THE WASHINGTON POST COMPANY
OTHER BUSINESSES. In 1992 revenues from other businesses increased 2 percent,
primarily as a result of the newly acquired businesses in 1992. At Stanley H.
Kaplan Educational Center, enrollments increased 2 percent; however, the
improvement resulted from increased registrations for lower priced courses,
while enrollments in higher priced courses decreased.
Operating income at the company's other businesses decreased from $10.2
million in 1991, to an operating loss of $6.1 million in 1992, due to
continuing investment in PCS and lower operating results at Kaplan. This
decline at Kaplan included a restructuring charge related to the change in its
distribution system to gain more control over its field operations.
EQUITY IN EARNINGS AND LOSSES OF AFFILIATES. The company's equity in earnings
of affiliates for 1992 was a loss of $11.7 million, compared with a loss of
$1.9 million in 1991. Further weaknesses at the company's newsprint
manufacturing affiliates contributed to the loss.
NON-OPERATING ITEMS. Net interest income totaled $5.5 million in 1992, compared
with net interest expense of $.4 million in 1991. Included in 1991 were a fee
of $2.1 million related to the $50 million prepayment on the company's 10.68
percent promissory notes and interest of $1.6 million related to the tax
settlement with the IRS, mentioned previously.
Other expense in 1992 and 1991 included the costs related to the
disposition of certain plant, property and equipment. In 1992 other expense
also included the recognition of unrealized losses on the company's forward
foreign currency contracts.
INCOME TAXES. The effective tax rate increased to 43 percent in 1992, from 37.6
percent in 1991, exclusive of the cumulative effect of the change in accounting
for other postretirement benefits. The favorable settlement with the IRS
significantly lowered the effective rate in 1991.
FINANCIAL CONDITION: CAPITAL RESOURCES
During the period 1991 through 1993 the company spent approximately $285
million on purchases of additional plant, property and equipment, investments
in new businesses, various other capital programs, and the repurchase of Class
B common stock. In September 1993 the company sold its cable franchises in the
United Kingdom for approximately $65 million. Including this transaction, since
the end of 1992 working capital has increased by approximately $124 million. At
January 2, 1994, the company had $172 million in cash and cash equivalents,
$258 million in marketable securities and $52 million in debt.
During 1993 and 1992 the company repurchased 99,800 and 33,949 shares,
respectively, of its Class B common stock at a cost of $23.1 million and $7.5
million, respectively. Sixty-three thousand of these shares were purchased from
The Washington Post Company Profit Sharing Plan. The annual dividend rate in
1994 remains at $4.20 per share.
In December 1993 the Federal Communications Commission (FCC) awarded a
pioneer's preference for personal communications services to American PCS, L.P.
(known as American Personal Communications or APC), a limited partnership in
which The Washington Post Company has a 70 percent interest. In accordance with
that preference, APC has applied at the FCC for a license to operate a PCS
system in most of Maryland, Washington, D.C., northern Virginia and portions of
West Virginia and Pennsylvania. APC has begun to acquire cell sites and specify
PCS equipment, and upon authorization from the FCC, will begin construction of
the system itself. The company estimates that its cost of construction could
approximate $200 million, most of which will be incurred in 1994 and 1995.
The company has an agreement to purchase the assets of two television
stations in Houston and San Antonio, Texas, for approximately $250 million. The
completion of the transaction is contingent upon approval by the FCC, which the
company received in February 1994.
Excluding the expansion of PCS and the purchase of the television stations,
the company estimates that in 1994 it will spend approximately $80 million to
$100 million for plant and equipment, principally for the completion of various
projects at the newspaper and magazine divisions and the development of new
media products. It expects to fund all of these expenditures from cash flow
In February 1994 the FCC issued new rules related to pricing and
reregulation of the cable industry. The company is in the process of evaluating
the rules, but does not expect them to have a material effect on consolidated
In management's opinion, the company will have ample liquidity to meet the
various cash needs in 1994 as outlined above.