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Investor Relations

SEC Filings

GRAHAM HOLDINGS CO filed this Form 10-K on 03/29/1994
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<PAGE>   47
                          THE WASHINGTON POST COMPANY

MAGAZINE DIVISION. Newsweek revenues in 1993 decreased 4 percent, principally
due to an 8 percent decline in advertising revenues at both the domestic and
international editions. Lower rates and fewer pages were responsible for the
decrease. Circulation revenues increased 1 percent at Newsweek, with higher
volume and rates at the international editions being the major contributors to
the increase. In 1993 Newsweek Domestic published the same number of weekly
issues as in 1992 (52), with two special newsstand issues in 1993, compared
with one special issue in 1992. At Newsweek International 51 weekly issues were
published in 1993, the same as in the prior year.
    At Newsweek, the operating margin decreased to  5 percent, from 7 percent
in 1992, principally as a result of the decrease in advertising revenues and
certain costs related to the relocation of the New York City operations
scheduled for 1994.

CABLE DIVISION. Revenues at the cable division in 1993 increased 7 percent over
last year (excluding the operations in the United Kingdom, which were sold in
September 1993, revenues also increased 7 percent). The number of basic
subscribers rose 4 percent, primarily due to the 10,000 subscribers acquired
from Coast TV Cable, Inc., in Long Beach, Mississippi. Also affecting the
change in division revenues were higher advertising revenues at the domestic
systems, an approximately $3 million negative impact of rate reregulation and
the sale of the company's cable operations in the United Kingdom.
    Operating margin in 1993 remained flat at 22 percent, compared to the prior
year. Excluding the operations in the United Kingdom, 1993 operating margin was
25 percent, the same as in 1992. Domestic cable cash flow rose 5 percent to
$85.9 million, from $82.0 million last year. Total costs at the domestic
systems increased 9 percent, reflecting the continued rise in programming costs
and the larger number of subscribers.

OTHER BUSINESSES. In 1993 revenues from other businesses increased 23 percent.
Revenues from PASS, acquired at the end of 1992, were the major contributor to
the increase. Revenues at Stanley H. Kaplan Educational Center rose 3 percent
over last year, and enrollments increased 2 percent, principally in the lower
priced courses.
    The company's other businesses recorded an operating loss of $9.1 million
in 1993, compared with an operating loss of $6.1 million in 1992, principally
due to the expansion of established businesses, the continuing investment in
PCS and lower operating results at Kaplan. This decline at Kaplan was a result
of additional costs related to a change in its operating structure, implemented
at the end of 1992.

EQUITY IN EARNINGS AND LOSSES OF AFFILIATES. The company's equity in earnings
of affiliates for 1993 was a loss of $2.0 million, compared with a loss of
$11.7 million in 1992. Better results at the company's newsprint affiliates,
which included gains on the sale of land in 1993, contributed to the

NON-OPERATING ITEMS. Interest income, net of interest expense, was $6.1 million
in 1993, compared with $5.5 million in 1992. This increase was a result of
higher invested cash balances, which were partially offset by lower interest
    Other income in 1993 was $20.4 million, compared with other expense of $1.7
million in 1992. In 1993 other income included a $20.2 million gain on the sale
of the company's cable franchises in the United Kingdom. In 1992 other expense
included the recognition of unrealized losses on the company's forward foreign
currency contracts, in addition to the costs associated with the disposition of
certain plant, property and equipment.

INCOME TAXES. The effective tax rate decreased to 41.6 percent in 1993, from 43
percent in 1992, exclusive of the cumulative effect of the change in accounting
principle. During 1993 the company adjusted the provision for income taxes to
reflect the increase in the federal income tax rate, which was retroactive to
the beginning of the year. Offsetting the rate increase was the lower effective
rate for foreign taxes recorded on the sale of the company's cable operations
in the United Kingdom.


In 1992 net income increased 80 percent to $127.8 million, from net income of
$70.8 million in 1991. Earnings per share increased 81 percent to $10.80, from
$5.96 in 1991. The company's 1991 earnings included a one-time, after-tax
charge of $47.9 million ($4.04 per share) related to a change in accounting for
certain employee postretirement benefits. Net income in 1991 also included a
credit of $10.0 million ($.84 per share) resulting from a settlement with the
Internal Revenue Service (IRS) and an after-tax charge of $3.5 million ($.30
per share) for severance and related costs resulting from a voluntary reduction
in staff at The Washington Post newspaper. Excluding these nonrecurring charges
and credits from 1991 results, both net income and earnings per share for 1992
increased 14 percent.
    Results for 1992 included 53 weeks at The Washington Post and The Herald
newspapers; 1991 included 52 weeks. Also included in 1992 are the acquisitions
of The Gazette Newspapers and other small businesses.