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SEC Filings

10-Q
GRAHAM HOLDINGS CO filed this Form 10-Q on 11/15/1994
Entire Document
 
<PAGE>   6


                                                                              6.


THE WASHINGTON POST COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


NOTE 1:  RESULTS OF OPERATIONS, WHEN EXAMINED ON A QUARTERLY BASIS, REFLECT THE
SEASONALITY OF ADVERTISING THAT AFFECTS THE NEWSPAPER, MAGAZINE AND
BROADCASTING OPERATIONS. ADVERTISING REVENUES IN THE SECOND AND FOURTH QUARTERS
ARE TYPICALLY HIGHER THAN FIRST AND THIRD QUARTER REVENUES.  ALL ADJUSTMENTS
REFLECTED IN THE INTERIM FINANCIAL STATEMENTS ARE OF A NORMAL RECURRING NATURE.

NOTE 2:  SUMMARIZED COMBINED (UNAUDITED) RESULTS OF OPERATIONS FOR THE THIRD
QUARTER AND YEAR-TO-DATE OF 1994 AND 1993 FOR THE COMPANY'S AFFILIATES ARE AS
FOLLOWS (IN THOUSANDS):


<TABLE>
<CAPTION>
                                                        THIRD QUARTER                        YEAR-TO-DATE     
                                                   --------------------------        --------------------------
                                                     1994             1993             1994             1993   
                                                   ---------        ---------        ---------        ---------
<S>                                                <C>              <C>              <C>              <C>
OPERATING REVENUES                                 $195,459         $164,103         $556,120         $492,425
OPERATING INCOME                                     14,396            9,460           31,066           18,088
NET INCOME (LOSS)                                    22,480            3,614           22,240            4,472
</TABLE>


NOTE 3:  IN APRIL 1994 THE COMPANY ACQUIRED SUBSTANTIALLY ALL OF THE ASSETS
COMPRISING THE BUSINESSES OF TELEVISION STATIONS KPRC-TV, AN NBC AFFILIATE IN
HOUSTON, TEXAS, AND KSAT-TV, AN ABC AFFILIATE IN SAN ANTONIO, TEXAS, FOR $253
MILLION IN CASH.  THE TRANSACTION WAS ACCOUNTED FOR AS A PURCHASE AND THE
RESULTS OF OPERATIONS OF THE TELEVISION STATIONS WERE INCLUDED WITH THOSE OF
THE COMPANY FOR THE PERIOD SUBSEQUENT TO THE DATE OF ACQUISITION.

           THE FOLLOWING STATEMENTS PRESENT THE COMPANY'S UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED INCOME STATEMENTS FOR THE NINE MONTHS ENDED OCTOBER 2,
1994, AND OCTOBER 3, 1993, AS IF THE ACQUISITION OF THE TELEVISION STATIONS HAD
OCCURRED AT THE BEGINNING OF EACH NINE MONTH PERIOD.  AMOUNTS REFLECT AN
ALLOCATION OF THE PURCHASE PRICE TO THE ACQUIRED NET TANGIBLE ASSETS, WITH THE
EXCESS BEING AMORTIZED OVER PERIODS OF BETWEEN 15 AND 20 YEARS.  THE REVENUES
AND RESULTS OF OPERATIONS PRESENTED IN THE PRO FORMA INCOME STATEMENTS DO NOT
NECESSARILY REFLECT THE RESULTS OF OPERATIONS THAT WOULD ACTUALLY HAVE BEEN
OBTAINED IF THE ACQUISITION HAD OCCURRED AT THE BEGINNING OF EACH NINE MONTH
PERIOD.


<TABLE>
<CAPTION>
                                                                                    PRO FORMA INCOME STATEMENTS
                                                                                     FOR THE NINE-MONTHS ENDED
                                                                                     OCT. 2,           OCT. 3,
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                                              1994              1993  
                                                                                   ----------        ----------
<S>                                                                                <C>               <C>
OPERATING REVENUES                                                                 $1,182,461        $1,150,975
NET INCOME
  BEFORE CUMULATIVE EFFECT OF CHANGE IN
    ACCOUNTING PRINCIPLE                                                              117,711           114,131
  AFTER CUMULATIVE EFFECT OF CHANGE IN
    ACCOUNTING PRINCIPLE                                                              117,711           125,731
EARNINGS PER SHARE
  BEFORE CUMULATIVE EFFECT OF CHANGE IN
    ACCOUNTING PRINCIPLE                                                               $10.12             $9.71
  AFTER CUMULATIVE EFFECT OF CHANGE IN
    ACCOUNTING PRINCIPLE                                                               $10.12            $10.69
</TABLE>


           IN MAY 1994 THE COMPANY ACQUIRED AN 80 PERCENT INTEREST IN MAMMOTH
MICRO PRODUCTIONS, A PRODUCER AND PUBLISHER OF MULTIMEDIA CD-ROM TITLES, FOR
$23 MILLION IN CASH.  THIS TRANSACTION WAS ACCOUNTED FOR AS A PURCHASE AND,
ACCORDINGLY THE ASSETS AND LIABILITIES HAVE BEEN RECORDED AT THEIR ESTIMATED
FAIR VALUES AT THE DATE OF ACQUISITION.  THE EXCESS OF THE COST OVER THE FAIR
VALUE OF NET ASSETS ACQUIRED IS BEING AMORTIZED OVER VARIOUS PERIODS UP TO 15
YEARS.  RESULTS OF OPERATIONS OF THE ACQUIRED BUSINESS WERE INCLUDED WITH THOSE
OF THE COMPANY FOR THE PERIOD SUBSEQUENT TO THE DATE OF ACQUISITION.

NOTE 4:  DURING THE FIRST NINE MONTHS OF 1994 THE COMPANY REPURCHASED 226,200
SHARES OF ITS CLASS B COMMON STOCK AT A COST OF $52.7 MILLION.