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Investor Relations

SEC Filings

10-Q
GRAHAM HOLDINGS CO filed this Form 10-Q on 11/15/1994
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.

         THIRD QUARTER COMPARISONS

         Net income for the third quarter of 1994 was $47.5 million, an
increase of 6 percent from net income of $44.8 million in the third quarter
last year.  Earnings per share increased 8 percent to $4.13 per share, from
$3.82 per share in the third quarter of 1993, with a smaller number of shares
outstanding.

         The 1994 third-quarter results include an after-tax gain of $8.4
million ($.73 per share) on the sale of land at one of the company's newsprint
affiliates.  The 1993 third-quarter results included an after-tax gain of $13.4
million ($1.14 per share) on the sale of the company's cable franchises in the
United Kingdom.  Excluding these one-time gains, earnings rose 24 percent in
the third quarter this year.

         Revenues for the third quarter of 1994 rose 10 percent to $399.8
million, from $364.1 million in the same period last year.  Advertising
revenues rose 17 percent and other revenues increased 5 percent, while
circulation and subscriber revenues fell 2 percent.  The newspaper division,
Newsweek and other businesses all posted higher revenue in the third quarter
this year.  The broadcast division had exceptionally strong revenue gains,
reflecting the results of the two television stations acquired on April 22 as
well as improved revenues at existing company owned stations.

         Costs and expenses for the third quarter of 1994 increased 8 percent
to $333.6 million, from $309.1 million in the third quarter of 1993.  Operating
expenses increased 8 percent, while selling, general and administrative
expenses increased 4.5 percent compared with the third quarter last year.
Depreciation expense increased 6 percent over the third quarter of 1993.
Approximately, 70 percent of the total increase in costs and expenses relates
to additional expenses associated with new businesses, while the remainder
reflects normal increases in the costs of operations. In the third quarter of
1994 operating income rose to $66.3 million, a 20 percent increase over $55.0
million in 1993.