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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>   9
                                                                             9.


EQUITY IN EARNINGS AND LOSSES OF AFFILIATES.  The company's equity in earnings
of affiliates in the third quarter of 1994 was income of $11.1 million,
compared with break-even results in the third quarter of 1993.  The one-time
after-tax gain of $8.4 million on the sale of land at one of the company's
newsprint affiliates was the major contributor to the improvement.

NON-OPERATING ITEMS.  Interest income, net of interest expense, was $.1
million, compared with $1.6 million in the same period last year.  The decrease
was attributable to lower invested cash balances offset partially by higher
interest rates.

INCOME TAXES.  The effective income tax rate for the third quarter of 1994 was
lower than the effective rate for 1993, primarily due to the effect and
accounting treatment of foreign taxes on the gain on the sale of land at one of
the company's newsprint affiliates.  Income from affiliates is recorded by the
company at the company's share of after-tax net income of the affiliate.  The
third quarter also includes the impact of the revised estimated effective
income tax rate for the first half of 1994.

         NINE MONTH COMPARISONS

         Net income in the first nine months of 1994 was $117.5 million ($10.11
per share) down from net income of $122.9 million ($10.45 per share) in the
same period last year with fewer shares outstanding.

         Net income in the first nine months of 1994 included an after-tax gain
of $8.4 million ($.73 per share) on the sale of land at one of the company's
newsprint affiliates.  Net income in the same period of 1993 included both 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 and a one-time credit of $11.6 million
($.98 per share) resulting from the adoption of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109).
Excluding these one-time gains and credits in 1994 and 1993, earnings rose 11
percent in the first three quarters this year over the same period last year.

         Total revenues for the first nine months of 1994 increased 5.5 percent
to $1,163.1 million, from $1,102.5 million in the comparable period last year.
Advertising revenues, which include the results of the two new television
stations in 1994, increased 9.5 percent, while circulation and subscriber
revenues fell 3 percent.  Other revenues increased 7 percent over the first
three quarters of 1993.

         Total costs and expenses increased 4.5 percent during the first nine
months of 1994 to $976.1 million, from $933.7 million in the corresponding
period of 1993.  Operating expenses increased 7 percent, while selling, general
and administrative expenses decreased 2.6 percent compared with the first three
quarters of 1993.  Normal increases in fixed costs, such as payroll and fringe
benefits, and circulation related expenses, were partially offset by lower
newsprint