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10-K
GRAHAM HOLDINGS CO filed this Form 10-K on 03/29/1994
Entire Document
 
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                          THE WASHINGTON POST COMPANY
                          ---------------------------

increased in 1992 to a majority interest and, accordingly, it is included as a
fully consolidated subsidiary (see Note K on acquisitions).
    Summarized financial data for the affiliates' operations is as follows (in
thousands):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
                                  1993                1992                 1991
- ---------------------------------------------------------------------------------
<S>                            <C>                 <C>                 <C>
FINANCIAL POSITION
Working capital . . . .        $  (67,923)         $(119,505)          $  (93,737)
Property, plant and
  equipment . . . . . .           422,606            436,620              478,502
Total assets  . . . . .           732,940            718,352              759,850
Long-term debt  . . . .           200,105            197,203              212,923
Net equity  . . . . . .           172,332            175,618              203,997

RESULTS OF OPERATIONS
Operating revenues  . .        $  610,617          $ 650,194           $  644,814
Operating income  . . .            43,569             20,500               30,509
Net income (loss) . . .             7,218            (13,175)               6,543
</TABLE>


    The following table summarizes the status and results of the company's
investments in affiliates (in thousands):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
                                                       1993                1992
- ---------------------------------------------------------------------------------
<S>                                                <C>                <C>
Beginning investment  . . . . . . . . . . .        $  162,410         $   181,764
Equity in losses  . . . . . . . . . . . . .            (1,994)            (11,730)
Dividends and distributions received  . . .            (2,743)             (2,575)
Foreign currency translation  . . . . . . .            (2,422)             (1,611)
Other . . . . . . . . . . . . . . . . . . .                --              (3,438)
                                                   ----------         -----------
Ending investment . . . . . . . . . . . . .        $  155,251         $   162,410
                                                   ==========         ===========
</TABLE>



    At January 2, 1994, the unamortized excess of the company's investments
over its equity in the underlying net assets of its affiliates at the date of
acquisition was approximately $89,700,000. Amortization included in "Equity in
losses of affiliates" was $2,600,000 for the years ended January 2, 1994, and
January 3, 1993, and $2,550,000 for the year ended December 29, 1991.

E.  INCOME TAXES

In 1993 the company adopted the provisions of SFAS No. 109, "Accounting for
Income Taxes," which requires the use of the asset and liability method of
accounting for deferred income taxes. The cumulative effect of this adoption
was an increase in 1993 net income of $11,600,000 and is shown on the
Consolidated Statements of Income as the cumulative effect of a change in
accounting principle.  Financial statements for years prior to 1993 were not
restated. Information shown below for those prior years was determined under
the provisions of APB Opinion No. 11.
    The provision for income taxes consists of the following (in thousands):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
                                                     Current             Deferred
- ---------------------------------------------------------------------------------
<S>                                                <C>                 <C>
1993
U.S. Federal  . . . . . . . . . . . . . . . .      $  85,082           $     (535)
Foreign . . . . . . . . . . . . . . . . . . .          6,913                 (657)
State and local . . . . . . . . . . . . . . .         19,324                 (477)
                                                   ---------           ----------
                                                   $ 111,319           $   (1,669)
                                                   =========           ==========

1992
U.S. Federal  . . . . . . . . . . . . . . . .      $  79,380           $     (295)
Foreign . . . . . . . . . . . . . . . . . . .            488               (1,219)
State and local . . . . . . . . . . . . . . .         18,109                  (63)
                                                   ---------           ----------
                                                   $  97,977           $   (1,577)
                                                   =========           ==========

1991
U.S. Federal  . . . . . . . . . . . . . . . .      $  60,732           $   (3,195)
Foreign . . . . . . . . . . . . . . . . . . .            567                 (528)
State and local . . . . . . . . . . . . . . .         14,226                 (302)
                                                   ---------           ----------
                                                   $  75,525           $   (4,025)
                                                   =========           ==========
</TABLE>


    During 1993 the company sold its cable franchises in the United Kingdom.
This transaction increased foreign taxes by approximately $6,800,000.
    In 1992 and 1991 deferred tax benefit resulted principally from the excess
of financial statement depreciation over tax depreciation, the tax effect of
which amounted to $1,783,000 in 1992 and $2,437,000 in 1991, and accrued
postretirement benefit expense, the effect of which amounted to $4,138,000 in
1992 and $3,163,000 in 1991. These amounts were offset by the tax effect of
$7,469,000 in 1992 and $5,335,000 in 1991 of net pension credits in excess of
contributions.
    The provision for income taxes exceeds the amount of income tax determined
by applying the U.S. Federal statutory rate of 35 percent in 1993 and 34
percent in 1992 and 1991 to income before taxes as a result of the following
(in thousands):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
                                   1993                1992                1991
- ---------------------------------------------------------------------------------
<S>                           <C>                 <C>                  <C>
U.S. Federal statutory
  taxes . . . . . . . . .     $    92,213         $    76,226          $   64,675
State and local taxes
  net of U.S. Federal income
  tax benefit . . . . . .          12,251              11,911               9,190
Amortization of goodwill
  not deductible for income
  tax purposes  . . . . .           2,433               2,922               2,805
Prior period tax
  adjustments . . . . . .              --                  --             (10,013)
Other . . . . . . . . . .           2,753               5,341               4,843
                              -----------         -----------          ----------
Provision for income          
  taxes . . . . . . . . .     $   109,650         $    96,400          $   71,500
                              ===========         ===========          ==========
</TABLE>


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