EQUITY IN EARNINGS AND LOSSES OF AFFILIATES. The company's equity in earnings
of affiliates during the first nine months of 1995 was income of $15.9 million,
compared with income of $7.9 million in the first nine months of 1994. A
one-time after-tax gain of $8.4 million on the sale of land at one of the
company's newsprint affiliates was included in 1994 income. Improved results
from the company's newsprint mill affiliates were the major contributors to the
increase over 1994.
NON-OPERATING ITEMS. Interest income, net of interest expense, was $2.0
million for the first three quarters of 1995 compared to $2.8 million in the
same period of last year.
Other income in the first three quarters of 1995 was $14.2 million,
compared with $3.1 million in the comparable period of 1994. The increase is
due to the sale of substantially all of the company's interest in American PCS,
L.P. in January 1995. 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
INCOME TAXES. The effective income tax rate for the first nine months of 1995
was 39 percent compared to 42 percent in the same period last year. The
decrease for the first three quarters of 1995 is due to the recognition of
certain tax benefits associated with the write-off of the company's investment
in Mammoth Micro Productions.
On May 17, 1995, the company announced a contract to purchase new
press equipment as part of an estimated three year $250 million capital project
to provide new production facilities for The Washington Post newspaper.
On August 8, the company announced it had reached agreements in
principle to acquire three cable systems serving approximately 65,000
subscribers in four states from Time Warner and from Cox Communications. The
combined purchase price is approximately $120 million in cash.
On August 11, the company reached an agreement in principle with
Tele-Communications Inc. (TCI) to trade the assets of certain cable systems.
According to the terms of the agreement, the company will acquire approximately
63,100 subscribers in three states. TCI will acquire approximately 39,400
subscribers in two states.
The company expects to fund both the new plant construction and the
cable system acquisitions through internally generated funds and short-term
As indicated previously, the newspaper division has experienced
significant increases in newsprint prices in the first nine months of 1995 and
anticipates further increases in the near future. These increases have had and
will continue to have a negative impact on the company's operating results. As
a result of the company's investment