32 per share in 2022.
Other.
In 2021, the Company paid $30.9 million related to contingent consideration and deferred payments
from prior acquisitions, mostly for the 2020 acquisition of Framebridge. In March 2021, Hoover’s minority
shareholders put
their remaining outstanding shares to the Company, which had a redemption value of
$3.5 million. In 2020, the Company received $25.1 million in proceeds from the exercise of stock options. In
March 2019, a Hoover minority shareholder put some shares to the Company, which had a redemption value of
$0.6 million.
75 GRAHAM HOLDINGS COMPANY
Debt and interest
Operating leases . . . . . . . . . . . .
Programming purchase
commitments (1)
. . . . . . . . . .
Other purchase obligations(2) . .
Long-term liabilities (3) . . . . . . .
Contractual Obligations. The following reflects a summary of the Company’s contractual obligations as of
December 31, 2021:
(in thousands)
2022
2023
2024
2025
2026
Thereafter
Total
. . . . . . . . . . . $ 33,092 $241,678 $ 35,212 $28,626 $415,938 $ 36,537 $ 791,083
644,228
107,541
296,514
45,897
50,392
64,030
79,854
8,821
97,789
2,820
4,952
44,696
2,729
213
24,615
2,596
177
12,016
2,494
–
6,820
2,433
–
25,366
10,786
14,163
211,302
23,858
Total . . . . . . . . . . . . . . . . . $250,063 $373,909 $126,666 $93,705 $471,088 $369,203 $1,684,634
(1)
(2)
Includes commitments for the Company’s television broadcasting business that are reflected in the Company’s Consolidated Financial
Statements and commitments to purchase programming to be produced in future years.
Includes purchase obligations related to employment agreements, capital projects and other legally binding commitments. Other purchase
orders made in the ordinary course of business are excluded from the table above. Any amounts for which the Company is liable under
purchase orders are reflected in the Company’s Consolidated Balance Sheets as accounts payable and accrued liabilities.
(3) Primarily made up of multiemployer pension plan withdrawal obligations and postretirement benefit obligations other than pensions. The
Company has other long-term liabilities excluded from the table above, including obligations for deferred compensation, long-term
incentive plans and long-term deferred revenue.
In management’s opinion, the Company will have sufficient financial resources to meet its business requirements
in the next 12 months, including working capital requirements, capital expenditures, interest payments, potential
acquisitions and strategic investments, dividends and stock repurchases.
Other. The Company does not have any off-balance-sheet arrangements or financing activities with special-
purpose entities (SPEs).
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and judgments that affect the amounts reported in the financial statements. On an
ongoing basis, the Company evaluates its estimates and assumptions. The Company bases its estimates on
historical experience and other assumptions believed to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying value of assets and liabilities that are not readily
apparent from other sources. Actual results could differ from these estimates.
An accounting policy is considered to be critical if it is important to the Company’s financial condition and
results and if it requires management’s most difficult, subjective and complex judgments in its application. For a
summary of all of the Company’s significant accounting policies, see Note 2 to the Company’s Consolidated
Financial Statements.
Revenue Recognition, Trade Accounts Receivable and Allowance for Credit Losses. Education revenue is
primarily derived from postsecondary education services, professional education and test preparation services.
Revenue, net of any refunds, corporate discounts, scholarships and employee tuition discounts is recognized
ratably over the instruction period or access period for higher education and supplemental education services.
At Kaplan International and Kaplan Supplemental Education, estimates of average student course length are
developed for each course, along with estimates for the anticipated level of student drops and refunds from test
performance guarantees, and these estimates are evaluated on an ongoing basis and adjusted as necessary. As
Kaplan’s businesses and related course offerings have changed, including more online programs, the complexity
and significance of management’s estimates have increased.
2021 FORM 10-K 76
KHE provides non-academic operations support services to Purdue Global pursuant to a TOSA, which includes
technology support, help-desk functions, human resources support for faculty and employees, admissions
support, financial aid administration, marketing and advertising, back-office business functions, and certain
student recruitment services. KHE is not entitled to receive any reimbursement of costs incurred in providing
support services, or any fee, unless and until Purdue Global has first covered all of its operating costs (subject to
a cap), received payment for cost efficiencies, if any, and during the first five years of the TOSA receive a
priority payment of $10 million per year in addition to the operating cost reimbursements and cost efficiency
payments. KHE will receive reimbursement for its operating costs of providing the support services after
payment of Purdue Global’s operating costs, cost efficiency payments, and priority payment. If there are
sufficient revenues, KHE may be entitled to a cost efficiency payment, if any, and additional fee equal to 12.5%
of Purdue Global’s revenue. Subject to certain limitations, a portion of the fee that is earned by KHE in one year
may be carried over to subsequent years for payment to Kaplan.
The support fee and reimbursement for KHE support costs are entirely dependent on the availability of cash at
the end of Purdue Global’s fiscal year (June 30), and therefore, all consideration in the contract is variable. The
Company uses significant judgment to forecast the operating results of Purdue Global, the availability of cash at
the end of each fiscal year, and the consideration it expects to receive from Purdue Global annually. Key
assumptions used in the forecast model include student census and degree enrollment data, Purdue Global and
KHE expenses, changes to working capital, contractually stipulated minimum payments, and lead conversion
rates. The forecast is updated as uncertainties are resolved. The Company reviews and updates the assumptions
regularly, as a significant change in one or more of these estimates could affect revenue recognized. Changes to
the estimated variable consideration were not material for the year ended December 31, 2021.
A Kaplan International business has a contract with an examination body through August 2032 comprised of two
performance obligations, one to build and create a professional exam and another to manage the delivery of that
exam to qualified candidates. The first obligation was completed in 2021. The second obligation began after the
first obligation was completed and is expected to continue through the end of the contract term. Revenues are
recognized for both of these obligations using forecasted financial results and the use of a market-based profit
margin applied to costs incurred during the financial reporting period. This profit margin is different for each
obligation as a result of the different value created by each distinct obligation. The forecast, including key
assumptions such as expected candidate volumes and related exam-management expenses, is updated as future
uncertainties are resolved, which may result in changes to the profit margin associated with each performance
obligation. The Company reviews and updates the assumptions regularly, as a significant change in one or more
of these estimates could affect revenue recognized. Changes to the estimated variable consideration were not
material for the year ended December 31, 2021.
The determination of whether revenue should be reported on a gross or net basis is based on an assessment of
whether the Company acts as a principal or an agent in the transaction. In certain cases, the Company is
considered the agent, and the Company records revenue equal to the net amount retained when the fee is earned.
In these cases, costs incurred with third-party suppliers is excluded from the Company’s revenue. The Company
assesses whether it obtained control of the specified goods or services before they are transferred to the customer
as part of this assessment. In addition, the Company considers other indicators such as the party primarily
responsible for fulfillment, inventory risk and discretion in establishing price.
Accounts receivable have been reduced by an allowance that reflects the current expected credit losses associated
with the receivables. This estimated allowance is based on historical write-offs, current macroeconomic
conditions, reasonable and supportable forecasts of future economic conditions and management’s evaluation of
the financial condition of the customer. The Company generally considers an account past due or delinquent
when a student or customer misses a scheduled payment. The Company writes off accounts receivable balances
deemed uncollectible against the allowance for credit losses following the passage of a certain period of time, or
generally when the account is turned over for collection to an outside collection agency.
77 GRAHAM HOLDINGS COMPANY
Goodwill and Other Intangible Assets. The Company has a significant amount of goodwill and indefinite-
lived intangible assets that are reviewed at least annually for possible impairment.
(in millions)
As of December 31
2021
2020
Goodwill and indefinite-lived intangible assets . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Percentage of goodwill and indefinite-lived intangible assets to total assets . . .
$1,791.8
7,425.5
24%
$1,605.2
6,444.1
25%
The Company performs its annual goodwill and intangible assets impairment test as of November 30. Goodwill
and other intangible assets are reviewed for possible impairment between annual tests if an event occurred or
circumstances changed that would more likely than not reduce the fair value of the reporting unit or other
intangible assets below its carrying value.
Goodwill
The Company tests its goodwill at the reporting unit level, which is an operating segment or one level below an
operating segment. The Company initially performs an assessment of qualitative factors to determine if it is
necessary to perform a quantitative goodwill impairment test. The Company quantitatively tests goodwill for
impairment if, based on its assessment of the qualitative factors, it determines that it is more likely than not that
the fair value of a reporting unit is less than its carrying amount, or if it decides to bypass the qualitative
assessment. The quantitative goodwill impairment test compares the estimated fair value of a reporting unit with
its carrying amount, including goodwill. An impairment charge is recognized for the amount by which the
carrying amount exceeds the reporting unit’s fair value.
In the third quarter of 2021, as a result of the emergence of the COVID-19 Delta variant and continued weak
product demand in the commercial office electrical products and hospitality sectors caused by the COVID-19
pandemic, the Company performed an interim review of the goodwill and indefinite-lived intangibles of the
Dekko reporting unit. As a result of the impairment review, the Company recorded a $26.7 million goodwill
impairment charge. The Company estimated the fair value of the reporting unit by utilizing a discounted cash
flow model. The carrying value of the reporting unit exceeded the estimated fair value, resulting in a goodwill
impairment charge for the amount by which the carrying value exceeded the estimated fair value after taking into
account the effect of deferred income taxes. Dekko is included in manufacturing.
The Company had 20 reporting units as of December 31, 2021. The reporting units with significant goodwill
balances as of December 31, 2021, were as follows, representing 89% of the total goodwill of the Company:
(in millions)
Education
Kaplan international
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Higher education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplemental education . . . . . . . . . . . . . . . . . . . . . . . . .
Television broadcasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leaf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hoover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dekko . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill
$ 621.3
63.2
170.6
190.8
162.0
118.3
91.3
47.8
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,465.3
2021 FORM 10-K 78
As of November 30, 2021, in connection with the Company’s annual impairment testing, the Company decided
to perform the quantitative goodwill impairment process at all of the reporting units with the exception of
Framebridge, for which it performed a qualitative assessment. The Company’s policy requires the performance
of a quantitative impairment review of the goodwill at least once every three years. The Company used a
discounted cash flow model, and, where appropriate, a market value approach was also utilized to supplement the
discounted cash flow model to determine the estimated fair value of its reporting units. The Company made
estimates and assumptions regarding future cash flows, discount rates, long-term growth rates and market values
to determine each reporting unit’s estimated fair value. The methodology used to estimate the fair value of the
Company’s reporting units on November 30, 2021, was consistent with the one used during the 2020 annual
goodwill impairment test.
The Company made changes to certain of its assumptions utilized in the discounted cash flow models for 2021
compared with the prior year to take into account changes in the economic environment, regulations and their
impact on the Company’s businesses. The key assumptions used by the Company were as follows:
• Expected cash flows underlying the Company’s business plans for the periods 2022 through 2026 were
used. The Company used expected cash flows for the periods 2022 through 2031 for the Hoover
reporting unit. The expected cash flows took into account historical growth rates, the effect of the
changed economic outlook at the Company’s businesses, industry challenges and an estimate for the
possible impact of any applicable regulations.
• Cash flows beyond 2026 were projected to grow at a long-term growth rate, which the Company
estimated between 1.5% and 3% for each reporting unit.
• The Company used a discount rate of 10% to 17% to risk adjust the cash flow projections in
determining the estimated fair value.
The fair value of each of the reporting units exceeded its respective carrying value as of November 30, 2021.
The estimated fair value of the Dekko reporting unit at the manufacturing businesses exceeded its carrying value
by a margin less than 25% following a goodwill impairment recorded in the third quarter of 2021. The total
goodwill at this reporting unit was $47.8 million as of December 31, 2021, or 3% of the total goodwill of the
Company. There exists a reasonable possibility that a decrease in the assumed projected cash flows or long-term
growth rate, or an increase in the discount rate assumption used in the discounted cash flow model of this
reporting unit, could result in an additional impairment charge.
The estimated fair value of the Company’s other reporting units with significant goodwill balances exceeded
their respective carrying values by a margin in excess of 25%. It is possible that impairment charges could occur
in the future, given changes in market conditions and the inherent variability in projecting future operating
performance. Additional COVID-19 disruptions could result in future adverse changes in projections for future
operating results or other key assumptions, such as projected revenue, profit margin, capital expenditures or cash
flows associated with fair value estimates and could lead to additional future impairments, which could be
material.
Indefinite-Lived Intangible Assets
The Company initially assesses qualitative factors to determine if it is more likely than not that the fair value of
its indefinite-lived intangible assets is less than its carrying value. The Company compares the fair value of the
indefinite-lived intangible asset with its carrying value if the qualitative factors indicate it is more likely than not
that the fair value of the asset is less than its carrying value or if it decides to bypass the qualitative assessment.
The Company records an impairment loss if the carrying value of the indefinite-lived intangible assets exceeds
the fair value of the assets for the difference in the values. The Company uses a discounted cash flow model, and,
in certain cases, a market value approach is also utilized to supplement the discounted cash flow model to
79 GRAHAM HOLDINGS COMPANY
determine the estimated fair value of the indefinite-lived intangible assets. The Company makes estimates and
assumptions regarding future cash flows, discount rates, long-term growth rates and other market values to
determine the estimated fair value of the indefinite-lived intangible assets. The Company’s policy requires the
performance of a quantitative impairment review of the indefinite-lived intangible assets at least once every three
years.
The Company’s intangible assets with an indefinite life are principally from trade names, franchise rights and
FCC licenses. The fair value of the indefinite-lived intangible assets exceeded their respective carrying values as
of November 30, 2021. There is always a possibility that impairment charges could occur in the future, given the
inherent variability in projecting future operating performance. Additional COVID-19 disruptions could result in
future adverse changes in projections for future operating results or other key assumptions, such as projected
revenue, profit margin, capital expenditures or cash flows associated with fair value estimates and could lead to
additional future impairments, which could be material.
Pension Costs. The Company sponsors a defined benefit pension plan for eligible employees in the U.S.
Excluding curtailment gains, settlement gains and special termination benefits, the Company’s net pension credit
was $93.0 million, $55.4 million and $52.7 million for 2021, 2020 and 2019, respectively. The Company’s
pension benefit obligation and related credits are actuarially determined and are impacted significantly by the
Company’s assumptions related to future events, including the discount rate, expected return on plan assets and
rate of compensation increases. The Company evaluates these critical assumptions at least annually and,
periodically, evaluates other assumptions involving demographic factors, such as retirement age, mortality and
turnover, and updates them to reflect its experience and expectations for the future. Actual results in any given
year will often differ from actuarial assumptions because of economic and other factors.
The Company assumed a 6.25% expected return on plan assets for 2021, 2020 and 2019. The Company’s actual
return on plan assets was 24.4% in 2021, 25.4% in 2020 and 23.9% in 2019. The 10-year and 20-year actual
returns on plan assets on an annual basis were 13.7% and 10.0%, respectively.
Accumulated and projected benefit obligations are measured as the present value of future cash payments. The
Company discounts those cash payments using the weighted average of market-observed yields for high-quality
fixed-income securities with maturities that correspond to the payment of benefits. Lower discount rates increase
present values and generally increase subsequent-year pension costs; higher discount rates decrease present
values and decrease subsequent-year pension costs. The Company’s discount rate at December 31, 2021, 2020
and 2019, was 2.9%, 2.5% and 3.3%, respectively, reflecting market interest rates.
Changes in key assumptions for the Company’s pension plan would have had the following effects on the 2021
pension credit, excluding curtailment gains, settlement gains and special termination benefits:
• Expected return on assets – A 1% increase or decrease to the Company’s assumed expected return on
plan assets would have increased or decreased the pension credit by approximately $22.1 million.
• Discount rate – A 1% decrease to the Company’s assumed discount rate would have decreased the
pension credit by approximately $0.6 million. A 1% increase to the Company’s assumed discount rate
would have increased the pension credit by approximately $18.0 million.
The Company’s net pension credit includes an expected return on plan assets component, calculated using the
expected return on plan assets assumption applied to a market-related value of plan assets. The market-related
value of plan assets is determined using a five-year average market value method, which recognizes realized and
unrealized appreciation and depreciation in market values over a five-year period. The value resulting from
applying this method is adjusted, if necessary, such that it cannot be less than 80% or more than 120% of the
market value of plan assets as of the relevant measurement date. As a result, year-to-year increases or decreases
in the market-related value of plan assets impact the return on plan assets component of pension credit for the
year.
2021 FORM 10-K 80
At the end of each year, differences between the actual return on plan assets and the expected return on plan
assets are combined with other differences in actual versus expected experience to form a net unamortized
actuarial gain or loss in accumulated other comprehensive income. Only those net actuarial gains or losses in
excess of the deferred realized and unrealized appreciation and depreciation are potentially subject
to
amortization.
The types of items that generate actuarial gains and losses that may be subject to amortization in net periodic
pension (credit) cost include the following:
• Asset returns that are more or less than the expected return on plan assets for the year;
• Actual participant demographic experience different from assumed (retirements, terminations and
deaths during the year);
• Actual salary increases different from assumed; and
• Any changes in assumptions that are made to better reflect anticipated experience of the plan or to
reflect current market conditions on the measurement date (discount rate, longevity increases, changes
in expected participant behavior and expected return on plan assets).
Amortization of the unrecognized actuarial gain or loss is included as a component of pension credit for a year if
the magnitude of the net unamortized gain or loss in accumulated other comprehensive income exceeds 10% of
the greater of the benefit obligation or the market-related value of assets (10% corridor). The amortization
component is equal to that excess divided by the average remaining service period of active employees expected
to receive benefits under the plan. At the end of 2018, the Company had no net unamortized actuarial gains in
accumulated other comprehensive income subject to amortization outside the 10% corridor, and therefore, no
amortized gain was included in the pension credit for 2019.
During 2019, there were significant pension asset gains offset by a decrease in the discount rate and the purchase
that resulted in no net unamortized actuarial gains in accumulated other
of a group annuity contract
comprehensive income subject to amortization outside the 10% corridor, and therefore, no amortized gain
amount was included in the pension credit for 2020.
During 2020, there were significant pension asset gains offset by a further decrease in the discount rate that
resulted in net unamortized actuarial gains in accumulated other comprehensive income subject to amortization
outside the 10% corridor, and therefore, an amortized gain of $7.9 million was included in the pension credit for
2021.
During 2021, there were significant pension asset gains and an increase in the discount rate. The Company
currently estimates that there will be net unamortized actuarial gains in accumulated other comprehensive income
subject to amortization outside the 10% corridor, and therefore, an amortized gain amount of $68.9 million is
included in the estimated pension credit for 2022.
Overall, the Company estimates that it will record a net pension credit of approximately $179 million in 2022.
Note 15 to the Company’s Consolidated Financial Statements provides additional details surrounding pension
costs and related assumptions.
Accounting for Income Taxes.
Valuation Allowances
Deferred income taxes arise from temporary differences between the tax and financial statement recognition of
assets and liabilities. In evaluating its ability to recover deferred tax assets within the jurisdiction from which
they arise, the Company considers all available positive and negative evidence, including scheduled reversals of
deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations.
These assumptions require significant judgment about forecasts of future taxable income.
81 GRAHAM HOLDINGS COMPANY
the Company had state income tax net operating loss carryforwards of
As of December 31, 2021,
$1,026.1 million, which will expire at various future dates. Also at December 31, 2021, the Company had
$87.1 million of non-U.S. income tax loss carryforwards, of which $44.2 million may be carried forward
indefinitely; $12.2 million of losses that, if unutilized, will expire in varying amounts through 2026; and
$30.7 million of losses that, if unutilized, will start to expire after 2026. At December 31, 2021, the Company has
established approximately $57.6 million in total valuation allowances, primarily against deferred state tax assets,
net of U.S. Federal income taxes, and non-U.S. deferred tax assets, as the Company believes that it is more likely
than not that the benefit from certain state and non-U.S. net operating loss carryforwards and other deferred tax
assets will not be realized. The Company has established valuation allowances against state income tax benefits
recognized, without considering potentially offsetting deferred tax liabilities established with respect to prepaid
pension cost and goodwill. Prepaid pension cost and goodwill have not been considered a source of future
taxable income for realizing deferred tax benefits recognized since these temporary differences are not likely to
reverse in the foreseeable future. However, certain deferred state tax assets have an indefinite life. As a result, the
Company has considered deferred tax liabilities for prepaid pension cost and goodwill as a source of future
taxable income for realizing those deferred state tax assets. The valuation allowances established against state
and non-U.S. income tax benefits recorded may increase or decrease within the next 12 months, based on
operating results, the market value of investment holdings or business and tax planning strategies; as a result, the
Company is unable to estimate the potential tax impact, given the uncertain operating and market environment.
The Company will be monitoring future operating results and projected future operating results on a quarterly
basis to determine whether the valuation allowances provided against state and non-U.S. deferred tax assets
should be increased or decreased, as future circumstances warrant.
Recent Accounting Pronouncements. See Note 2 to the Company’s Consolidated Financial Statements for a
discussion of recent accounting pronouncements.
2021 FORM 10-K 82
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Graham Holdings Company
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Graham Holdings Company and its
subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of
operations, of comprehensive income, of changes in common stockholders’ equity and of cash flows for each of
the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the
“consolidated financial statements”). We also have audited the Company’s internal control over financial
reporting as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting
principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in
all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria
established in Internal Control—Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over
financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing
under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and
on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are
free of material misstatement, whether due to error or fraud, and whether effective internal control over financial
reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of
the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
83 GRAHAM HOLDINGS COMPANY
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
internal control over financial reporting may not prevent or detect
Because of its inherent
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
limitations,
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the
consolidated financial statements that was communicated or required to be communicated to the audit committee
and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and
(ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit
matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we
are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the accounts or disclosures to which it relates.
Goodwill Impairment Assessments – Hoover and Dekko Reporting Units
As described in Notes 2 and 9 to the consolidated financial statements, the Company’s consolidated goodwill
balance was $1,649.6 million as of December 31, 2021. As disclosed by management, the goodwill associated
with the Hoover and Dekko reporting units was $91.3 million and $47.8 million, respectively as of December 31,
2021. Management reviews goodwill for possible impairment at least annually, as of November 30, or between
annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of
the reporting unit below its carrying value. An impairment charge is recognized for the amount by which the
carrying value exceeds the reporting unit’s fair value. Management reviews the carrying value of goodwill
utilizing a discounted cash flow model. To determine the estimated fair value of the reporting unit, management
makes assumptions regarding estimated future cash flows, discount rates, long-term growth rates, and market
values.
The principal considerations for our determination that performing procedures relating to the goodwill
impairment assessments of the Hoover and Dekko reporting units is a critical audit matter are (i) the significant
judgment by management when determining the fair value of the reporting units; (ii) a high degree of auditor
judgment, subjectivity, and effort in performing procedures and evaluating management’s estimated future cash
flows and significant assumptions related to revenues, profit margins, and the discount rate; and (iii) the audit
effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming
our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness
of controls relating to management’s goodwill impairment assessment, including controls over the valuation of
the Company’s reporting units. These procedures also included, among others, (i) testing management’s process
for determining the fair value of the Hoover and Dekko reporting units; (ii) evaluating the appropriateness of the
discounted cash flow model; (iii) testing the completeness and accuracy of underlying data used in the model;
and (iv) evaluating the reasonableness of significant assumptions related to revenues, profit margins, and the
discount rate. Evaluating management’s assumptions related to revenues and profit margins involved evaluating
2021 FORM 10-K 84
whether the assumptions used were reasonable considering (i) the current and past performance of the reporting
unit; (ii) relevant industry forecasts and macroeconomic conditions; (iii) consistency with external market and
industry data; (iv) management’s historical forecasting accuracy; (v) consistency with evidence obtained in other
areas of the audit; and (vi) the Company’s objectives and strategies. Professionals with specialized skill and
knowledge were used to assist in evaluating the appropriateness of the model and the reasonableness of the
discount rate assumption.
/s/ PricewaterhouseCoopers LLP
Washington, District of Columbia
February 25, 2022
We have served as the Company’s auditor since 1946.
85 GRAHAM HOLDINGS COMPANY
GRAHAM HOLDINGS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Operating Revenues
Year Ended December 31
2021
2020
2019
Sales of services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,089,800
1,096,174
$2,056,228
832,893
$2,111,035
821,064
Operating Costs and Expenses
Cost of services sold (exclusive of items shown below) . . . . . . . . . .
Cost of goods sold (exclusive of items shown below) . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation of property, plant and equipment . . . . . . . . . . . . . . . . .
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of goodwill and other long-lived assets . . . . . . . . . . . . .
Income from Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of affiliates, net . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-operating pension and postretirement benefit income, net . . . .
Gain on marketable equity securities, net . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income, net
Income Before Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (Income) Loss Attributable to Noncontrolling Interests . . . . . . .
Net Income Attributable to Graham Holdings Company Common
3,185,974
2,889,121
2,932,099
1,243,384
871,137
831,853
71,415
57,870
32,940
1,239,241
672,865
715,401
74,257
56,780
30,170
1,315,928
632,318
717,659
59,253
53,243
9,152
3,108,599
2,788,714
2,787,553
77,375
17,914
3,409
(33,943)
109,230
243,088
32,554
449,627
96,300
353,327
(1,252)
100,407
6,664
3,871
(38,310)
59,315
60,787
214,534
407,268
107,300
299,968
397
144,546
11,664
6,151
(29,779)
162,798
98,668
32,431
426,479
98,600
327,879
(24)
Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 352,075
$ 300,365
$ 327,855
Per Share Information Attributable to Graham Holdings Company
Common Stockholders
Basic net income per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic average number of common shares outstanding . . . . . . . . . . . . . . .
Diluted net income per common share . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted average number of common shares outstanding . . . . . . . . . . . . .
$
$
$
$
70.65
4,951
70.45
4,965
$
$
58.30
5,124
58.13
5,139
61.70
5,285
61.21
5,327
See accompanying Notes to Consolidated Financial Statements.
2021 FORM 10-K 86
GRAHAM HOLDINGS COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Year Ended December 31
2021
2020
2019
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 353,327
$299,968
$327,879
Other Comprehensive Income, Before Tax
Foreign currency translation adjustments:
Translation adjustments arising during the year . . . . . . . . . . . . . . . .
Adjustment for sale of a business with foreign operations . . . . . . . .
(16,052)
–
31,642
–
(16,052)
31,642
5,371
2,011
7,382
Pension and other postretirement plans:
Actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of net actuarial (gain) loss included in net income . . .
Amortization of net prior service cost (credit) included in net
income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements included in net income . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flow hedges gain (loss)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
519,595
(2)
(5,486)
365,164
(69)
1,219
231,104
(5,725)
(2,046)
3,170
(120)
2,680
–
517,157
349
368,994
(1,282)
(4,142)
(91,676)
127,515
(1,344)
Other Comprehensive Income, Before Tax . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense related to items of other comprehensive income . . .
501,454
(133,380)
399,354
(99,335)
133,553
(34,087)
Other Comprehensive Income, Net of Tax . . . . . . . . . . . . . . . . . . . . . . . . . .
368,074
300,019
99,466
Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive (income) loss attributable to noncontrolling interests . .
721,401
(1,252)
599,987
397
427,345
(24)
Total Comprehensive Income Attributable to Graham Holdings
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 720,149
$600,384
$427,321
See accompanying Notes to Consolidated Financial Statements.
87 GRAHAM HOLDINGS COMPANY
GRAHAM HOLDINGS COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
Assets
Current Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in marketable equity securities and other investments . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories and contracts in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, Plant and Equipment, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease Right-of-Use Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indefinite-Lived Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortized Intangible Assets, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid Pension Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Charges and Other Assets (includes $782 and $0 of restricted cash) . . . . . . . . . . . .
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities and Equity
Current Liabilities
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt
Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued Compensation and Related Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mandatorily Redeemable Noncontrolling Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments and Contingencies (Note 18)
Redeemable Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Preferred Stock, $1 par value; 977,000 shares authorized, none issued . . . . . . . . . . . .
Common Stockholders’ Equity
Common stock
Class A Common stock, $1 par value; 7,000,000 shares authorized; 964,001 shares
issued and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Class B Common stock, $1 par value; 40,000,000 shares authorized; 19,035,999
shares issued; 3,942,065 and 4,018,832 shares outstanding . . . . . . . . . . . . . . . . . . . .
Capital in excess of par value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income, net of taxes
Cumulative foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gain on pensions and other postretirement plans . . . . . . . . . . . . . . . . . . . . . .
Cash flow hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of 15,093,934 and 15,017,167 shares of Class B common stock held in treasury . . . . .
Total Common Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Liabilities and Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
See accompanying Notes to Consolidated Financial Statements.
As of December 31
2021
2020
$
145,886
12,175
824,445
607,471
141,471
81,741
32,744
1,241
1,847,174
468,126
437,969
155,444
1,649,582
142,180
247,120
2,306,514
7,900
163,516
$ 7,425,525
$
583,629
358,720
4,585
77,655
141,749
1,166,338
175,391
36,497
676,706
13,661
405,200
525,752
2,999,545
$
413,991
9,063
587,582
537,156
120,622
75,523
29,313
942
1,774,192
378,286
462,560
155,777
1,484,750
120,437
204,646
1,708,305
8,396
146,770
$ 6,444,119
$
520,236
331,021
5,140
86,797
6,452
949,646
201,918
48,768
521,274
9,240
428,849
506,103
2,665,798
14,311
11,928
–
–
964
964
19,036
389,456
7,126,761
19,036
388,159
6,804,822
(6,298)
979,157
(1,471)
(4,108,022)
4,399,583
12,086
4,411,669
$ 7,425,525
9,754
595,287
(1,727)
(4,056,993)
3,759,302
7,091
3,766,393
$ 6,444,119
2021 FORM 10-K 88
GRAHAM HOLDINGS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Cash Flows from Operating Activities
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and goodwill and other long-lived asset impairment
. . . . . . . . . . . . . .
Amortization of lease right-of-use asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net pension benefit, settlement, and special separation benefit expense . . . . . . . . . . . . . . . . . . . . .
Gain on marketable equity securities and cost method investments, net
. . . . . . . . . . . . . . . . . . . . .
Credit loss expense and provision for other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration fair value measurements and accretion . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on disposition and write-downs of businesses, property, plant and equipment, investments
and other assets, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of affiliates, net of distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in operating assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes receivable/payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets and other liabilities, net
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31
2021
2020
2019
$ 353,327
$ 299,968
$ 327,879
162,225
73,752
(91,898)
(254,844)
6,824
5,659
(4,207)
179
161,207
89,956
(41,573)
(57,669)
10,667
6,348
2,895
2,153
(8,554)
4,917
65,046
(214,926)
6,592
14,377
(59,292)
4,551
32,397
19,086
(8,689)
(85,147)
(14,144)
1,238
61,328
3,786
(32,714)
(25,728)
3,310
(91,478)
11,735
429
121,648
84,185
(137,909)
(103,748)
22,726
6,278
–
1,070
(28,346)
(2,678)
69,751
(53,602)
(5,317)
(47,069)
30,487
1,828
(88,597)
(33,655)
233
Net Cash Provided by Operating Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
202,426
210,663
165,164
Cash Flows from Investing Activities
Investments in certain businesses, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of marketable equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of marketable equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net proceeds from sales of businesses, property, plant and equipment and other assets . . . . . . . . .
Investments in equity affiliates, cost method and other investments . . . . . . . . . . . . . . . . . . . . . . . .
Loans to related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(351,882)
(162,537)
65,499
(48,036)
10,295
(8,531)
–
557
(20,080)
(69,591)
93,775
(20,004)
225,570
(12,367)
–
2,068
(179,421)
(93,504)
19,303
(7,499)
54,495
(27,529)
(3,500)
920
Net Cash (Used in) Provided by Investing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(494,635)
199,371
(236,735)
Cash Flows from Financing Activities
Net borrowings under revolving credit facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issuance of borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common shares repurchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments of borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred payments of acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (repayments of) proceeds from vehicle floor plan payable . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issuance of noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from (repayments of) bank overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
134,696
70,184
(55,683)
(49,645)
(30,866)
(30,136)
(10,563)
3,777
(3,508)
3,410
–
(639)
76,241
2,084
(161,829)
(83,360)
(19,348)
(29,970)
(14,160)
–
–
1,636
25,129
(425)
Net Cash Provided by (Used in) Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31,027
(204,002)
Effect of Currency Exchange Rate Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3,029)
2,978
–
41,250
(2,103)
(8,702)
(2,255)
(29,553)
14,384
6,000
(550)
(185)
481
(33)
18,734
2,766
Net (Decrease) Increase in Cash and Cash Equivalents and Restricted Cash . . . . . . . . . . . . . . . . .
Cash and Cash Equivalents and Restricted Cash at Beginning of Year . . . . . . . . . . . . . . . . . . . . . .
(264,211)
423,054
209,010
214,044
(50,071)
264,115
Cash and Cash Equivalents and Restricted Cash at End of Year . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 158,843
$ 423,054
$ 214,044
Supplemental Cash Flow Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash paid during the year for:
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 39,000
$ 30,000
$ 91,000
$ 31,000
$ 28,000
$ 30,000
See accompanying Notes to Consolidated Financial Statements.
89 GRAHAM HOLDINGS COMPANY
GRAHAM HOLDINGS COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS’ EQUITY
(in thousands)
Class A
Common
Stock
Class B
Common
Stock
Capital in
Excess of
Par Value
Retained
Earnings
Accumulated
Other
Comprehensive
Income
Treasury
Stock
Noncontrolling
Interest
Total
Equity
As of December 31, 2018 . . . . . . . . . . . . . . $964
Net income for the year . . . . . . . . . . . . . . . .
Issuance of noncontrolling interest . . . . . . . .
Acquisition of redeemable noncontrolling
interest . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss attributable to noncontrolling
interest . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
Acquisition of noncontrolling interest
Net income attributable to redeemable
noncontrolling interests . . . . . . . . . . . . . .
Change in redemption value of redeemable
noncontrolling interests . . . . . . . . . . . . . .
Dividends paid on common stock . . . . . . . . .
Repurchase of Class B common stock . . . . .
Issuance of Class B common stock, net of
restricted stock award forfeitures . . . . . . .
Amortization of unearned stock
compensation and stock option
expense . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income, net of income
taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of redeemable noncontrolling
interest . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of December 31, 2019 . . . . . . . . . . . . . .
Net income for the year . . . . . . . . . . . . . . . .
Net loss attributable to noncontrolling
interest . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of redeemable noncontrolling
interest . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss attributable to redeemable
noncontrolling interests . . . . . . . . . . . . . .
Change in redemption value of redeemable
noncontrolling interests . . . . . . . . . . . . . .
Distribution to noncontrolling interest
. . . . .
Dividends paid on common stock . . . . . . . .
Repurchase of Class B common stock . . . . .
Issuance of Class B common stock, net of
restricted stock award forfeitures . . . . . . .
Amortization of unearned stock
compensation and stock option
expense . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income, net of
income taxes . . . . . . . . . . . . . . . . . . . . .
As of December 31, 2020 . . . . . . . . . . . . . .
Net income for the year . . . . . . . . . . . . . . .
Noncontrolling interest capital
contribution . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling
interests . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of redeemable noncontrolling
interest . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss attributable to redeemable
noncontrolling interests . . . . . . . . . . . . .
Change in redemption value of
redeemable noncontrolling interests . . .
Distribution to noncontrolling interest . . .
Dividends paid on common stock . . . . . . .
Repurchase of Class B common stock . . .
Issuance of Class B common stock, net of
restricted stock award forfeitures . . . . .
Amortization of unearned stock
compensation and stock option
expense . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income, net of
income taxes . . . . . . . . . . . . . . . . . . . . . .
Purchase of redeemable noncontrolling
interest . . . . . . . . . . . . . . . . . . . . . . . . . .
$19,036 $378,837 $6,236,125
327,879
$203,829
$(3,922,009)
$
–
6,556
(152)
1,153
152
(176)
32
(29,553)
(3,721)
6,521
(2,103)
3,960
99,466
964
19,036
381,669 6,534,427
299,968
303,295
(3,920,152)
7,557
386
11
(29,970)
(411)
6,901
(386)
273
(353)
(161,829)
24,988
964
19,036
388,159 6,804,822
353,327
300,019
603,314
(4,056,993)
7,091
3,350
1,943
257
(555)
(1,943)
691
(30,136)
292
(5,593)
6,598
(55,683)
4,654
368,074
Redeemable
Noncontrolling
Interest
$ 4,346
$2,916,782
327,879
6,556
–
1,715
176
(32)
(550)
5,655
6,005
(11)
279
11,928
6,617
(691)
(35)
–
1,153
(176)
32
(29,553)
(2,103)
239
6,521
99,466
–
3,326,796
299,968
–
–
11
273
(353)
(29,970)
(161,829)
24,577
6,901
300,019
3,766,393
353,327
3,350
–
–
691
549
(555)
(30,136)
(55,683)
(939)
6,598
368,074
–
(3,508)
As of December 31, 2021 . . . . . . . . . . . . . . $964
$19,036 $389,456 $7,126,761
$971,388
$(4,108,022)
$12,086
$4,411,669
$14,311
See accompanying Notes to Consolidated Financial Statements.
2021 FORM 10-K 90
GRAHAM HOLDINGS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND NATURE OF OPERATIONS
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.
Education—Kaplan, Inc. provides an extensive range of educational services for students and professionals.
Kaplan’s various businesses comprise three categories: Kaplan International, Higher Education (KHE) and
Supplemental Education.
Media—The Company’s diversified media operations comprise television broadcasting, several websites and
print publications, podcast content and a marketing solutions provider.
Television broadcasting. As of December 31, 2021, the Company owned seven television stations located in
Houston, TX; Detroit, MI; Orlando, FL; San Antonio, TX; Roanoke, VA; and two stations in Jacksonville, FL.
All stations are network-affiliated except for WJXT in Jacksonville, FL.
Manufacturing—The Company’s manufacturing businesses include Hoover, Dekko, Joyce/Dayton and Forney.
Other—The Company’s other business operations include automotive dealerships, restaurants and entertainment
venues, consumer internet brands, custom framing services and home health and hospice services.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation. The accompanying Consolidated Financial
Statements have been prepared in accordance with generally accepted accounting principles (GAAP) in the U.S.
and include the assets, liabilities, results of operations and cash flows of the Company and its majority-owned
and controlled subsidiaries. All significant intercompany accounts and transactions have been eliminated in
consolidation.
Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to
make estimates and judgments that affect the amounts reported in the financial statements. 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. On an ongoing basis, the Company evaluates its
estimates and assumptions.
The Company assessed certain accounting matters that generally require consideration of forecasted financial
information, in context with the information reasonably available to the Company and the unknown future
impacts of the novel coronavirus (COVID-19) pandemic as of December 31, 2021 and through the date of this
filing. The accounting matters assessed included, but were not limited to, the Company’s carrying value of
goodwill and other long-lived assets, allowance for doubtful accounts, inventory valuation and related reserves,
fair value of financial assets, valuation allowances for tax assets and revenue recognition. Other than the
goodwill and other long-lived asset impairment charges (see Notes 9, 12 and 19), there were no other impacts to
the Company’s consolidated financial statements as of and for the year ended December 31, 2021 resulting from
our assessments. The Company’s future assessment of the magnitude and duration of COVID-19, as well as other
factors, could result in material impacts to the Company’s consolidated financial statements in future reporting
periods.
91 GRAHAM HOLDINGS COMPANY
Business Combinations. The purchase price of an acquisition is allocated to the assets acquired, including
intangible assets, and liabilities assumed, based on their respective fair values at
the acquisition date.
Acquisition-related costs are expensed as incurred. The excess of the cost of an acquired entity over the net of the
amounts assigned to the assets acquired and liabilities assumed is recognized as goodwill. The net assets and
results of operations of an acquired entity are included in the Company’s Consolidated Financial Statements from
the acquisition date.
Cash and Cash Equivalents. Cash and cash equivalents consist of cash on hand, short-term investments with
original maturities of three months or less and investments in money market funds with weighted average
maturities of three months or less.
Restricted Cash. Restricted cash represents amounts required to be held by non-U.S. higher education
institutions for prepaid tuition pursuant to foreign government regulations. These regulations stipulate that the
Company has a fiduciary responsibility to segregate certain funds to ensure these funds are only used for the
benefit of eligible students.
Concentration of Credit Risk. Cash and cash equivalents are maintained with several financial institutions
domestically and internationally. Deposits held with banks may exceed the amount of insurance provided on such
deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions
with investment-grade credit ratings. The Company routinely assesses the financial strength of significant
customers, and this assessment, combined with the large number and geographical diversity of its customers,
limits the Company’s concentration of risk with respect to receivables from contracts with customers.
Allowance for Credit Losses. Accounts receivable have been reduced by an allowance that reflects the current
expected credit losses associated with the receivables. The current expected credit losses are estimated based on
historical write-offs, current macroeconomic conditions and reasonable and supportable forecasts of future
economic conditions. Reserves are also established against specific receivables based on aging category,
historical collection experience and management’s evaluation of the financial condition of the customer. The
Company generally considers an account past due or delinquent when a student or customer misses a scheduled
payment. The Company writes off accounts receivable balances deemed uncollectible against the allowance for
credit losses following the passage of a certain period of time, or generally when the account is turned over for
collection to an outside collection agency.
Investments in Equity Securities. The Company measures its investments in equity securities at fair value
with changes in fair value recognized in earnings. The Company elected the measurement alternative to measure
cost method investments that do not have readily determinable fair value at cost less impairment, adjusted by
observable price changes with any fair value changes recognized in earnings. If the fair value of a cost method
investment declines below its cost basis and the decline is considered other than temporary, the Company will
record a write-down, which is included in earnings. The Company uses the average cost method to determine the
basis of the securities sold.
Fair Value Measurements. Fair value measurements are determined based on the assumptions that a market
participant would use in pricing an asset or liability based on a three-tiered hierarchy that draws a distinction
between market participant assumptions based on (i) observable inputs, such as quoted prices in active markets
(Level 1); (ii) inputs other than quoted prices in active markets that are observable either directly or indirectly
(Level 2); and (iii) unobservable inputs that require the Company to use present value and other valuation
techniques in the determination of fair value (Level 3). Financial assets and liabilities are classified in their
entirety based on the lowest level of input that is significant to the fair value measure. The Company’s
assessment of the significance of a particular input to the fair value measurements requires judgment and may
affect the valuation of the assets and liabilities being measured and their placement within the fair value
hierarchy.
For assets that are measured using quoted prices in active markets, the total fair value is the published market
price per unit multiplied by the number of units held, without consideration of transaction costs. Assets and
2021 FORM 10-K 92
liabilities that are measured using significant other observable inputs are primarily valued by reference to quoted
prices of similar assets or liabilities in active markets, adjusted for any terms specific to that asset or liability.
The Company measures certain assets—including goodwill; intangible assets; property, plant and equipment;
lease right-of-use assets; cost and equity-method investments—at fair value on a nonrecurring basis when they
are deemed to be impaired. The fair value of these assets is determined with valuation techniques using the best
information available and may include quoted market prices, market comparables and discounted cash flow
models.
Fair Value of Financial Instruments. The carrying amounts reported in the Company’s Consolidated
Financial Statements for cash and cash equivalents, restricted cash, accounts receivable, accounts payable and
accrued liabilities, the current portion of deferred revenue and the current portion of debt approximate fair value
because of the short-term nature of these financial instruments. The fair value of long-term debt is determined
based on a number of observable inputs, including the current market activity of the Company’s publicly traded
notes, trends in investor demands and market values of comparable publicly traded debt. The fair value of
interest rate hedges are determined based on a number of observable inputs, including time to maturity and
market interest rates.
Inventories and Contracts in Progress.
Inventories and contracts in progress are stated at the lower of cost or
net realizable values and are based on the first-in, first-out (FIFO) method. Inventory costs include direct
material, direct and indirect
labor, and applicable manufacturing overhead. The Company allocates
manufacturing overhead based on normal production capacity and recognizes unabsorbed manufacturing costs in
earnings. The provision for excess and obsolete inventory is based on management’s evaluation of inventories on
hand relative to historical usage, estimated future usage and technological developments.
Vehicle inventory is based on the specific identification method. The cost of new and used vehicle inventories
includes the cost of any equipment added, reconditioning and transportation. In certain instances, vehicle
manufacturers provide incentives which are reflected as a reduction in the carrying value of each vehicle
purchased.
Property, Plant and Equipment. Property, plant and equipment is recorded at cost and includes interest
capitalized in connection with major long-term construction projects. Replacements and major improvements are
capitalized; maintenance and repairs are expensed as incurred. Depreciation is calculated using the straight-line
method over the estimated useful lives of the property, plant and equipment: 3 to 20 years for machinery and
equipment; 20 to 50 years for buildings. The costs of leasehold improvements are amortized over the lesser of
their useful lives or the terms of the respective leases.
Evaluation of Long-Lived Assets. The recoverability of long-lived assets and finite-lived intangible assets is
assessed whenever adverse events or changes in circumstances indicate that recorded values may not be
recoverable. A long-lived asset is considered to not be recoverable when the undiscounted estimated future
cash flows are less than the asset’s recorded value. An impairment charge is measured based on estimated fair
market value, determined primarily using estimated future cash flows on a discounted basis. Losses on long-lived
assets to be disposed of are determined in a similar manner, but the fair market value would be reduced for
estimated costs to dispose.
Goodwill and Other Intangible Assets. Goodwill is the excess of purchase price over the fair value of
identified net assets of businesses acquired. The Company’s intangible assets with an indefinite life are
principally from trade names and trademarks, franchise agreements and Federal Communications Commission
(FCC) licenses. Amortized intangible assets are primarily student and customer relationships and trade names
and trademarks, with amortization periods up to 15 years. Costs associated with renewing or extending intangible
assets are insignificant and expensed as incurred.
93 GRAHAM HOLDINGS COMPANY
The Company reviews goodwill and indefinite-lived intangible assets at least annually, as of November 30, for
possible impairment. Goodwill and indefinite-lived intangible assets are reviewed for possible impairment
between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair
value of the reporting unit or indefinite-lived intangible asset below its carrying value. The Company tests its
goodwill at the reporting unit level, which is an operating segment or one level below an operating segment. The
Company initially assesses qualitative factors to determine if it is necessary to perform the goodwill or
indefinite-lived intangible asset quantitative impairment review. The Company reviews the goodwill and
indefinite-lived assets for impairment using the quantitative process if, based on its assessment of the qualitative
factors, it determines that it is more likely than not that the fair value of a reporting unit or indefinite-lived
intangible asset is less than its carrying value, or if it decides to bypass the qualitative assessment. The Company
reviews the carrying value of goodwill and indefinite-lived intangible assets utilizing a discounted cash flow
model, and, where appropriate, a market value approach is also utilized to supplement the discounted cash flow
model. The Company makes assumptions regarding estimated future cash flows, discount rates, long-term
growth rates and market values to determine the estimated fair value of each reporting unit and indefinite-lived
intangible asset. If these estimates or related assumptions change in the future, the Company may be required to
record impairment charges.
Investments in Affiliates. The Company uses the equity method of accounting for its investments in and
earnings or losses of affiliates that it does not control, but over which it exerts significant influence. Significant
influence is generally deemed to exist if the Company has an ownership interest in the voting stock of an investee
between 20% and 50%. The Company also uses the equity method of accounting for its investments in a
partnership or limited liability company with specific ownership accounts, if the Company has an ownership
interest of 3% or more. The Company considers whether the fair values of any of its equity method investments
have declined below their carrying values whenever adverse events or changes in circumstances indicate that
recorded values may not be recoverable. If the Company considered any such decline to be other than temporary
(based on various factors, including historical financial results, product development activities and the overall
health of the affiliate’s industry), a write-down would be recorded to estimated fair value.
Revenue Recognition. The Company identifies a contract for revenue recognition when there is approval and
commitment from both parties, the rights of the parties and payment terms are identified, the contract has
commercial substance and the collectability of consideration is probable. The Company evaluates each contract
to determine the number of distinct performance obligations in the contract, which requires the use of judgment.
Education Revenue. Education revenue is primarily derived from postsecondary education and supplementary
education services provided both domestically and abroad. Generally, tuition and other fees are paid upfront and
recorded in deferred revenue in advance of the date when education services are provided to the student. In some
instances, installment billing is available to students, which reduces the amount of cash consideration received in
advance of performing the service. The contractual terms and conditions associated with installment billing
indicate that the student is liable for the total contract price; therefore, mitigating the Company’s exposure to
losses associated with nonpayment. The Company determined the installment billing does not represent a
significant financing component.
Kaplan International. Kaplan International provides higher education, professional education, and test
preparation services and materials to students primarily in the United Kingdom (U.K.), Singapore, and Australia.
Some Kaplan International contracts consist of one performance obligation that is a combination of indistinct
promises to the student, while other Kaplan International contracts include multiple performance obligations as
the promises in the contract are capable of being both distinct and distinct within the context of the contract. One
Kaplan International business offers an option whereby students receive future services at a discount that is
accounted for as a material right.
The transaction price is stated in the contract and known at the time of contract inception; therefore, no variable
consideration exists. Revenue is allocated to each performance obligation based on its standalone selling price.
2021 FORM 10-K 94
Any discounts within the contract are allocated across all performance obligations unless observable evidence
exists that the discount relates to a specific performance obligation or obligations in the contract. Kaplan
International generally determines standalone selling prices based on prices charged to students.
Revenue is recognized ratably over the instruction period or access period for higher education, professional
education and test preparation services. Kaplan International generally uses the time elapsed method, an input
measure, as it best depicts the simultaneous consumption and delivery of these services. Course materials
determined to be a separate performance obligation are recognized at the point in time when control transfers to
the student, generally when the products are delivered to the student.
One Kaplan International business has a contract with a customer consisting of two performance obligations
which consisted entirely of variable consideration at contract inception. The Company allocates revenue to each
performance obligation based on the expected cost plus a margin. The margin was determined by a market
assessment. Revenue is recognized over time, using an input method, as the customer simultaneously benefits
from the services as delivery occurs. The Company records a contract asset associated with this Kaplan
International contract as the right to revenue is dependent on something other than the passage of time.
Higher Education (KHE). KHE primarily provides non-academic operations support services to Purdue
University Global (Purdue Global) pursuant to a Transition and Operations Support Agreement (TOSA). This
contract has a 30-year term and consists of one performance obligation, which represents a series of daily
promises to provide support services to Purdue Global. The transaction price is entirely made up of variable
consideration related to the reimbursement of KHE support costs and the KHE fee. The TOSA outlines a
payment structure, which dictates how cash will be distributed at the end of Purdue Global’s fiscal year, which is
the 30th of June. The collectability of the KHE support costs and KHE fee is entirely dependent on the
availability of cash at the end of the fiscal year. This variable consideration is constrained based on fiscal year
forecasts prepared for Purdue Global. The forecasts are updated throughout the fiscal year until the uncertainty is
ultimately resolved, which is at the end of each Purdue Global fiscal year. As KHE’s performance obligation is
made up of a series, the variable consideration is allocated to the distinct service period to which it relates, which
is the Purdue Global fiscal year.
Support services revenue is recognized over time based on the expenses incurred to date and the percentage of
expected reimbursement. KHE fee revenue is also recognized over time based on the amount of Purdue Global
revenue recognized to date and the percentage of fee expected to be collected for the fiscal year. The Company
used these input measures as Purdue Global simultaneously receives and consumes the benefits of the services
provided by KHE.
Kaplan Supplemental Education. Supplemental Education offers test preparation services and materials to
students, as well as professional training and exam preparation for professional certifications and licensures to
students. Generally, Supplemental Education contracts consist of multiple performance obligations as promises
for these services are distinct within the context of the contract. The transaction price is stated in the contract and
known at the time of contract inception, therefore no variable consideration exists. Revenue is allocated to each
performance obligation based on its standalone selling price. Supplemental Education generally determines
standalone selling prices based on the prices charged to students and professionals. Any discounts within the
contract are allocated across all performance obligations unless observable evidence exists that the discount
relates to a specific performance obligation in the contract.
Supplemental Education services revenue is recognized ratably over the period of access to the education
materials. An estimate of the average access period is developed for each course, and this estimate is evaluated
on an ongoing basis and adjusted as necessary. The time elapsed method, an input measure, is used as it best
depicts the simultaneous consumption and availability of access to the services. Revenue associated with distinct
course materials is recognized at the point in time when control transfers to the student, generally when products
are delivered to the student.
95 GRAHAM HOLDINGS COMPANY
Supplemental Education offers a guarantee on certain courses that gives students the ability to repeat a course if
they are not satisfied with their exam score. The Company accounts for this guarantee as a separate performance
obligation.
Television Broadcasting Revenue. Television broadcasting revenue at Graham Media Group (GMG) is
primarily comprised of television and internet advertising revenue, and retransmission revenue.
Television Advertising Revenue. GMG accounts for the series of advertisements included in television
advertising contracts as one performance obligation and recognizes advertising revenue over time. The Company
elected the right to invoice practical expedient, an output method, as GMG has the right to consideration that
equals the value provided to the customer for advertisements delivered to date. As a result of the election to use
the right to invoice practical expedient, GMG does not determine the transaction price or allocate any variable
consideration at contract inception. Rather, GMG recognizes revenue commensurate with the amount to which
GMG has the right to invoice the customer. Payment is typically received in arrears within 60 days of revenue
recognition.
Retransmission Revenue. Retransmission revenue represents compensation paid by cable, satellite and other
multichannel video programming distributors (MVPDs) to retransmit GMG’s stations’ broadcasts in their
designated market areas. The retransmission rights granted to MVPDs are accounted for as a license of functional
intellectual property as the retransmitted broadcast provides significant standalone functionality. As such, each
retransmission contract with an MVPD includes one performance obligation for each station’s retransmission
license. GMG recognizes revenue using the usage-based royalty method, in which revenue is recognized in the
month the broadcast is retransmitted based on the number of MVPD subscribers and the applicable per user rate
identified in the retransmission contract. Payment is typically received in arrears within 60 days of revenue
recognition.
Manufacturing Revenue. Manufacturing revenue consists primarily of product sales generated by four
businesses: Hoover, Dekko, Joyce, and Forney. The Company has determined that each item ordered by the
customer is a distinct performance obligation as it has standalone value and is distinct within the context of the
contract. For arrangements with multiple performance obligations, the Company initially allocates the transaction
price to each obligation based on its standalone selling price, which is the retail price charged to customers. Any
discounts within the contract are allocated across all performance obligations unless observable evidence exists
that the discount relates to a specific performance obligation or obligations in the contract.
The Company sells some products and services with a right of return. This right of return constitutes variable
consideration and is constrained from revenue recognition on a portfolio basis, using the expected value method
until the refund period expires.
The Company recognizes revenue when or as control transfers to the customer. Some manufacturing revenue is
recognized ratably over the manufacturing period, if the product created for the customer does not have an
alternative use to the Company and the Company has an enforceable right to payment for performance completed
to date. The determination of the method by which the Company measures its progress toward the satisfaction of
its performance obligations requires judgment. The Company measures its progress for these products using the
units delivered method, an output measure. These arrangements represented 21%, 23% and 28% of the
manufacturing revenue recognized for the years ended December 31, 2021, 2020 and 2019, respectively.
Other manufacturing revenue is recognized at the point in time when control transfers to the customer, generally
when the products are shipped. Some customers have a bill and hold arrangement with the Company. Revenue
for bill and hold arrangements is recognized when control transfers to the customer, even though the customer
does not have physical possession of the goods. Control transfers when the bill-and-hold arrangement has been
requested from the customer, the product is identified as belonging to the customer and is ready for physical
transfer, and the product cannot be directed for use by anyone but the customer.
2021 FORM 10-K 96
Payment terms and conditions vary by contract, although terms generally include a requirement of payment
within 90 days of delivery.
The Company evaluated the terms of the warranties and guarantees offered by its manufacturing businesses and
determined that these should not be accounted for as a separate performance obligation as a distinct service is not
identified.
Healthcare Revenue. The Company contracts with patients to provide home health or hospice services.
Payment is typically received from third-party payors such as Medicare, Medicaid, and private insurers. The
payor is a third party to the contract that stipulates the transaction price of the contract. The Company identifies
the patient as the party who benefits from its healthcare services and as such, the patient is its customer.
The Centers for Medicare and Medicaid Services released a revised reimbursement structure under the Patient
Driven Groupings Model (PDGM) for Medicare claims for home healthcare services effective for new and
modified revenue contracts beginning on or after January 1, 2020. Home health services contracts generally have
one performance obligation to provide home health services to patients. Under the PDGM model, the Company
recognizes revenue using the right to invoice practical expedient, an output method, as the contractual right to
revenue corresponds directly with the transfer of services to the patient. Given the election of the practical
expedient, the Company does not determine the transaction price or allocate any variable consideration at
contract inception. Rather, the Company recognizes revenue commensurate with the amount to which it has the
right to invoice the customer, which is a function of the average length of stay within each of the two 30 day
payment periods. Payment is typically received from Medicare within 30 days after a claim is filed. Medicare is
the most common third-party payor for home health services.
Home health revenue contracts may be modified to account for changes in the patient’s plan of care. The
Company identifies contract modifications when the modification changes the existing enforceable rights and
obligations. As modifications to the plan of care modify the original performance obligation, the Company
accounts for the contract modification as an adjustment to revenue (either as an increase in or a reduction of
revenue) on a cumulative catch-up basis.
Hospice services contracts generally have one performance obligation to provide healthcare services to patients.
The transaction price reflects the amount of revenue the Company expects to receive in exchange for providing
these services. As the transaction price for healthcare services is known at the time of contract inception, no
variable consideration exists. Hospice service revenue is recognized ratably over the period of care. The
Company generally uses the time-elapsed method, an input measure as it best depicts the simultaneous delivery
and consumption of healthcare services. Payment is received from third-party payors for hospice services within
60 days after a claim is filed, or in some cases in two installments, one during the contract and one after the
services have been provided. Medicare is the most common third-party payor.
Other Revenue. The Company recognizes revenue associated with management services it provides to its
affiliates. The Company accounts for the management services provided as one performance obligation and
recognizes revenue over time as the services are delivered. The Company uses the right to invoice practical
expedient, an output method, as the Company’s right to revenue corresponds directly with the value delivered to
the affiliate. As a result of the election to use the right to invoice practical expedient, the Company does not
determine the transaction price or allocate any variable consideration at contract inception. Rather, the Company
recognizes revenue commensurate with the amount to which it has the right to invoice the affiliate, which is
based on contractually identified percentages. Payment is received monthly in arrears.
Automotive Revenue. The automotive subsidiary generates revenue primarily through the sale of new and used
vehicles, the arrangement of vehicle financing, insurance and other service contracts (F&I revenue) and the
performance of vehicle repair and maintenance services.
97 GRAHAM HOLDINGS COMPANY
New and used vehicle revenue contracts generally contain one performance obligation to deliver the vehicle to
the customer in exchange for the stated contract consideration. Revenue is recognized at the point in time when
control of the vehicle passes to the customer. F&I revenue is recognized at the point in time when the agreement
between the customer and financing, insurance or service provider is executed. As the automotive subsidiary acts
as an agent in these F&I revenue transactions, revenue is recognized net of any financing, insurance and service
provider costs. Repair and maintenance services revenue is recognized over time, as the service is performed.
Other Revenue. Restaurant Revenue. Restaurant revenues consists of sales generated by Clyde’s Restaurant
Group (CRG). Food and beverage revenue, net of discounts and taxes, is recognized at the point in time when it
is delivered to the customer. Proceeds from the sale of gift cards are recorded as deferred revenue and recognized
as revenue upon redemption by the customer.
Custom Framing Services Revenue. Framebridge sells custom framing solutions to customers. Custom framing
services revenue, net of discounts and taxes, is recognized when the products are delivered to the customer.
Proceeds from the sale of gift cards are recorded as deferred revenue and recognized as revenue upon redemption
by the customer.
Code3 Revenue. Code3 generates media management revenue in exchange for providing social media
marketing solutions to its clients. The Company determined that Code3 contracts generally have one
performance obligation made up of a series of promises to manage the client’s media spend on advertising
platforms for the duration of the contract period.
Code3 recognizes revenue, net of media acquisition costs, over time as media management services are delivered
to the customer. Generally, Code3 recognizes revenue using the right to invoice practical expedient, an output
method, as Code3’s right to revenue corresponds directly with the value delivered to its customer. As a result of
the election to use the right to invoice practical expedient, Code3 does not determine the transaction price or
allocate any variable consideration at contract inception. Rather, Code3 recognizes revenue commensurate with
the amount to which it has the right to invoice the customer which is a function of the cost of social media
placement plus a management fee, less any applicable discounts. Payment is typically received within 100 days
of revenue recognition.
Code3 evaluates whether it is the principal (i.e. presents revenue on a gross basis) or agent (i.e. presents revenue
on a net basis) in its contracts. Code3 presents revenue for media management services, net of media acquisition
costs, as an agent, as Code3 does not control the media before placement on social media platforms.
Leaf Group Revenue. Leaf Group (Leaf) generates revenue through its media and marketplace businesses.
Media revenue is primarily derived from advertisements displayed on Leaf’s online media properties. Revenue is
recognized over time as the performance obligation is delivered. Revenue is generally recognized based on an
output measure including impressions delivered, cost per click or time-based advertisements.
Marketplace revenue is primarily derived from the sale of products from Society6 and Saatchi Art Group. Each
product ordered generally is accounted for as an individual performance obligation. Product revenue, net of
discounts and taxes, is recognized when control of the promised good is transferred to the customer.
Other Revenue. Other revenue primarily includes advertising, circulation and subscription revenue from Slate,
Megaphone, Decile, Pinna and Foreign Policy. The Company accounts for other advertising revenues
consistently with the advertising revenue streams addressed above. Circulation revenue consists of fees that
provide customers access to online and print publications. The Company recognizes circulation and subscription
revenue ratably over the subscription period beginning on the date that the publication or product is made
available to the customer. Circulation revenue contracts are generally annual or monthly subscription contracts
that are paid in advance of delivery of performance obligations.
Revenue Policy Elections. The Company has elected to account for shipping and handling activities that occur
after the customer has obtained control of the good as a fulfillment cost rather than as an additional promised
2021 FORM 10-K 98
service. Therefore, revenue for these performance obligations is recognized when control of the good transfers to
the customer, which is when the good is ready for shipment. The Company accrues the related shipping and
handling costs over the period when revenue is recognized.
The Company has elected to exclude from the measurement of the transaction price all taxes assessed by a
governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction
and collected by the entity from a customer.
Revenue Practical Expedients. The Company does not disclose the value of unsatisfied performance
obligations for (i) contracts with an original expected length of one year or less, (ii) contracts for which the
amount of revenue recognized is based on the amount to which the Company has the right to invoice the
customer for services performed, (iii) contracts for which the consideration received is a usage-based royalty
promised in exchange for a license of intellectual property and (iv) contracts for which variable consideration is
allocated entirely to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single
performance obligation.
Costs to Obtain a Contract. The Company incurs costs to obtain a contract that are both incremental and
expected to be recovered as the costs would not have been incurred if the contract was not obtained and the
revenue from the contract exceeds the associated cost. The revenue guidance provides a practical expedient to
expense sales commissions as incurred in instances where the amortization period is one year or less. The
amortization period is defined in the guidance as the contract term, inclusive of any expected contract renewal
periods. The Company has elected to apply this practical expedient to all contracts except for contracts in its
education division. In the education division, costs to obtain a contract are amortized over the applicable
amortization period except for cases in which commissions paid on initial contracts and renewals are
commensurate. The Company amortizes these costs to obtain a contract on a straight-line basis over the
amortization period. These expenses are included as cost of services or products in the Company’s Consolidated
Statements of Operations.
Leases. The Company has operating leases for substantially all of its educational facilities, corporate offices
and other facilities used in conducting its business, as well as certain equipment. The Company determines if an
arrangement is a lease at inception. Operating leases are included in lease right-of-use (ROU) assets, current
portion of lease liabilities, and lease liabilities on the Company’s Consolidated Balance Sheets. ROU assets
represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the
Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities
are recognized at the lease commencement date based on the present value of lease payments over the lease term.
ROU assets also include any initial direct costs, prepaid lease payments and lease incentives received, when
applicable. As most of the Company’s leases do not provide an implicit rate, the Company used its incremental
borrowing rate based on the information available at the lease commencement date in determining the present
value of lease payments. The Company used the incremental borrowing rate on December 31, 2018 for operating
leases that commenced prior to that date.
The Company’s lease terms may include options to extend or terminate the lease by one to 10 years or more
when it is reasonably certain that the option will be exercised. Leases with a term of twelve months or less are
not recorded on the balance sheet; however, lease expense for these leases is recognized on a straight-line basis.
The Company has elected the practical expedient to not separate lease components from nonlease components.
As such, lease expense includes these nonlease components, when applicable. Fixed lease expense is recognized
on a straight-line basis over the lease term. Variable lease expense is recognized when incurred. The Company’s
lease agreements do not contain any significant residual value guarantees or restrictive covenants. In some
instances, the Company subleases its leased real estate facilities to third parties.
As of December 31, 2021 and 2020, the Company had $4.0 million and $5.9 million, respectively, in net,
property, plant and equipment and current finance lease liabilities related to service loaner vehicles at the
99 GRAHAM HOLDINGS COMPANY
automotive subsidiary. Service loaner vehicles are generally purchased from the lessor within six months of
contract commencement and upon purchase the vehicles are placed into used vehicle inventory at cost. The
Company does not have any other significant financing leases.
Pensions and Other Postretirement Benefits. The Company maintains various pension and incentive savings
plans. Most of the Company’s employees are covered by these plans. The Company also provides healthcare and
life insurance benefits to certain retired employees. These employees become eligible for benefits after meeting
age and service requirements.
The Company recognizes the overfunded or underfunded status of a defined benefit postretirement plan as an
asset or liability in its Consolidated Balance Sheets and recognizes changes in that funded status in the year in
which the changes occur through comprehensive income. The Company measures changes in the funded status of
its plans using the projected unit credit method and several actuarial assumptions, the most significant of which
are the discount rate, the expected return on plan assets and the rate of compensation increase. The Company
uses a measurement date of December 31 for its pension and other postretirement benefit plans.
Self-Insurance. The Company uses a combination of insurance and self-insurance for a number of risks,
including claims related to employee healthcare and dental care, disability benefits, workers’ compensation,
general liability, property damage and business interruption. Liabilities associated with these plans are estimated
based on, among other things, the Company’s historical claims experience, severity factors and other actuarial
assumptions. The expected loss accruals are based on estimates, and, while the Company believes that the
amounts accrued are adequate, the ultimate loss may differ from the amounts provided.
Income Taxes. The Company accounts for income taxes under the asset and liability method, which requires
the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have
been included in the financial statements. Under this method, deferred tax assets and liabilities are determined
based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on
deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
The Company records net deferred tax assets to the extent that it believes these assets will more likely than not be
realized. In making such determination, the Company considers all available positive and negative evidence,
including future reversals of existing taxable temporary differences, projected future taxable income,
tax
planning strategies and recent financial operations; this evaluation is made on an ongoing basis. In the event the
Company were to determine that it was able to realize net deferred income tax assets in the future in excess of
their net recorded amount, the Company would record an adjustment to the valuation allowance, which would
reduce the provision for income taxes.
The Company recognizes a tax benefit from an uncertain tax position when it is more likely than not that the
position will be sustained upon examination, including resolutions of any related appeals or litigation processes,
based on the technical merits. The Company records a liability for the difference between the benefit recognized
and measured for financial statement purposes and the tax position taken or expected to be taken on the
Company’s tax return. Changes in the estimate are recorded in the period in which such determination is made.
Foreign Currency Translation.
Income and expense accounts of the Company’s non-U.S. operations where
the local currency is the functional currency are translated into U.S. dollars using the current rate method,
whereby operating results are converted at the average rate of exchange for the period, and assets and liabilities
are converted at the closing rates on the period end date. Gains and losses on translation of these accounts are
accumulated and reported as a separate component of equity and other comprehensive income. Gains and losses
on foreign currency transactions, including foreign currency denominated intercompany loans on entities with a
functional currency in U.S. dollars, are recognized in the Consolidated Statements of Operations.
2021 FORM 10-K 100
Equity-Based Compensation. The Company measures compensation expense for awards settled in shares
based on the grant date fair value of the award. The Company measures compensation expense for awards settled
in cash, or that may be settled in cash, based on the fair value at each reporting date. The Company recognizes
the expense over the requisite service period, which is generally the vesting period of the award. Stock award
forfeitures are accounted for as they occur.
Earnings Per Share. Basic earnings per share is calculated under the two-class method. The Company treats
restricted stock as a participating security due to its nonforfeitable right to dividends. Under the two-class
method,
the Company allocates to the participating securities their portion of dividends declared and
undistributed earnings to the extent the participating securities may share in the earnings as if all earnings for the
period had been distributed. Basic earnings per share is calculated by dividing the income available to common
stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings
per share is calculated similarly except that the weighted average number of common shares outstanding during
the period includes the dilutive effect of the assumed exercise of options and restricted stock issuable under the
Company’s stock plans. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per
share by application of the treasury stock method.
Mandatorily Redeemable Noncontrolling Interest. The Company’s mandatorily redeemable noncontrolling
interest represents the noncontrolling interest in GHC One LLC (GHC One), a subsidiary of Graham Healthcare
Group (GHG). The minority shareholders must liquidate their 5% interest in GHC One upon its required
liquidation in 2026. This interest is reported as a noncurrent liability at December 31, 2021 and 2020 in the
Consolidated Balance Sheets. The Company presents this liability at fair value, which is computed quarterly at
the current redemption value. Changes in the redemption value is recorded as interest expense or income in the
Company’s Consolidated Statement of Operations.
Redeemable Noncontrolling Interest. The Company’s redeemable noncontrolling interest represents the
noncontrolling interest in CSI Pharmacy Holding Company, LLC (CSI), which is 75% owned, Framebridge,
which is 93.4% owned, and Weiss, which is 50.1% owned. CSI’s minority shareholders may put up to 50% of
their shares to the Company. The first put period begins in 2022. A second put period for another tranche of
shares begins in 2024. The minority shareholder of Framebridge has an option to put 20% of the shares to the
Company annually starting in 2024. The minority shareholder of Weiss has an option to put 10% of the shares to
the Company annually starting in 2026 and may put all of the shares starting in 2033. In March 2021, Hoover’s
minority shareholders put the remaining outstanding shares to the Company. Following the redemption, the
Company owns 100% of Hoover. Prior to the redemption, the Company owned 98.01% of Hoover. The
Company presents the redeemable noncontrolling interests at the greater of its carrying amount or redemption
value at the end of each reporting period in the Consolidated Balance Sheets. Changes in the redemption value
are recorded to capital in excess of par value in the Company’s Consolidated Balance Sheets.
Comprehensive Income. Comprehensive income consists of net
adjustments, net changes in cash flow hedges, and pension and other postretirement plan adjustments.
income,
foreign currency translation
Recently Adopted and Issued Accounting Pronouncements.
In March 2020, the FASB issued guidance
providing optional practical expedients and exceptions to ease the potential accounting impacts associated with
the discontinuation of the London Interbank Offered Rate (LIBOR) or by other reference rates expected to be
discontinued. The Company adopted the contract modification practical expedient in the fourth quarter of 2021
as it is in the process of modifying any contracts that reference a discontinuing reference rate. This guidance is
not expected to have a significant impact on the Company’s Consolidated Financial Statements.
Other new accounting pronouncements issued but not effective until after December 31, 2021, are not expected
to have a material impact on the Company’s Consolidated Financial Statements.
101 GRAHAM HOLDINGS COMPANY
3. ACQUISITIONS AND DISPOSITIONS OF BUSINESSES
Acquisitions. During 2021, the Company acquired six businesses: two in education, two in healthcare, one in
automotive, and one in other businesses for $392.4 million in cash and contingent consideration and the
assumption of floor plan payables. The assets and liabilities of the companies acquired were recorded at their
estimated fair values at the date of the acquisition.
On June 14, 2021, the Company acquired all of the outstanding common shares of Leaf Group Ltd. for
$308.6 million in cash and the assumption of $9.2 million in liabilities related to their previous stock
compensation plan, which will be paid in the future. Leaf is a consumer internet company that builds creator-
driven brands in lifestyle and home and art design categories. The acquisition is expected to provide benefits in
the future by diversifying the Company’s business operations and providing operating synergies with other
business units. The Company includes Leaf in other businesses.
Kaplan acquired certain assets of Projects in Knowledge, a continuing medical education provider for healthcare
professionals, and another small business in November 2021. These acquisitions are expected to build upon
Kaplan’s existing customer base in the medical and test preparation fields. Both business are included in
Kaplan’s supplemental education division.
In December 2021, GHG acquired two businesses, a home health business in Florida and a 50.1% interest in
Weiss, a physician practice specializing in allergies, asthma and immunology. The minority shareholder of Weiss
has an option to put 10% of the shares to the Company annually starting in 2026 and may put all of the shares
starting in 2033. The fair value of the redeemable noncontrolling interest in Weiss was $6.6 million at the
acquisition date, determined using an income approach. These acquisitions are expected to expand the market the
healthcare division serves and are included in healthcare.
On December 28, 2021, the Company’s automotive subsidiary acquired a Ford automotive dealership for cash
and the assumption of $16.2 million in floor plan payables (see Note 6). In connection with the acquisition, the
automotive subsidiary of the Company borrowed $22.5 million to finance the acquisition (see Note 11). The
dealership will be operated and managed by an entity affiliated with Christopher J. Ourisman, a member of the
Ourisman Automotive Group family of dealerships. The acquisition expands the Company’s automotive business
operations and is included in automotive.
During 2020, the Company acquired three businesses: two in education and one in other businesses for
$96.8 million in cash and contingent consideration. The assets and liabilities of the companies acquired were
recorded at their estimated fair values at the date of acquisition.
In the first three months of 2020, Kaplan acquired two small businesses; one in its supplemental education
division and one in its international division.
In May 2020, the Company acquired an additional interest in Framebridge, Inc. for cash and contingent
consideration that resulted in the Company obtaining control of the investee. Following the acquisition, the
Company owns 93.4% of Framebridge. The Company previously accounted for Framebridge under the equity
method, and included it in Investments in Affiliates on the Consolidated Balance Sheet (see Note 4). The
contingent consideration is primarily based on Framebridge achieving revenue milestones within a specific time
period. The fair value of the contingent consideration at the acquisition date was $50.6 million, determined using
a Monte Carlo simulation. The fair value of the redeemable noncontrolling interest
in Framebridge was
$6.0 million as of the acquisition date, determined using a market approach. The minority shareholder has an
option to put 20% of the minority shares annually starting in 2024. The acquisition is expected to provide
benefits in the future by diversifying the Company’s business operations and is included in other businesses.
the Company acquired eight businesses: one in education,
During 2019,
three in healthcare, one in
manufacturing, two in automotive and one in other businesses for $211.8 million in cash and contingent
consideration and the assumption of $25.8 million in floor plan payables. The assets and liabilities of the
companies acquired were recorded at their estimated fair values at the date of acquisition.
2021 FORM 10-K 102
On January 31, 2019, the Company acquired an interest in two automotive dealerships for cash and the
assumption of floor plan payables (see Note 6). In connection with the acquisition, the automotive subsidiary of
the Company borrowed $30 million to finance the acquisition and entered into an interest rate swap to fix the
interest rate on the debt at 4.7% per annum. The Company has a 90% interest in the automotive subsidiary. The
Company also entered into a management services agreement with an entity affiliated with Christopher J.
Ourisman, a member of the Ourisman Automotive Group family of dealerships. Mr. Ourisman and his team
operate and manage the dealerships. The Company paid a fee of $2.3 million for the year ended December 31,
2019 in connection with the management services provided under this agreement. In addition, the Company
advanced $3.5 million to the minority shareholder, an entity controlled by Mr. Ourisman, at an interest rate of 6%
per annum. The minority shareholder has the option to acquire up to an additional 10% interest in the automotive
subsidiary. The acquisition is expected to provide benefits in the future by diversifying the Company’s business
operations and is included in automotive.
In July 2019, GHG acquired a 100% interest in a small business which is expected to provide certain strategic
benefits in the future and is included in healthcare. On July 11, 2019, Kaplan acquired a 100% interest in
Heverald, the owner of ESL Education, Europe’s largest language-travel agency and Alpadia, a chain of German
and French language schools and junior summer camps. The acquisition is expected to provide synergies within
Kaplan’s International English business and is included in Kaplan’s international division.
On July 31, 2019, the Company closed its acquisition of Clyde’s Restaurant Group. At the date of acquisition,
CRG owned and operated 13 restaurants and entertainment venues in the Washington, D.C. metropolitan area,
including Old Ebbitt Grill and The Hamilton. In connection with the acquisition, the Company entered into
several leases with an entity affiliated with some of CRG’s senior managers. The acquisition is expected to
provide benefits in the future by diversifying the Company’s business operations and is included in other
businesses.
In September 2019, Joyce/Dayton Corp. acquired the assets of a small business. The acquisition is expected to
complement current product offerings and is included in manufacturing.
On December 1, 2019, GHG acquired 75% of the preferred shares of CSI Pharmacy Holding Company, LLC. In
connection with the acquisition, CSI entered into an $11.25 million Term Loan to finance the acquisition. CSI is
a specialty and home infusion pharmacy, which provides intravenous immunoglobulin therapies to patients. The
minority shareholders may put up to 50% of their preferred shares to GHG and the first put period begins in
2022. A second put period for another tranche of preferred shares begins in 2024. The fair value of the
redeemable noncontrolling interest in CSI was $1.7 million at the acquisition date, determined using an income
approach. The acquisition is expected to expand the product offerings of the healthcare division.
103 GRAHAM HOLDINGS COMPANY
Acquisition-related costs for acquisitions that closed during 2021, 2020 and 2019 were $3.0 million, $1.1 million
and $3.0 million, respectively, and were expensed as incurred. The aggregate purchase price of these acquisitions
was allocated as follows, based on acquisition date fair values to the following assets and liabilities:
(in thousands)
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
Property, plant and equipment
Lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indefinite-lived intangible assets . . . . . . . . . . . . . . . . .
Amortized intangible assets . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . .
Floor plan payables . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current and noncurrent lease liabilities . . . . . . . . . . . .
Redeemable noncontrolling interest . . . . . . . . . . . . . . .
Noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase Price Allocation
Year Ended December 31
2021
2020
2019
$ 18,835
25,420
12,661
26,333
205,003
22,200
100,800
4,899
42,850
(16,198)
(52,421)
(26,286)
(6,617)
–
$
745
3,496
3,346
6,580
73,951
–
14,589
975
15,958
–
(14,917)
(6,593)
(6,005)
–
$
6,762
34,134
56,391
98,505
84,669
46,900
21,291
8,308
(2,703)
(25,755)
(42,555)
(99,131)
(1,715)
(1,154)
Aggregate purchase price, net of cash acquired . . .
$357,479
$ 92,125
$183,947
The 2021 fair values recorded were based upon valuations and the estimates and assumptions used in such
valuations are subject to change within the measurement period (up to one year from the acquisition date). The
recording of deferred tax assets or liabilities, working capital and the final amount of residual goodwill and other
intangibles are not yet finalized. The 2019 values above reflect a measurement period adjustment related to the
lease right-of-use assets, current and noncurrent lease liabilities and the finalization of working capital. Goodwill
is calculated as the excess of the consideration transferred over the net assets recognized and represents the
estimated future economic benefits arising from other assets acquired that could not be individually identified
and separately recognized. The goodwill recorded due to these acquisitions is attributable to the assembled
workforces of the acquired companies and expected synergies. The Company expects to deduct $79.4 million,
$3.2 million and $70.7 million of goodwill for income tax purposes for the acquisitions completed in 2021, 2020
and 2019, respectively.
The acquired companies were consolidated into the Company’s financial statements starting on their respective
acquisition dates. The Company’s Consolidated Statements of Operations include aggregate revenue and
operating loss of $132.4 million and $14.2 million, respectively, for the year ended December 31, 2021. The
following unaudited pro forma financial information presents the Company’s results as if the current year
acquisitions had occurred at the beginning of 2020. The unaudited pro forma information also includes the 2020
acquisitions as if they occurred at the beginning of 2019 and the 2019 acquisitions as if they had occurred at the
beginning of 2018:
(in thousands)
Year Ended December 31
2021
2020
2019
Operating revenues . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . .
$3,513,689
358,890
$3,323,427
279,810
$3,089,712
304,734
These pro forma results were based on estimates and assumptions, which the Company believes are reasonable,
and include the historical results of operations of the acquired companies and adjustments for depreciation and
2021 FORM 10-K 104
amortization of identified assets and the effect of pre-acquisition transaction related expenses incurred by the
Company and the acquired entities. The pro forma information does not include efficiencies, cost reductions and
synergies expected to result from the acquisitions. They are not the results that would have been realized had
these entities been part of the Company during the periods presented and are not necessarily indicative of the
Company’s consolidated results of operations in future periods.
Sale of Businesses.
In December 2020, the Company completed the sale of Megaphone which was included in
other businesses. In November 2019, Kaplan UK completed the sale of a small business which was included in
Kaplan International. As a result of these sales, the Company reported gains (losses) in other non-operating
income (see Note 16).
Other Transactions.
In March 2019, a Hoover minority shareholder put some shares to the Company, which
had a redemption value of $0.6 million. Following the redemption, the Company owned 98.01% of Hoover. In
March 2021, Hoover’s minority shareholders put the remaining outstanding shares to the Company, which had a
redemption value of $3.5 million. Following the redemption, the Company owns 100% of Hoover.
During 2019, the Company established GHC One as a vehicle to invest in a portfolio of healthcare businesses
together with a group of senior managers of GHG. As a holder of preferred units, the Company is obligated to
contribute 95% of the capital required for the acquisition of portfolio investments with the remaining 5% of the
capital coming from the group of senior managers. The operating agreement of GHC One requires the dissolution
of the entity on March 31, 2026, at which time the net assets will be distributed to its members. As a preferred
unit holder, the Company will receive an amount up to its contributed capital plus a preferred annual return of
8% (guaranteed return) after the group of senior managers has received a redemption of their 5% interest in net
assets (manager return). All distributions in excess of the manager and guaranteed return will be paid to common
unit holders, which currently comprise the group of senior managers of GHG. The Company may convert its
preferred units to common units at any time after which it will receive 80% of all distributions in excess of the
manager return, with the remaining 20% of excess distributions going to the group of senior managers as holders
of the other common units.
As of December 31, 2021, the Company holds a controlling financial interest in GHC One and therefore includes
the assets, liabilities, results of operations and cash flows in its consolidated financial statements. GHC One
acquired CSI and another small business during 2019, and Weiss during 2021. The Company accounts for the
minority ownership of the group of senior managers as a mandatorily redeemable noncontrolling interest (see
Note 2).
4. INVESTMENTS
Money Market Investments. As of December 31, 2021, the Company had no money market investments,
compared to $268.8 million at December 31, 2020, that are classified as cash and cash equivalents in the
Company’s Consolidated Balance Sheets.
Investments in Marketable Equity Securities.
following:
Investments in marketable equity securities consist of the
(in thousands)
As of December 31
2021
2020
Total cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross unrealized gains . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross unrealized losses . . . . . . . . . . . . . . . . . . . . . . . . . . .
$273,201
537,915
(1,119)
$232,847
340,255
–
Total Fair Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$809,997
$573,102
105 GRAHAM HOLDINGS COMPANY
At December 31, 2021 and 2020, the Company owned 44,430 and 28,000 shares, respectively, in Markel
Corporation (Markel) valued at $54.8 million and $28.9 million, respectively. The Co-Chief Executive Officer of
Markel, Mr. Thomas S. Gayner, is a member of the Company’s Board of Directors. As of December 31, 2021,
there was no marketable equity security holding that exceeded 5% of the Company’s total assets.
The Company purchased $48.0 million, $20.0 million and $7.5 million of marketable equity securities during
2021, 2020 and 2019, respectively.
During 2021, 2020 and 2019, the gross cumulative realized net gains from the sales of marketable equity
securities were $46.0 million, $23.0 million and $9.5 million, respectively. The total proceeds from such sales
were $65.5 million, $93.8 million and $19.3 million, respectively.
The net gain (loss) on marketable equity securities comprised the following:
(in thousands)
Gain on marketable equity securities, net
Less: Net (gains) losses in earnings from marketable
. . . . . . . . . . . .
Year ended December 31
2021
2020
2019
$243,088
$60,787
$98,668
equity securities sold and donated . . . . . . . . . . . . . . . .
(17,830)
13,382
(2,810)
Net unrealized gains in earnings from marketable
equity securities still held at the end of the year . . .
$225,258
$74,169
$95,858
Investments in Affiliates.
As of December 31, 2021, the Company held an approximate 12% interest in
Intersection Holdings, LLC (Intersection), and accounts for its investment under the equity method. The
Company holds two of the ten seats of Intersection’s governing board, which allows the Company to exercise
significant influence over Intersection. As of December 31, 2021, the Company also held investments in several
other affiliates; GHG held a 40% interest in Residential Home Health Illinois, a 42.5% interest in Residential
Hospice Illinois, a 40% interest in the joint venture formed between GHG and a Michigan hospital, and a 40%
interest in the joint venture formed between GHG and Allegheny Health Network (AHN). For the years ended
December 31, 2021, 2020 and 2019, the Company recorded $10.9 million, $9.6 million and $9.3 million,
respectively, in revenue for services provided to the affiliates of GHG.
The Company had $52.5 million and $26.1 million in its investment account that represents cumulative
undistributed income in its investments in affiliates as of December 31, 2021 and 2020, respectively.
In the third quarter of 2021, the Company recorded an impairment charge of $6.6 million on one of its
investments in affiliates as a result of the challenging economic environment for this business following an
announcement by the Chinese government to reform the education sector for private education companies. In the
first quarter of 2020, the Company recorded impairment charges of $3.6 million on two of its investments in
affiliates as a result of the challenging economic environment for these businesses, of which $2.7 million related
to the Company’s investment in Framebridge. It is reasonably possible that further COVID-19 disruptions could
result in additional impairment charges related to the Company’s investments in affiliates should the impact of
COVID-19 not dissipate or have a worsening adverse impact on our affiliates in future periods. The Company
records its share of the earnings or losses of its affiliates from their most recent available financial statements. In
some instances, the reporting period of the affiliates’ financial statements lags the Company’s financial reporting
period, but such lag is never more than three months. It is possible that the Company’s results of operations for
the year ended December 31, 2021 does not capture the impact of the COVID-19 pandemic on the earnings or
losses of the affiliates whose financial results are recorded on a lag basis.
In May 2020, the Company made an additional investment in Framebridge (see Note 3) that resulted in the
Company obtaining control of the investee. The results of operations, cash flows, assets and liabilities of
2021 FORM 10-K 106
Framebridge are included in the consolidated financial statements of the Company from the date of the
acquisition. Timothy J. O’Shaughnessy, President and Chief Executive Officer of Graham Holdings Company,
was a personal investor in Framebridge and served as Chairman of the Board prior to the acquisition of the
additional interest. The Company acquired Mr. O’Shaughnessy’s interest under the same terms as the other
Framebridge investors.
In February 2019, the Company sold its interest in Gimlet Media. In connection with this sale, the Company
recorded a gain of $29.0 million in the first quarter of 2019. The total proceeds from the sale were $33.5 million.
Additionally, Kaplan International Holdings Limited (KIHL) held a 45% interest in a joint venture formed with
University of York. KIHL loaned the joint venture £22 million, which loan is repayable over 25 years at an
interest rate of 7% and guaranteed by the University of York. The loan is repayable by December 2041.
Summarized Financial Data of Nonconsolidated Affiliates. The Company’s investments in affiliates consists of
investments in private equity funds and other operating entities that it does not control, but over which it exerts
significant influence. The following tables present summarized financial data for the Company’s nonconsolidated
affiliates. The amounts included in the tables below present 100% of the balance sheets and the results of
operations of such nonconsolidated affiliates accounted for under the equity method.
The Company’s ownership in private equity fund partnerships varies between approximately 4% and 10%; the
Company’s related investment balance included in Investments in Affiliates was $72.8 million and $41.1 million
as of December 31, 2021 and 2020, respectively.
The summarized balance sheet data of the private equity fund investments consists of the following:
(in thousands)
As of December 31
2021
2020
Investments in securities, at estimated fair value . . . .
Other currents assets . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,039,368
28,590
$1,500,192
24,111
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,067,958
$1,524,303
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total partners’ capital . . . . . . . . . . . . . . . . . . . . . . . . .
4,790
2,063,168
7,488
1,516,815
Total liabilities and partners’ capital
. . . . . . . . . . .
$2,067,958
$1,524,303
The summarized operating data of the private equity fund investments was as follows:
(in thousands)
Net investment loss . . . . . . . . . . . . . . . . . . . . . . . . . .
Net realized gain on investments . . . . . . . . . . . . . . .
Net change in unrealized appreciation on
Year ended December 31
2021
2020
2019
$ (13,324)
190,368
$ (15,301)
440
$ (13,691)
79,443
investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,043,627
525,588
150,641
Increase in net assets from operations . . . . . . . . .
$1,220,671
$510,727
$216,393
107 GRAHAM HOLDINGS COMPANY
The summarized balance sheet data of the operating entity investments consists of the following:
(in thousands)
As of December 31
2021
2020
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$203,274
569,505
$ 164,526
566,053
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$772,779
$ 730,579
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
219,220
329,965
428,735
264,807
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$549,185
$ 693,542
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . .
$ (80,604)
$(103,829)
The summarized operating data of the operating entity investments was as follows:
(in thousands)
Year ended December 31
2021
2020
2019
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) attributable to the entity . . . . . . . .
$358,928
146,312
135,241
102,829
$ 312,194
11,217
(206,504)
(148,394)
$ 438,168
103,510
(125,146)
(81,268)
Cost Method Investments. The Company held investments without readily determinable fair values in a
number of equity securities that are accounted for as cost method investments, which are recorded at cost, less
impairment, and adjusted for observable price changes for identical or similar investments of the same issuer.
The carrying value of these investments was $48.9 million and $35.7 million as of December 31, 2021 and 2020,
respectively. During the years ended December 31, 2021, 2020 and 2019, the Company recorded gains of
$11.8 million, $4.2 million and $5.1 million, respectively, to those equity securities based on observable
transactions. For the year ended December 31, 2020, the Company recorded impairment losses of $7.3 million to
those securities.
5. ACCOUNTS RECEIVABLE, ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts receivable consist of the following:
(in thousands)
As of December 31
2021
2020
Receivables from contracts with customers, less
estimated credit losses of $21,836 and $21,494 . . . . . .
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$589,582
17,889
$519,577
17,579
$607,471
$537,156
The changes in estimated credit losses was as follows:
(in thousands)
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at
Beginning
of Period
$21,494
14,276
14,775
Additions –
Charged to
Costs and
Expenses
$ 6,824
10,667
1,706
Deductions
$(6,482)
(3,449)
(2,205)
Balance at
End of
Period
$21,836
21,494
14,276
2021 FORM 10-K 108
Accounts payable and accrued liabilities consist of the following:
(in thousands)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued compensation and related benefits . . . . . . . . . . .
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .
As of December 31
2021
2020
$126,985
179,307
277,337
$106,215
135,493
278,528
$583,629
$520,236
Cash overdrafts of $5.5 million and $2.1 million are included in accounts payable and accrued liabilities at
December 31, 2021 and 2020, respectively.
6. INVENTORIES, CONTRACTS IN PROGRESS AND VEHICLE FLOOR PLAN PAYABLE
Inventories and contracts in progress consist of the following:
(in thousands)
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Work-in-process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contracts in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of December 31
2021
2020
$ 54,944
11,506
72,796
2,225
$ 45,382
10,402
64,061
777
$141,471
$120,622
The Company finances new and used vehicle inventory through standardized floor plan facilities with Truist
Bank (Truist floor plan facility) and Ford Motor Credit Company (Ford floor plan facility). The Truist floor plan
facility bore interest at variable rates that were based on LIBOR plus 1.15% per annum. On December 28, 2021,
the Company entered into an amended agreement with Truist modifying the interest rate to Secured Overnight
Financing Rate (SOFR) plus 1.19% per annum. The Ford floor plan facility bears interest at variable rates that
are based on the prime rate, with a floor of 3.5%, plus 1.5% per annum. The weighted average interest rate for
the floor plan facilities was 1.1%, 1.7% and 3.3% for the years ended December 31, 2021, 2020 and 2019,
respectively. As of December 31, 2021, the aggregate capacity under the floor plan facilities was $70.9 million,
of which $31.6 million had been utilized, and is included in accounts payable and accrued liabilities in the
Consolidated Balance Sheet. Changes in the vehicle floor plan payable are reported as cash flows from financing
activities in the Consolidated Statements of Cash Flows.
The floor plan facility is collateralized by vehicle inventory and other assets of the relevant dealership subsidiary,
and contains a number of covenants, including, among others, covenants restricting the dealership subsidiary
with respect to the creation of liens and changes in ownership, officers and key management personnel. The
Company was in compliance with all of these restrictive covenants as of December 31, 2021.
The floor plan interest expense related to the vehicle floor plan arrangements is offset by amounts received from
manufacturers in the form of floor plan assistance capitalized in inventory and recorded against cost of goods
sold in the Consolidated Statements of Operations when the associated inventory is sold. For the years ended
December 31, 2021, 2020 and 2019, the Company recognized a reduction in cost of goods sold of $2.7 million,
$2.1 million and $1.8 million, respectively, related to manufacturer floor plan assistance.
109 GRAHAM HOLDINGS COMPANY
7. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
(in thousands)
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery, equipment and fixtures . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . .
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . .
As of December 31
2021
2020
$ 73,651
211,758
419,778
215,640
19,517
$ 19,394
176,653
398,334
229,512
25,301
940,344
(472,218)
849,194
(470,908)
$ 468,126
$ 378,286
Depreciation expense was $71.4 million, $74.3 million, and $59.3 million in 2021, 2020 and 2019, respectively.
The Company capitalized $2.1 million of interest related to the construction of buildings in 2019.
The Company recorded property, plant and equipment impairment charges of $2.4 million, $2.3 million and
$0.3 million in 2021, 2020 and 2019, respectively. The Company estimated the fair value of the property, plant
and equipment using income and market approaches.
8. LEASES
The components of lease expense were as follows:
(in thousands)
Year ended December 31
2021
2020
2019
Operating lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term and month-to-month lease cost
. . . . . . . . .
Variable lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sublease income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 96,078
17,724
20,889
(16,918)
$113,669
21,862
18,718
(18,508)
$104,007
19,267
20,582
(20,108)
Total net lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . .
$117,773
$135,741
$123,748
The Company recorded impairment charges of $3.9 million, $11.4 million and $1.1 million in 2021, 2020 and
2019, respectively. The Company estimated the fair value of the right-of-use assets using an income approach.
In connection with the sale of the KHE Campuses (KHEC) business, the Company is the guarantor of several
leases for which it has established ROU assets and lease liabilities. Any net lease cost or sublease income related
to these leases is recorded in other non-operating income. The total net lease cost related to these leases was
$0.1 million, $0.8 million and $0.8 million for 2021, 2020 and 2019, respectively.
2021 FORM 10-K 110
Supplemental information related to leases was as follows:
(in thousands)
Cash Flow Information:
Year ended December 31
2021
2020
2019
Operating cash flows from operating leases
(payments) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $105,164 $113,664 $112,671
Right-of-use assets obtained in exchange for new
operating lease liabilities (noncash) . . . . . . . . . . . . . . .
59,409
27,031
236,714
As of December 31
2021
2020
Balance Sheet Information:
Lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$437,969
$ 77,655
405,200
$462,560
$ 86,797
428,849
Total lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$482,855
$515,646
Weighted average remaining lease term (years) . . . . . . . . . . . . . . . .
Weighted average discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.6
4.6%
9.9
4.4%
At December 31, 2021, maturities of lease liabilities were as follows:
(in thousands)
December 31, 2021
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter
Total payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Imputed interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 97,501
79,854
64,030
50,392
45,897
296,514
634,188
(151,333)
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 482,855
As of December 31, 2021, the Company has entered into operating leases, including educational and other
facilities, that have not yet commenced that have minimum lease payments of $6.6 million. These operating
leases will commence in fiscal year 2022 with lease terms of two to 11 years.
9. GOODWILL AND OTHER INTANGIBLE ASSETS
The Company changed the presentation of its segments in the third quarter of 2021 into the following seven
reportable segments: Kaplan International, Higher Education, Supplemental Education, Television Broadcasting,
Manufacturing, Healthcare and Automotive (see Note 19).
In the third quarter of 2021, as a result of the emergence of the COVID-19 Delta variant and continued weak
product demand in the commercial office electrical products and hospitality sectors caused by the COVID-19
pandemic, the Company performed an interim review of the goodwill and indefinite-lived intangibles of the
Dekko reporting unit. As a result of the impairment review, the Company recorded a $26.7 million goodwill
impairment charge. The Company estimated the fair value of the reporting unit by utilizing a discounted cash
flow model. The carrying value of the reporting unit exceeded the estimated fair value, resulting in a goodwill
impairment charge for the amount by which the carrying value exceeded the estimated fair value after taking into
account the effect of deferred income taxes. Dekko is included in manufacturing.
In the first quarter of 2020, as a result of the uncertainty and challenging operating environment created by the
COVID-19 pandemic, the Company performed an interim review of the goodwill, indefinite-lived intangibles
111 GRAHAM HOLDINGS COMPANY
and other long-lived assets of the CRG and automotive dealership reporting units and asset groups. As a result of
the impairment reviews, the Company recorded a $9.7 million goodwill and indefinite-lived intangible asset
impairment charge at CRG and a $6.7 million indefinite-lived intangible asset impairment charge at the auto
dealerships. The Company estimated the fair value of the reporting units and indefinite-lived intangible assets by
utilizing a discounted cash flow model. The carrying value of the CRG reporting unit and the indefinite-lived
intangible assets exceeded the estimated fair value, resulting in a goodwill and indefinite-lived intangible asset
impairment charge for the amount by which the carrying value exceeded the estimated fair value. CRG is
included in other businesses and the automotive dealerships are included in automotive.
Additional COVID-19 disruptions could result in future adverse changes in projections for future operating
results or other key assumptions, such as projected revenue, profit margin, capital expenditures or cash flows
associated with fair value estimates and could lead to additional future impairments, which could be material.
In the fourth quarter of 2019, Television Broadcasting recorded an intangible asset impairment charge of
$7.8 million related to FCC licenses at two of its stations, due to a decline in local market conditions. The fair
value of the intangible asset was estimated using an income approach.
Amortization of intangible assets for the years ended December 31, 2021, 2020 and 2019, was $57.9 million,
$56.8 million and $53.2 million, respectively. Amortization of intangible assets is estimated to be approximately
$59 million in 2022, $51 million in 2023, $39 million in 2024, $31 million in 2025, $26 million in 2026 and
$41 million thereafter.
The changes in the carrying amount of goodwill, by segment, were as follows:
(in thousands)
Education
Broadcasting Manufacturing Healthcare Automotive
Television
Other
Businesses
Total
As of December 31, 2019
Goodwill
Accumulated
. . . . . . . . . . .
impairment losses . .
Measurement period
adjustment
. . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . .
Impairment . . . . . . . . . . . . . .
Foreign currency exchange
rate changes . . . . . . . . . . .
As of December 31, 2020
Goodwill
Accumulated
. . . . . . . . . . .
impairment losses . .
Acquisitions . . . . . . . . . . . .
Impairment . . . . . . . . . . . . .
Foreign currency exchange
rate changes . . . . . . . . . .
As of December 31, 2021
. . . . . . . . . . .
Goodwill
Accumulated
impairment
losses . . . . . . . . . . . .
$1,140,958
$190,815
$234,993
$98,421 $39,121 $30,423 $1,734,731
(331,151)
809,807
–
190,815
(7,616)
227,377
–
98,421
–
39,121
(7,685)
(346,452)
22,738 1,388,279
154
13,022
–
29,245
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
60,928
(6,878)
154
73,950
(6,878)
–
29,245
1,183,379
190,815
234,993
98,421
39,121
91,351 1,838,080
(331,151)
852,228
–
190,815
16,342
–
(13,485)
–
–
–
(7,616)
227,377
–
(26,686)
–
98,421
19,908
–
– (14,563)
(353,330)
76,788 1,484,750
39,121
6,705 162,048
–
–
205,003
(26,686)
–
–
–
–
(13,485)
1,186,236
190,815
234,993
118,329
45,826 253,399 2,029,598
(331,151)
–
(34,302)
–
– (14,563)
(380,016)
$ 855,085
$190,815
$200,691
$118,329 $45,826 $238,836 $1,649,582
2021 FORM 10-K 112
The changes in carrying amount of goodwill at the Company’s education division were as follows:
(in thousands)
As of December 31, 2019
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated impairment losses . . . . . . . . . . . . . . . . .
Measurement period adjustment
. . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency exchange rate changes . . . . . . . . . . . . . . .
As of December 31, 2020
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated impairment losses . . . . . . . . . . . . . . . . .
Acquisitions
Foreign currency exchange rate changes . . . . . . . . . . . . .
As of December 31, 2021
Kaplan
International
Higher
Education
Supplemental
Education
Total
$595,604
–
595,604
154
9,788
29,203
$ 174,564
(111,324)
$ 370,790
(219,827)
$1,140,958
(331,151)
63,240
150,963
809,807
–
–
–
–
3,234
42
154
13,022
29,245
634,749
–
634,749
–
(13,481)
174,564
(111,324)
374,066
(219,827)
1,183,379
(331,151)
63,240
154,239
–
–
16,342
(4)
852,228
16,342
(13,485)
Goodwill
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated impairment losses . . . . . . . . . . . . . . . .
621,268
–
174,564
(111,324)
390,404
(219,827)
1,186,236
(331,151)
$621,268
$ 63,240
$ 170,577
$ 855,085
Other intangible assets consist of the following:
As of December 31, 2021
As of December 31, 2020
Useful
Life
Range
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
(in thousands)
Amortized Intangible Assets
Student and customer
relationships . . . . . . . . . . 2–10 years $300,027
$206,714
$ 93,313 $294,077
$178,075
$116,002
Trade names and
trademarks . . . . . . . . . . .2–15 years(1)
158,365
68,113
90,252
109,809
54,766
55,043
Network affiliation
agreements . . . . . . . . . . .
10 years
17,400
8,628
8,772
17,400
6,888
10,512
Databases and
technology . . . . . . . . . . .
3–6 years
36,585
26,464
10,121
34,864
19,924
14,940
Noncompete
agreements . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . .
2–5 years
1–8 years
1,000
68,500
$581,877
991
23,847
$334,757
9
44,653
1,000
24,800
$247,120 $481,950
937
16,714
$277,304
63
8,086
$204,646
Indefinite-Lived Intangible
Assets
Trade names and
trademarks . . . . . . . . . . .
Franchise agreements . . . .
FCC licenses . . . . . . . . . . .
Licensure and
accreditation . . . . . . . . .
$ 86,972
44,058
11,000
150
$142,180
$ 87,429
21,858
11,000
150
$120,437
(1) As of December 31, 2020, the trade names and trademarks’ maximum useful life was 10 years.
113 GRAHAM HOLDINGS COMPANY
10. INCOME TAXES
Income before income taxes consists of the following:
(in thousands)
Year Ended December 31
2021
2020
2019
U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$421,420
28,207
$403,295
3,973
$390,144
36,335
$449,627
$407,268
$426,479
The provision for income taxes consists of the following:
(in thousands)
Current
Deferred
Total
Year Ended December 31, 2021
U.S. Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and Local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-U.S.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31, 2020
U.S. Federal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and Local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31, 2019
U.S. Federal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and Local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$20,806
4,354
6,094
$64,356
(435)
1,125
$ 85,162
3,919
7,219
$31,254
$65,046
$ 96,300
$77,882
8,083
6,958
$ 6,669
4,954
2,754
$ 84,551
13,037
9,712
$92,923
$14,377
$107,300
$16,500
2,949
9,400
$63,838
6,630
(717)
$ 80,338
9,579
8,683
$28,849
$69,751
$ 98,600
The provision for income taxes differs from the amount of income tax determined by applying the U.S. Federal
statutory rate of 21% to the income before taxes as a result of the following:
(in thousands)
Year Ended December 31
2021
2020
2019
U.S. Federal taxes at statutory rate (see above) . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and local taxes, net of U.S. Federal tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowances against state tax benefits, net of U.S. Federal tax . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowances against other non-U.S. income tax benefits . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net
$94,422
2,238
859
(24)
4,042
(5,237)
$ 85,526
15,366
(5,067)
2,048
2,445
6,982
$89,561
(4,064)
11,632
(1,743)
1,202
2,012
Provision for Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$96,300
$107,300
$98,600
The Company’s effective tax rate for 2021 was favorably impacted by a $17.2 million deferred tax adjustment
arising from a change in the estimated deferred state income tax rate attributable to the apportionment formula
used in the calculation of deferred taxes related to the Company’s pension and other postretirement plans. This
benefit is included in the overall state tax provision of $2.2 million reflected above.
2021 FORM 10-K 114
Deferred income taxes consist of the following:
(in thousands)
Employee benefit obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State income tax loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State capital loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State income tax credit carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Federal income tax loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Federal foreign income tax credit carryforwards . . . . . . . . . . . . . . . . . . .
Non-U.S. income tax loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-U.S. capital loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of December 31
2021
2020
$ 64,258
3,554
63,050
107
511
69,509
970
18,877
3,707
63,715
6,396
$ 72,787
3,795
53,499
289
281
18,272
992
15,802
3,925
74,240
6,214
Deferred Tax Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
294,654
(57,603)
250,096
(47,217)
Deferred Tax Assets, Net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid pension cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gain on marketable equity securities . . . . . . . . . . . . . . . . . . . . . . .
Goodwill and other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-U.S. withholding tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Tax Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
237,051
594,372
138,868
103,497
15,451
51,668
2,001
905,857
202,879
457,644
88,371
90,921
15,807
61,148
1,866
715,757
Deferred Income Tax Liabilities, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$668,806
$512,878
The Company has $1,026.1 million of state income tax net operating loss carryforwards available to offset future
state taxable income. During 2021, the Company recorded $115.4 million of state income tax loss carryforwards
as a result of the Leaf acquisition. State income tax loss carryforwards, if unutilized, will start to expire
approximately as follows:
(in millions)
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 and after . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1.9
7.5
7.5
18.3
14.5
976.4
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,026.1
The Company has recorded at December 31, 2021, $63.1 million in deferred state income tax assets, net of U.S.
Federal income tax, with respect to these state income tax loss carryforwards. The Company has established
$35.4 million in valuation allowances against these deferred state income tax assets, since the Company has
determined that it is more likely than not that some of these state tax losses may not be fully utilized in the future
to reduce state taxable income.
115 GRAHAM HOLDINGS COMPANY
The Company has $331.0 million of U.S. Federal income tax loss carryforwards obtained as a result of prior
stock acquisitions. During 2021, the Company recorded $262.5 million of U.S. Federal
income tax loss
carryforwards as a result of the Leaf acquisition. U.S. Federal income tax loss carryforwards are expected to be
fully utilized as follows:
(in millions)
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 and after . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 27.9
27.4
27.4
24.4
13.6
210.3
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$331.0
The Company has established at December 31, 2021, $69.5 million in U.S. Federal deferred tax assets with
respect to these U.S. Federal income tax loss carryforwards.
For U.S. Federal income tax purposes, the Company has established U.S. Federal deferred tax assets with respect
to $1.0 million of foreign tax credits available to be credited against future U.S. Federal income tax liabilities that
will start to expire in 2023 if unutilized. The Company has recorded a full valuation allowance against these
deferred tax assets since the Company determined that it is more likely than not these foreign tax credit
carryforwards may not be utilized in the future to reduce U.S. Federal income taxes.
The Company has $87.1 million of non-U.S. income tax loss carryforwards as a result of operating losses and
carryforwards that were obtained in part through prior stock acquisitions that are available to offset future
non-U.S. taxable income and has recorded, with respect to these losses, $18.9 million in non-U.S. deferred
income tax assets. The Company has established $14.9 million in valuation allowances against the deferred tax
assets for the portion of non-U.S. tax losses that may not be utilized to reduce future non-U.S. taxable income.
The $87.1 million of non-U.S. income tax loss carryforwards consist of $44.2 million in losses that may be
carried forward indefinitely; $12.2 million of losses that, if unutilized, will expire in varying amounts through
2026; and $30.7 million of losses that, if unutilized, will start to expire after 2026.
The Company has $12.4 million of non-U.S. capital loss carryforwards that may be carried forward indefinitely
and are available to offset future non-U.S. capital gains. The Company recorded a $3.7 million non-U.S. deferred
income tax asset for these non-U.S. capital loss carryforwards and has established a full valuation allowance
against this non-U.S. deferred tax asset since the Company has determined that it is more likely than not that the
capital loss carryforwards may not be utilized to reduce taxable income in the future.
Deferred tax valuation allowances and changes in deferred tax valuation allowances were as follows:
(in thousands)
Year ended
December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at
Beginning
of Period
Tax
Expense and
Revaluation
Deductions
Balance
at End of
Period
$47,217
46,243
33,120
$13,915
7,303
14,512
$(3,529)
(6,329)
(1,389)
$57,603
47,217
46,243
The Company has established $37.5 million in valuation allowances against deferred state tax assets recognized,
net of U.S. Federal tax. As stated above, approximately $35.4 million of the valuation allowances, net of U.S.
Federal income tax, relate to state income tax loss carryforwards. In most instances, the Company has established
valuation allowances against deferred state income tax assets without considering potentially offsetting deferred
tax liabilities established with respect to prepaid pension cost and goodwill. Prepaid pension cost and goodwill
have not been considered a source of future taxable income for realizing those deferred state tax assets
2021 FORM 10-K 116
recognized since these temporary differences are not likely to reverse in the foreseeable future. However, certain
deferred state tax assets have an indefinite life. As a result, the Company has considered deferred tax liabilities
for prepaid pension cost and goodwill as a source of future taxable income for realizing those deferred state tax
assets with indefinite lives. The valuation allowances established against deferred state income tax assets may
increase or decrease within the next 12 months, based on operating results or the market value of investment
holdings. In 2021, the Company released $1.8 million in valuation allowances against deferred state income tax
assets at the healthcare division as the healthcare division generated positive operating results that support the
realization of these deferred tax assets, net of the federal benefit. The Company will monitor future results on a
quarterly basis to determine whether the valuation allowances provided against deferred state tax assets should be
increased or decreased as future circumstances warrant.
the non-U.S. valuation allowances relate to non-U.S.
The Company has established $19.1 million in valuation allowances against non-U.S. deferred tax assets, and, as
stated above, $14.9 million of
income tax loss
carryforwards and $3.7 million relate to non-U.S. capital loss carryforwards. Valuation allowances established
against non-U.S. deferred tax assets are recorded at the education division and other businesses. These non-U.S.
valuation allowances may increase or decrease within the next 12 months, based on operating results. As a result,
the Company is unable to estimate the potential tax impact, given the uncertain operating environment. The
Company will monitor future education division and other businesses’ operating results and projected future
operating results on a quarterly basis to determine whether the valuation allowances provided against non-U.S.
deferred tax assets should be increased or decreased as future circumstances warrant.
The Company estimates that unremitted non-U.S. subsidiary earnings, when distributed, will not be subject to tax
except to the extent non-U.S. withholding taxes are imposed. Approximately $2.0 million of deferred tax
liabilities remain recorded on the books at December 31, 2021 with respect to future non-U.S. withholding taxes
the Company estimated may be imposed on future cash distributions.
U.S. Federal and state tax liabilities may be recorded if the investment in non-U.S. subsidiaries become held for
sale instead of being held indefinitely, but calculation of the tax due is not practicable.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted, which
included several technical corrections to the Tax Cuts and Jobs Act and provisions allowing certain net operating
losses generated by businesses in 2018, 2019, and 2020 to be carried back five years. Overall, the CARES Act
had limited impact on the Company’s tax provision for the year ended December 31, 2021.
On July 1, 2015 (the Distribution Date), the Company completed the spin-off of Cable ONE as an independent,
publicly traded company. The transaction was structured as a tax-free spin-off of Cable ONE to the stockholders
of the Company. Since July 1, 2015, Cable ONE has been an independent public company trading on the New
York Stock Exchange under the symbol “CABO”. In connection with the CARES Act, Cable ONE has the ability
to carryback its 2019 taxable losses to the tax period from January 1, 2015 to June 30, 2015, the period in which
Cable ONE was included in the Company’s 2015 tax return. As a result, the Company amended its 2015 tax
returns in order to accommodate Cable ONE’s request to carryback its 2019 taxable losses. The Company
expects that this action will have no impact on the results or the financial position of the Company. To reflect the
expected refund due to Cable ONE, the Company has included a $15.9 million current income tax receivable and
a corresponding liability to Cable ONE on its balance sheet as of December 31, 2021.
The 2018 U.S. Federal tax return and subsequent years remain open to IRS examination. The Company files
income tax returns with the U.S. Federal government and in various state, local and non-U.S. governmental
jurisdictions, with the consolidated U.S. Federal tax return filing considered the only major tax jurisdiction.
The Company endeavors to comply with tax laws and regulations where it does business, but cannot guarantee
that, if challenged, the Company’s interpretation of all relevant tax laws and regulations will prevail and that all
tax benefits recorded in the financial statements will ultimately be recognized in full.
117 GRAHAM HOLDINGS COMPANY
The following summarizes the Company’s unrecognized tax benefits, excluding interest and penalties, for the
respective periods:
(in thousands)
Year Ended December 31
2021
2020
2019
Beginning unrecognized tax benefits . . . . . . . . . . . . . . . . . . . . . . . . .
Increases related to current year tax positions . . . . . . . . . . . . . . . .
Increases related to prior year tax positions . . . . . . . . . . . . . . . . .
Decreases related to prior year tax positions . . . . . . . . . . . . . . . . .
Decreases related to settlement with tax authorities . . . . . . . . . . .
Decreases due to lapse of applicable statutes of limitations . . . . .
$1,898
1,061
45
–
–
–
$ 1,572
742
656
–
(1,072)
–
$ 2,483
–
1,072
–
(1,291)
(692)
Ending unrecognized tax benefits . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,004
$ 1,898
$ 1,572
The unrecognized tax benefits relate to federal and state research and development tax credits applicable to the
2019 to 2021 tax periods, as well as state income tax filing positions applicable to the 2012 to 2014 and 2020 tax
periods. In making these determinations, the Company presumes that taxing authorities pursuing examinations of
the Company’s compliance with tax law filing requirements will have full knowledge of all relevant information,
and, if necessary, the Company will pursue resolution of disputed tax positions by appeals or litigation. Although
the Company cannot predict the timing of resolution with tax authorities, the Company estimates that some of the
unrecognized tax benefits may change in the next 12 months due to settlement with the tax authorities. The
Company expects that a $1.8 million federal tax benefit and a $1.3 million state tax benefit, net of $0.3 million
federal tax expense, will reduce the effective tax rate in the future if the unrecognized tax benefits are recognized.
The Company classifies interest and penalties related to uncertain tax positions as a component of interest and
other expenses, respectively. As of December 31, 2021, the Company has not accrued interest related to the
unrecognized tax benefits. The Company has not accrued any penalties related to the unrecognized tax benefits.
11. DEBT
The Company’s borrowings consist of the following:
(in thousands)
. . . . . . . . . . . . . . .
Unsecured notes (1)
Revolving credit facility . . . . . . . . . . .
Truist Bank commercial note . . . . . . .
Truist Bank commercial note (2)
. . . . .
Truist Bank commercial note . . . . . . .
Pinnacle Bank term loan . . . . . . . . . . .
Pinnacle Bank line of credit
. . . . . . . .
Other indebtedness . . . . . . . . . . . . . . .
Total Debt
. . . . . . . . . . . . . . . . . . . . .
Less: current portion . . . . . . . . . . . . . .
Total Long-Term Debt . . . . . . . . . . .
Maturities
2026
2023
2029
2031
2032
2024
2022
2023 - 2030
Stated Interest
Rate
Effective Interest
Rate
5.75%
1.52% - 3.75%
2.08% - 2.14%
1.84% -1.85%
2.10%
4.15%
3.25%
0.00% - 16.00%
5.75%
1.63%
2.12%
1.87%
2.10%
4.18%
3.56%
As of December 31
2021
2020
$ 396,830
209,643
–
24,504
22,500
9,558
–
4,466
$396,112
74,686
25,250
–
–
10,692
2,295
3,520
667,501
(141,749)
512,555
(6,452)
$ 525,752
$506,103
(1) The carrying value is net of $3.2 million and $3.9 million of unamortized debt issuance costs as of December 31, 2021 and 2020,
respectively.
(2) The carrying value is net of $0.1 million of unamortized debt issuance costs as of December 31, 2021.
The Company’s $400 million senior unsecured fixed-rate notes (the Notes), due June 1, 2026, are guaranteed,
jointly and severally, on a senior unsecured basis, by certain of the Company’s existing and future domestic
2021 FORM 10-K 118
subsidiaries, as described in the terms of the indenture. The Notes have a coupon rate of 5.75% per annum,
payable semi-annually on June 1 and December 1. The Company may redeem the Notes in whole or in part at
any time at the respective redemption prices described in the indenture. At December 31, 2021 and 2020, the fair
value of the Notes, based on quoted market prices (Level 2 fair value assessment), totaled $417.5 million and
$421.7 million, respectively.
In May 2018, the Company entered into an amended $300 million unsecured five-year revolving credit facility
(the Revolving Credit Facility) that is guaranteed, jointly and severally, by certain of the Company’s existing and
future domestic subsidiaries. The Revolving Credit Facility matures on May 30, 2023; bears interest at the
Company’s option, either at (a) a fluctuating interest rate equal to the highest of Wells Fargo’s prime rate,
0.5 percent above the Federal funds rate or the one-month Eurodollar rate plus 1%, or (b) the Eurodollar rate for
the applicable currency and interest period as defined in the agreement, which is generally a periodic rate equal
to LIBOR, CDOR, BBSY or SOR plus an applicable margin that depends on the Company’s consolidated debt to
consolidated adjusted EBITDA; and has a commitment fee based on the Company’s leverage ratio, of between
0.15% and 0.25% on the undrawn portion. On November 23, 2021, the Company amended the Revolving Credit
Facility to, among other things, update the benchmark interest rates for borrowings denominated in (i) U.S.
dollars under its U.S. dollar tranche to be based on SOFR on or before the USD LIBOR transition date and
(ii) British Pound (GBP) and Singapore dollars under its multicurrency tranche to be based on Sterling Overnight
Index Average (SONIA) and Singapore Overnight Rate Average (SORA), respectively. The Company is required
to maintain a Total Net Leverage Ratio of not greater than 3.5 to 1.0 and a consolidated interest coverage ratio of
at least 3.5 to 1.0 based upon the ratio of consolidated adjusted EBITDA to consolidated interest expense as
determined pursuant to the credit agreement. The outstanding balance on the Company’s revolving credit facility
was $209.6 million as of December 31, 2021, consisting of borrowings of $137 million under its U.S. dollar
tranche with interest payable at either 1 month USD LIBOR plus 1.50% or prime rate plus 0.5%, as applicable,
and £54 million under its multicurrency tranche with interest payable at SONIA plus 1.50%.
On December 28, 2021, the Company’s automotive subsidiary entered into a commercial note with Truist Bank
in an aggregate amount of $22.5 million. The commercial note is payable over a 10-year period in monthly
installments of $0.2 million, plus accrued and unpaid interest, due on the first day of each month, with a final
payment of the outstanding principal balance on January 1, 2032. The commercial note bears interest at variable
rates based on SOFR plus 2.05% per annum. The commercial note contains terms and conditions, including
remedies in the event of a default by the automotive subsidiary.
On October 21, 2021, the Company’s automotive subsidiary entered into a commercial note with Truist Bank in
an aggregate principal amount of $24.75 million. The commercial note is payable over a 10-year period in
monthly installments of $0.1 million, plus accrued and unpaid interest, due on the first day of each month, with a
final payment of the outstanding principal balance on October 1, 2031. The commercial note bears interest at
variable rates based on SOFR plus 1.8% per annum. The commercial note contains terms and conditions,
including remedies in the event of a default by the automotive subsidiary. The automotive subsidiary used the net
proceeds from this commercial note to repay the outstanding balance on the commercial note due in 2029. On the
same date, the Company’s automotive subsidiary rolled its existing interest rate swap into a new interest rate
swap agreement with a total notional value of $24.75 million and a maturity date of October 1, 2031. The new
interest rate swap agreement will pay the automotive subsidiary variable interest on the $24.75 million notional
amount based on SOFR plus 1.8% per annum and the automotive subsidiary will pay the counterparty a fixed
rate of 4.118% per annum. The new interest rate swap agreement was entered into to convert the variable rate
borrowing under this commercial note into a fixed rate borrowing. Based on the terms of the new interest rate
swap agreement and the underlying borrowing, the new interest rate swap was determined to be effective and
thus qualifies as a cash flow hedge.
On January 26, 2021, the GHG subsidiary amended its loan facility with Pinnacle Bank to decrease the principal
of the term loan to $10.6 million, bearing interest at 4.15% per annum, and increase the two-year line of credit
expiring on December 2, 2022 to $6.0 million, bearing interest at the greater of (a) 3.25% and (b) the sum of
one-month LIBOR as in effect on the first business day of each month plus an applicable interest rate of 2.75%.
119 GRAHAM HOLDINGS COMPANY
The fair value of the Company’s other debt, which is based on Level 2 inputs, approximates its carrying value as
of December 31, 2021 and 2020. The Company is in compliance with all financial covenants of the Revolving
Credit Facility, commercial notes, and Pinnacle Bank term loan and line of credit as of December 31, 2021.
During 2021 and 2020, the Company had average borrowings outstanding of approximately $545.2 million and
$512.4 million, respectively, at average annual interest rates of approximately 4.8% and 5.1%, respectively. The
Company incurred net interest expense of $30.5 million, $34.4 million and $23.6 million during 2021, 2020 and
2019, respectively.
For the years ended December 31, 2021 and 2020, the Company recorded interest expense of $4.1 million and
$8.5 million, respectively, to adjust the fair value of the mandatorily redeemable noncontrolling interest. For the
year ended December 31, 2019, the Company recorded interest income of $0.1 million to adjust the fair value of
the mandatorily redeemable noncontrolling interest. Fair value adjustments are presented within interest expense
and interest income in the Company’s Consolidated Statements of Operations and are reclassified to present the
net change in fair value for each reporting period. The fair value of the mandatorily redeemable noncontrolling
interest was based on the fair value of the underlying subsidiaries owned by GHC One, 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
(Level 3 fair value assessment).
2021 FORM 10-K 120
12. FAIR VALUE MEASUREMENTS
The Company’s financial assets and liabilities measured at fair value on a recurring basis were as follows:
(in thousands)
As of December 31, 2021
Level 1
Level 2
Level 3
Total
Assets
Marketable equity securities(1)
Other current investments(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Financial Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$809,997
7,230
$817,227
$
$
–
7,218
7,218
$
$
–
–
–
$809,997
14,448
$824,445
Liabilities
Deferred compensation plan liabilities(3) . . . . . . . . . . . . . . . . . . . .
Contingent consideration liabilities(4)
. . . . . . . . . . . . . . . . . . . . . .
Interest rate swap(5)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange swap(6)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mandatorily redeemable noncontrolling interest(7) . . . . . . . . . . .
Total Financial Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
–
–
–
–
–
–
$ 31,589
–
2,049
484
–
$ 34,122
$
–
14,881
–
–
13,661
$28,542
$ 31,589
14,881
2,049
484
13,661
$ 62,664
(in thousands)
As of December 31, 2020
Level 1
Level 2
Level 3
Total
Assets
Money market investments(8)
Marketable equity securities(1)
Other current investments(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Financial Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
–
573,102
10,397
$583,499
$268,841
–
4,083
$272,924
$
$
–
–
–
–
$268,841
573,102
14,480
$856,423
Liabilities
Deferred compensation plan liabilities(3) . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration liabilities(4)
. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate swap(5)
Foreign exchange swap(6)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mandatorily redeemable noncontrolling interest(7) . . . . . . . . . . . . . .
Total Financial Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
–
–
–
–
–
–
$ 31,178
–
2,342
259
–
$ 33,779
$
–
37,174
–
–
9,240
$46,414
$ 31,178
37,174
2,342
259
9,240
$ 80,193
(1) The Company’s investments in marketable equity securities are held in common shares of U.S. and Canadian corporations that are
(2)
(3)
(4)
(5)
(6)
actively traded on U.S. and Canadian stock exchanges. Price quotes for these shares are readily available.
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.
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.
Included in Accounts payable and accrued liabilities and Other Liabilities. The Company determined the fair value of the contingent
consideration liabilities using either a Monte Carlo simulation or probability-weighted analysis depending on the type of target included
in the contingent consideration requirements (revenue, EBITDA, client retention). All analyses included estimated financial projections
for the acquired businesses and acquisition-specific discount rates.
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.
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.
(7) The fair value of the mandatorily redeemable noncontrolling interest is based on the fair value of the underlying subsidiaries owned by
GHC One, after taking into account any debt and other noncontrolling interests of its subsidiary investments. The fair value of the owned
subsidiaries is determined using enterprise value analyses which include an equal weighing between guideline public company and
discounted cash flow analyses.
(8) The Company’s money market investments are included in cash and cash equivalents and the value considers the liquidity of the
counterparty.
121 GRAHAM HOLDINGS COMPANY
The following table provides a reconciliation of changes in the Company’s financial liabilities measured at fair
value on a recurring basis, using Level 3 inputs:
(in thousands)
As of December 31, 2019 . . . . . . . . . . . . . . . . . . . . .
Acquisition of business . . . . . . . . . . . . . . . . . . . . . . .
Changes in fair value (1)
. . . . . . . . . . . . . . . . . . . . . .
Accretion of value included in net income (1) . . . . . .
Settlements or distributions . . . . . . . . . . . . . . . . . . .
Foreign currency exchange rate changes . . . . . . . . .
As of December 31, 2020 . . . . . . . . . . . . . . . . . . . . .
Acquisition of business . . . . . . . . . . . . . . . . . . . . . .
Changes in fair value (1)
. . . . . . . . . . . . . . . . . . . . .
Capital contributions . . . . . . . . . . . . . . . . . . . . . . .
Accretion of value included in net income (1)
. . . .
Settlements or distributions . . . . . . . . . . . . . . . . . .
Foreign currency exchange rate changes . . . . . . .
Contingent
consideration
liabilities
Mandatorily
redeemable
noncontrolling
interest
$ 13,546
50,609
(2,051)
2,895
(28,061)
236
37,174
1,868
(5,482)
–
1,275
(19,942)
(12)
$
829
–
8,483
–
(72)
–
9,240
–
4,077
427
–
(83)
–
As of December 31, 2021 . . . . . . . . . . . . . . . . . . . .
$ 14,881
$13,661
(1) Changes in fair value and accretion of value of contingent consideration liabilities are included in Selling,
general and administrative expenses and the changes in fair value of mandatorily redeemable noncontrolling
interest is included in Interest expense in the Company’s Consolidated Statements of Operations.
For the years ended December 31, 2021, 2020 and 2019, the Company recorded goodwill and other long-lived
asset impairment charges of $32.9 million, $30.2 million and $9.2 million, respectively (see Note 19). The
remeasurement of goodwill and other long-lived assets is classified as a Level 3 fair value assessment due to the
significance of unobservable inputs developed in the determination of the fair value. The Company used a
discounted cash flow model to determine the estimated fair value of the reporting unit, indefinite-lived intangible
assets, and other long-lived assets. A market value approach was also utilized to supplement the discounted cash
flow model. The Company made estimates and assumptions regarding future cash flows, royalty rates, discount
rates, market values, and long-term growth rates.
For the years ended December 31, 2021, 2020 and 2019, the Company recorded gains of $11.8 million,
$4.2 million, and $5.1 million, respectively,
to equity securities that are accounted for as cost method
investments based on observable transactions for identical or similar investments of the same issuer. For the year
ended December 31, 2020, the Company recorded impairment losses of $7.3 million to equity securities that are
accounted for as cost method investments.
For the years ended December 31, 2021 and 2020, the Company recorded impairment charges of $6.6 million on
one of its investments in affiliates and $3.6 million on two of its investments in affiliates, respectively (see
Note 4).
13. REVENUE FROM CONTRACTS WITH CUSTOMERS
The Company generated 78%, 78% and 76% of its revenue from U.S. domestic sales in 2021, 2020 and 2019,
respectively. The remaining 22%, 22%, and 24% of revenue was generated from non-U.S. sales.
In 2021, 2020 and 2019, the Company recognized 67%, 73%, and 73%, respectively, of its revenue over time as
control of the services and goods transferred to the customer. The remaining 33%, 27% and 27%, respectively, of
revenue was recognized at a point in time, when the customer obtained control of the promised goods.
2021 FORM 10-K 122
The determination of the method by which the Company measures its progress towards the satisfaction of its
performance obligations requires judgment and is described in the Summary of Significant Accounting Policies
(Note 2).
In the second quarter of 2020, GHG received $7.4 million under the CARES Act as a general distribution from
the Provider Relief Fund to provide relief for lost revenues and expenses incurred in connection with COVID-19.
The healthcare revenues for the year ended December 31, 2020 includes $5.7 million for lost revenues related to
COVID-19 (see Note 19).
Contract Assets. As of December 31, 2021, the Company recognized a contract asset of $17.7 million related to
a contract at a Kaplan International business, which is included in Deferred Charges and Other Assets. The
Company expects to recognize an additional $495.9 million related to the remaining performance obligation in
the contract over the next eleven years. As of December 31, 2020, the contract asset was $8.7 million.
Deferred Revenue. The Company records deferred revenue when cash payments are received or due in
advance of the Company’s performance, including amounts which are refundable. The following table presents
the change in the Company’s deferred revenue balance during the year ended December 31, 2021:
(in thousands)
As of
December 31,
2021
December 31,
2020
%
Change
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$363,065
$343,322
6
In April 2020, GHG received $31.5 million under the expanded Medicare Accelerated and Advanced Payment
Program modified by the CARES Act as a result of COVID-19. The Department of Health and Human Services
began to recoup this advance 365 days after the payment was issued and for the year ended December 31, 2021,
$18.9 million of the balance was recognized as revenue for claims submitted for eligible services. The remaining
amount
is included in the current deferred revenue balance on the Consolidated Balance Sheet as of
December 31, 2021. As of December 31, 2020, the $31.5 million balance was included in the current and
noncurrent deferred revenue balances on the Consolidated Balance Sheet.
The majority of the change in the deferred revenue balance is due to increased enrollment in the Kaplan
International division as a result of recovery from COVID-19 and current year acquisitions, offset by the
advanced Medicare payment. During the year ended December 31, 2021,
the Company recognized
$278.6 million from the Company’s deferred revenue balance as of December 31, 2020.
Revenue allocated to remaining performance obligations represents deferred revenue amounts that will be
recognized as revenue in future periods. As of December 31, 2021, the deferred revenue balance related to
certain medical and nursing qualifications with an original contract length greater than twelve months at Kaplan
Supplemental Education was $8.8 million. Kaplan Supplemental Education expects to recognize 72% of this
revenue over the next twelve months and the remainder thereafter.
Costs to Obtain a Contract. The following table presents changes in the Company’s costs to obtain a contract
asset:
(in thousands)
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at
Beginning
of Year
$24,363
31,020
21,311
Costs
Associated
with New
Contracts
Less: Costs
Amortized
During the
Year
Other
Balance
at
End of
Year
$61,214
51,891
66,607
$(59,116) $(380) $26,081
24,363
(58,855)
31,020
(57,741)
307
843
The majority of other activity was related to currency translation adjustments in 2021, 2020, and 2019.
123 GRAHAM HOLDINGS COMPANY
14. CAPITAL STOCK, STOCK AWARDS AND STOCK OPTIONS
Capital Stock. Each share of Class A common stock and Class B common stock participates equally in
dividends. The Class B stock has limited voting rights and as a class has the right to elect 30% of the Board of
Directors; the Class A stock has unlimited voting rights, including the right to elect a majority of the Board of
Directors.
During 2021, 2020, and 2019 the Company purchased a total of 93,969, 406,112, and 3,392 shares, respectively,
of its Class B common stock at a cost of approximately $55.7 million, $161.8 million, and $2.1 million,
respectively. On September 10, 2020, the Board of Directors authorized the Company to purchase up to 500,000
shares of its Class B Common Stock. The Company did not announce a ceiling price or time limit for the
purchases. At December 31, 2021, the Company had remaining authorization from the Board of Directors to
purchase up to 270,182 shares of Class B common stock.
Stock Awards.
In 2012, the Company adopted an incentive compensation plan (the 2012 Plan), which, among
other provisions, authorizes the awarding of Class B common stock to key employees in the form of stock
awards, stock options and other awards involving the actual transfer of shares. All stock awards, stock options
and other awards involving the actual transfer of shares issued subsequent to the adoption of this plan are covered
under this incentive compensation plan. Stock awards made under the 2012 Plan are primarily subject to the
general restriction that stock awarded to a participant will be forfeited and revert to Company ownership if the
participant’s employment terminates before the end of a specified period of service to the Company. The number
of Class B common shares authorized for issuance under the 2012 Plan is 772,588 shares. At December 31, 2021,
there were 545,000 shares reserved for issuance under the 2012 incentive compensation plan. Of this number,
214,760 shares were subject to stock awards and stock options outstanding, and 330,240 shares were available
for future awards.
Activity related to stock awards under the 2012 incentive compensation plan for the year ended December 31,
2021 was as follows:
Beginning of year, unvested . . . . . . . . . . . . . . . . . . . . . . . .
Awarded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average
Grant-
Date
Fair
Value
$584.24
539.36
522.17
598.44
Number of
Shares
27,240
20,258
(12,871)
(3,056)
End of Year, unvested . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31,571
579.37
For the share awards outstanding at December 31, 2021, the aforementioned restriction is expected to lapse in
2023 for 12,820 shares, 2025 for 16,751 shares and 2027 for 2,000 shares. Stock-based compensation costs
resulting from Company stock awards were $3.9 million, $4.1 million and $4.2 million in 2021, 2020 and 2019,
respectively.
As of December 31, 2021, there was $9.8 million of total unrecognized compensation expense related to these
awards. That cost is expected to be recognized on a straight-line basis over a weighted average period of
2.3 years.
Stock Options. Stock options granted under the 2012 Plan cannot be less than the fair value on the grant date,
generally vest over six years and have a maximum term of ten years.
2021 FORM 10-K 124
Activity related to options outstanding for the year ended December 31, 2021 was as follows:
Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expired or forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number
of Shares
183,189
–
–
–
Average
Option
Price
$612.16
–
–
–
End of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
183,189
612.16
Of the shares covered by options outstanding at the end of 2021, 118,139 are now exercisable; 13,209 are
expected to become exercisable in 2022; 13,211 are expected to become exercisable in 2023; 12,876 are expected
to become exercisable in 2024; 12,877 are expected to become exercisable in 2025; and 12,877 are expected to
become exercisable in 2026. For 2021, 2020 and 2019, the Company recorded expense of $1.7 million,
$2.2 million and $2.0 million, respectively, related to stock options. Information related to stock options
outstanding and exercisable at December 31, 2021, is as follows:
Range of
Exercise
Prices
$
244
427
719
805–872
Options Outstanding
Options Exercisable
Shares
Outstanding
at
12/31/2021
1,931
77,258
77,258
26,742
183,189
Weighted
Average
Remaining
Contractual
Life (years)
0.9
8.7
2.8
4.0
5.5
Weighted
Average
Exercise
Price
$243.85
426.86
719.15
865.02
612.16
Shares
Exercisable
at
12/31/2021
1,931
12,876
77,258
26,074
118,139
Weighted
Average
Remaining
Contractual
Life (years)
0.9
8.7
2.8
3.9
3.7
Weighted
Average
Exercise
Price
$243.85
426.86
719.15
865.51
711.83
the intrinsic value for all options outstanding, exercisable and unvested was
At December 31, 2021,
$16.4 million, $3.4 million and $13.1 million, respectively. The intrinsic value of a stock option is the amount by
which the market value of the underlying stock exceeds the exercise price of the option. The market value of the
Company’s stock was $629.83 at December 31, 2021. At December 31, 2021, there were 65,050 unvested
options related to this plan with an average exercise price of $431.16 and a weighted average remaining
contractual term of 8.7 years. At December 31, 2020, there were 82,385 unvested options with an average
exercise price of $453.97 and a weighted average remaining contractual term of 9.4 years.
As of December 31, 2021, total unrecognized stock-based compensation expense related to stock options was
$5.7 million, which is expected to be recognized on a straight-line basis over a weighted average period of
approximately 4.7 years. There were no options exercised during 2021. There were 77,258 options exercised
during 2020. The total intrinsic value of options exercised during 2020 was $11.1 million; a tax benefit from
these stock option exercises of $2.9 million was realized. There were 1,743 options exercised during 2019. The
total intrinsic value of options exercised during 2019 was $0.6 million; a tax benefit from these option exercises
of $0.2 million was realized.
During 2020, the Company granted 77,258 options at an exercise price above the fair market value of its
common stock at the date of grant. The weighted average grant-date fair value of options granted during 2020
was $93.79. No options were granted during 2021 or 2019.
125 GRAHAM HOLDINGS COMPANY
The fair value of options at date of grant was estimated using the Black-Scholes method utilizing the following
assumptions:
Expected life (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020
8
0.53%
27.70%
1.45%
The Company also maintains a stock option plan at Kaplan. Under the provisions of this plan, options are issued
with an exercise price equal to the estimated fair value of Kaplan’s common stock, and options vest ratably over
the number of years specified (generally four to five years) at the time of the grant. Upon exercise, an option
holder may receive Kaplan shares or cash equal to the difference between the exercise price and the then fair
value.
At December 31, 2021, a Kaplan senior manager holds 7,206 Kaplan restricted shares. The fair value of Kaplan’s
common stock is determined by the Company’s compensation committee of the Board of Directors, and in
January 2022, the committee set the fair value price at $1,425 per share. No options were awarded during 2021,
2020, or 2019; no options were exercised during 2021, 2020 or 2019; and no options were outstanding at
December 31, 2021.
Kaplan recorded stock compensation expense of $1.3 million in 2021, and a stock compensation credit of
$1.1 million and $1.3 million in 2020 and 2019, respectively. At December 31, 2021, the Company’s accrual
balance related to the Kaplan restricted shares totaled $10.3 million. There were no payouts in 2021, 2020 or
2019.
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 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.
2021 FORM 10-K 126
The following reflects the Company’s net income and share data used in the basic and diluted earnings per share
computations using the two-class method:
(in thousands, except per share amounts)
Numerator:
Numerator for basic earnings per share:
Net income attributable to Graham Holdings Company common
Year Ended December 31
2021
2020
2019
stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$352,075
$300,365
$327,855
Less: Dividends paid–common stock outstanding and unvested
restricted shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(30,136)
(29,970)
(29,553)
Undistributed earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Percent allocated to common stockholders . . . . . . . . . . . . . . . . . . . .
321,939
270,395
298,302
99.36% 99.45%
99.45%
Add: Dividends paid–common stock outstanding . . . . . . . . . . . . . . .
319,867
29,946
268,917
29,812
296,665
29,387
Numerator for basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . .
349,813
298,729
326,052
Add: Additional undistributed earnings due to dilutive stock
options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
4
13
Numerator for diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . .
$349,818
$298,733
$326,065
Denominator:
Denominator for basic earnings per share:
Weighted average shares outstanding . . . . . . . . . . . . . . . . . . . . . . . .
Add: Effect of dilutive stock options . . . . . . . . . . . . . . . . . . . . . . . . .
Denominator for diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . .
Graham Holdings Company Common Stockholders:
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,951
14
4,965
5,124
15
5,139
5,285
42
5,327
$
$
70.65
70.45
$
$
58.30
58.13
$
$
61.70
61.21
Earnings per share amounts may not recalculate due to rounding.
Diluted earnings per share excludes the following weighted average potential common shares, as the effect would
be antidilutive, as computed under the treasury stock method:
(in thousands)
Weighted average restricted stock . . . . . . . . . . . . .
Year Ended December 31
2021
13
2020
12
2019
12
The 2021, 2020 and 2019 diluted earnings per share amounts exclude the effects of 104,000, 181,258 and
104,000 stock options outstanding, respectively, as their inclusion would have been antidilutive due to a market
condition.
In 2021, 2020 and 2019, the Company declared regular dividends totaling $6.04, $5.80 and $5.56 per share,
respectively.
127 GRAHAM HOLDINGS COMPANY
15. PENSIONS AND OTHER POSTRETIREMENT PLANS
The Company maintains various pension and incentive savings plans and contributed to multiemployer plans on
behalf of certain union-represented employee groups. Most of the Company’s employees are covered by these
plans. The Company also provides healthcare and life insurance benefits to certain retired employees. These
employees become eligible for benefits after meeting age and service requirements.
The Company uses a measurement date of December 31 for its pension and other postretirement benefit plans.
In December 2019, the Company purchased an irrevocable group annuity contract from an insurance company
for $216.8 million to settle $212.1 million of the outstanding defined benefit pension obligation related to certain
retirees and beneficiaries. The purchase of the group annuity contract was funded from the assets of the
Company’s pension plans As a result of this transaction, the Company was relieved of all responsibility for these
pension obligations and the insurance company is now required to pay and administer the retirement benefits
owed to approximately 3,800 retirees and beneficiaries, with no change to the amount, timing or form of monthly
retirement benefit payments. As a result, the Company recorded a one-time settlement gain of $91.7 million.
Defined Benefit Plans. The Company’s defined benefit pension plans consist of various pension plans and a
Supplemental Executive Retirement Plan (SERP) offered to certain executives of the Company.
In the second quarter of 2021, the Company recorded $1.1 million in expenses related to a Separation Incentive
Program (SIP) for certain Dekko employees, which will be funded from the assets of the Company’s pension
plans.
In the second quarter of 2020, the Company recorded $6.0 million in expenses related to a SIP for certain
Kaplan, Code3 and Decile employees, which was funded from the assets of the Company’s pension plans. In the
third quarter of 2020, the Company recorded $7.8 million in expenses related to a SIP for certain Kaplan
employees, which was funded from the assets of the Company’s pension plans.
In the second quarter of 2019, the Company offered a SIP for certain Kaplan employees, which was funded from
the assets of the Company’s pension plans. The Company recorded $6.4 million in expense related to the SIP for
2019.
2021 FORM 10-K 128
The following table sets forth obligation, asset and funding information for the Company’s defined benefit
pension plans:
(in thousands)
Pension Plans
As of December 31
2021
2020
Change in Benefit Obligation
Benefit obligation at beginning of year . . . . . . . . . . . .
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Special termination benefits . . . . . . . . . . . . . . . . . . . .
$1,095,117
22,991
26,917
2
5,660
(63,510)
1,132
$1,020,356
22,656
32,587
69
78,900
(73,232)
13,781
Benefit Obligation at End of Year . . . . . . . . . . . . . .
$1,088,309
$1,095,117
Change in Plan Assets
Fair value of assets at beginning of year . . . . . . . . . . .
Actual return on plan assets . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,803,422
654,911
(63,510)
$2,312,706
563,948
(73,232)
Fair Value of Assets at End of Year . . . . . . . . . . . .
$3,394,823
$2,803,422
Funded Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,306,514
$1,708,305
(in thousands)
SERP
As of December 31
2021
2020
Change in Benefit Obligation
Benefit obligation at beginning of year . . . . . . . . . . . .
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial (gain) loss . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 122,299
1,022
2,943
(7,640)
(5,918)
$ 116,193
954
3,678
7,448
(5,974)
Benefit Obligation at End of Year . . . . . . . . . . . . . .
$ 112,706
$ 122,299
Change in Plan Assets
Fair value of assets at beginning of year . . . . . . . . . . .
Employer contributions . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair Value of Assets at End of Year . . . . . . . . . . . .
$
$
–
5,918
(5,918)
–
$
$
–
5,974
(5,974)
–
Funded Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (112,706)
$ (122,299)
The change in the Company’s benefit obligations for the pension plans was primarily due to benefits paid during
the year. The change in the benefit obligations for the Company’s SERP was due to the recognition of an
actuarial gain resulting from an increase to the discount rate used to measure the benefit obligation and benefits
paid during the year.
129 GRAHAM HOLDINGS COMPANY
The accumulated benefit obligation for the Company’s pension plans at December 31, 2021 and 2020, was
$1,052.7 million and $1,064.3 million, respectively. The accumulated benefit obligation for the Company’s
SERP at December 31, 2021 and 2020, was $112.2 million and $121.7 million, respectively. The amounts
recognized in the Company’s Consolidated Balance Sheets for its defined benefit pension plans are as follows:
(in thousands)
Pension Plans
As of December 31
SERP
As of December 31
2021
2020
2021
2020
Noncurrent asset . . . . . . . . . . . . . . . . . . . . . . .
Current liability . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent liability . . . . . . . . . . . . . . . . . . . .
$2,306,514
–
–
$1,708,305
–
–
$
–
(6,334)
(106,372)
$
–
(6,495)
(115,804)
Recognized Asset (Liability)
. . . . . . . . . . . .
$2,306,514
$1,708,305
$(112,706)
$(122,299)
Key assumptions utilized for determining the benefit obligation are as follows:
Discount rate . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase – age
graded . . . . . . . . . . . . . . . . . . . . . . . . .
Cash balance interest crediting rate . . . .
Pension Plans
As of December 31
2021
2.9%
2020
2.5%
SERP
As of December 31
2021
2.9%
2020
2.5%
5.0% – 1.0% 5.0% – 1.0% 5.0% – 1.0% 5.0% – 1.0%
1.41% with
phase in to
2.90% in
2024
1.41% with
phase in to
2.50% in
2023
–
–
The Company made no contributions to its pension plans in 2021 and 2020, and the Company does not expect to
make any contributions in 2022. The Company made contributions to its SERP of $5.9 million and $6.0 million
for the years ended December 31, 2021 and 2020, respectively. As the plan is unfunded, the Company makes
contributions to the SERP based on actual benefit payments.
At December 31, 2021, future estimated benefit payments, excluding charges for early retirement programs, are
as follows:
(in thousands)
Pension Plans
SERP
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 – 2031 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 61,330
61,487
62,710
63,299
63,102
316,913
$ 6,425
6,706
6,897
7,029
7,118
35,476
2021 FORM 10-K 130
The total (benefit) cost arising from the Company’s defined benefit pension plans consists of the following
components:
(in thousands)
Pension Plans
Year Ended December 31
2021
2020
2019
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service cost
Interest cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 22,991
26,917
(137,878)
2,846
(7,906)
$ 22,656
32,587
(113,427)
2,830
–
$ 20,422
46,821
(122,790)
2,882
–
Net Periodic Benefit for the Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Special separation benefit expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(93,030)
–
1,132
(55,354)
–
13,781
(52,665)
(91,676)
6,432
Total Benefit for the Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (91,898) $ (41,573) $(137,909)
Other Changes in Plan Assets and Benefit Obligations Recognized in
Other Comprehensive Income
Current year actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current year prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized net actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Curtailment and settlement
Total Recognized in Other Comprehensive Income (Before Tax
$(511,373) $(371,621) $(245,402)
5,725
(2,882)
–
91,676
69
(2,830)
–
–
2
(2,846)
7,906
–
Effects) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(506,311) $(374,382) $(150,883)
Total Recognized in Total Benefit and Other Comprehensive Income
(Before Tax Effects) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(598,209) $(415,955) $(288,792)
(in thousands)
SERP
Year Ended December 31
2021
2020
2019
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service cost
Interest cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
1,022
2,943
331
5,930
$
954
3,678
331
5,267
Total Cost for the Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 10,226
$ 10,230
$
858
4,314
339
2,314
7,825
Other Changes in Benefit Obligations Recognized in Other
Comprehensive Income
Current year actuarial (gain) loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Recognized in Other Comprehensive Income (Before Tax
Effects) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Recognized in Total Cost and Other Comprehensive Income
$
(7,640) $
(331)
(5,930)
7,448
(331)
(5,267)
$ 15,544
(339)
(2,314)
$ (13,901) $
1,850
$
12,891
(Before Tax Effects) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
(3,675) $ 12,080
$ 20,716
131 GRAHAM HOLDINGS COMPANY
The costs for the Company’s defined benefit pension plans are actuarially determined. Below are the key
assumptions utilized to determine periodic cost:
Pension Plans
Year Ended December 31
SERP
Year Ended December 31
Discount rate . . . . . . . .
Expected return on
2021
2.5%
2020
3.3%
2019
4.3%
2021
2.5%
plan assets . . . . . . . .
6.25%
6.25%
6.25%
–
Rate of compensation
2020
3.3%
–
2019
4.3%
–
increase – age
graded . . . . . . . . . . . 5.0% – 1.0% 5.0% – 1.0% 5.0% – 1.0% 5.0% – 1.0% 5.0% – 1.0% 5.0% – 1.0%
Cash balance interest
crediting rate . . . . . .
1.41% with
phase in to
2.50% in 2023
2.77% with
phase in to
3.30% in 2022
3.45% with
phase in to
4.30% in 2021
–
–
–
Accumulated other comprehensive income (AOCI) includes the following components of unrecognized net
periodic cost for the defined benefit plans:
(in thousands)
Pension Plans
As of December 31
2021
2020
SERP
As of December 31
2021
2020
Unrecognized actuarial (gain) loss . . . . . . . . . . . .
. . . . . . . . . . . . . .
Unrecognized prior service cost
$(1,342,623)
4,511
$(839,156)
7,355
$19,111
36
$32,681
367
Gross Amount
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liability (asset) . . . . . . . . . . . . . . . . .
(1,338,112)
355,078
(831,801)
224,586
19,147
(5,340)
33,048
(8,923)
Net Amount
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (983,034)
$(607,215)
$13,807
$24,125
Defined Benefit Plan Assets. The Company’s defined benefit pension obligations are funded by a portfolio
made up of private investment funds, a U.S. stock index fund, and a relatively small number of stocks and high-
quality fixed-income securities that are held by a third-party trustee. The assets of the Company’s pension plans
were allocated as follows:
U.S. equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Private investment funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. stock index fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. fixed income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of December 31
2021
2020
61% 58%
17% 18%
9%
9%
9%
8%
4%
7%
100% 100%
The Company manages approximately 39% of the pension assets internally, of which the majority is invested in
private investment funds with the remaining investments in Berkshire Hathaway stock, a U.S. stock index fund,
and short-term fixed-income securities. The remaining 61% of plan assets are managed by two investment
companies. The goal of the investment managers is to produce moderate long-term growth in the value of these
assets, while protecting them against large decreases in value. Both investment managers may invest in a
combination of equity and fixed-income securities and cash. The managers are not permitted to invest in
securities of the Company or in alternative investments. One investment manager cannot invest more than 15%
of the assets at the time of purchase in the stock of Alphabet and Berkshire Hathaway, and no more than 30% of
2021 FORM 10-K 132
the assets it manages in specified international exchanges at the time the investment is made. The other
investment manager cannot invest more than 20% of the assets at the time of purchase in the stock of Berkshire
Hathaway, and no more than 15% of the assets it manages in specified international exchanges at the time the
investment is made, and no less than 10% of the assets could be invested in fixed-income securities. Excluding
the exceptions noted above, the investment managers cannot invest more than 10% of the assets in the securities
of any other single issuer, except for obligations of the U.S. Government, without receiving prior approval from
the Plan administrator.
In determining the expected rate of return on plan assets, the Company considers the relative weighting of plan
assets, the historical performance of total plan assets and individual asset classes and economic and other
indicators of future performance. In addition, the Company may consult with and consider the input of financial
and other professionals in developing appropriate return benchmarks.
The Company evaluated its defined benefit pension plan asset portfolio for the existence of significant
concentrations (defined as greater than 10% of plan assets) of credit risk as of December 31, 2021. Types of
concentrations that were evaluated include, but are not limited to, investment concentrations in a single entity,
type of industry, foreign country and individual fund. At December 31, 2021, the pension plan held investments
in one common stock and one private investment fund that exceeded 10% of total plan assets, valued at
$998.8 million, or approximately 29% of total plan assets. At December 31, 2020, the pension plan held
investments in one common stock and one private investment fund that exceeded 10% of total plan assets, valued
at $850.6 million, or approximately 30% of total plan assets.
The Company’s pension plan assets measured at fair value on a recurring basis were as follows:
(in thousands)
Cash equivalents and other short-term investments . . . . . .
Equity securities
U.S. equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International equities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Private investment funds . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. stock index fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of December 31, 2021
Level 1
Level 2
Level 3
Total
$
2,159
$145,683
$
–
$ 147,842
2,067,152
301,640
–
–
–
–
–
–
–
–
573,970
302,478
2,067,152
301,640
573,970
302,478
Total Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,370,951
$145,683
$876,448
$3,393,082
Receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,741
$3,394,823
(in thousands)
Cash equivalents and other short-term investments . . . . . . . . .
Equity securities
U.S. equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Private investment fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. stock index fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of December 31, 2020
Level 1
Level 2
Level 3
Total
$
2,218
$197,655
$
–
$ 199,873
1,614,879
233,818
–
–
–
–
–
–
–
–
496,458
256,291
1,614,879
233,818
496,458
256,291
Total Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,850,915
$197,655
$752,749
$2,801,319
Receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,103
$2,803,422
133 GRAHAM HOLDINGS COMPANY
Cash equivalents and other short-term investments. These investments are primarily held in U.S. Treasury
securities and registered money market funds. 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.
U.S. equities. These investments are held in common and preferred stock of U.S. corporations and American
Depositary Receipts (ADRs) traded on U.S. exchanges. Common and preferred shares and ADRs are traded
actively on exchanges, and price quotes for these shares are readily available. These investments are classified as
Level 1 in the valuation hierarchy.
International equities. These investments are held in common and preferred stock issued by non-U.S.
corporations. Common and preferred shares are traded actively on exchanges, and price quotes for these shares
are readily available. These investments are classified as Level 1 in the valuation hierarchy.
Private investment funds. This category includes a commingled fund and a private investment fund. The
commingled fund invests in a diversified mix of publicly-traded securities (U.S. and international stocks) and
private companies. The private investment fund invests in non-public companies. These investment funds have
restrictions that limit the Company’s ability to liquidate its investments. The investment in the commingled fund
may be redeemed in part, or in full, at the 60-month anniversary of the investment, or at any subsequent
36-month anniversary date following the initial 60-month anniversary. The investment in the private investment
fund is generally not redeemable until the dissolution of the fund. The funds are valued using the net asset value
(NAV) provided by the administrator of the funds and reviewed by the Company. The NAV is based on the value
of the underlying assets owned by the fund, minus liabilities and divided by the number of units outstanding.
These investments are classified as Level 3 in the valuation hierarchy.
U.S. stock index fund. This fund consists of investments held in a diversified mix of securities (U.S. and
international stocks, and fixed-income securities) and a combination of other collective funds that together are
designed to track the performance of the S&P 500 Index. The fund is valued using the NAV provided by the
administrator of the fund and reviewed by the Company. The NAV is based on the value of the underlying assets
owned by the fund, minus liabilities and divided by the number of units outstanding. The investment in this fund
may be redeemed daily, subject to the restrictions of the fund. This investment is classified as Level 3 in the
valuation hierarchy.
The following table provides a reconciliation of changes in pension assets measured at fair value on a recurring
basis, using Level 3 inputs:
(in thousands)
As of December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases, sales, and settlements, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual return on plan assets:
Private
Investment
Funds
U.S. Stock
Index Fund
$151,854
130,000
$ 322,229
(100,000)
Losses relating to assets sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gains relating to assets still held at year-end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
–
214,604
(5,763)
39,825
As of December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
496,458
256,291
Purchases, sales, and settlements, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual return on plan assets:
3,912
(25,000)
Gains relating to assets sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gains relating to assets still held at year-end . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
–
73,600
3,715
67,472
As of December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$573,970
$ 302,478
2021 FORM 10-K 134
Other Postretirement Plans. The following table sets forth obligation, asset and funding information for the
Company’s other postretirement plans:
(in thousands)
Postretirement Plans
As of December 31
2021
2020
Change in Benefit Obligation
Benefit obligation at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid, net of Medicare subsidy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 5,587
92
(582)
(375)
$ 6,816
167
(991)
(405)
Benefit Obligation at End of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 4,722
$ 5,587
Change in Plan Assets
Fair value of assets at beginning of year
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employer contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid, net of Medicare subsidy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
– $
375
(375)
–
405
(405)
Fair Value of Assets at End of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
– $
–
Funded Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(4,722) $(5,587)
The change in the benefit obligation for the Company’s other postretirement plans was due to updated claims
experience based on actual premium rates, the recognition of an actuarial gain resulting from an increase to the
discount rate used to measure the benefit obligation, and benefits paid during the year.
The amounts recognized in the Company’s Consolidated Balance Sheets for its other postretirement plans are as
follows:
(in thousands)
Postretirement Plans
As of December 31
2021
2020
Current liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (671) $ (797)
(4,051)
(4,790)
Recognized Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(4,722) $(5,587)
The discount rates utilized for determining the benefit obligation at December 31, 2021 and 2020, for the
postretirement plans were 2.23% and 1.78%, respectively. The assumed healthcare cost trend rate used in
measuring the postretirement benefit obligation at December 31, 2021, was 6.17% for pre-age 65, decreasing to
trend rate used in measuring the
4.5% in the year 2032 and thereafter. The assumed healthcare cost
postretirement benefit obligation at December 31, 2021, was 6.52% for post-age 65, decreasing to 4.5% in the
year 2032 and thereafter. The assumed healthcare cost trend rate used in measuring the postretirement benefit
obligation at December 31, 2021, was 8.00% for Medicare Advantage, decreasing to 4.5% in the year 2032 and
thereafter.
The Company made contributions to its postretirement benefit plans of $0.4 million for each of the years ended
December 31, 2021 and 2020. As the plans are unfunded, the Company makes contributions to its postretirement
plans based on actual benefit payments.
135 GRAHAM HOLDINGS COMPANY
At December 31, 2021, future estimated benefit payments are as follows:
(in thousands)
Postretirement
Plans
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 – 2031 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 671
$ 590
$ 485
$ 393
$ 335
$2,474
The total benefit arising from the Company’s other postretirement plans consists of the following components:
(in thousands)
Postretirement Plans
Year Ended December 31
2021
2020
2019
Interest cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of prior service credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
92 $
(7)
(3,510)
167
(481)
(4,048)
$
289
(7,363)
(4,360)
Net Periodic Benefit for the Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3,425)
(120)
(4,362)
–
(11,434)
–
Total Benefit for the Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(3,545) $(4,362) $(11,434)
Other Changes in Benefit Obligations Recognized in Other Comprehensive
Income
Current year actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of prior service credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (582) $ (991) $ (1,246)
7,363
481
4,360
4,048
–
–
7
3,510
120
Total Recognized in Other Comprehensive Income (Before Tax Effects) . . . .
$ 3,055
$ 3,538
$ 10,477
Total Recognized in Benefit and Other Comprehensive Income (Before Tax
Effects) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (490) $ (824) $
(957)
The costs for the Company’s postretirement plans are actuarially determined. The discount rate utilized to
determine periodic cost for the years ended December 31, 2021, 2020 and 2019 were 1.78%, 2.68% and 3.69%.
AOCI included the following components of unrecognized net periodic benefit for the postretirement plans:
(in thousands)
As of December 31
2021
2020
Unrecognized actuarial gain . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
Unrecognized prior service credit
$(13,642)
(12)
$(16,690)
(19)
Gross Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(13,654)
3,724
(16,709)
4,512
Net Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (9,930)
$(12,197)
Multiemployer Pension Plans.
In 2021, 2020 and 2019, the Company contributed to one multiemployer
defined benefit pension plan under the terms of a collective-bargaining agreement that covered certain union-
represented employees. The Company’s total contributions to the multiemployer pension plan amounted to
$0.1 million in each year for 2021, 2020 and 2019.
2021 FORM 10-K 136
Savings Plans. The Company recorded expense associated with retirement benefits provided under incentive
savings plans (primarily 401(k) plans) of approximately $10.9 million in 2021, $8.8 million in 2020 and
$9.8 million in 2019.
16. OTHER NON-OPERATING INCOME
A summary of non-operating income is as follows:
(in thousands)
Year Ended December 31
2021
2020
2019
Net gain on cost method investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of cost method investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net gain (loss) on sale of businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency loss, net
Impairment of cost method investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on acquiring a controlling interest in an equity affiliate . . . . . . . . . . . . . . . .
Gain on sale of equity affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net
$11,756
9,355
3,789
(179)
–
–
–
7,833
$
4,209
1,039
213,302
(2,153)
(7,327)
3,708
1,370
386
$ 5,080
267
(564)
(1,070)
–
–
28,994
(276)
Total Other Non-Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$32,554
$214,534
$32,431
The gains on cost method investments result from observable price changes in the fair value of the underlying
equity securities accounted for under the cost method (see Notes 4 and 12).
For the years ended December 31, 2021, 2020 and 2019, the Company recorded contingent consideration gains
of $3.9 million, $3.5 million and $1.4 million, respectively, related to the disposition of Kaplan University (KU)
in 2018.
In the second quarter of 2020, the Company made an additional investment in Framebridge (see Notes 3 and 4)
that resulted in the Company obtaining control of the investee. The Company remeasured its previously held
equity interest in Framebridge at the acquisition-date fair value and recorded a gain of $3.7 million. The fair
value was determined using a market approach by using the share value indicated in the transaction.
In the fourth quarter of 2020, the Company recorded a $209.8 million gain on the sale of Megaphone.
In the first quarter of 2019, the Company recorded a $29.0 million gain on the sale of the Company’s interest in
Gimlet Media.
137 GRAHAM HOLDINGS COMPANY
17. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The other comprehensive income (loss) consists of the following components:
(in thousands)
Foreign currency translation adjustments:
Year Ended December 31, 2021
Before-Tax
Amount
Income
Tax
After-Tax
Amount
Translation adjustments arising during the year . . . . . . . . . . . . . . . . . . . .
$ (16,052) $
–
$ (16,052)
Pension and other postretirement plans:
Actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prior service cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of net actuarial gain included in net income . . . . . . . . . . .
Amortization of net prior service cost included in net income . . . . . . . .
Settlement included in net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
519,595
(2)
(5,486)
3,170
(120)
(133,915)
1
1,414
(817)
30
385,680
(1)
(4,072)
2,353
(90)
517,157
(133,287)
383,870
Cash flow hedge:
Gain for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
349
(93)
256
Other Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$501,454
$(133,380) $368,074
(in thousands)
Foreign currency translation adjustments:
Year Ended December 31, 2020
Before-Tax
Amount
Income
Tax
After-Tax
Amount
Translation adjustments arising during the year . . . . . . . . . . . . . . . . . . . . .
$ 31,642
$
–
$ 31,642
Pension and other postretirement plans:
Actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prior service cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of net actuarial loss included in net income . . . . . . . . . . . . .
Amortization of net prior service cost included in net income . . . . . . . . .
365,164
(69)
1,219
2,680
(98,594)
19
(329)
(724)
266,570
(50)
890
1,956
Cash flow hedges:
Loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,282)
293
(989)
Other Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$399,354
$(99,335) $300,019
368,994
(99,628)
269,366
2021 FORM 10-K 138
(in thousands)
Foreign currency translation adjustments:
Year Ended December 31, 2019
Before-Tax
Amount
Income
Tax
After-Tax
Amount
Translation adjustments arising during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment for sale of a business with foreign operations . . . . . . . . . . . . . . . . . . . . . .
$
Pension and other postretirement plans:
Actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prior service cost
Amortization of net actuarial gain included in net income . . . . . . . . . . . .
Amortization of net prior service credit included in net income . . . . . . . .
Settlement included in net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
5,371
2,011
7,382
$
–
–
–
5,371
2,011
7,382
231,104
(5,725)
(2,046)
(4,142)
(91,676)
(62,398)
1,546
552
1,118
24,752
168,706
(4,179)
(1,494)
(3,024)
(66,924)
127,515
(34,430)
93,085
Cash flow hedges:
Loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,344)
343
(1,001)
Other Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$133,553
$(34,087) $ 99,466
The accumulated balances related to each component of other comprehensive income (loss) are as follows:
(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
As of December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(21,888)
$325,921
$ (738)
$303,295
Other comprehensive income (loss) before
reclassifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31,642
266,520
(1,476)
296,686
Net amount reclassified from accumulated other
comprehensive income . . . . . . . . . . . . . . . . . . . . . . .
–
Net other comprehensive income (loss) . . . . . . . . . . . .
31,642
As of December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,754
Other comprehensive income (loss) before
2,846
269,366
595,287
487
(989)
(1,727)
3,333
300,019
603,314
reclassifications . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(16,052)
385,679
(375)
369,252
Net amount reclassified from accumulated other
comprehensive income . . . . . . . . . . . . . . . . . . . . . .
–
(1,809)
Net other comprehensive income (loss) . . . . . . . . . . .
(16,052)
383,870
631
256
(1,178)
368,074
As of December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (6,298)
$979,157
$(1,471)
$971,388
139 GRAHAM HOLDINGS COMPANY
The amounts and line items of reclassifications out of Accumulated Other Comprehensive Income (Loss) are as
follows:
(in thousands)
Foreign Currency Translation
Adjustments:
Adjustment for sales of businesses
Year Ended December 31
2021
2020
2019
Affected Line Item in
the Consolidated Statements of Operations
with foreign operations . . . . . . . .
$
– $
–
$ 2,011 Other income, net
Pension and Other Postretirement
Plans:
Amortization of net actuarial (gain)
loss . . . . . . . . . . . . . . . . . . . . . . .
Amortization of net prior service
cost (credit) . . . . . . . . . . . . . . . . .
Settlement gains . . . . . . . . . . . . . . .
Cash Flow Hedges
(5,486)
1,219
(2,046)
(1)
3,170
(120)
(2,436)
627
2,680
–
(4,142)
(91,676)
(1)
(1)
3,899
(1,053)
(97,864) Before tax
26,422 Provision for income taxes
(1,809)
2,846
(71,442) Net of tax
631
–
631
474
13
487
(146)
Interest expense
51 Provision for income taxes
(95) Net of tax
Total reclassification for the year . . . .
$(1,178) $ 3,333
$(69,526) 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 15) and are included in non-operating pension and postretirement benefit income in the Company’s Consolidated
Statements of Operations.
18. CONTINGENCIES AND OTHER COMMITMENTS
Litigation, Legal and Other Matters. The Company and its subsidiaries are subject to complaints and
administrative proceedings and are defendants in various civil lawsuits that have arisen in the ordinary course of
their businesses, including contract disputes; actions alleging negligence, libel, defamation and invasion of
privacy; trademark, copyright and patent infringement; violations of employment laws and applicable wage and
hour laws; and statutory or common law claims involving current and former students and employees. Although
the outcomes of the legal claims and proceedings against the Company cannot be predicted with certainty, based
on currently available information, management believes that there are no existing claims or proceedings that are
likely to have a material effect on the Company’s business, financial condition, results of operations or cash
flows. However, based on currently available information, management believes it is reasonably possible that
future losses from existing and threatened legal, regulatory and other proceedings in excess of the amounts
recorded could reach approximately $15 million.
In 2015, Kaplan sold substantially all of the assets of the KHEC business to Education Corporation of America.
In 2018, certain subsidiaries of Kaplan contributed the institutional assets and operations of KU to a new
university: an Indiana nonprofit, public-benefit corporation affiliated with Purdue University, known as Purdue
University Global. Kaplan could be held liable to the current owners of KU and the KHEC schools related to the
pre-sale conduct of the schools, and the pre-sale conduct of the schools has been and could be the subject of
future compliance reviews, regulatory proceedings or lawsuits that could result in monetary liabilities or fines or
other sanctions. On May 6, 2021, Kaplan received a notice from the Department of Education (ED) that it would
be conducting a fact-finding process pursuant to the borrower defense to repayment (BDTR) regulations to
2021 FORM 10-K 140
determine the validity of more than 800 BDTR claims and a request for documents related to several of Kaplan’s
previously owned schools. Beginning in July 2021, Kaplan started receiving the claims and related information
requests. In total, Kaplan received 1,449 borrower defense applications that seek discharge of approximately
$35 million in loans. Most claims received are from former KU students. The ED’s process for adjudicating these
claims is subject to the borrower defense regulations but it is not clear to what extent the ED will exclude claims
based on the underlying statutes of limitations, evidence provided by Kaplan, or any prior investigation related to
schools attended by the student applicants. Kaplan believes it has defenses that would bar any student discharge
or school liability including that the claims are barred by the applicable statute of limitations, unproven,
incomplete and fail to meet regulatory filing requirements. Kaplan expects to vigorously defend any attempt by
the ED to hold Kaplan liable for any ultimate student discharges and is responding to all claims with
documentary and narrative evidence to refute the allegations, demonstrate their lack of merit, and support the
denial of all such claims by the ED. If the claims are successful, the ED may seek reimbursement for the amount
discharged from Kaplan. If the ED initiates a reimbursement action against Kaplan following approval of former
students’ BDTR applications, Kaplan may be subject to significant liability.
In June 2021, the Committee for Private Education (CPE) in Singapore instructed Kaplan Singapore to cease new
enrollments for three marketing diploma programs on both a full and part-time basis due to noncompliance with
minimum entry level requirements for admission and to teach out existing students in these programs. On
August 23, 2021, the CPE issued the same instructions with respect to the Kaplan Foundation diploma and four
information technology diploma programs on both a full and part-time basis. In November 2021, the CPE issued
the same instructions with respect to a further 23 full-time or part-time diploma programs. Post regulatory action,
Kaplan Singapore is currently still able to offer 449 programs that are registered with the CPE, out of which there
are 16 diplomas, 361 bachelors and the balance of which are certificate and postgraduate courses. Kaplan
Singapore will apply for re-registration of diploma programs in 2022. The impact from regulatory actions by the
CPE will have a significant adverse impact on Kaplan Singapore’s revenues, operating results and cash flows in
the future. No assurance can be given that applications for re-registration of the impacted programs will be
successful. An inability to re-register one or more impacted programs could have a further material adverse effect
on Kaplan Singapore’s revenues, operating results and cash flows.
Other Commitments. The Company’s broadcast subsidiaries are parties to certain agreements that commit
them to purchase programming to be produced in future years. At December 31, 2021, such commitments
amounted to approximately $14.2 million. If such programs are not produced, the Company’s commitment would
expire without obligation.
19. BUSINESS SEGMENTS
Basis of Presentation. The Company’s organizational structure is based on a number of factors that
management uses to evaluate, view and run its business operations, which include, but are not limited to,
customers, the nature of products and services and use of resources. The business segments disclosed in the
Consolidated Financial Statements are based on this organizational structure and information reviewed by the
Company’s management to evaluate the business segment results.
To meet the quantitative threshold related to revenue required for separate disclosure, the Company changed the
presentation of its segments in the third quarter of 2021 into the following seven reportable segments: Kaplan
International, Kaplan Higher Education, Kaplan Supplemental Education, Television Broadcasting,
Manufacturing, Healthcare and Automotive. Segment operating results have been restated to reflect this change.
The Company evaluates segment performance based on operating income before amortization of intangible
assets and impairment of goodwill and other long-lived assets. The accounting policies at the segments are the
same as described in Note 2. In computing operating income before amortization by segment, the effects of
amortization of intangible assets, impairment of goodwill and other long-lived assets, equity in earnings (losses)
of affiliates, interest income, interest expense, non-operating pension and postretirement benefit income, other
non-operating income and expense items and income taxes are excluded. Intersegment sales are not material.
141 GRAHAM HOLDINGS COMPANY
Identifiable assets by segment are those assets used in the Company’s operations in each business segment. The
investments in marketable equity securities and affiliates, and prepaid pension cost are not
included in
identifiable assets by segment. Investments in marketable equity securities are discussed in Note 4.
Education. Education products and services are provided by Kaplan, Inc. Kaplan International includes
professional training and postsecondary education businesses largely outside the U.S., as well as English-
language programs. KHE includes the results as a service provider to higher education institutions. Supplemental
Education includes Kaplan’s standardized test preparation, domestic professional and other continuing education
businesses.
As of December 31, 2021, Kaplan had a total outstanding accounts receivable balance of $97.4 million from
Purdue Global related to amounts due for reimbursements for services, fees earned and a deferred fee. Included
in this total, Kaplan has a $19.2 million long-term receivable balance due from Purdue Global at December 31,
2021, related to the advance of $20.0 million during the initial KU Transaction.
Television Broadcasting. Television broadcasting operations are conducted through seven television stations
serving the Detroit, Houston, San Antonio, Orlando, Jacksonville and Roanoke television markets. All stations
are network-affiliated (except for WJXT in Jacksonville), with revenues derived primarily from sales of
advertising time. In addition, the stations generate revenue from retransmission consent agreements for the right
to carry their signals.
Manufacturing. Manufacturing operations include Hoover, a Thomson, GA-based supplier of pressure
impregnated kiln-dried lumber and plywood products for fire retardant and preservative application; Dekko, a
Garrett,
lighting, and electrical
components and assemblies; Joyce/Dayton Corp., a Dayton, OH-based manufacturer of screw jacks and other
linear motion systems; and Forney, a global supplier of products and systems that control and monitor
combustion processes in electric utility and industrial applications.
IN-based manufacturer of electrical workspace solutions, architectural
Healthcare. Graham Healthcare Group provides home health, hospice and palliative services. GHG also
provides other healthcare services, including nursing care and prescription services for patients receiving
in-home infusion treatments.
Automotive. Automotive includes four automotive dealerships in the Washington, D.C. metropolitan area,
including Lexus of Rockville, Honda of Tysons Corner, Jeep of Bethesda and Ford of Manassas, which was
acquired in December 2021.
Other Businesses. Other businesses includes the following:
• Leaf Group, a consumer internet company, which was acquired in June 2021.
• Clyde’s Restaurant Group owns and operates eleven restaurants and entertainment venues in the
Washington, D.C. metropolitan area.
• Code3 is a marketing and insights company that manages digital advertising campaigns.
•
Framebridge, a custom framing service company, which was acquired in May 2020.
• The Slate Group and Foreign Policy Group, which publish online and print magazines and websites;
and four investment stage businesses, CyberVista, Decile, Pinna and City Cast. Other businesses also
includes Megaphone, which was sold in December 2020.
Corporate Office. Corporate office includes the expenses of the Company’s corporate office, defined benefit
pension expense, and certain continuing obligations related to prior business dispositions.
2021 FORM 10-K 142
Geographical Information. The Company’s non-U.S. revenues in 2021, 2020 and 2019 totaled approximately
$709 million, $642 million and $691 million, respectively, primarily from Kaplan’s operations outside the U.S.
Additionally, revenues in 2021, 2020 and 2019 totaled approximately $404 million, $375 million, and
$384 million, respectively, from Kaplan’s operations in the U.K. The Company’s long-lived assets in non-U.S.
countries (excluding goodwill and other intangible assets), totaled approximately $476 million and $442 million
at December 31, 2021 and 2020, respectively.
Restructuring. During 2020, Kaplan developed and implemented a number of initiatives across its businesses
to help mitigate the negative revenue impact arising from COVID-19 and to re-align its program offerings to
better pursue opportunities from the disruption. These initiatives include employee salary and work-hour
reductions;
reduced discretionary spending; facility
restructuring to reduce its classroom and office facilities; reduced capital expenditures; and accelerated
development and promotion of various online programs and solutions.
temporary furlough and other employee reductions;
In 2020, Kaplan recorded restructuring costs related to severance, the exit of classroom and office facilities, and
approved Separation Incentive Programs that reduced the number of employees at all of Kaplan’s divisions.
In 2020, Code3 and Decile recorded restructuring costs in connection with a restructuring plan that included the
exit of an office facility, an approved Separation Incentive Program to reduce the number of employees, and
other cost reduction initiatives to mitigate the adverse impact of COVID-19 on advertising demand.
Restructuring related costs across all businesses in 2020 were recorded as follows:
Kaplan
International
Higher
Education
Supplemental
Education
Kaplan
Corporate
Total
Education
Other
Businesses
$ 4,366
$
–
$ 1,797
$
–
–
–
$ 6,163
$
9,942
3,573
–
–
–
Total
$ 6,163
9,942
3,573
Operating lease cost
Accelerated
. . .
2,905
3,451
3,586
1,620
152
1,801
(in thousands)
Severance . . . . . . . . . . . . . . .
Facility related costs:
depreciation of
property, plant and
equipment . . . . . . . . .
Total Restructuring Costs
Included in Segment
Income (Loss) from
Operations (1) . . . . . . . . . .
Impairment of other long-
lived assets:
Lease right-of-use
$ 8,891
$3,603
$ 7,184
$
–
$19,678
$
–
$19,678
assets . . . . . . . . . . . . .
$ 3,976
$2,062
$ 4,005
$
Property, plant and
equipment . . . . . . . . .
1,248
174
813
–
–
$10,043
$1,405
$11,448
2,235
86
2,321
Non-operating pension and
postretirement benefit
income, net . . . . . . . . . . . .
Total Restructuring
1,100
2,233
8,566
883
12,782
999
13,781
Related Costs . . . . . . . . . .
$15,215
$8,072
$20,568
$883
$44,738
$2,490
$47,228
(1) These amounts are included in the segments’ Income (Loss) from Operations before Amortization of Intangible Assets and Impairment
of Goodwill and Other Long-Lived Assets.
143 GRAHAM HOLDINGS COMPANY
Total accrued restructuring costs at Kaplan were $1.2 million and $4.7 million as of December 31, 2021 and
2020, respectively.
In June 2020, CRG made the decision to close its restaurant and entertainment venue in Columbia, MD effective
July 19, 2020 and recorded accelerated depreciation of property, plant and equipment totaling $5.7 million for
the year ended December 31, 2020.
Company information broken down by operating segment and education division:
(in thousands)
Operating Revenues
Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Television broadcasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intersegment elimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31
2021
2020
2019
$1,361,245
494,177
458,125
223,030
327,069
324,353
–
(2,025)
$1,305,713
525,212
416,137
198,196
258,144
187,347
–
(1,628)
$1,451,750
463,464
449,053
161,768
236,319
170,412
–
(667)
$3,185,974
$2,889,121
$2,932,099
Income (Loss) from Operations before Amortization of Intangible Assets and Impairment of
Goodwill and Other Long-Lived Assets
Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Television broadcasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
69,892
154,862
36,926
29,912
11,771
(76,153)
(59,025)
$
41,056
199,938
40,427
30,327
502
(72,915)
(51,978)
$
63,680
166,076
46,809
14,319
531
(33,317)
(51,157)
Amortization of Intangible Assets and Impairment of Goodwill and Other Long-Lived Assets
Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Television broadcasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (Loss) from Operations
Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Television broadcasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 168,185
$ 187,357
$ 206,941
$
$
$
19,319
5,440
52,974
3,106
–
9,971
–
90,810
50,573
149,422
(16,048)
26,806
11,771
(86,124)
(59,025)
$
$
$
29,452
5,440
28,099
4,220
6,698
13,041
–
86,950
11,604
194,498
12,328
26,107
(6,196)
(85,956)
(51,978)
$
$
$
15,608
13,408
26,342
6,411
–
626
–
62,395
48,072
152,668
20,467
7,908
531
(33,943)
(51,157)
$
77,375
$ 100,407
$ 144,546
Equity in Earnings of Affiliates, Net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest Expense, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Operating Pension and Postretirement Benefit Income, Net
. . . . . . . . . . . . . . . . . . . . . . . .
Gain on Marketable Equity Securities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Income, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,914
(30,534)
109,230
243,088
32,554
6,664
(34,439)
59,315
60,787
214,534
11,664
(23,628)
162,798
98,668
32,431
Income Before Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 449,627
$ 407,268
$ 426,479
2021 FORM 10-K 144
(in thousands)
Depreciation of Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Television broadcasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension Service Cost
Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Television broadcasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital Expenditures
Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Television broadcasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset information for the Company’s business segments is as follows:
Year Ended December 31
2021
2020
2019
$ 32,113
14,018
9,808
1,313
2,156
11,376
631
$31,759
13,830
10,333
1,665
2,017
13,947
706
$25,655
12,817
10,036
2,314
2,180
5,376
875
$ 71,415
$74,257
$59,253
$
9,357
3,575
1,282
561
–
1,755
6,461
$10,024
3,263
1,424
543
–
1,698
5,704
$10,385
3,025
80
492
–
1,640
4,800
$ 22,991
$22,656
$20,422
$100,780
6,803
7,190
3,671
31,124
13,176
25
$33,553
13,470
8,034
2,481
3,181
5,075
80
$57,246
19,362
11,218
2,303
1,402
2,301
115
$162,769
$65,874
$93,947
(in thousands)
Identifiable Assets
Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Television broadcasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of December 31
2021
2020
$2,026,782
448,627
486,304
194,823
238,200
689,872
68,962
$1,975,104
453,988
551,611
160,654
151,789
365,744
348,045
$4,153,570
$4,006,935
Investments in Marketable Equity Securities . . . . . . . . . . . . . . . . . . . .
Investments in Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid Pension Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
809,997
155,444
2,306,514
573,102
155,777
1,708,305
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$7,425,525
$6,444,119
145 GRAHAM HOLDINGS COMPANY
The Company’s education division comprises the following operating segments:
(in thousands)
Operating Revenues
Year Ended December 31
2021
2020
2019
Kaplan international . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Higher education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplemental education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kaplan corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intersegment elimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 726,875
317,854
309,069
14,759
(7,312)
$ 653,892
316,095
327,087
12,643
(4,004)
$ 750,245
305,672
388,814
9,480
(2,461)
Income (Loss) from Operations before Amortization of Intangible Assets and Impairment of
Long-Lived Assets
Kaplan international . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Higher education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplemental education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kaplan corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intersegment elimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of Long-Lived Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (Loss) from Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kaplan international . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Higher education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplemental education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kaplan corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intersegment elimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation of Property, Plant and Equipment
Kaplan international . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Higher education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplemental education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kaplan corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension Service Cost
Kaplan international . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Higher education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplemental education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kaplan corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital Expenditures
Kaplan international . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Higher education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplemental education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kaplan corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset information for the Company’s education division is as follows:
$1,361,245
$1,305,713
$1,451,750
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
33,457
24,134
36,919
(24,715)
97
69,892
16,001
3,318
33,457
24,134
36,919
(44,034)
97
50,573
21,472
3,658
6,544
439
32,113
291
4,440
3,814
812
9,357
92,532
3,629
4,297
322
15,248
24,364
19,705
(18,266)
5
41,056
17,174
12,278
15,248
24,364
19,705
(47,718)
5
11,604
19,562
3,082
8,724
391
31,759
433
4,150
4,207
1,234
10,024
24,085
3,234
6,030
204
42,129
13,960
34,487
(26,891)
(5)
63,680
14,915
693
42,129
13,960
34,487
(42,499)
(5)
48,072
15,394
2,883
7,132
246
25,655
454
4,535
4,734
662
10,385
48,362
3,463
5,362
59
$ 100,780
$
33,553
$
57,246
(in thousands)
Identifiable Assets
Kaplan international . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Higher education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplemental education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kaplan corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of December 31
2021
2020
$1,493,868
187,789
286,877
58,248
$1,455,722
187,123
274,687
57,572
$2,026,782
$1,975,104
2021 FORM 10-K 146
Graham Holdings Company in Brief
Graham Holdings Company (NYSE:GHC) is a diversified education and media company whose operations include
educational services; television broadcasting; online, podcast, print and local TV news; home health and hospice
care; and manufacturing. The Company also owns automotive dealerships, restaurants, a custom framing service
company, a cybersecurity training company, a marketing solutions provider, a customer data and analytics software
company, and a consumer internet company.
GRAHAM HOLDINGS COMPANY
ghco.com
Education
Kaplan
kaplan.com
Kaplan North America
Kaplan International
TELEVISION BROADCASTING
Graham Media Group
KPRC–Houston (NBC affiliate)
click2houston.com
MeTV
Heroes & Icons
StartTV
WDIV–Detroit (NBC affiliate)
clickondetroit.com
ThisTV
MeTV
CoziTV
WKMG–Orlando (CBS affiliate)
clickorlando.com
DABL
CoziTV
StartTV
Decades
KSAT–San Antonio
(ABC affiliate)
ksat.com
MeTV
Movies!
Heroes & Icons
StartTV
QVC1
QVC2
WJXT–Jacksonville
(Independent)
news4jax.com
StartTV
Dabl
WCWJ–Jacksonville
(CW affiliate)
yourjax.com
Bounce
Movies!
WSLS–Roanoke (NBC affiliate)
wsls.com
GetTV
MeTV
StartTV
Movies!
OTHER BUSINESSES
Leaf Group
leafgroup.com
Society6
society6.com
Graham Digital
grahamdigital.com
SocialNewsDesk
socialnewsdesk.com
MANUFACTURING
Hoover Treated Wood
Products, Inc.
frtw.com
Dekko
dekko.com
Joyce/Dayton Corp.
joycedayton.com
Forney Corporation
forneycorp.com
AUTOMOTIVE
Automotive Group
ourismanhondaoftysonscorner.com
ourismanjeep.com
ourismanlexusofrockville.com
ourismanfordofmanassas.com
carcaretogo.com
HEALTHCARE
Graham Healthcare Group
grahamhealthcaregroup.com
Residential Healthcare Group
Residential Hospice
residentialhealthcaregroup.com
Deny Designs
denydesigns.com
Saatchi Art
saatchiart.com
The Other Art Fair
theotherartfair.com
Well+Good
wellandgood.com
LIVESTRONG.com
livestrong.com
Hunker
hunker.com
OnlyInYourState
onlyinyourstate.com
Cuteness
cuteness.com
eHow
ehow.com
Techwalla
techwalla.com
Sapling
sapling.com
Clyde’s Restaurant Group
clydes.com
Framebridge
framebridge.com
Code3
code3.com
Decile
decile.com
The FP Group
Foreign Policy
foreignpolicy.com
Pinna
pinna.fm
The Slate Group
slate.com
CyberVista
cybervista.net
CityCast
citycast.fm
Corporate Directory
BOARD OF DIRECTORS
Donald E. Graham (3, 4)
Chairman of the Board
Timothy J. O’Shaughnessy (3, 4)
President and Chief Executive Officer
Tony Allen, PhD (2)
President, Delaware State University
Christopher C. Davis (1, 3, 4)
Chairman, Davis Selected Advisers, LP
Thomas S. Gayner (1, 3)
Co-Chief Executive Officer,
Markel Corporation
Jack A. Markell*
Former Governor of Delaware
Anne M. Mulcahy (2, 4)
Retired Chairman of the Board and
Chief Executive Officer, Xerox Corporation
OTHER COMPANY OFFICERS
Wallace R. Cooney
Senior Vice President–Finance
Chief Financial Officer
Nicole M. Maddrey
Senior Vice President, General Counsel
and Secretary
Jacob M. Maas
Executive Vice President
Emily D. Firippis
Assistant Treasurer
Matthew R. Greisler
Vice President, Treasurer
Stacey Halota
Vice President–Information Security and Privacy
Jocelyn E. Henderson
Vice President–Corporate Audit Services
Andrew S. Rosen
Executive Vice President
Chairman and Chief Executive Officer,
Kaplan
Cherie Kummer
Vice President–Tax
G. Richard Wagoner, Jr. (1)
Retired Chairman of the Board and Chief
Executive Officer, General Motors Corporation
Katharine Weymouth (2, 3)
Former Chief Executive Officer and Publisher,
The Washington Post
Committees of the Board of Directors
(1) Audit Committee
(2) Compensation Committee
(3) Finance Committee
(4) Executive Committee
* Resigned December 31, 2021
Pinkie D. Mayfield
Vice President–Corporate Affairs
Chief Communications Officer
Marcel A. Snyman
Vice President–Chief Accounting Officer
Sandra M. Stonesifer
Vice President–Chief Human Resources
Officer
Theresa A. Wilson
Vice President–Risk Management
Elaine Wolff
Vice President, Deputy General Counsel
and Assistant Secretary
2022 ANNUAL MEETING
The 2022 Annual Meeting of Shareholders will be held
on Thursday, May 5, at 8:30 a.m.
The Hamilton
600 14th Street N.W.
Washington, DC 20005
STOCK TRADING
Graham Holdings Company Class B common stock is
traded on the New York Stock Exchange under the
symbol GHC. Class A common stock is not traded publicly.
FORM 10-K
The Company’s Form 10-K annual report to the Securities and
Exchange Commission is part of this annual report to share-
holders. All of the Company’s SEC filings are accessible from
the Company’s website, ghco.com.
COMMON STOCK PRICES AND DIVIDENDS
High and low sales prices during the past two years were:
2021
2020
Quarter
High
Low
High
Low
STOCK TRANSFER AGENT AND REGISTRAR
January–March
$634
$524
$649
$268
General shareholder correspondence:
Computershare
PO Box 505000
Louisville, KY 40233
Transfers by overnight courier:
Computershare
462 South 4th Street, Suite 1600
Louisville, KY 40202
SHAREHOLDER INQUIRIES
Communications concerning transfer requirements, lost
certi fi cates, dividends and changes of address should be
directed to Computershare Investor Services:
Tel: (800) 446-2617
(781) 575-2723
TDD: (800) 952-9245
Questions also may be sent via the website:
www-us.computershare.com/investor/Contact.
April–June
$685
$568
$4 1 1
$296
July–September
$674
$57 1
$446
$329
October–December $63 1
$548
$546
$376
Class A and Class B common stock participate equally as to
dividends. Quarterly dividends were paid at the rate of $1.51
per share in 2021, $1.45 per share in 2020, and $1.39 per share
in 2019. At January 31, 2022, there were 27 Class A and 339
Class B registered shareholders.
Design: Vivo Design, Inc. Printing: Mount Vernon Printing Company
2 0 2 1 A N N U A L R E P O R T
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GRAHAM HOLDINGS
1300 NORTH 17TH STREET
SUITE 1700
ARLINGTON, VA 22209
703 345 6300
GHCO.COM