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Investor Relations

SEC Filings

10-Q
GRAHAM HOLDINGS CO filed this Form 10-Q on 08/16/1994
Entire Document
 
<PAGE>   7
                                                                              7.



I
TEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION

         This analysis should be read in conjunction with the consolidated
financial statements and the notes thereto.

         Revenues and expenses in the first and third quarters are customarily
lower than those in the second and fourth quarters because of significant 
fluctuations in advertising volume.  For that reason, the results of operations
for each quarter are compared with those of the corresponding quarter in the
preceding year.

         SECOND QUARTER COMPARISONS

         Net income for the second quarter of 1994 was $41.3 million, an
increase of 9 percent from net income of $38.0 million in the second quarter
last year. Earnings per share increased 10 percent to $3.54 per share, from
$3.23 per share in the second quarter of 1993, with a smaller number of shares
outstanding.

         Revenues for the second quarter of 1994 rose 7 percent to $404.8
million, from $376.7 million in the same period last year.  Advertising
revenues rose 12 percent and other revenues increased 7 percent, while
circulation and subscriber revenues fell 2 percent.  The newspaper division,
Newsweek and other businesses all posted higher revenue in the second quarter
this year.  The broadcast division had exceptionally strong revenue gains,
primarily reflecting the results of the two television stations acquired on
April 22.

         Costs and expenses for the second quarter of 1994 increased 7 percent
to $335.3 million, from $312.7 million in the second quarter of 1993.
Operating expenses increased 12 percent, while selling, general and
administrative expenses decreased 3 percent compared with the second quarter
last year. Approximately 50 percent of the total increase relates to additional
expenses associated with the newly acquired businesses, while the remainder
reflects normal increases in the costs of operations.    In the second quarter
of 1994 operating income rose to $69.6  million, a 9 percent increase over
$64.0 million in 1993.

NEWSPAPER DIVISION.  At the newspaper division revenues increased  5 percent in
the second quarter of 1994.  Advertising revenues for the division rose 6.5
percent, with a 1.1 percent increase in advertising linage at The Washington
Post.  Classified volume grew 6 percent in the quarter with recruitment
advertising remaining strong.  Retail linage was down 6 percent, while general
rose almost 9 percent compared with the same period last year.  Preprint volume
increased 22 percent over the second quarter of 1993; lower rates initiated at
the beginning of the fourth quarter of 1993, have attracted advertisers to
preprints from other forms of outside advertising.  Circulation