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10-Q
GRAHAM HOLDINGS CO filed this Form 10-Q on 11/01/2017
Entire Document
 


for the first nine months of 2017 decreased 32% to $98.2 million from $144.6 million in the same period of 2016, due to lower revenues and the significantly higher network fees.
Other Businesses
A summary of Other Businesses’ operating results is as follows:
  
 
Three Months Ended
 
  
 
Nine Months Ended
 
  
  
 
September 30
 
%
 
September 30
 
%
(in thousands)
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
Operating Revenues
 
  
 
  
 
  
 
  
 
  
 
  
Manufacturing
 
$
115,594

 
$
62,207

 
86

 
$
298,164

 
$
176,908

 
69

Healthcare
 
40,473

 
37,690

 
7

 
115,592

 
110,068

 
5

SocialCode
 
14,497

 
15,180

 
(4
)
 
41,926

 
38,961

 
8

Other
 
8,561

 
7,236

 
18

 
25,253

 
18,361

 
38

  
 
$
179,125

 
$
122,313

 
46

 
$
480,935

 
$
344,298

 
40

Operating Expenses
 
  

 
  

 
  

 
  

 
  

 
  

Manufacturing
 
$
109,813

 
$
58,430

 
88

 
$
292,893

 
$
169,145

 
73

Healthcare
 
39,553

 
36,383

 
9

 
115,214

 
107,288

 
7

SocialCode
 
20,745

 
26,017

 
(20
)
 
50,078

 
54,223

 
(8
)
Other
 
16,047

 
12,284

 
31

 
49,265

 
35,235

 
40

  
 
$
186,158

 
$
133,114

 
40

 
$
507,450

 
$
365,891

 
39

Operating Income (Loss)
 
  

 
  

 
  
 
  

 
  

 
  
Manufacturing
 
$
5,781

 
$
3,777

 
53

 
$
5,271

 
$
7,763

 
(32
)
Healthcare
 
920

 
1,307

 
(30
)
 
378

 
2,780

 
(86
)
SocialCode
 
(6,248
)
 
(10,837
)
 
42

 
(8,152
)
 
(15,262
)
 
47

Other
 
(7,486
)
 
(5,048
)
 
(48
)
 
(24,012
)
 
(16,874
)
 
(42
)
  
 
$
(7,033
)
 
$
(10,801
)
 
35

 
$
(26,515
)
 
$
(21,593
)
 
(23
)
Depreciation
 
  

 
 
 
  
 
  

 
  

 
  
Manufacturing
 
$
2,717

 
$
1,809

 
50

 
$
6,629

 
$
5,588

 
19

Healthcare
 
1,166

 
686

 
70

 
3,429

 
2,090

 
64

SocialCode
 
256

 
241

 
6

 
753

 
683

 
10

Other
 
381

 
553

 
(31
)
 
1,157

 
1,028

 
13

  
 
$
4,520

 
$
3,289

 
37

 
$
11,968

 
$
9,389

 
27

Amortization of Intangible Assets and Impairment of Goodwill and Other Long-Lived Assets
 
  

 
 
 
  
 
  

 
  

 
  
Manufacturing
 
$
6,306

 
$
3,089

 

 
$
25,117

 
$
8,722

 

Healthcare
 
2,420

 
1,674

 
45

 
5,718

 
5,028

 
14

SocialCode
 
83

 

 

 
250

 

 

Other
 

 
21

 

 

 
63

 

  
 
$
8,809

 
$
4,784

 
84

 
$
31,085

 
$
13,813

 

Pension Expense
 
  

 
  

 
  
 
  

 
  

 
  
Manufacturing
 
$
947

 
$
24

 

 
$
994

 
$
62

 

Healthcare
 
166

 

 

 
498

 

 

SocialCode
 
149

 
135

 
10

 
445

 
406

 
10

Other
 
113

 
120

 
(6
)
 
336

 
371

 
(9
)
  
 
$
1,375

 
$
279

 

 
$
2,273

 
$
839

 

Manufacturing includes four businesses: Dekko, a manufacturer of electrical workspace solutions, architectural lighting and electrical components and assemblies; Joyce/Dayton Corp., a manufacturer of screw jacks and other linear motion systems; Forney, a global supplier of products and systems that control and monitor combustion processes in electric utility and industrial applications; and Hoover Treated Wood Products, Inc., a supplier of pressure impregnated kiln-dried lumber and plywood products for fire retardant and preservative applications that the Company acquired in April 2017. In September 2016, Dekko acquired Electri-Cable Assemblies (ECA), a manufacturer of power, data and electrical solutions for the office furniture industry.
In the second quarter of 2017, the Company recorded a $9.2 million goodwill and other long-lived asset impairment charge at Forney, due to lower than expected revenues resulting from sluggish overall demand for its energy products. Excluding this impairment charge, manufacturing revenues and operating income increased in the first nine months of 2017 due to the Hoover acquisition and growth and improved results at Dekko, including the ECA acquisition, offset by a decline in results at Forney, which included $1.2 million in expense related to a separation incentive program implemented in the third quarter of 2017 that will be mostly funded from the assets of the Company's pension plan.

26