<PAGE> 1
This report (including all exhibits)
consists of a total of 12 pages, of which this
page is number 1. The exhibit index is on page 10.
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly
Period Ended April 3, 1994 Commission File Number 1-6714
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THE WASHINGTON POST COMPANY
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 53-0182885
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1150 15th Street, N.W. Washington, D.C. 20071
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(202) 334-6000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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 X . No .
-------- -------
Shares outstanding at April 30, 1994:
Class A Common Stock 1,843,250 Shares
Class B Common Stock 9,869,154 Shares
<PAGE> 2
THE WASHINGTON POST COMPANY
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Income
(Unaudited) for the Thirteen Weeks
Ended April 3, 1994 and April 4, 1993......... 3
Condensed Consolidated Balance Sheets (Unaudited)
at April 3, 1994 and January 2, 1994.......... 4
Condensed Consolidated Statements of Cash Flows
(Unaudited) for the Thirteen Weeks Ended
April 3, 1994 and April 4, 1993............... 5
Notes to Condensed Consolidated Financial Statements
(Unaudited)................................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........... 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..................... 10
Signatures...................................................... 11
Exhibit 11...................................................... 12
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The Washington Post Company
Consolidated Statements of Income (Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
-------------------------------
April 3, April 4,
(In thousands, except per share amounts) 1994 1993
-------- --------
<S> <C> <C>
Operating revenues
Advertising $212,195 $214,602
Circulation and subscriber 109,165 113,428
Other 37,094 33,676
------- --------
358,454 361,706
------- --------
Operating costs and expenses
Operating 199,553 195,083
Selling, general and administrative 88,957 97,783
Depreciation and amortization of property,
plant and equipment 14,710 14,982
Amortization of goodwill and other intangibles 4,031 4,067
------- -------
307,251 311,915
------- -------
Income from operations 51,203 49,791
Other income (expense)
Equity in losses of affiliates (5,385) (1,795)
Interest income 3,565 2,606
Interest expense (1,435) (1,446)
Other 2,604 (51)
------- -------
Income before income taxes and cumulative
effect of change in accounting principle 50,552 49,105
------- -------
Provision for income taxes
Current 22,962 20,991
Deferred (1,222) (391)
------- -------
21,740 20,600
------- -------
Income before cumulative effect of change in
accounting principle 28,812 28,505
Cumulative effect of change in method of
accounting for income taxes -- 11,600
------- -------
Net income $ 28,812 $ 40,105
======= =======
Earnings per share:
Before cumulative effect of change in
accounting principle $2.46 $2.42
Cumulative effect of change in
accounting principle -- .98
------ ------
Net income $ 2.46 $ 3.40
====== ======
Dividends declared per share $ 2.10 $ 2.10
====== ======
Average number of shares outstanding 11,720 11,796
</TABLE>
3
<PAGE> 4
The Washington Post Company
Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
April 3, January 2,
(In thousands) 1994 1994
-------- --------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 377,891 $ 171,512
Marketable securities 76,870 258,412
Accounts receivable, less estimated returns,
doubtful accounts and allowances 126,004 140,518
Inventories 20,678 16,419
Program rights 14,564 15,460
Other current assets 17,451 23,253
--------- ---------
633,458 625,574
Investments in affiliates 158,845 155,251
Property, plant and equipment
Buildings 170,159 166,433
Machinery, equipment and fixtures 582,030 579,423
Leasehold improvements 29,452 29,287
--------- ---------
781,641 775,143
Less accumulated depreciation and amortization (482,015) (469,359)
--------- ---------
299,626 305,784
Land 28,841 28,799
Construction in progress 43,269 29,135
--------- ---------
371,736 363,718
Goodwill and other intangibles,
less accumulated amortization 304,898 309,157
Deferred charges and other assets 190,675 168,804
--------- --------
$1,659,612 $1,622,504
========= =========
Liabilities and Shareholders' equity
Current liabilities
Accounts payable and accrued liabilities $ 147,639 $ 163,553
Federal and state income taxes 36,912 15,726
Deferred subscription revenue 80,779 79,254
Dividends declared 12,299 --
--------- --------
277,629 258,533
Other liabilities 195,610 191,088
Long-term debt 50,350 51,768
Deferred income taxes 37,415 33,696
--------- ---------
561,004 535,085
Shareholders' equity
Capital stock 20,000 20,000
Capital in excess of par value 21,322 21,354
Retained earnings 1,574,759 1,570,546
Unrealized gain on available-for-sale
securities (Note 3) 6,285 --
Cumulative foreign currency translation
adjustment 3,645 2,908
Cost of class B common stock held in Treasury (527,403) (527,389)
--------- ---------
1,098,608 1,087,419
--------- --------
$1,659,612 $1,622,504
========= =========
</TABLE>
4
<PAGE> 5
The Washington Post Company
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
------------------------------
April 3, April 4,
(In thousands) 1994 1993
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 28,812 $ 40,105
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of change in accounting
principle -- (11,600)
Depreciation and amortization of property, plant
and equipment 14,710 14,982
Amortization of goodwill and other intangibles 4,031 4,067
Amortization of program rights 4,661 4,795
Provision for doubtful accounts 15,276 14,319
Increase in interest and income taxes payable 17,437 11,047
Provision for deferred income taxes (1,222) (391)
Change in assets and liabilities:
(Increase) in accounts receivable (937) (33,879)
(Increase) in inventories (4,259) (1,557)
(Decrease) in accounts payable and accrued
liabilities (11,905) (8,634)
Other 5,202 6,281
-------- --------
Net cash provided by operating activities 71,806 39,535
Cash flows from investing activities:
Purchases of property, plant and equipment (22,894) (17,673)
Purchases of marketable securities -- (103,965)
Proceeds from sales of marketable securities 182,587 124,200
Investments in certain businesses (8,750) --
Payments for program rights (4,526) (5,361)
Other 456 18
-------- --------
Net cash provided (used) by investing activities 146,873 (2,781)
Cash flows from financing activities:
Dividends paid (12,300) (12,404)
Common shares repurchased -- (14,947)
-------- --------
Net cash (used) by financing activities (12,300) (27,351)
-------- --------
Net increase in cash and cash equivalents 206,379 9,403
Beginning cash and cash equivalents 171,512 86,840
-------- --------
Ending cash and cash equivalents $ 377,891 $ 96,243
======== ========
</TABLE>
5
<PAGE> 6
The Washington Post Company
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1: Results of operations, when examined on a quarterly basis, reflect the
seasonality of advertising that affects the newspaper, magazine and
broadcasting operations. Advertising revenues in the second and fourth
quarters are typically higher than first and third quarter revenues. All
adjustments reflected in the interim financial statements are of a normal
recurring nature.
Note 2: Summarized combined (unaudited) results of operations for the first
quarters of 1994 and 1993 for the company's affiliates are as follows (in
thousands):
<TABLE>
<CAPTION>
First Quarter
------------------------
1994 1993
--------- ---------
<S> <C> <C>
Operating revenues $167,142 $162,301
Operating income 2,454 (4,129)
Net loss (4,204) (3,323)
</TABLE>
Note 3: Effective January 3, 1994, the company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" (SFAS No. 115). The adoption of SFAS No. 115 requires that
certain investments in equity securities held by the company be classified as
"available-for-sale" and measured at fair value. At April 3, 1994, the fair
value of such equity securities was $14,341,000, which exceeded cost by
approximately $11,026,000. The unrealized gain, net of deferred taxes of
$4,741,000, is included as a separate item in shareholders' equity.
6
<PAGE> 7
Item 2. 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.
Revenues and expenses in the first and third quarters are customarily
lower than those in the second and fourth quarters because of significant
fluctuations in advertising volume. For that reason, the results of operations
for each quarter are compared with those of the corresponding quarter in the
preceding year.
RESULTS OF OPERATIONS
Net income for the first quarter of 1994 was $28.8 million ($2.46 per
share), a decrease of 28 percent from net income of $40.1 million ($3.40 per
share) last year. First quarter 1993 earnings included a one-time credit of
$11.6 million ($.98 per share) resulting from the adoption of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes."
Excluding this credit, net income in the first quarter of 1993 was $28.5
million ($2.42 per share).
Revenues for the first three months of 1994 were $358.5 million, a
decrease of 1 percent from $361.7 million in the same period last year.
Advertising revenues declined 1 percent and circulation revenues fell 4
percent, while other revenues increased 10 percent.
Costs and expenses for the first quarter of 1994 decreased 1.5 percent
to $307.3 million, from $311.9 million in the first quarter of 1993. Operating
expenses increased 2 percent, while selling, general and administrative
expenses decreased 9 percent compared with the first three months of 1993.
Normal increases in fixed costs, such as payroll and fringe benefits, were more
than offset by newsprint and magazine paper expenses and other circulation
related expenses, which declined due to lower consumption. In the first
quarter of 1994 operating income rose to $51.2 million, a 3 percent increase
over $49.8 million in 1993.
Newspaper Division. At the newspaper division revenues decreased 2
percent in the first three months of 1994. Advertising revenues for the
division fell 2 percent, primarily due to a 3.5 percent decline in advertising
volume at The Washington Post. Retail linage at The Post decreased 8.5 percent
and classified volume was down 1 percent. A soft market continues to affect
the real estate category, while recruitment advertising remains strong.
General linage increased 4 percent and preprint volume was even with the same
period last year. Circulation revenues were flat when compared with the first
quarter of 1993. Daily circulation at The Post declined slightly in the
quarter as a result of
7
<PAGE> 8
adverse weather conditions in January and February in the Washington, D.C.,
area; Sunday circulation was even with the same period last year.
Broadcast Division. Revenues at the broadcast division increased 13 percent
over the first quarter of 1993. Local advertising revenues increased 15
percent and national advertising revenues rose 12 percent in the first quarter
of 1994. The major factor contributing to this improvement was an increase in
automotive advertising.
Magazine Division. Newsweek revenues in the first quarter of 1994 decreased 8
percent, principally due to a 12 percent decline in advertising revenues.
Fewer pages and lower rates at the domestic edition were the major contributors
to the decrease. Circulation revenues fell 3 percent at Newsweek, primarily
due to lower volume at both the domestic and international divisions. In the
first quarter of 1994 Newsweek published the same number of weekly (13) and
special (1) issues as in 1993.
Cable Division. At the cable division first quarter 1994 revenues were 3
percent lower than 1993, including operations in the United Kingdom, which were
subsequently sold during 1993. Excluding foreign operations, cable division
revenues were even with the first three months of 1993. A 2 percent increase
in basic subscribers was offset by a decrease in subscriber rates attributable
to the rate freeze and reductions enacted in the 1992 Cable Act.
Other Businesses. In the first quarter of 1994, revenues from other
businesses, principally Stanley H. Kaplan Educational Center, Pro Am Sports
System (PASS), and Legi-Slate, increased 10 percent. Revenues at Kaplan
increased 7 percent over the first three months of 1993, and enrollments
increased 8 percent.
Equity in Earnings and Losses of Affiliates. The company's equity in earnings
of affiliates in the first quarter of 1994 was a loss of $5.4 million, compared
with a loss of $1.8 million in the first quarter of 1993. Lower results at the
company's affiliated newsprint mills, which included a large gain on the sale
of land in the first three months of 1993, were the major reason for the
decrease.
Non-operating Items. Interest income, net of interest expense, was $2.1
million, compared with $1.2 million in the same period last year. The increase
was attributable to higher invested cash balances.
Other income in the first quarter of 1994 was $2.6 million, compared
with other expense of $.1 million in the first quarter of 1993. In 1994 other
income included a gain of $2.5 million resulting from a change in the company's
ownership interest in one of its affiliates.
8
<PAGE> 9
FINANCIAL CONDITION
In January 1994 American PCS, L.P. (known as American Personal
Communications or APC), a limited partnership in which the company has a 70
percent interest, filed an application for a PCS authorization with the Federal
Communications Commission (FCC). APC has begun some operations, and
immediately following receipt of authorization from the FCC, the company
expects to substantially increase the level of its capital investment in the
business.
In February 1994 the FCC issued new rules related to pricing and the
reregulation of the cable industry. The company has evaluated the rules and
does not expect them to have a material effect on consolidated financial
results.
In April 1994 the company purchased the assets of two television
stations in Houston and San Antonio, Texas, for $253 million in cash and the
assumption of approximately $4 million in liabilities related to the operations
of the two stations.
The company has experienced no other significant changes in its
financial condition since the end of 1993.
9
<PAGE> 10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) The following documents are filed as exhibits to this report:
<TABLE>
<CAPTION>
EXHIBIT FILING
NUMBER DESCRIPTION PAGE NUMBER
<S> <C> <C>
11 Calculation of average number of
shares outstanding.......................... 12
</TABLE>
(b) No reports on Form 8-K were filed during the
period covered by this report.
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements 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.
THE WASHINGTON POST COMPANY
(Registrant)
Date: May 18, 1994 /s/ Donald E. Graham
-------------------------------------
Donald E. Graham, Chairman &
Chief Executive Officer
(Principal Executive Officer)
Date: May 18, 1994 /s/ John B. Morse, Jr.
-------------------------------------
John B. Morse, Jr., Vice President-Finance
(Principal Financial Officer)
11
<PAGE> 1
Exhibit 11
CALCULATION OF AVERAGE
NUMBER OF SHARES OUTSTANDING
(In thousands of shares)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------
April 3, April 4,
1994 1993
-------- --------
<S> <C> <C>
Number of shares of
Class A and Class B
stock outstanding
at beginning of
period 11,713 11,798
Issuance of shares of
Class B common stock
(weighted), net of
forfeiture of re-
stricted stock awards --- 14
Repurchase of Class B
common stock (weighted) --- (21)
Unexercised stock option
equivalent shares com-
puted under the "treasury
stock method" 7 5
------- -------
Average number of
shares outstanding
during the period 11,720 11,796
======= =======
</TABLE>
12
