<PAGE> 1
This report (including all exhibits)
consists of a total of 15 pages, of which this
page is number 1. The exhibit index is on page 13.
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 July 3, 1994 Commission File Number 1-6714
--------------------------------------------------------------------
THE WASHINGTON POST COMPANY
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 53-0182885
- - --------------------------------------------------------------------------------
(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 July 31, 1994:
Class A Common Stock 1,843,250 Shares
Class B Common Stock 9,645,105 Shares
<PAGE> 2
2.
THE WASHINGTON POST COMPANY
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Income
(Unaudited) for the Thirteen and Twenty-six
Weeks Ended July 3, 1994 and
July 4, 1993............................................. 3
Condensed Consolidated Balance Sheets (Unaudited)
at July 3, 1994 and January 2, 1994...................... 4
Condensed Consolidated Statements of Cash Flows
(Unaudited) for the Twenty-six Weeks Ended
July 3, 1994 and July 4, 1993............................ 5
Notes to Condensed Consolidated Financial Statements
(Unaudited).............................................. 6
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition....................... 7
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security Holders.............................................. 12
Item 6. Exhibits and Reports on Form 8-K.............................. 13
Signatures............................................................. 14
Exhibit 11............................................................. 15
</TABLE>
<PAGE> 3
3.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
THE WASHINGTON POST COMPANY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
------------------------- -------------------------
JULY 3, JULY 4, JULY 3, JULY 4,
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
OPERATING REVENUES
ADVERTISING $261,682 $233,078 $473,877 $447,680
CIRCULATION AND SUBSCRIBER 110,098 112,779 219,263 226,207
OTHER 33,033 30,848 70,127 64,524
------- ------- ------- -------
404,813 376,705 763,267 738,411
------- ------- ------- -------
OPERATING COSTS AND EXPENSES
OPERATING 216,229 193,597 415,782 388,680
SELLING, GENERAL AND ADMINISTRATIVE 97,160 99,949 186,117 197,732
DEPRECIATION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT 15,360 15,100 30,070 30,082
AMORTIZATION OF GOODWILL AND OTHER
INTANGIBLES 6,502 4,058 10,533 8,125
------- ------- ------- -------
335,251 312,704 642,502 624,619
------- ------- ------- -------
INCOME FROM OPERATIONS 69,562 64,001 120,765 113,792
OTHER INCOME (EXPENSE)
EQUITY IN EARNINGS (LOSSES) OF AFFILIATES 2,211 (591) (3,174) (2,386)
INTEREST INCOME 2,030 2,488 5,595 5,094
INTEREST EXPENSE (1,413) (985) (2,848) (2,431)
OTHER 2 638 2,606 587
------- ------- ------- -------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 72,392 65,551 122,944 114,656
------- ------- ------- -------
PROVISION FOR INCOME TAXES
CURRENT 31,763 28,237 54,725 49,228
DEFERRED (628) (677) (1,850) (1,068)
------- ------- ------- -------
31,135 27,560 52,875 48,160
------- ------- ------- -------
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE 41,257 37,991 70,069 66,496
CUMULATIVE EFFECT OF CHANGE IN METHOD
OF ACCOUNTING FOR INCOME TAXES - - - 11,600
------- ------- ------- -------
NET INCOME $ 41,257 $ 37,991 $ 70,069 $ 78,096
======= ======= ======= =======
EARNINGS PER SHARE:
BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE $ 3.54 $ 3.23 $ 5.99 $ 5.65
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE - - - .98
------- ------- ------- -------
NET INCOME $ 3.54 $ 3.23 $ 5.99 $ 6.63
======= ======= ======= =======
DIVIDENDS DECLARED PER SHARE $ - $ - $ 2.10 $ 2.10
======= ======= ======= =======
AVERAGE NUMBER OF SHARES OUTSTANDING 11,667 11,755 11,693 11,775
</TABLE>
<PAGE> 4
4.
<TABLE>
<CAPTION>
THE WASHINGTON POST COMPANY
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JULY 3, JANUARY 2,
(IN THOUSANDS) 1994 1994
-------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $ 97,257 $ 171,512
MARKETABLE SECURITIES 14,785 258,412
ACCOUNTS RECEIVABLE, LESS ESTIMATED RETURNS,
DOUBTFUL ACCOUNTS AND ALLOWANCES 172,307 140,518
INVENTORIES 18,203 16,419
PROGRAM RIGHTS 17,950 15,460
OTHER CURRENT ASSETS 15,734 23,253
--------- ---------
336,236 625,574
INVESTMENTS IN AFFILIATES 162,159 155,251
PROPERTY, PLANT AND EQUIPMENT
BUILDINGS 180,768 166,433
MACHINERY, EQUIPMENT AND FIXTURES 611,423 579,423
LEASEHOLD IMPROVEMENTS 29,639 29,287
--------- ---------
821,830 775,143
LESS ACCUMULATED DEPRECIATION AND AMORTIZATION (493,742) (469,359)
--------- ---------
328,088 305,784
LAND 32,416 28,799
CONSTRUCTION IN PROGRESS 57,540 29,135
--------- ---------
418,044 363,718
GOODWILL AND OTHER INTANGIBLES,
LESS ACCUMULATED AMORTIZATION 528,795 309,157
DEFERRED CHARGES AND OTHER ASSETS 198,263 168,804
--------- ---------
$ 1,643,497 $ 1,622,504
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES $ 176,729 $ 163,553
FEDERAL AND STATE INCOME TAXES 17,206 15,726
DEFERRED SUBSCRIPTION REVENUE 76,775 79,254
--------- ---------
270,710 258,533
OTHER LIABILITIES 198,168 191,088
LONG-TERM DEBT 50,332 51,768
DEFERRED INCOME TAXES 35,958 33,696
--------- ---------
555,168 535,085
SHAREHOLDERS' EQUITY
CAPITAL STOCK 20,000 20,000
CAPITAL IN EXCESS OF PAR VALUE 21,290 21,354
RETAINED EARNINGS 1,616,017 1,570,546
UNREALIZED GAIN ON AVAILABLE-FOR-SALE
SECURITIES 5,451 --
CUMULATIVE FOREIGN CURRENCY TRANSLATION
ADJUSTMENT 5,291 2,908
COST OF CLASS B COMMON STOCK HELD IN TREASURY (579,720) (527,389)
--------- ---------
1,088,329 1,087,419
--------- ---------
$ 1,643,497 $ 1,622,504
========= =========
</TABLE>
<PAGE> 5
5.
<TABLE>
<CAPTION>
THE WASHINGTON POST COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
TWENTY-SIX WEEKS ENDED
----------------------------
JULY 3, JULY 4,
(IN THOUSANDS) 1994 1993
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $ 70,069 $ 78,096
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 30,070 30,082
AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES 10,533 8,125
AMORTIZATION OF PROGRAM RIGHTS 10,195 9,501
PROVISION FOR DOUBTFUL ACCOUNTS 29,428 26,913
(DECREASE) IN INTEREST AND INCOME TAXES
PAYABLE (1,082) (3,476)
PROVISION FOR DEFERRED INCOME TAXES (1,850) (1,068)
CHANGE IN ASSETS AND LIABILITIES:
(INCREASE) IN ACCOUNTS RECEIVABLE (60,837) (49,132)
(INCREASE) DECREASE IN INVENTORIES (1,784) 991
INCREASE IN ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES 12,556 2,771
OTHER 2,565 (1,894)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 99,863 89,309
CASH FLOWS FROM INVESTING ACTIVITIES:
PURCHASES OF PROPERTY, PLANT AND EQUIPMENT (44,108) (44,732)
PURCHASES OF MARKETABLE SECURITIES (14,657) (208,743)
PROCEEDS FROM SALES OF MARKETABLE SECURITIES 256,617 261,200
INVESTMENTS IN CERTAIN BUSINESSES (284,207) --
PAYMENTS FOR PROGRAM RIGHTS (9,867) (10,704)
OTHER 405 (1,558)
-------- --------
NET CASH (USED) BY INVESTING ACTIVITIES (95,817) (4,537)
CASH FLOWS FROM FINANCING ACTIVITIES:
PRINCIPAL PAYMENTS ON DEBT (1,400) --
DIVIDENDS PAID (24,598) (24,741)
COMMON SHARES REPURCHASED (52,303) (14,947)
OTHER -- 61
-------- --------
NET CASH (USED) BY FINANCING ACTIVITIES (78,301) (39,627)
-------- --------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (74,255) 45,145
BEGINNING CASH AND CASH EQUIVALENTS 171,512 86,840
------- -------
ENDING CASH AND CASH EQUIVALENTS $ 97,257 $ 131,985
====== =======
</TABLE>
<PAGE> 6
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 SECOND
QUARTER AND YEAR-TO-DATE OF 1994 AND 1993 FOR THE COMPANY'S AFFILIATES ARE AS
FOLLOWS (IN THOUSANDS):
<TABLE>
<CAPTION>
SECOND QUARTER YEAR-TO-DATE
-------------------------- --------------------------
1994 1993 1994 1993
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
OPERATING REVENUES $199,742 $166,021 $360,661 $328,322
OPERATING INCOME 19,111 13,685 16,670 9,556
NET INCOME (LOSS) 6,152 4,275 (240) 952
</TABLE>
NOTE 3: IN APRIL 1994 THE COMPANY ACQUIRED SUBSTANTIALLY ALL OF THE ASSETS
COMPRISING THE BUSINESSES OF TELEVISION STATIONS KPRC- TV, AN NBC AFFILIATE IN
HOUSTON, TEXAS, AND KSAT-TV, AN ABC AFFILIATE IN SAN ANTONIO, TEXAS, FOR $253
MILLION IN CASH. THE TRANSACTION WAS ACCOUNTED FOR AS A PURCHASE AND THE
RESULTS OF OPERATIONS OF THE TELEVISION STATIONS WERE INCLUDED WITH THOSE OF
THE COMPANY FOR THE PERIOD SUBSEQUENT TO THE DATE OF ACQUISITION.
THE FOLLOWING STATEMENTS PRESENT THE COMPANY'S UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED INCOME STATEMENTS FOR THE SIX MONTHS ENDED JULY 3, 1994,
AND JULY 4, 1993, AS IF THE ACQUISITION OF THE TELEVISION STATIONS HAD OCCURRED
AT THE BEGINNING OF EACH SIX MONTH PERIOD. AMOUNTS REFLECT AN ALLOCATION OF
THE PURCHASE PRICE TO THE ACQUIRED NET TANGIBLE ASSETS, WITH THE EXCESS BEING
AMORTIZED OVER A PERIOD OF 15 YEARS. THE REVENUES AND RESULTS OF OPERATIONS
PRESENTED IN THE PRO FORMA INCOME STATEMENTS DO NOT NECESSARILY REFLECT THE
RESULTS OF OPERATIONS THAT WOULD ACTUALLY HAVE BEEN OBTAINED IF THE ACQUISITION
HAD OCCURRED AT THE BEGINNING OF EACH SIX MONTH PERIOD.
<TABLE>
<CAPTION>
PRO FORMA INCOME STATEMENTS
FOR THE SIX-MONTHS ENDED
JULY 3, JULY 4,
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1994 1993
-------- --------
<S> <C> <C>
OPERATING REVENUES $782,634 $770,564
NET INCOME
BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE $69,605 $67,087
AFTER CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE $69,605 $78,687
EARNINGS PER SHARE
BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE $5.95 $5.70
AFTER CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE $5.95 $6.68
</TABLE>
IN MAY 1994 THE COMPANY ACQUIRED AN 80 PERCENT INTEREST IN MAMMOTH
MICRO PRODUCTIONS, A PRODUCER AND PUBLISHER OF MULTIMEDIA CD-ROM TITLES, FOR
$23 MILLION IN CASH. THIS TRANSACTION WAS ACCOUNTED FOR AS A PURCHASE AND,
ACCORDINGLY THE ASSETS AND LIABILITIES HAVE BEEN RECORDED AT THEIR ESTIMATED
FAIR VALUES AT THE DATE OF ACQUISITION. THE EXCESS OF THE COST OVER THE FAIR
VALUE OF NET ASSETS ACQUIRED IS BEING AMORTIZED OVER VARIOUS PERIODS UP TO 15
YEARS. RESULTS OF OPERATIONS OF THE ACQUIRED BUSINESS WERE INCLUDED WITH THOSE
OF THE COMPANY FOR THE PERIOD SUBSEQUENT TO THE DATE OF ACQUISITION.
NOTE 4: DURING THE SECOND QUARTER OF 1994 THE COMPANY REPURCHASED 224,600
SHARES OF ITS CLASS B COMMON STOCK AT A COST OF $52.3 MILLION.
<PAGE> 7
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.
SECOND QUARTER COMPARISONS
Net income for the second quarter of 1994 was $41.3 million, an
increase of 9 percent from net income of $38.0 million in the second quarter
last year. Earnings per share increased 10 percent to $3.54 per share, from
$3.23 per share in the second quarter of 1993, with a smaller number of shares
outstanding.
Revenues for the second quarter of 1994 rose 7 percent to $404.8
million, from $376.7 million in the same period last year. Advertising
revenues rose 12 percent and other revenues increased 7 percent, while
circulation and subscriber revenues fell 2 percent. The newspaper division,
Newsweek and other businesses all posted higher revenue in the second quarter
this year. The broadcast division had exceptionally strong revenue gains,
primarily reflecting the results of the two television stations acquired on
April 22.
Costs and expenses for the second quarter of 1994 increased 7 percent
to $335.3 million, from $312.7 million in the second quarter of 1993.
Operating expenses increased 12 percent, while selling, general and
administrative expenses decreased 3 percent compared with the second quarter
last year. Approximately 50 percent of the total increase relates to additional
expenses associated with the newly acquired businesses, while the remainder
reflects normal increases in the costs of operations. In the second quarter
of 1994 operating income rose to $69.6 million, a 9 percent increase over
$64.0 million in 1993.
NEWSPAPER DIVISION. At the newspaper division revenues increased 5 percent in
the second quarter of 1994. Advertising revenues for the division rose 6.5
percent, with a 1.1 percent increase in advertising linage at The Washington
Post. Classified volume grew 6 percent in the quarter with recruitment
advertising remaining strong. Retail linage was down 6 percent, while general
rose almost 9 percent compared with the same period last year. Preprint volume
increased 22 percent over the second quarter of 1993; lower rates initiated at
the beginning of the fourth quarter of 1993, have attracted advertisers to
preprints from other forms of outside advertising. Circulation
<PAGE> 8
8.
revenues increased almost 1 percent compared with the first quarter of 1993.
BROADCAST DIVISION. Revenues at the broadcast division, which include the
results of the two Texas television stations purchased at the end of April,
increased 39 percent over the second quarter of 1993. Local advertising
revenues increased 49 percent and national advertising revenues rose 36 percent
in the second quarter of 1994. Approximately 80 percent of the increase is
attributable to the newly acquired stations.
MAGAZINE DIVISION. Newsweek revenues in the second quarter of 1994 increased 1
percent. Advertising revenues rose almost 1 percent, primarily due to a slight
increase in volume at the domestic edition and higher rates at the
international editions. Circulation revenues were up 2 percent at Newsweek,
with increased newsstand sales the major contributor to the improvement. In
the second quarter Newsweek published the same number of weekly issues (13) as
in 1993, but 1994 includes 1 additional newsstand-only special issue.
CABLE DIVISION. At the cable division second quarter 1994 revenues were 4
percent lower than 1993, primarily as a result of an 8 percent decline in
subscriber revenues. This decrease in subscriber revenues is a result of the
decrease in subscriber rates attributable to the rate freeze and reductions
enacted in the 1992 Cable Act and the results of operations in the United
Kingdom, which were subsequently sold during 1993. Excluding foreign
operations, cable division revenues decreased 1 percent in the second quarter
of 1994.
OTHER BUSINESSES. In the second quarter of 1994, revenues from other
businesses, principally Stanley H. Kaplan Educational Center, Pro Am Sports
System (PASS), and Legi-Slate, increased 8 percent. Revenues at Kaplan rose 5
percent over the second quarter of 1993, and enrollments increased 3 percent.
EQUITY IN EARNINGS AND LOSSES OF AFFILIATES. The company's equity in earnings
of affiliates in the second quarter of 1994 was income of $2.2 million,
compared with a loss of $.6 million in the second quarter of 1993. Better
results at the company's newspaper affiliates were the major factor
contributing to the improvement.
NON-OPERATING ITEMS. Interest income, net of interest expense, was $.6
million, compared with $1.5 million in the same period last year. The decrease
was attributable to lower invested cash balances.
SIX MONTH COMPARISONS
Earnings for the first six months of 1994 were $70.1 million, an increase
of 5 percent over net income of $66.5 million in the first half of 1993.
Earnings per share increased 6 percent to $5.99 per
<PAGE> 9
9.
share, from $5.65 per share in the first six months last year, with a smaller
number of shares outstanding. Net income in 1993 does not include 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." Including this credit, net income in the first half of 1993 was $78.1
million ($6.63 per share).
Total revenues for the first six months of 1994 increased 3 percent to
$763.3 million, from $738.4 million in the comparable period last year.
Advertising revenues, which include the results of the two new television
stations in 1994, increased 6 percent, while circulation and subscriber
revenues fell 3 percent. Other revenues increased 9 percent over the first
half of 1993.
Total costs and expenses increased 3 percent during the first six
months of 1994 to $642.5 million, from $624.6 million in the corresponding
period of 1993. Operating expenses increased 7 percent, while selling, general
and administrative expenses decreased 6 percent compared with the first half of
1993. Normal increases in fixed costs, such as payroll and fringe benefits,
and circulation related expenses, were partially offset by lower newsprint and
magazine paper expense. Over 60 percent of the total increase relates to
additional expenses associated with the newly acquired businesses. In the
first half of 1994 operating income rose to $120.8 million, a 6 percent
increase over $113.8 million in the same period last year.
NEWSPAPER DIVISION. Newspaper division revenues were up 2 percent in the first
half of 1994, over the comparable period of 1993. Although advertising volume
at The Washington Post fell 1.2 percent in the first six months of 1994,
advertising revenues for the division rose 3 percent in the period due to
strong performances in general and classified advertising volume at The Post.
Circulation revenues for the division increased almost 1 percent when compared
with the first half of 1993. Daily circulation at The Post was essentially
even with the prior year, while Sunday circulation was up by less than 1
percent.
BROADCAST DIVISION. Revenues at the broadcast division, which include the
results of the two Texas television stations purchased at the end of April,
increased 28 percent over the first six months of 1993. In the first half of
1994 local advertising revenues rose 33 percent and national advertising
revenues increased 26 percent. Approximately 65 percent of the increase is
attributable to the newly acquired stations.
MAGAZINE DIVISION. At Newsweek revenues decreased 3 percent in the first half
of 1994. A major contributor to the decline was a 6 percent decrease in
advertising revenues, which resulted from lower rates at the domestic edition
and lower volume, despite the publication of one additional newsstand-only
issue in 1994. In the
<PAGE> 10
10.
first six months of 1994, circulation revenues decreased 1 percent, primarily
due to lower newsstand volume and less favorable currency rates at the
international editions.
CABLE DIVISION. Cable division revenues were down 3 percent in the first half
of 1994. Subscriber revenues fell 8 percent in the first six months of 1994,
principally due to a decrease in subscriber rates attributable to the rate
freeze and reductions enacted in the Cable Act, which was partially offset by a
2 percent increase in basic subscribers. In 1993 results also included
operations in the United Kingdom, which were subsequently sold. Excluding
foreign operations, cable division revenues were even with the first six months
of 1993.
OTHER BUSINESSES. At the company's other businesses, revenues rose 9 percent
in the first half of 1994. Improved results at Stanley H. Kaplan Educational
Center was the major contributor to the increase over 1993.
EQUITY IN EARNINGS AND LOSSES OF AFFILIATES. The company's equity in earnings
of affiliates during the first half of 1994 was a loss of $3.2 million,
compared with a loss of $2.4 million in the first six months of 1993. Lower
results from the company's newsprint affiliates, which were partially offset by
improved earnings at the newspaper affiliates, were the major contributors to
the decrease.
NON-OPERATING ITEMS. Interest income, net of interest expense, was even with
the first six months of 1993, primarily due to lower invested cash balances and
higher interest rates. In 1993 net interest income included the capitalization
of interest, higher invested cash balances and lower interest rates.
Other income in the first half of 1994 was $2.6 million, compared with
$.6 million in the comparable period 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.
FINANCIAL CONDITION
In December 1993 the Federal Communications Commission
(FCC) awarded a pioneer's preference for personal communications services (PCS)
to American PCS, L.P. (known as American Personal Communications or APC), a
limited partnership in which the company has a 70 percent interest. Under the
terms of the initial award, the license was to be awarded at no cost to the
pioneer. Pursuant to the award, in January 1994, APC filed an application for
a PCS authorization with the FCC. APC has begun some operations, and
immediately following receipt of authorization from the FCC, the company
expects to substantially increase the level of capital investment in the
business.
On August 9, 1994, the FCC reversed its position with respect to
awarding licenses to pioneers at no cost. Under the terms of the new
<PAGE> 11
11.
decision pioneers will now have to pay the lesser of either 90 percent of the
winning bid for a similar license in the same market or 90 percent of the
weighted average price of the top 10 winning bids nationwide. Such cost for
APC will not be determinable until the conclusion of the auction process, but
it will be in addition to the company's initial estimate of construction costs,
which could approximate $200 million.
In February 1994, the FCC issued new rules related to pricing and the
reregulation of the cable industry, which took effect on July 14, 1994, and
which will reduce cable revenues. The company has evaluated the rules and does
not expect them to have a material effect on consolidated financial results.
Post-Newsweek Stations now has six television stations, two each
affiliated with ABC, CBS and NBC. Several of these stations have negotiated
long-term affiliation agreements during the past 15 months. As a result of
these agreements, Post-Newsweek Stations will receive significantly improved
network compensation over the life of the contracts, which together with the
acquisition of the Texas stations, is projected to increase materially
broadcast division operating income. The full effect of the increases will be
felt beginning in the third quarter of 1994 and in subsequent periods.
In July 1994, Katharine Graham, chairman of the executive committee,
announced her intention to resign as a trustee of certain trusts holding Class
A shares and to relinquish her right to vote certain other Class A shares held
in trust. These changes are subject to the approval of the FCC because of the
company's ownership of television properties. If effected these changes will
reduce the percentage of Class A shares voted by Mrs. Graham, from 52.4 percent
to 29.1 percent and the combined percentage of Class A shares voted by Mrs.
Graham and Donald E. Graham, chairman and chief executive officer, from 66.6
percent to 56.8 percent.
During the first half of 1994 the company repurchased 224,600 shares
of its Class B common stock at a cost of approximately $52.3 million.
The company has experienced no other significant changes in its
financial condition since the end of 1993.
<PAGE> 12
12.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's May 12, 1994, Annual Meeting of Stockholders, the
stockholders elected each of the nominees to its Board of Directors named in
the Company's proxy statement dated March 31, 1994. The voting results are set
forth below:
Election of the nominees to the Board of Directors:
CLASS A DIRECTORS
<TABLE>
<CAPTION>
BROKER
NOMINEE FOR WITHHELD NON-VOTES
------- --- -------- ---------
<S> <C> <C> <C>
Cohen 1,843,250 - 0 - - 0 -
Gillespie 1,843,250 - 0 - - 0 -
D. Graham 1,843,250 - 0 - - 0 -
K. Graham 1,843,250 - 0 - - 0 -
Ruane 1,843,250 - 0 - - 0 -
Simmons 1,843,250 - 0 - - 0 -
Spoon 1,843,250 - 0 - - 0 -
Wilson 1,843,250 - 0 - - 0 -
</TABLE>
CLASS B DIRECTORS
<TABLE>
<CAPTION>
BROKER
NOMINEE FOR WITHHELD NON-VOTES
------- --- -------- ---------
<S> <C> <C> <C>
Burke 8,018,824 13,532 - 0 -
Gomory 8,019,790 12,566 - 0 -
Keough 8,019,720 12,636 - 0 -
Preiskel 8,017,838 14,518 - 0 -
</TABLE>
<PAGE> 13
13.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following document is filed as an exhibit to this report:
<TABLE>
<CAPTION>
EXHIBIT FILING
NUMBER DESCRIPTION PAGE NUMBER
<S> <C> <C>
11 Calculation of average number of
shares outstanding................................... 15
</TABLE>
(b) During the period covered by this report the Company filed a Current Report
on Form 8-K dated April 22, 1994, which (i) described under Item 2
("Acquisition or Disposition of Assets.") the Company's purchase of
substantially all of the assets comprising the businesses of television
stations KPRC-TV, an NBC affiliate in Houston, Texas, and KSAT-TV, an ABC
affiliate in San Antonio, Texas, and (ii) included under Item 7 ("Financial
Statements and Exhibits.") the financial information required by the
instructions to such Item.
<PAGE> 14
14.
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: August 16, 1994 /s/ Donald E. Graham
--------------- --------------------------------------
Donald E. Graham, Chairman &
Chief Executive Officer
(Principal Executive Officer)
Date: August 16, 1994 /s/ John B. Morse, Jr.
--------------- -----------------------------------------
John B. Morse, Jr., Vice President-Finance
(Principal Financial Officer)
<PAGE> 1
15.
Exhibit 11
CALCULATION OF AVERAGE
NUMBER OF SHARES OUTSTANDING
(In thousands of shares)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
-------------------- ----------------------
July 3, July 4, July 3, July 4,
1994 1993 1994 1993
-------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Number of shares of
Class A and Class B
stock outstanding
at beginning of
period 11,713 11,750 11,713 11,798
Issuance of shares of
Class B common stock
(weighted), net of
forfeiture of re-
stricted stock awards --- --- --- 15
Repurchase of Class B
common stock (weighted) (50) --- (25) (43)
Unexercised stock option
equivalent shares com-
puted under the "treasury
stock method" 4 5 5 5
------ ------ ------ ------
Average number of
shares outstanding
during the period 11,667 11,755 11,693 11,775
====== ====== ====== ======
</TABLE>
