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SEC Filings

GRAHAM HOLDINGS CO filed this Form 10-Q on 05/18/1994
Entire Document
<PAGE>   7

tem 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.


     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