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SEC Filings

10-K
GRAHAM HOLDINGS CO filed this Form 10-K on 02/23/2018
Entire Document
 


The following summarizes the Company’s unrecognized tax benefits, excluding interest and penalties, for the respective periods:
 
Year Ended December 31
(in thousands)
2017
 
2016
 
2015
Beginning unrecognized tax benefits
$
17,331

 
$
17,331

 
$
19,817

Increases related to current year tax positions

 

 

Increases related to prior year tax positions

 

 

Decreases related to prior year tax positions

 

 
(2,486
)
Decreases related to settlement with tax authorities

 

 

Decreases due to lapse of applicable statutes of limitations

 

 

Ending unrecognized tax benefits
$
17,331

 
$
17,331

 
$
17,331

The unrecognized tax benefits mainly relate to state income tax filing positions applicable to the 2014 tax period. 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 no portion of unrecognized tax benefits will be reduced in the next 12 months due to settlement with the tax authorities. However, due to lapse of statutes of limitations, the Company expects that approximately $15.7 million of the unrecognized tax benefits will be recognized, and the Company will record a $3.5 million state tax benefit, net of $0.7 million federal tax expense during 2018. Subsequently, the Company expects that a $1.7 million state tax benefit, net of $0.4 million federal tax expense, will reduce the effective tax rate in the future if 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, 2017, the Company has accrued $1.1 million of 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:
 
As of December 31
(in thousands)
2017
 
2016
7.25% unsecured notes due February 1, 2019 (1)
$
399,507

 
$
399,052

U.K. Credit facility (2)
93,671

 
91,316

Other indebtedness
109

 
1,479

Total Debt
493,287

 
491,847

Less: current portion
(6,726
)
 
(6,128
)
Total Long-Term Debt
$
486,561

 
$
485,719

____________
(1)
The carrying value is net of $0.1 million of unamortized debt issuance costs as of December 31, 2016.
(2)
The carrying value is net of $0.4 million and $0.5 million of unamortized debt issuance costs as of December 31, 2017 and 2016, respectively.
The Company did not borrow funds under its USD revolving credit facility in 2017 or 2016. The Company’s other indebtedness at December 31, 2017, is at an interest rate of 2% and matures in 2026. The Company’s other indebtedness at December 31, 2016, is at interest rates of 2% to 6% and matures between 2019 and 2026.
On July 14, 2016, Kaplan entered into a credit agreement (the Kaplan Credit Agreement) among Kaplan International Holdings Limited, as borrower, the lenders party thereto, HSBC BANK PLC as Facility Agent, and other agents party thereto. The Kaplan Credit Agreement provides for a four-year credit facility in an aggregate principal amount of £75 million. Borrowings bear interest at a rate per annum of LIBOR plus an applicable interest rate margin between 1.25% and 1.75%, in each case determined on a quarterly basis by reference to a pricing grid based upon the Company’s total leverage ratio. The Kaplan Credit Agreement requires that 6.66% of the amount of the loan be repaid on the first three anniversaries of funding, with the remaining balance due on July 1, 2020. The Kaplan Credit Agreement contains terms and conditions, including remedies in the event of a default by the Company, typical of facilities of this type and requires the Company to maintain a 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 Kaplan Credit Agreement. As of December 31, 2017, the Company is in compliance with all financial covenants.
On July 25, 2016, Kaplan borrowed £75 million under the Kaplan Credit Agreement. On the same date, Kaplan entered into an interest rate swap agreement with a total notional value of £75 million and a maturity date of July 1,

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