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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 2023
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 October 27, 2023:
Class A Common Stock – 964,001 Shares
Class B Common Stock – 3,580,335 Shares



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

Organization, Basis of Presentation and Recent Accounting Pronouncements

Acquisitions and Dispositions of Businesses

Investments

Accounts Receivable, Vehicle Floor Plan Payable, Accounts Payable and Accrued Liabilities

Inventories and Contracts in Progress

Goodwill and Other Intangible Assets

Debt

Fair Value Measurements

Revenue From Contracts With Customers

(Loss) Earnings Per Share

Pension and Postretirement Plans

Other Non-Operating Income

Accumulated Other Comprehensive Income (Loss)

Contingencies

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



PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
GRAHAM HOLDINGS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
  Three Months Ended 
 September 30
Nine Months Ended 
 September 30
  
(in thousands, except per share amounts)2023202220232022
Operating Revenues
Sales of services$633,535 $588,166 $1,845,617 $1,708,848 
Sales of goods477,984 424,272 1,402,447 1,151,613 
1,111,519 1,012,438 3,248,064 2,860,461 
Operating Costs and Expenses    
Cost of services sold (exclusive of items shown below)373,784 342,138 1,093,756 996,821 
Cost of goods sold (exclusive of items shown below)407,803 352,619 1,182,899 945,265 
Selling, general and administrative254,757 223,857 741,402 676,563 
Depreciation of property, plant and equipment22,207 19,657 63,335 58,545 
Amortization of intangible assets11,759 14,635 39,007 44,436 
Impairment of goodwill and other long-lived assets98,321  99,066  
  1,168,631 952,906 3,219,465 2,721,630 
(Loss) Income from Operations(57,112)59,532 28,599 138,831 
Equity in (losses) earnings of affiliates, net
(791)(1,111)(2,245)2,920 
Interest income1,986 803 4,738 2,214 
Interest expense(11,810)(11,579)(37,878)(38,969)
Non-operating pension and postretirement benefit income, net35,653 50,687 97,313 152,063 
Gain (loss) on marketable equity securities, net
16,759 (54,250)113,429 (172,878)
Other income, net3,581 2,358 22,458 6,410 
(Loss) Income Before Income Taxes
(11,734)46,440 226,414 90,591 
Provision for Income Taxes
9,400 12,600 70,400 26,800 
Net (Loss) Income
(21,134)33,840 156,014 63,791 
Net Income Attributable to Noncontrolling Interests(1,897)(1,060)(3,985)(2,872)
Net (Loss) Income Attributable to Graham Holdings Company Common Stockholders
$(23,031)$32,780 $152,029 $60,919 
Per Share Information Attributable to Graham Holdings Company Common Stockholders
      
Basic net (loss) income per common share
$(5.02)$6.78 $32.23 $12.51 
Basic average number of common shares outstanding4,602 4,808 4,686 4,841 
Diluted net (loss) income per common share
$(5.02)$6.76 $32.14 $12.48 
Diluted average number of common shares outstanding4,602 4,820 4,700 4,853 
See accompanying Notes to Condensed Consolidated Financial Statements.
1


GRAHAM HOLDINGS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)
  Three Months Ended 
 September 30
Nine Months Ended 
 September 30
(in thousands)2023202220232022
Net (Loss) Income$(21,134)$33,840 $156,014 $63,791 
Other Comprehensive Loss, Before Tax      
Foreign currency translation adjustments:      
Translation adjustments arising during the period(19,474)(44,260)(8,096)(86,926)
Pension and other postretirement plans:        
Amortization of net prior service cost included in net income
410 716 1,230 2,148 
Amortization of net actuarial gain included in net income
(10,473)(18,083)(31,673)(53,939)
  (10,063)(17,367)(30,443)(51,791)
Cash flow hedges (losses) gains(3,824)2,202 (3,566)4,935 
Other Comprehensive Loss, Before Tax(33,361)(59,425)(42,105)(133,782)
Income tax benefit related to items of other comprehensive loss
3,468 3,970 8,651 12,213 
Other Comprehensive Loss, Net of Tax(29,893)(55,455)(33,454)(121,569)
Comprehensive (Loss) Income(51,027)(21,615)122,560 (57,778)
Comprehensive income attributable to noncontrolling interests
(1,897)(1,060)(3,985)(2,872)
Total Comprehensive (Loss) Income Attributable to Graham Holdings Company$(52,924)$(22,675)$118,575 $(60,650)

See accompanying Notes to Condensed Consolidated Financial Statements.
2


GRAHAM HOLDINGS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
As of
(in thousands)September 30,
2023
December 31,
2022
  (Unaudited)  
Assets    
Current Assets    
Cash and cash equivalents$159,981 $169,319 
Restricted cash40,657 20,467 
Investments in marketable equity securities and other investments672,346 622,408 
Accounts receivable, net541,670 560,779 
Inventories and contracts in progress279,211 226,811 
Prepaid expenses100,746 97,450 
Income taxes receivable1,592 9,313 
Other current assets1,893 1,547 
Total Current Assets1,798,096 1,708,094 
Property, Plant and Equipment, Net539,924 503,000 
Lease Right-of-Use Assets406,527 429,403 
Investments in Affiliates191,408 186,419 
Goodwill, Net1,499,707 1,560,953 
Indefinite-Lived Intangible Assets185,711 178,934 
Amortized Intangible Assets, Net122,847 161,422 
Prepaid Pension Cost1,703,216 1,658,046 
Deferred Income Taxes6,810 6,812 
Deferred Charges and Other Assets (includes $0 and $646 of restricted cash)
234,943 189,132 
Total Assets$6,689,189 $6,582,215 
Liabilities and Equity    
Current Liabilities    
Accounts payable, vehicle floor plan payable and accrued liabilities$629,725 $563,005 
Deferred revenue414,525 381,416 
Income taxes payable12,572 3,766 
Current portion of lease liabilities65,591 70,007 
Current portion of long-term debt21,880 155,813 
Dividends declared7,555  
Total Current Liabilities1,151,848 1,174,007 
Accrued Compensation and Related Benefits133,057 134,921 
Other Liabilities35,971 37,506 
Deferred Income Taxes482,420 466,275 
Mandatorily Redeemable Noncontrolling Interest32,043 30,845 
Lease Liabilities372,021 393,626 
Long-Term Debt739,806 570,547 
Total Liabilities2,947,166 2,807,727 
Commitments and Contingencies (Note 14)
Redeemable Noncontrolling Interests27,882 21,827 
Preferred Stock  
Common Stockholders’ Equity    
Common stock20,000 20,000 
Capital in excess of par value387,039 390,438 
Retained earnings7,284,165 7,163,128 
Accumulated other comprehensive income, net of taxes  
Cumulative foreign currency translation adjustment(62,734)(54,638)
Unrealized gain on pensions and other postretirement plans365,979 388,591 
Cash flow hedges(548)2,198 
Cost of Class B common stock held in treasury(4,305,400)(4,178,334)
Total Common Stockholders’ Equity3,688,501 3,731,383 
Noncontrolling Interests25,640 21,278 
Total Equity3,714,141 3,752,661 
Total Liabilities and Equity$6,689,189 $6,582,215 
See accompanying Notes to Condensed Consolidated Financial Statements.
3


GRAHAM HOLDINGS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
  Nine Months Ended 
 September 30
(in thousands)20232022
Cash Flows from Operating Activities    
Net Income$156,014 $63,791 
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation, amortization and goodwill and long-lived asset impairments201,408 102,981 
Amortization of lease right-of-use asset50,181 51,344 
Net pension benefit and special separation benefit expense(73,852)(136,411)
(Gain) loss on marketable equity securities and cost method investments, net(116,533)172,318 
Gain on disposition of business, property, plant and equipment and investments, net(11,785)(2,177)
Credit loss expense4,312 2,831 
Stock-based compensation expense, net of forfeitures5,026 4,552 
Foreign exchange (gain) loss(1,820)1,973 
Equity in losses (earnings) of affiliates, net of distributions
15,516 5,167 
Provision for deferred income taxes25,696 9,189 
Accretion expense and change in fair value of contingent consideration liabilities(4,301)(3,898)
Change in operating assets and liabilities:
Accounts receivable15,629 58,940 
Inventories(47,164)(47,486)
Accounts payable and accrued liabilities(6,878)(33,994)
Deferred revenue44,822 36,676 
Income taxes receivable/payable16,367 (7,495)
Lease liabilities(53,924)(59,612)
Other assets and other liabilities, net(13,638)(19,698)
Other(2,550)4,674 
Net Cash Provided by Operating Activities202,526 203,665 
Cash Flows from Investing Activities    
Investments in certain businesses, net of cash acquired(77,004)(130,177)
Proceeds from sales of marketable equity securities61,979 74,233 
Purchases of property, plant and equipment(61,156)(57,097)
Loan to related party(30,000) 
Investments in equity affiliates, cost method and other investments
(12,839)(30,075)
Purchases of marketable equity securities(6,162)(35,070)
Net proceeds from disposition of property, plant and equipment, and investments
3,712 5,580 
Other 2,039 961 
Net Cash Used in Investing Activities(119,431)(171,645)
Cash Flows from Financing Activities    
Issuance of borrowings293,387 77,299 
Net payments under revolving credit facilities(140,000)(11,000)
Common shares repurchased(132,248)(54,581)
Repayments of borrowings(117,792)(10,564)
Net proceeds from vehicle floor plan payable52,623 11,688 
Dividends paid(23,534)(23,122)
Proceeds from bank overdrafts3,824 4,391 
Deferred payments of acquisitions(3,786)(4,731)
Proceeds from exercise of stock options1,306 1,531 
Other(3,485)905 
Net Cash Used in Financing Activities(69,705)(8,184)
Effect of Currency Exchange Rate Change(3,184)(11,824)
Net Increase in Cash and Cash Equivalents and Restricted Cash10,206 12,012 
Beginning Cash and Cash Equivalents and Restricted Cash190,432 158,843 
Ending Cash and Cash Equivalents and Restricted Cash$200,638 $170,855 


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, 2022$20,000 $390,438 $7,163,128 $336,151 $(4,178,334)$21,278 $3,752,661 $21,827 
Net income for the period52,977 52,977 
Net income attributable to noncontrolling interests(650)650  
Net income attributable to redeemable noncontrolling interests
(55)(55)55 
Change in redemption value of redeemable noncontrolling interests64 64 70 
Noncontrolling interest capital contribution520 520 
Distribution to redeemable noncontrolling interest (70)
Dividends on common stock(15,812)(15,812)
Repurchase of Class B common stock(23,439)(23,439)
Issuance of Class B common stock(4,067)4,494 427 
Amortization of unearned stock compensation and stock option expense1,802 1,802 
Other comprehensive income, net of income taxes585 585 
As of March 31, 2023$20,000 $388,173 $7,199,588 $336,736 $(4,197,279)$22,512 $3,769,730 $21,882 
Net income for the period124,171 124,171 
Net income attributable to noncontrolling interests(809)809  
Net income attributable to redeemable noncontrolling interests(574)(574)574 
Change in redemption value of redeemable noncontrolling interests(4,550)51 (4,499)4,604 
Distributions to noncontrolling interests(324)(324)(61)
Dividends on common stock(7,722)(7,722)
Repurchase of Class B common stock(45,643)(45,643)
Forfeiture of restricted stock awards, net of Class B common stock issuances61 (244)(183)
Amortization of unearned stock compensation and stock option expense1,715 1,715 
Other comprehensive loss, net of income taxes(4,146)(4,146)
As of June 30, 2023$20,000 $385,399 $7,314,654 $332,590 $(4,243,166)$23,048 $3,832,525 $26,999 
Net loss for the period(21,134)(21,134)
Net income attributable to noncontrolling interest(1,034)1,034  
Net income attributable to redeemable noncontrolling interests(863)(863)863 
Change in redemption value of redeemable noncontrolling interests44 44 52 
Noncontrolling interest capital contribution3,000 3,000 
Distributions to noncontrolling interests(1,486)(1,486)(32)
Dividends on common stock(7,458)(7,458)
Repurchase of Class B common stock(63,166)(63,166)
Issuance of Class B common stock(52)932 880 
Amortization of unearned stock compensation and stock option expense1,692 1,692 
Other comprehensive loss, net of income taxes(29,893)(29,893)
As of September 30, 2023$20,000 $387,039 $7,284,165 $302,697 $(4,305,400)$25,640 $3,714,141 $27,882 
5


(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, 2021$20,000 $389,456 $7,126,761 $971,388 $(4,108,022)$12,086 $4,411,669 $14,311 
Net income for the period96,566 96,566 
Net income attributable to noncontrolling interests
(986)986  
Net loss attributable to redeemable noncontrolling interests
44 44 (44)
Change in redemption value of redeemable noncontrolling interests64 64 64 
Distribution to noncontrolling interest(357)(357)
Dividends on common stock(15,497)(15,497)
Repurchase of Class B common stock(9,527)(9,527)
Issuance of Class B common stock1,437 1,437 
Amortization of unearned stock compensation and stock option expense
1,677 1,677 
Other comprehensive loss, net of income taxes
(13,135)(13,135)
As of March 31, 2022$20,000 $391,133 $7,206,888 $958,253 $(4,116,112)$12,779 $4,472,941 $14,331 
Net loss for the period(66,615)(66,615)
Noncontrolling interest capital contribution140 140 
Acquisition of noncontrolling interest512 512 
Net income attributable to noncontrolling interests
(929)929  
Acquisition of redeemable noncontrolling interest 2,164 
Net loss attributable to redeemable noncontrolling interests
59 59 (59)
Change in redemption value of redeemable noncontrolling interests
64 64 64 
Distribution to noncontrolling interest(872)(872)
Dividends on common stock(7,656)(7,656)
Repurchase of Class B common stock(24,776)(24,776)
Forfeiture of restricted stock awards, net of Class B common stock issuances(462)(415)(877)
Amortization of unearned stock compensation and stock option expense
2,302 2,302 
Other comprehensive loss, net of income taxes(52,979)(52,979)
As of June 30, 2022$20,000 $392,973 $7,131,747 $905,274 $(4,141,303)$13,552 $4,322,243 $16,500 
Net income for the period33,840 33,840 
Noncontrolling interest capital contribution2,960 2,960 
Redeemable noncontrolling interest capital contribution 1,050 
Net income attributable to noncontrolling interests(1,049)1,049  
Net income attributable to redeemable noncontrolling interests(11)(11)11 
Change in redemption value of redeemable noncontrolling interests61 61 64 
Distribution to noncontrolling interest(369)(369)
Dividends on common stock(7,575)(7,575)
Repurchase of Class B common stock(20,278)(20,278)
Forfeiture of restricted stock awards, net of Class B common stock issuances(112)(91)(203)
Amortization of unearned stock compensation and stock option expense1,748 1,748 
Other comprehensive loss, net of income taxes(55,455)(55,455)
As of September 30, 2022$20,000 $394,609 $7,156,952 $849,819 $(4,161,672)$17,253 $4,276,961 $17,625 

See accompanying Notes to Condensed Consolidated Financial Statements.
6


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 holding company whose operations include: education; television broadcasting–online, podcast, print and local TV news; manufacturing; home health and hospice care; automotive dealerships; and other businesses. The Company’s Kaplan subsidiary provides a wide variety of educational services, both domestically and outside the United States (U.S.). The Company’s television broadcast segment owns and operates seven television broadcasting stations. The Company’s manufacturing companies comprise the ownership of a supplier of pressure treated wood, a manufacturer of electrical solutions, a manufacturer of lifting solutions, and a supplier of parts used in electric utilities and industrial systems. The Company’s healthcare segment provides home health, hospice and palliative services, in-home specialty pharmacy infusion therapies, applied behavior analysis (ABA) therapy, physician services for allergy, asthma and immunology patients, in-home aesthetics, and healthcare software-as-a-service technology. The Company’s automotive business comprises seven dealerships and valet repair services. The Company’s other businesses include a consumer internet company; restaurants; a custom framing company; a marketing solutions provider; a customer data and analytics software company; website and print magazines; and a daily local news podcast and newsletter company.

Basis of Presentation – The accompanying condensed consolidated financial statements have been prepared in accordance with: (i) generally accepted accounting principles in the United States of America (GAAP) for interim financial information; (ii) the instructions to Form 10-Q; and (iii) the guidance of Rule 10-01 of Regulation S-X under the Securities and Exchange Act of 1934, as amended, for financial statements required to be filed with the Securities and Exchange Commission (SEC). They include the assets, liabilities, results of operations and cash flows of the Company, including its domestic and foreign subsidiaries that are more than 50% owned or otherwise controlled by the Company. As permitted under such rules, certain notes and other financial information normally required by GAAP have been condensed or omitted. Management believes the accompanying condensed consolidated financial statements reflect all normal and recurring adjustments necessary for a fair statement of the Company’s financial position, results of operations, and cash flows as of and for the periods presented herein. The Company’s results of operations for the three and nine months ended September 30, 2023 and 2022 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, 2022.
The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.
Certain amounts in previously issued financial statements have been reclassified to conform to the current year presentation (see Note 15).
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.
Recently Adopted and Issued Accounting Pronouncements – In September 2022, the Financial Accounting Standards Board issued new guidance that requires a buyer in a supplier finance program to disclose certain qualitative and quantitative information about the program’s nature, activity during the period, changes from period to period, and potential magnitude. The standard was adopted by the Company in the first quarter of 2023 and did not have a significant impact on its Condensed Consolidated Financial Statements.
2. ACQUISITIONS AND DISPOSITIONS OF BUSINESSES
Acquisitions. During 2023, the Company acquired four businesses: two in healthcare, one in automotive, and one in other businesses for $82.3 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 acquisition.
In September 2023, the Company’s automotive subsidiary acquired a Toyota automotive dealership, including the real property for the dealership operations. In addition to a cash payment and the assumption of $2.2 million in floor plan payables, the automotive subsidiary borrowed $37.0 million to finance the acquisition. The dealership is
7


operated and managed by an entity affiliated with Christopher J. Ourisman, a member of the Ourisman Automotive Group family of dealerships. This acquisition expands the Company’s automotive business operations and is included in automotive.
In July 2023, the Company acquired a small business which is included in other businesses.
In January 2023, Graham Healthcare Group (GHG) acquired two small businesses which are included in healthcare.
During 2022, the Company acquired seven businesses: five in healthcare and two in automotive, for $143.2 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 acquisition.
In May 2022, GHG acquired two small businesses which are included in healthcare.
On July 5, 2022, the Company’s automotive subsidiary acquired two automotive dealerships, including the real property for the dealership operations. In addition to a cash payment and the assumption of $10.9 million in floor plan payables, the automotive subsidiary borrowed $77.4 million to finance the acquisition. The dealerships are operated and managed by an entity affiliated with Christopher J. Ourisman, a member of the Ourisman Automotive Group family of dealerships. These acquisitions expand the Company’s automotive business operations and are included in automotive.
In July 2022, GHG acquired a 100% interest in a multi-state provider of ABA clinics. The acquisition is expected to expand the product offerings of the healthcare division and is included in healthcare.
In August 2022, GHG acquired two small businesses which are included in healthcare.
Acquisition-related costs for acquisitions that closed during the first nine months of 2023 and 2022 were $1.2 million and $1.6 million, respectively. The aggregate purchase price of the 2023 and 2022 acquisitions was allocated as follows (2023 on a preliminary basis), based on acquisition date fair values to the following assets and liabilities:
Purchase Price Allocation
Nine Months EndedYear Ended
(in thousands)September 30, 2023December 31, 2022
Accounts receivable$68 $3,172 
Inventory5,224 21,278 
Property, plant and equipment29,859 36,255 
Lease right-of-use assets 4,773 
Goodwill44,968 53,946 
Indefinite-lived intangible assets6,300 41,800 
Amortized intangible assets235 1,200 
Other assets4 404 
Deferred income taxes 2,535 
Floor plan payables(2,215)(10,908)
Other liabilities(935)(3,798)
Current and noncurrent lease liabilities(1,184)(5,865)
Redeemable noncontrolling interest (2,164)
Noncontrolling interest (512)
Aggregate purchase price, net of cash acquired$82,324 $142,116 
The 2023 fair values recorded were based upon preliminary 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 the amounts of residual goodwill and other intangibles are not yet finalized. 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 $44.0 million and $39.7 million of goodwill for income tax purposes for the acquisitions completed in 2023 and 2022, respectively.
The acquired companies were consolidated into the Company’s financial statements starting on their respective acquisition dates. The Company’s Condensed Consolidated Statements of Operations for the third quarter of 2023 include aggregate revenues and operating losses for the companies acquired in 2023 of $2.4 million and $0.1 million, respectively. The Company’s Condensed Consolidated Statements of Operations include aggregate revenues and operating losses of $3.5 million and $0.1 million, respectively, for the nine months ended
8


September 30, 2023. The following unaudited pro forma financial information presents the Company’s results as if the current year acquisitions had occurred at the beginning of 2022. The unaudited pro forma also includes the 2022 acquisitions as if they occurred at the beginning of 2021:
Three Months Ended 
 September 30
Nine Months Ended 
 September 30
(in thousands)2023202220232022
Operating revenues$1,150,953 $1,053,162 $3,363,004 $3,148,090 
Net (loss) income(18,235)36,255 162,653 78,704 
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.
Disposition of Businesses. In June 2023, the Company entered into an agreement to merge the Pinna business with Realm of Possibility, Inc. (Realm) in return for an additional noncontrolling financial interest in Realm (the Pinna transaction). The Company deconsolidated the Pinna subsidiary, which was included in other businesses, and continues to account for its interest in Realm under the equity method of accounting (see Notes 3 and 12).
In October 2022, the Company entered into an agreement to merge the CyberVista business with CyberWire, Inc. in return for a noncontrolling financial interest in the merged entity, N2K Networks, Inc. (the CyberVista transaction). The Company deconsolidated the CyberVista subsidiary, which was included in other businesses, and accounts for its continuing interest in N2K Networks under the equity method of accounting (see Note 3).
Other Transactions. In November 2022, a CSI Pharmacy Holdings Company, LLC (CSI) minority shareholder put some shares to the Company, which had a redemption value of $1.2 million. Following the redemption, the Company owns 76.5% of CSI.
3. INVESTMENTS
Money Market Investments. As of September 30, 2023 and December 31, 2022, the Company had money market investments of $39.7 million and $7.7 million, respectively, that are classified as cash and cash equivalents in the Company’s Condensed Consolidated Balance Sheets.
Investments in Marketable Equity Securities. Investments in marketable equity securities consist of the following:
  As of
September 30,
2023
December 31,
2022
(in thousands)
Total cost
$225,971 $270,764 
Gross unrealized gains
447,394 363,147 
Gross unrealized losses(7,851)(23,990)
Total Fair Value
$665,514 $609,921 
At September 30, 2023 and December 31, 2022, the Company owned 55,430 shares in Markel Group Inc. (Markel) valued at $81.6 million and $73.0 million, respectively. The Chief Executive Officer of Markel, Mr. Thomas S. Gayner, is a member of the Company’s Board of Directors. As of September 30, 2023, the Company owned 422 Class A and 482,945 Class B shares in Berkshire Hathaway valued at $393.5 million, which exceeded 5% of the Company’s total assets.
The Company purchased $4.6 million of marketable equity securities during the first nine months of 2023. The Company purchased $35.1 million of marketable equity securities during the first nine months of 2022.
During the first nine months of 2023, the gross cumulative realized net gains from the sales of marketable equity securities were $13.0 million. The total proceeds from such sales were $62.0 million. During the first nine months of 2022, the gross cumulative realized gains from the sales of marketable equity securities were $39.5 million. The total proceeds from such sales were $74.2 million.
9


The net gain (loss) on marketable equity securities comprised the following:

Three Months Ended 
 September 30

Nine Months Ended 
 September 30
(in thousands)
2023202220232022
Gain (loss) on marketable equity securities, net
$16,759 $(54,250)$113,429 $(172,878)
Less: Net losses (gains) in earnings from marketable equity securities sold and donated
 137 (5,475)10,742 
Net unrealized gains (losses) in earnings from marketable equity securities still held at the end of the period
$16,759 

$(54,113)

$107,954 $(162,136)
Investments in Affiliates. In June 2023, the Company entered into an agreement to merge the Pinna business with Realm in return for an additional noncontrolling financial interest in Realm. The Company held an equity interest in Realm prior to the merger transaction, which was accounted for under the equity method. Following the merger transaction, the Company’s convertible note in Realm converted into equity and the Company also made an additional investment in Realm. As of September 30, 2023, the Company held a 42.3% interest in Realm on a fully diluted basis, and continues to account for its investment under the equity method.
As of September 30, 2023, the Company held a 49.9% interest in N2K Networks on a fully diluted basis, and accounts for its investment under the equity method. The Company holds two of the five seats of N2K Networks’ governing board with the other shareholders retaining substantive participation rights to control the financial and operating decisions of N2K Networks through representation on the board.
As of September 30, 2023, the Company held an approximate 18% 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. In April 2023, the Company entered into a term note agreement to loan Intersection $30.0 million at an interest rate of 9% per annum. The principal and interest on the note are payable in monthly installments over 5 years with the final payment due by May 2028. The outstanding balance on this loan was $29.3 million as of September 30, 2023.
As of September 30, 2023, the Company also held investments in several other affiliates; GHG held a 40% interest in Residential Home Health Illinois, a 40% 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). During the first quarter of 2022, GHG invested an additional $18.5 million in the Residential Home Health Illinois and Residential Hospice Illinois affiliates to fund their acquisition of certain home health and hospice assets of the NorthShore University HealthSystem. The transaction diluted GHG’s interest in Residential Hospice Illinois resulting in a $0.6 million gain on the sale of investment in affiliate (see Note 12). For the three and nine months ended September 30, 2023, the Company recorded $4.1 million and $11.5 million, respectively, in revenue for services provided to the affiliates of GHG. For the three and nine months ended September 30, 2022, the Company recorded $3.5 million and $10.5 million, respectively, in revenue for services provided to the affiliates of GHG.
The Company had $40.8 million and $49.1 million in its investment account that represents cumulative undistributed income in its investments in affiliates as of September 30, 2023 and December 31, 2022, respectively.
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 outstanding balance on this loan was £19.9 million as of September 30, 2023. The loan is repayable by December 2041.
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 $73.6 million and $66.7 million as of September 30, 2023 and December 31, 2022, respectively. During the first nine months ended September 30, 2023, the Company recorded gains of $3.1 million to those equity securities based on observable transactions. During the three and nine months ended September 30, 2022, the Company recorded gains of $0.6 million to those equity securities based on observable transactions.
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4. ACCOUNTS RECEIVABLE, ACCOUNTS PAYABLE, VEHICLE FLOOR PLAN PAYABLE AND ACCRUED LIABILITIES
Accounts receivable consist of the following:
As of
September 30,
2023
December 31,
2022
(in thousands)
Receivables from contracts with customers, less estimated credit losses of $22,598 and $21,387
$513,747 $533,622 
Other receivables27,923 27,157 
 $541,670 $560,779 
Credit loss expense was $2.4 million and $0.6 million for the three months ended September 30, 2023 and 2022, respectively. Credit loss expense was $4.3 million and $2.8 million for the nine months ended September 30, 2023 and 2022, respectively.
Accounts payable, vehicle floor plan payable and accrued liabilities consist of the following:
As of
September 30,
2023
December 31,
2022
(in thousands)
Accounts payable$136,468 $136,186 
Vehicle floor plan payable126,869 69,756 
Accrued compensation and related benefits137,232 149,823 
Other accrued liabilities229,156 207,240 
$629,725 $563,005 
Cash overdrafts of $4.3 million and $0.5 million are included in accounts payable as of September 30, 2023 and December 31, 2022, respectively.
The Company finances new, used and service loaner vehicle inventory through standardized floor plan facilities with Truist Bank and Toyota Motor Credit Corporation (Truist and Toyota floor plan facility) and Ford Motor Credit Company (Ford floor plan facility). On September 26, 2023, the Company entered into a credit agreement with Truist Bank (see Note 7) to, among other things, establish a new revolving floor plan credit facility with an aggregate capacity of $115.0 million. The Truist and Toyota floor plan facility bears interest at variable rates that are based on Secured Overnight Financing Rate (SOFR) plus 1.25% per annum. In connection with the establishment of the Truist and Toyota floor plan facility, the previous Truist floor plan facility, dated July 5, 2022, was repaid and terminated. At September 30, 2023, the floor plan facilities bore interest at variable rates that are based on the SOFR and prime-based interest rates. The weighted average interest rate for the floor plan facilities was 6.6% and 3.5% for the three months ended September 30, 2023 and 2022, respectively. The weighted average interest rate for the floor plan facilities was 6.0% and 2.6% for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, the aggregate capacity under the floor plan facilities was $142.9 million. 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 facilities are collateralized by vehicle inventory and other assets of the relevant dealership subsidiary, and contain 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 September 30, 2023.
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 September 30, 2023 and 2022, the Company recognized a reduction in cost of goods sold of $1.6 million and $1.4 million, respectively, related to manufacturer floor plan assistance. For the nine months ended September 30, 2023 and 2022, the Company recognized a reduction in cost of goods sold of $4.5 million and $3.4 million, respectively, related to manufacturer floor plan assistance.
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5. INVENTORIES AND CONTRACTS IN PROGRESS
Inventories and contracts in progress consist of the following:
As of
September 30,
2023
December 31,
2022
(in thousands)
Raw materials$64,354 $68,494 
Work-in-process15,670 15,718 
Finished goods196,541 140,548 
Contracts in progress2,646 2,051 
 $279,211 $226,811 
6. GOODWILL AND OTHER INTANGIBLE ASSETS
In the third quarter of 2023, due to continued sustained weakness in demand for certain Dekko power and data products primarily in the commercial office space market, the Company performed an interim review of the goodwill of the Dekko reporting unit. As a result of the impairment review, the Company recorded a $47.8 million goodwill impairment charge. Also in the third quarter of 2023, as a result of the substantial digital advertising revenue declines and continued significant operating losses at World of Good Brands (WGB, formerly Leaf Media), the Company performed an interim review of the goodwill of the WGB reporting unit. As a result of the impairment review, the Company recorded a $50.2 million goodwill impairment charge. The Company estimated the fair value of the reporting units by utilizing a discounted cash flow model. The carrying value of the reporting units exceeded their estimated fair values, resulting in goodwill impairment charges for the amount by which the carrying values exceeded their estimated fair values after taking into account the effect of deferred income taxes. Dekko is included in manufacturing and WGB is included in other businesses.
Amortization of intangible assets for the three months ended September 30, 2023 and 2022, was $11.8 million and $14.6 million, respectively. Amortization of intangible assets for the nine months ended September 30, 2023 and 2022, was $39.0 million and $44.4 million, respectively. Amortization of intangible assets is estimated to be approximately $11 million for the remainder of 2023, $37 million in 2024, $29 million in 2025, $20 million in 2026, $6 million in 2027 and $20 million thereafter.
The changes in the carrying amount of goodwill, by segment, were as follows:
(in thousands)EducationTelevision
Broadcasting
ManufacturingHealthcareAutomotiveOther
Businesses
Total
Balance as of December 31, 2022        
Goodwill$1,145,502 $190,815 $234,993 $135,870 $84,697 $251,216 $2,043,093 
Accumulated impairment losses
(331,151) (34,302)  (116,687)(482,140)
814,351 190,815 200,691 135,870 84,697 134,529 1,560,953 
Measurement period adjustments
   (2,217)  (2,217)
Acquisitions   385 44,583  44,968 
Impairments  (47,760)  (50,239)(97,999)
Foreign currency exchange rate changes
(5,998)     (5,998)
Balance as of September 30, 2023        
Goodwill1,139,504 190,815 234,993 134,038 129,280 251,216 2,079,846 
Accumulated impairment losses
(331,151) (82,062)  (166,926)(580,139)
$808,353 $190,815 $152,931 $134,038 $129,280 $84,290 $1,499,707 
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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, 2022      
Goodwill$579,561 $174,564 $391,377 $1,145,502 
Accumulated impairment losses (111,324)(219,827)(331,151)
579,561 63,240 171,550 814,351 
Foreign currency exchange rate changes(6,009) 11 (5,998)
Balance as of September 30, 2023      
Goodwill573,552 174,564 391,388 1,139,504 
Accumulated impairment losses (111,324)(219,827)(331,151)
$573,552 $63,240 $171,561 $808,353 
Other intangible assets consist of the following:
As of September 30, 2023As of December 31, 2022
(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
$281,838 $231,161 $50,677 $297,766 $230,429 $67,337 
Trade names and trademarks
215 years
142,812 86,534 56,278 148,102 81,078 67,024 
Network affiliation agreements
10 years
17,400 12,603 4,797 17,400 10,367 7,033 
Databases and technology
36 years
36,087 34,871 1,216 36,216 32,219 3,997 
Noncompete agreements
25 years
20 18 2 1,000 995 5 
Other
18 years
41,327 31,450 9,877 43,644 27,618 16,026 
    $