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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 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)
Delaware53-0182885
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1300 North 17th Street, Arlington, Virginia

22209
(Address of principal executive offices)(Zip Code)
(703) 345-6300
(Registrant’s telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class B Common Stock, par value $1.00 per share GHCNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  .    No  .
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  .    No  .  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Accelerated
filer
Non-accelerated
filer
Smaller reporting
company
Emerging growth
company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  .    No  .  
Shares outstanding at April 30, 2021:
Class A Common Stock – 964,001 Shares
Class B Common Stock – 4,037,648 Shares



GRAHAM HOLDINGS COMPANY
Index to Form 10-Q
 
PART I. FINANCIAL INFORMATION
 
Item 1.
Financial Statements
 
 
Condensed Consolidated Statements of Operations
 
 
 
 
Condensed Consolidated Statements of Comprehensive Income (Loss)
 
 
 
 
Condensed Consolidated Balance Sheets
 
 
 
 
Condensed Consolidated Statements of Cash Flows
Condensed Consolidated Statements of Changes in Common Stockholders' Equity
 
 
 
 
Notes to Condensed Consolidated Financial Statements

Organization, Basis of Presentation and Recent Accounting Pronouncements

Acquisitions and Dispositions of Businesses

Investments

Accounts Receivable

Inventories, Contracts in Progress and Vehicle Floor Plan Payable

Goodwill and Other Intangible Assets

Debt

Fair Value Measurements

Income Taxes

Revenue From Contracts With Customers

Earnings (Loss) Per Share

Pension and Postretirement Plans

Other Non-Operating Income

Accumulated Other Comprehensive Income (Loss)

Contingencies

Business Segments
Item 2.
Management’s Discussion and Analysis of Results of Operations and Financial Condition
 
 
 
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
 
 
 
Item 4.
Controls and Procedures
 
 
PART II. OTHER INFORMATION
 
Item 6.
Exhibits
 
 
Signatures



PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
GRAHAM HOLDINGS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
  Three Months Ended 
 March 31
  
(in thousands, except per share amounts)20212020
Operating Revenues
Sales of services$483,669 $516,637 
Sales of goods228,786 215,620 
712,455 732,257 
Operating Costs and Expenses  
Cost of services sold292,434 333,049 
Cost of goods sold178,787 166,701 
Selling, general and administrative175,861 177,152 
Depreciation of property, plant and equipment16,545 16,704 
Amortization of intangible assets13,937 14,165 
Impairment of goodwill and other long-lived assets1,047 16,401 
  678,611 724,172 
Income from Operations33,844 8,085 
Equity in earnings (losses) of affiliates, net13,428 (1,547)
Interest income890 1,151 
Interest expense(8,448)(7,678)
Non-operating pension and postretirement benefit income, net28,787 18,403 
Gain (loss) on marketable equity securities, net79,214 (100,393)
Other income, net6,320 2,688 
Income (Loss) Before Income Taxes154,035 (79,291)
Provision for (Benefit from) Income Taxes41,400 (45,400)
Net Income (Loss)112,635 (33,891)
Net (Income) Loss Attributable to Noncontrolling Interests(185)646 
Net Income (Loss) Attributable to Graham Holdings Company Common Stockholders$112,450 $(33,245)
Per Share Information Attributable to Graham Holdings Company Common Stockholders
    
Basic net income (loss) per common share$22.49 $(6.32)
Basic average number of common shares outstanding4,967 5,274 
Diluted net income (loss) per common share$22.44 $(6.32)
Diluted average number of common shares outstanding4,977 5,274 
See accompanying Notes to Condensed Consolidated Financial Statements.
1


GRAHAM HOLDINGS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
  Three Months Ended 
 March 31
(in thousands)20212020
Net Income (Loss)$112,635 $(33,891)
Other Comprehensive Loss, Before Tax  
Foreign currency translation adjustments:  
Translation adjustments arising during the period(486)(37,376)
Pension and other postretirement plans:    
Amortization of net prior service cost included in net income
792 671 
Amortization of net actuarial (gain) loss included in net income
(2,429)220 
  (1,637)891 
Cash flow hedges gain (loss)621 (1,578)
Other Comprehensive Loss, Before Tax(1,502)(38,063)
Income tax benefit related to items of other comprehensive loss
299 120 
Other Comprehensive Loss, Net of Tax(1,203)(37,943)
Comprehensive Income (Loss)111,432 (71,834)
Comprehensive (income) loss attributable to noncontrolling interests
(185)646 
Total Comprehensive Income (Loss) Attributable to Graham Holdings Company$111,247 $(71,188)

See accompanying Notes to Condensed Consolidated Financial Statements.
2


GRAHAM HOLDINGS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
As of
(in thousands)March 31,
2021
December 31,
2020
  (Unaudited)  
Assets    
Current Assets    
Cash and cash equivalents$350,135 $413,991 
Restricted cash22,484 9,063 
Investments in marketable equity securities and other investments715,580 587,582 
Accounts receivable, net515,220 537,156 
Inventories and contracts in progress132,136 120,622 
Prepaid expenses85,119 75,523 
Income taxes receivable15,339 29,313 
Other current assets1,427 942 
Total Current Assets1,837,440 1,774,192 
Property, Plant and Equipment, Net375,862 378,286 
Lease Right-of-Use Assets453,193 462,560 
Investments in Affiliates169,203 155,777 
Goodwill, Net1,485,137 1,484,750 
Indefinite-Lived Intangible Assets121,050 120,437 
Amortized Intangible Assets, Net190,041 204,646 
Prepaid Pension Cost1,730,625 1,708,305 
Deferred Income Taxes7,651 8,396 
Deferred Charges and Other Assets
148,218 146,770 
Total Assets$6,518,420 $6,444,119 
Liabilities and Equity    
Current Liabilities    
Accounts payable and accrued liabilities$492,625 $520,236 
Deferred revenue331,678 331,021 
Income taxes payable6,891 5,140 
Current portion of lease liabilities84,749 86,797 
Current portion of long-term debt4,238 6,452 
Dividends declared7,553  
Total Current Liabilities927,734 949,646 
Accrued Compensation and Related Benefits196,558 201,918 
Other Liabilities36,591 48,768 
Deferred Income Taxes549,418 521,274 
Mandatorily Redeemable Noncontrolling Interest10,272 9,240 
Lease Liabilities419,131 428,849 
Long-Term Debt506,091 506,103 
Total Liabilities2,645,795 2,665,798 
Redeemable Noncontrolling Interests7,786 11,928 
Preferred Stock  
Common Stockholders’ Equity    
Common stock20,000 20,000 
Capital in excess of par value385,257 388,159 
Retained earnings6,902,166 6,804,822 
Accumulated other comprehensive income, net of taxes  
Cumulative foreign currency translation adjustment9,268 9,754 
Unrealized gain on pensions and other postretirement plans594,093 595,287 
Cash flow hedges(1,250)(1,727)
Cost of Class B common stock held in treasury(4,051,909)(4,056,993)
Total Common Stockholders’ Equity3,857,625 3,759,302 
Noncontrolling Interests7,214 7,091 
Total Equity3,864,839 3,766,393 
Total Liabilities and Equity$6,518,420 $6,444,119 

See accompanying Notes to Condensed Consolidated Financial Statements.
3


GRAHAM HOLDINGS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
  Three Months Ended 
 March 31
(in thousands)20212020
Cash Flows from Operating Activities    
Net Income (Loss)$112,635 $(33,891)
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation, amortization and goodwill and other long-lived asset impairments31,529 47,270 
Amortization of lease right-of-use asset18,594 23,749 
Net pension benefit(24,501)(13,784)
(Gain) loss on marketable equity securities and cost method investments, net(81,937)100,393 
(Gain) loss on disposition and write-down of businesses, property, plant and equipment and investments, net(240)2,761 
Provision for doubtful trade receivables1,126 2,429 
Stock-based compensation expense, net1,485 1,568 
Foreign exchange gain(3)(4,290)
Equity in (earnings) losses of affiliates, net of distributions(11,241)1,547 
Provision for (benefit from) deferred income taxes29,311 (21,550)
Change in operating assets and liabilities:
Accounts receivable, net25,196 100,732 
Inventories(11,493)(8,512)
Accounts payable and accrued liabilities(29,965)(97,476)
Deferred revenue(6,655)(12,790)
Income taxes receivable10,860 (27,774)
Lease liabilities(21,119)(22,503)
Other assets and other liabilities, net(20,881)(24,980)
Other1,298 (496)
Net Cash Provided by Operating Activities23,999 12,403 
Cash Flows from Investing Activities    
Purchases of marketable equity securities(48,036) 
Purchases of property, plant and equipment(13,113)(25,235)
Investments in equity affiliates, cost method and other investments
(2,415)(7,427)
Net proceeds from disposition of businesses, property, plant and equipment, and investments
270 218 
Proceeds from sales of marketable equity securities 48,016 
Investments in certain businesses, net of cash acquired (6,011)
Other 4  
Net Cash (Used in) Provided by Investing Activities(63,290)9,561 
Cash Flows from Financing Activities    
Dividends paid(7,553)(7,703)
Purchase of noncontrolling interest(3,508) 
Proceeds from bank overdrafts3,212 9,062 
Net proceeds from vehicle floor plan payable2,462 2,478 
Net payments under revolving credit facilities(2,223) 
Deferred payments of acquisition(1,340)(2,423)
Repayments of borrowings(1,034)(847)
Common shares repurchased (33,610)
Proceeds from exercise of stock options 5,335 
Issuance of borrowings 1,023 
Other(145) 
Net Cash Used in Financing Activities(10,129)(26,685)
Effect of Currency Exchange Rate Change(1,015)(7,684)
Net Decrease in Cash and Cash Equivalents and Restricted Cash(50,435)(12,405)
Beginning Cash and Cash Equivalents and Restricted Cash423,054 214,044 
Ending Cash and Cash Equivalents and Restricted Cash$372,619 $201,639 


See accompanying Notes to Condensed Consolidated Financial Statements.
4


GRAHAM HOLDINGS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS’ EQUITY (UNAUDITED)
(in thousands)Common
Stock
Capital in
Excess of
Par Value
Retained
Earnings
Accumulated Other Comprehensive IncomeTreasury
Stock
Noncontrolling
Interest
Total EquityRedeemable Noncontrolling Interest
As of December 31, 2020$20,000 $388,159 $6,804,822 $603,314 $(4,056,993)$7,091 $3,766,393 $11,928 
Net income for the period112,635 112,635 
Net income attributable to noncontrolling interests(185)185  
Change in redemption value of redeemable noncontrolling interests697 64 761 (634)
Distribution to noncontrolling interest(126)(126)
Dividends on common stock(15,106)(15,106)
Issuance of Class B common stock, net of restricted stock forfeitures
(5,188)5,084 (104)
Amortization of unearned stock compensation and stock option expense
1,589 1,589 
Other comprehensive loss, net of income taxes(1,203)(1,203)
Purchase of redeemable noncontrolling interest
 (3,508)
As of March 31, 2021$20,000 $385,257 $6,902,166 $602,111 $(4,051,909)$7,214 $3,864,839 $7,786 
(in thousands)Common
Stock
Capital in
Excess of
Par Value
Retained
Earnings
Accumulated Other Comprehensive IncomeTreasury
Stock
Noncontrolling
Interest
Total EquityRedeemable Noncontrolling Interest
As of December 31, 2019$20,000 $381,669 $6,534,427 $303,295 $(3,920,152)$7,557 $3,326,796 $5,655 
Net loss for the period(33,891)(33,891)
Net loss attributable to noncontrolling interest772 (772) 
Net income attributable to redeemable noncontrolling interests
(126)(126)126 
Dividends on common stock(15,289)(15,289)
Repurchase of Class B common stock(33,610)(33,610)
Issuance of Class B common stock
5,335 5,335 
Amortization of unearned stock compensation and stock option expense
1,568 1,568 
Other comprehensive loss, net of income taxes
(37,943)(37,943)
As of March 31, 2020$20,000 $383,237 $6,485,893 $265,352 $(3,948,427)$6,785 $3,212,840 $5,781 

See accompanying Notes to Condensed Consolidated Financial Statements.
5


GRAHAM HOLDINGS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION, BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS
Graham Holdings Company (the Company), is a diversified education and media company. The Company’s Kaplan subsidiary provides a wide variety of educational services, both domestically and outside the United States (U.S.). The Company’s media operations comprise the ownership and operation of seven television broadcasting stations, several websites and print publications, podcast content and a marketing solutions provider. The Company’s other business operations include manufacturing, automotive dealerships, restaurants and entertainment venues, custom framing services and home health and hospice services.
Basis of Presentation – The accompanying condensed consolidated financial statements have been prepared in accordance with: (i) generally accepted accounting principles in the United States of America (GAAP) for interim financial information; (ii) the instructions to Form 10-Q; and (iii) the guidance of Rule 10-01 of Regulation S-X under the Securities and Exchange Act of 1934, as amended, for financial statements required to be filed with the Securities and Exchange Commission (SEC). They include the assets, liabilities, results of operations and cash flows of the Company, including its domestic and foreign subsidiaries that are more than 50% owned or otherwise controlled by the Company. As permitted under such rules, certain notes and other financial information normally required by GAAP have been condensed or omitted. Management believes the accompanying condensed consolidated financial statements reflect all normal and recurring adjustments necessary for a fair statement of the Company’s financial position, results of operations, and cash flows as of and for the periods presented herein. The Company’s results of operations for the three months ended March 31, 2021 and 2020 may not be indicative of the Company’s future results. These condensed consolidated financial statements are unaudited and should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.
Use of Estimates in the Preparation of the Condensed Consolidated Financial Statements – The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported herein. Management bases its estimates and assumptions on historical experience and on various other factors that are believed to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in those estimates.
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 March 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 other long-lived asset impairment charges (see Note 8), there were no other impacts to the Company’s condensed consolidated financial statements as of and for the three months ended March 31, 2021 resulting from our assessments. The Company’s assessments as of and for the three months ended March 31, 2020 resulted in goodwill and indefinite-lived asset impairment charges (see Note 6 and Note 8). 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 condensed consolidated financial statements in future reporting periods.
2. ACQUISITIONS AND DISPOSITIONS OF BUSINESSES
Acquisitions. 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 Condensed Consolidated Balance Sheet (see Note 3). The contingent consideration is primarily based on Framebridge achieving revenue milestones within a specific time
6


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.
Acquisition-related costs were expensed as incurred. The aggregate purchase price of the 2020 acquisitions was allocated as follows based on acquisition date fair values to the following assets and liabilities:
Purchase Price Allocation
Year Ended
(in thousands)December 31, 2020
Accounts receivable$745 
Inventory3,496 
Property, plant and equipment3,346 
Lease right-of-use assets6,580 
Goodwill73,951 
Amortized intangible assets14,589 
Other assets975 
Deferred income taxes15,958 
Other liabilities(14,917)
Current and noncurrent lease liabilities(6,593)
Redeemable noncontrolling interest(6,005)
Aggregate purchase price, net of cash acquired$92,125 
The 2020 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). 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 $3.2 million of goodwill for income tax purposes for the acquisitions completed in 2020.
The acquired companies were consolidated into the Company’s financial statements starting on their respective acquisition dates. The following unaudited pro forma financial information presents the Company’s results as if the 2020 acquisitions occurred at the beginning of 2019:
Three Months Ended 
 March 31
(in thousands)2020
Operating revenues$738,331 
Net loss(40,396)
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 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.
Other Transactions. 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.
3. INVESTMENTS
Money Market Investments. As of March 31, 2021 and December 31, 2020, the Company had money market investments of $175.2 million and $268.8 million, respectively, that are classified as cash and cash equivalents in the Company’s Condensed Consolidated Balance Sheets.
7


Investments in Marketable Equity Securities. Investments in marketable equity securities consist of the following:
  As of
March 31,
2021
December 31,
2020
(in thousands)
Total cost
$280,883 $232,847 
Gross unrealized gains
419,469 340,255 
Total Fair Value
$700,352 $573,102 
At March 31, 2021 and December 31, 2020, the Company owned 44,430 shares and 28,000 shares, respectively, in Markel Corporation (Markel) valued at $50.6 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 March 31, 2021, there was no marketable equity security holding that exceeded 5% of the Company’s total assets.
The Company purchased $48.0 million of marketable equity securities during the first three months of 2021. There were no purchases of marketable equity securities during the first three months of 2020.
There were no sales of marketable equity securities during the first three months of 2021. During the first three months of 2020, the gross cumulative realized losses from the sales of marketable equity securities were $2.0 million. The total proceeds from such sales were $48.0 million.
The net gain (loss) on marketable equity securities comprised the following:

Three Months Ended 
 March 31
(in thousands)
20212020
Gain (loss) on marketable equity securities, net
$79,214 $(100,393)
Less: Net losses in earnings from marketable equity securities sold and donated
 8,774 
Net unrealized gains (losses) in earnings from marketable equity securities still held at the end of the period
$79,214 $(91,619)
Investments in Affiliates. As of March 31, 2021, the Company held an approximate 12% interest in Intersection Holdings, LLC, and in several other affiliates; Graham Healthcare Group (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 each of the three months ended March 31, 2021 and 2020, the Company recorded $2.5 million in revenue for services provided to the affiliates of GHG.
The Company had $39.4 million and $26.1 million in its investment account that represents cumulative undistributed income in its investments in affiliates as of March 31, 2021 and December 31, 2020, respectively.
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 three months ended March 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 2) that resulted in the Company obtaining control of the investee. The results of operations, cash flows, assets and liabilities of Framebridge are included in the condensed 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.
Additionally, Kaplan International Holdings Limited (KIHL) held a 45% interest in a joint venture formed with York University. 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.
8


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 $38.6 million and $35.7 million as of March 31, 2021 and December 31, 2020, respectively. During the three months ended March 31, 2021, the Company recorded gains of $2.7 million to those equity securities based on observable transactions. During the three months ended March 31, 2020, the Company recorded impairment losses of $2.6 million to those equity securities.
4. ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
As of
March 31,
2021
December 31,
2020
(in thousands)
Receivables from contracts with customers, less estimated credit losses of $21,126 and $21,494
$495,443 $519,577 
Other receivables19,777 17,579 
 $515,220 $537,156 
Credit loss expense was $1.1 million and $2.4 million for the three months ended March 31, 2021 and 2020, respectively.
5. INVENTORIES, CONTRACTS IN PROGRESS AND VEHICLE FLOOR PLAN PAYABLE
Inventories and contracts in progress consist of the following:
As of
March 31,
2021
December 31,
2020
(in thousands)
Raw materials$46,177 $45,382 
Work-in-process14,534 10,402 
Finished goods71,254 64,061 
Contracts in progress171 777 
 $132,136 $120,622 
The Company finances new and used vehicle inventory through a standardized floor plan facility (the “floor plan facility”) with Truist Bank. The vehicle floor plan facility bears interest at variable rates that are based on LIBOR plus 1.15% per annum. The weighted average interest rate for the floor plan facility was 1.2% and 2.6% for the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, the aggregate capacity under the floor plan facility was $50 million, of which $28.4 million had been utilized, and is included in accounts payable and accrued liabilities in the Condensed Consolidated Balance Sheet. Changes in the vehicle floor plan payable are reported as cash flows from financing activities in the Condensed 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 March 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 Condensed Consolidated Statements of Operations when the associated inventory is sold. For the three months ended March 31, 2021 and 2020, the Company recognized a reduction in cost of goods sold of $0.6 million and $0.4 million, respectively, related to manufacturer floor plan assistance.
6. GOODWILL AND OTHER INTANGIBLE ASSETS
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 and other long-lived assets of the Clyde’s Restaurant Group (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 and the automotive dealerships are included in other businesses. Additional COVID-19 disruptions could result in future
9


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.
Amortization of intangible assets for the three months ended March 31, 2021 and 2020, was $13.9 million and $14.2 million, respectively. Amortization of intangible assets is estimated to be approximately $38 million for the remainder of 2021, $46 million in 2022, $38 million in 2023, $27 million in 2024, $21 million in 2025 and $20 million thereafter. The changes in the carrying amount of goodwill, by segment, were as follows:
(in thousands)EducationTelevision
Broadcasting
ManufacturingHealthcareOther
Businesses
Total
Balance as of December 31, 2020        
Goodwill$1,183,379 $190,815 $234,993 $98,421 $130,472 $1,838,080 
Accumulated impairment losses
(331,151) (7,616) (14,563)(353,330)
852,228 190,815 227,377 98,421 115,909 1,484,750 
Foreign currency exchange rate changes
387     387 
Balance as of March 31, 2021        
Goodwill1,183,766 190,815 234,993 98,421 130,472 1,838,467 
Accumulated impairment losses
(331,151) (7,616) (14,563)(353,330)
$852,615 $190,815 $227,377 $98,421 $115,909 $1,485,137 
The changes in carrying amount of goodwill at the Company’s education division were as follows:
(in thousands)Kaplan
International
Higher
Education
Supplemental EducationTotal
Balance as of December 31, 2020      
Goodwill$634,749 $174,564 $374,066 $1,183,379 
Accumulated impairment losses (111,324)(219,827)(331,151)
634,749 63,240 154,239 852,228 
Foreign currency exchange rate changes361  26 387 
Balance as of March 31, 2021      
Goodwill635,110 174,564 374,092 1,183,766 
Accumulated impairment losses (111,324)(219,827)(331,151)
$635,110 $63,240 $154,265 $852,615 
Other intangible assets consist of the following:
As of March 31, 2021As of December 31, 2020
(in thousands)Useful Life
Range
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
 Carrying
Amount
Amortized Intangible Assets              
Student and customer relationships
210 years
$293,481 $185,781 $107,700 $294,077 $178,075 $116,002 
Trade names and trademarks
210 years
109,485 57,667 51,818 109,809 54,766 55,043 
Network affiliation agreements
10 years
17,400 7,322 10,078 17,400 6,888 10,512 
Databases and technology
36 years
34,747 21,572 13,175 34,864 19,924 14,940 
Noncompete agreements
25 years
1,000 963 37 1,000 937 63 
Other
18 years
24,800 17,567 7,233 24,800 16,714 8,086 
    $480,913 $290,872 $190,041 $481,950 $277,304 $204,646 
Indefinite-Lived Intangible Assets
              
Trade names and trademarks  $88,042     $87,429     
Franchise agreements21,858 21,858 
FCC licenses11,000 11,000 
Licensure and accreditation  150     150     
  $121,050 $120,437 
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7. DEBT
The Company’s borrowings consist of the following:
  As of
  March 31,
2021
December 31,
2020
(in thousands)
5.75% unsecured notes due June 1, 2026 (1)
$396,289 $396,112 
Revolving credit facility75,621 74,686 
Commercial note24,500 25,250 
Pinnacle Bank term loan10,411 10,692 
Pinnacle Bank line of credit73 2,295 
Other indebtedness3,435 3,520 
Total Debt$510,329 $512,555 
Less: current portion(4,238)(6,452)
Total Long-Term Debt$506,091 $506,103 
____________
(1)     The carrying value is net of $3.7 million and $3.9 million of unamortized debt issuance costs as of March 31, 2021 and December 31, 2020, respectively.
The outstanding balance on the Company’s revolving credit facility was £55 million as of March 31, 2021 with interest payable at the 3 month GBP LIBOR plus 1.50%. The Company’s other indebtedness at March 31, 2021 and December 31, 2020 is at interest rates of 0% to 16% and matures between 2023 and 2030.
The Company is in compliance with all financial covenants as of March 31, 2021.
During the three months ended March 31, 2021 and 2020, the Company had average borrowings outstanding of approximately $512.1 million and $511.4 million, respectively, at average annual interest rates of approximately 5.0% and 5.1%, respectively. During the three months ended March 31, 2021 and 2020, the Company incurred net interest expense of $7.6 million and $6.5 million, respectively.
During the three months ended March 31, 2021, the Company recorded interest expense of $1.1 million to adjust the fair value of the mandatorily redeemable noncontrolling interest. 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).
At March 31, 2021 and December 31, 2020, the fair value of the Company’s 5.75% unsecured notes, based on quoted market prices (Level 2 fair value assessment), totaled $418.4 million and $421.7 million, respectively, compared with the carrying amount of $396.3 million and $396.1 million, respectively. The carrying value of the Company’s other unsecured debt at March 31, 2021 and December 31, 2020 approximates fair value.
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8. FAIR VALUE MEASUREMENTS
The Company’s financial assets and liabilities measured at fair value on a recurring basis were as follows:
As of March 31, 2021
(in thousands)Level 1Level 2Level 3