SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 29, 2002
Commission File Number 1-6714
THE WASHINGTON POST COMPANY
| Delaware | 53-0182885 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
1150 15th Street, N.W. Washington, D.C. 20071
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code:
(202) 334-6000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Shares outstanding at November 6, 2002:
Class A Common Stock |
1,722,250 | Shares | ||||||
Class B Common Stock |
7,786,603 | Shares | ||||||
2.
THE WASHINGTON POST COMPANY
Index to Form 10-Q
PART I. |
FINANCIAL INFORMATION | |||||||
Item 1. |
Financial Statements | |||||||
| a. Condensed Consolidated Statements of Income (Unaudited) for the Thirteen and Thirty-nine Weeks Ended September 29, 2002 and September 30, 2001 |
3 | |||||||
| b. Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the Thirteen and Thirty-nine Weeks Ended September 29, 2002 and September 30, 2001 |
4 | |||||||
| c. Condensed Consolidated Balance Sheets at September 29, 2002 (Unaudited) and December 30, 2001 |
5 | |||||||
| d. Condensed Consolidated Statements of Cash Flows (Unaudited) for the Thirty-nine Weeks Ended September 29, 2002 and September 30, 2001 |
6 | |||||||
| e. Notes to Condensed Consolidated Financial Statements (Unaudited) |
7 | |||||||
Item 2. |
Management's Discussion and Analysis of Results of Operations and Financial Condition |
14 | ||||||
Item 4. |
Controls and Procedures | 21 | ||||||
PART II. |
OTHER INFORMATION | |||||||
Item 6. |
Exhibits and Reports on Form 8-K | 22 | ||||||
Signatures |
23 | |||||||
Certifications |
24 | |||||||
3.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The Washington Post Company
Condensed Consolidated Statements of Income (Unaudited)
| Thirteen Weeks Ended | Thirty-nine Weeks Ended | ||||||||||||||||
| September 29, | September 30, | September 29, | September 30, | ||||||||||||||
| (In thousands, except per share amounts) | 2002 | 2001 | 2002 | 2001 | |||||||||||||
Operating revenues |
|||||||||||||||||
Advertising |
$ | 292,523 | $ | 277,425 | $ | 882,183 | $ | 888,281 | |||||||||
Circulation and subscriber |
171,535 | 174,716 | 501,382 | 483,469 | |||||||||||||
Education |
160,454 | 127,159 | 457,148 | 367,680 | |||||||||||||
Other |
15,781 | 13,007 | 47,605 | 43,185 | |||||||||||||
| 640,293 | 592,307 | 1,888,318 | 1,782,615 | ||||||||||||||
Operating costs and expenses |
|||||||||||||||||
Operating |
342,411 | 345,567 | 1,011,093 | 1,029,097 | |||||||||||||
Selling, general and administrative |
162,642 | 144,954 | 499,895 | 444,278 | |||||||||||||
Depreciation of property, plant and equipment |
45,808 | 34,765 | 128,267 | 105,264 | |||||||||||||
Amortization of goodwill and other intangibles |
172 | 20,068 | 483 | 57,185 | |||||||||||||
| 551,033 | 545,354 | 1,639,738 | 1,635,824 | ||||||||||||||
Income from operations |
89,260 | 46,953 | 248,580 | 146,791 | |||||||||||||
Other income (expense) |
|||||||||||||||||
Equity in losses of affiliates |
(1,254 | ) | (26,535 | ) | (16,943 | ) | (45,636 | ) | |||||||||
Interest income |
69 | 226 | 261 | 1,597 | |||||||||||||
Interest expense |
(8,717 | ) | (11,861 | ) | (26,381 | ) | (39,726 | ) | |||||||||
Other, net |
1,115 | (4,365 | ) | 1,606 | 293,688 | ||||||||||||
Income before income taxes and cumulative effect
of change in accounting principle |
80,473 | 4,418 | 207,123 | 356,714 | |||||||||||||
Provision for income taxes |
32,700 | 2,850 | 84,500 | 141,600 | |||||||||||||
Income before cumulative effect of change in accounting principle |
47,773 | 1,568 | 122,623 | 215,114 | |||||||||||||
Cumulative effect in method of accounting for goodwill
and other intangible assets, net of taxes |
— | — | (12,100 | ) | — | ||||||||||||
Net income |
47,773 | 1,568 | 110,523 | 215,114 | |||||||||||||
Redeemable preferred stock dividends |
(249 | ) | (263 | ) | (1,033 | ) | (1,052 | ) | |||||||||
Net income available for common shares |
$ | 47,524 | $ | 1,305 | $ | 109,490 | $ | 214,062 | |||||||||
Basic earnings per common share: |
|||||||||||||||||
Before cumulative effect of change in accounting principle |
$ | 5.03 | $ | 0.17 | $ | 12.90 | $ | 22.68 | |||||||||
Cumulative effect of change in accounting principle |
— | — | (1.27 | ) | — | ||||||||||||
Redeemable preferred stock dividends |
(0.03 | ) | (0.03 | ) | (0.11 | ) | (0.11 | ) | |||||||||
Net income available for common stock |
$ | 5.00 | $ | 0.14 | $ | 11.52 | $ | 22.57 | |||||||||
Diluted earnings per share: |
|||||||||||||||||
Before cumulative effect of change in accounting principle |
$ | 5.02 | $ | 0.17 | $ | 12.88 | $ | 22.64 | |||||||||
Cumulative effect of change in accounting principle |
— | — | (1.27 | ) | — | ||||||||||||
Redeemable preferred stock dividends |
(0.03 | ) | (0.03 | ) | (0.11 | ) | (0.11 | ) | |||||||||
Net income available for common stock |
$ | 4.99 | $ | 0.14 | $ | 11.50 | $ | 22.53 | |||||||||
Dividends declared per common share |
$ | 1.40 | $ | 1.40 | $ | 5.60 | $ | 5.60 | |||||||||
Basic average number of common shares outstanding |
9,506 | 9,489 | 9,502 | 9,484 | |||||||||||||
Diluted average number of common shares outstanding |
9,523 | 9,502 | 9,518 | 9,500 | |||||||||||||
4.
The Washington Post Company
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
| Thirteen Weeks Ended | Thirty-nine Weeks Ended | ||||||||||||||||
| September 29, | September 30, | September 29, | September 30, | ||||||||||||||
| (In thousands) | 2002 | 2001 | 2002 | 2001 | |||||||||||||
Net income |
$ | 47,773 | $ | 1,568 | $ | 110,523 | $ | 215,114 | |||||||||
Other comprehensive income (loss) |
|||||||||||||||||
Foreign currency translation adjustment |
(1,906 | ) | (423 | ) | 2,511 | (3,799 | ) | ||||||||||
Change in unrealized gain on available-for-sale securities |
20,427 | (3,439 | ) | 4,997 | (2,067 | ) | |||||||||||
Less: reclassification adjustment for realized (gains)
losses included in net income |
— | 24 | (11,209 | ) | 3,238 | ||||||||||||
| 18,521 | (3,838 | ) | (3,701 | ) | (2,628 | ) | |||||||||||
Income tax (expense) benefit related to other comprehensive income |
(7,961 | ) | 1,333 | 2,383 | (513 | ) | |||||||||||
| 10,560 | (2,505 | ) | (1,318 | ) | (3,141 | ) | |||||||||||
Comprehensive income (loss) |
$ | 58,333 | $ | (937 | ) | $ | 109,205 | $ | 211,973 | ||||||||
5.
The Washington Post Company
Condensed Consolidated Balance Sheets
| September 29, | December 30, | |||||||||
| 2002 | 2001 | |||||||||
| (In thousands) | ||||||||||
| (unaudited) | ||||||||||
Assets |
||||||||||
Current assets
|
||||||||||
Cash and cash equivalents |
$ | 35,280 | $ | 31,480 | ||||||
Investments in marketable equity securities |
4,597 | 16,366 | ||||||||
Accounts receivable, net |
291,098 | 279,328 | ||||||||
Federal and state income taxes receivable |
— | 10,253 | ||||||||
Inventories |
36,208 | 19,042 | ||||||||
Other current assets |
39,744 | 40,388 | ||||||||
| 406,927 | 396,857 | |||||||||
Property, plant and equipment |
||||||||||
Buildings |
270,511 | 267,658 | ||||||||
Machinery, equipment and fixtures |
1,539,683 | 1,422,228 | ||||||||
Leasehold improvements |
82,214 | 79,108 | ||||||||
| 1,892,408 | 1,768,994 | |||||||||
Less accumulated depreciation |
(915,389 | ) | (794,596 | ) | ||||||
| 977,019 | 974,398 | |||||||||
Land |
34,733 | 34,733 | ||||||||
Construction in progress |
85,413 | 89,080 | ||||||||
| 1,097,165 | 1,098,211 | |||||||||
Investments in marketable equity securities |
218,921 | 219,039 | ||||||||
Investments in affiliates |
74,124 | 80,936 | ||||||||
Goodwill, net |
771,053 | 754,554 | ||||||||
Indefinite lived intangible assets, net |
453,306 | 450,759 | ||||||||
Other intangible assets, net |
2,095 | 1,448 | ||||||||
Prepaid pension cost |
476,679 | 447,688 | ||||||||
Deferred charges and other assets |
76,504 | 109,606 | ||||||||
| $ | 3,576,774 | $ | 3,559,098 | |||||||
Liabilities and Shareholders’ Equity |
||||||||||
Current liabilities |
||||||||||
Accounts payable and accrued liabilities |
$ | 330,840 | $ | 253,346 | ||||||
Deferred revenue |
138,827 | 130,744 | ||||||||
Dividends declared |
13,550 | — | ||||||||
Federal and state income taxes payable |
5,126 | — | ||||||||
Short-term borrowings |
362,714 | 50,000 | ||||||||
| 851,057 | 434,090 | |||||||||
Postretirement benefits other than pensions |
134,867 | 130,824 | ||||||||
Other liabilities |
198,536 | 192,540 | ||||||||
Deferred income taxes |
231,179 | 221,949 | ||||||||
Long-term debt |
405,267 | 883,078 | ||||||||
| 1,820,906 | 1,862,481 | |||||||||
Redeemable preferred stock |
12,916 | 13,132 | ||||||||
Preferred stock |
— | — | ||||||||
Common shareholders’ equity |
||||||||||
Common stock |
20,000 | 20,000 | ||||||||
Capital in excess of par value |
146,080 | 142,814 | ||||||||
Retained earnings |
3,085,882 | 3,029,595 | ||||||||
Accumulated other comprehensive income(loss) |
||||||||||
Cumulative foreign currency translation adjustment |
(7,167 | ) | (9,678 | ) | ||||||
Unrealized gain on available-for-sale securities |
20,452 | 24,281 | ||||||||
Cost of Class B common stock held in treasury |
(1,522,295 | ) | (1,523,527 | ) | ||||||
| 1,742,952 | 1,683,485 | |||||||||
| $ | 3,576,774 | $ | 3,559,098 | |||||||
6.
The Washington Post Company
Condensed Consolidated Statements of Cash Flows (Unaudited)
| Thirty-nine Weeks Ended | |||||||||||
| September 29, | September 30, | ||||||||||
| 2002 | 2001 | ||||||||||
| (In thousands) | |||||||||||
Cash flows from operating activities: |
|||||||||||
| </ | |||||||||||