SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 28, 2004
Commission File Number 1-6714
THE WASHINGTON POST COMPANY
(Exact name of registrant as specified in its charter)
| Delaware | 53-0182885 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| 1150 15th Street, N.W. Washington, D.C. | 20071 | |
| (Address of principal executive offices) | (Zip Code) |
(202) 334-6000
(Registrant’s telephone number, including area code)
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. Yes x. No ¨.
Shares outstanding at April 27, 2004:
| Class A Common Stock | 1,722,250 Shares | |
| Class B Common Stock | 7,839,172 Shares |
THE WASHINGTON POST COMPANY
| PART I. |
FINANCIAL INFORMATION | |||||
| Item 1. |
Financial Statements | |||||
| a. | 3 | |||||
| b. | 4 | |||||
| c. | Condensed Consolidated Balance Sheets at March 28, 2004 (Unaudited) and December 28, 2003 |
5 | ||||
| d. | 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 | 18 | ||||
| PART II. |
OTHER INFORMATION | |||||
| Item 6. |
Exhibits and Reports on Form 8-K | 19 | ||||
| Signatures | 21 | |||||
2.
PART I. FINANCIAL INFORMATION
| Item 1. | Financial Statements |
The Washington Post Company
Condensed Consolidated Statements of Income (Unaudited)
| Thirteen Weeks Ended |
||||||||
| (In thousands, except per share amounts) | March 28, 2004 |
March 30, 2003 |
||||||
| Operating revenues |
||||||||
| Advertising |
$ | 302,167 | $ | 279,796 | ||||
| Circulation and subscriber |
180,259 | 172,036 | ||||||
| Education |
258,271 | 177,778 | ||||||
| Other |
18,272 | 10,830 | ||||||
| 758,969 | 640,440 | |||||||
| Operating costs and expenses |
||||||||
| Operating |
409,681 | 348,634 | ||||||
| Selling, general and administrative |
198,132 | 169,170 | ||||||
| Depreciation of property, plant and equipment |
43,859 | 43,395 | ||||||
| Amortization of intangible assets |
2,380 | 149 | ||||||
| 654,052 | 561,348 | |||||||
| Income from operations |
104,917 | 79,092 | ||||||
| Other income (expense) |
||||||||
| Equity in losses of affiliates |
(1,716 | ) | (2,642 | ) | ||||
| Interest income |
344 | 114 | ||||||
| Interest expense |
(6,861 | ) | (7,237 | ) | ||||
| Other, net |
742 | 48,135 | ||||||
| Income before income taxes |
97,426 | 117,462 | ||||||
| Provision for income taxes |
38,000 | 44,400 | ||||||
| Net Income |
59,426 | 73,062 | ||||||
| Redeemable preferred stock dividends |
(502 | ) | (517 | ) | ||||
| Net income available for common shares |
$ | 58,924 | $ | 72,545 | ||||
| Basic earnings per common share |
$ | 6.17 | $ | 7.62 | ||||
| Diluted earnings per share |
$ | 6.15 | $ | 7.59 | ||||
| Dividends declared per common share |
$ | 3.50 | $ | 2.90 | ||||
| Basic average number of common shares outstanding |
9,550 | 9,526 | ||||||
| Diluted average number of common shares outstanding |
9,582 | 9,553 | ||||||
3.
The Washington Post Company
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
| Thirteen Weeks Ended |
||||||||
| (In thousands) | March 28, 2004 |
March 30, 2003 |
||||||
| Net income |
$ | 59,426 | $ | 73,062 | ||||
| Other comprehensive income (loss) |
||||||||
| Foreign currency translation adjustment |
(395 | ) | 3,105 | |||||
| Less: reclassification adjustment on sale of affiliate investment |
— | (1,633 | ) | |||||
| Change in unrealized gain on available-for-sale securities |
25,910 | (21,718 | ) | |||||
| Less: reclassification adjustment for realized losses included in net income |
— | 214 | ||||||
| 25,515 | (20,032 | ) | ||||||
| Income tax (expense) benefit related to other comprehensive income |
(10,135 | ) | 8,387 | |||||
| 15,380 | (11,645 | ) | ||||||
| Comprehensive income |
$ | 74,806 | $ | 61,417 | ||||
4.
The Washington Post Company
Condensed Consolidated Balance Sheets
| (In thousands) | March 28, 2004 |
December 28, 2003 |
||||||
| (unaudited) | ||||||||
| Assets |
||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ | 63,867 | $ | 87,437 | ||||
| Investments in marketable equity securities |
2,276 | 2,623 | ||||||
| Accounts receivable, net |
319,290 | 328,816 | ||||||
| Inventories |
30,064 | 27,709 | ||||||
| Income taxes receivable |
— | 5,318 | ||||||
| Other current assets |
44,701 | 43,933 | ||||||
| 460,198 | 495,836 | |||||||
| Property, plant and equipment |
||||||||
| Buildings |
289,161 | 288,961 | ||||||
| Machinery, equipment and fixtures |
1,664,743 | 1,656,111 | ||||||
| Leasehold improvements |
108,731 | 102,753 | ||||||
| 2,062,635 | 2,047,825 | |||||||
| Less accumulated depreciation |
(1,127,879 | ) | (1,084,790 | ) | ||||
| 934,756 | 963,035 | |||||||
| Land |
32,290 | 32,234 | ||||||
| Construction in progress |
85,632 | 56,104 | ||||||
| 1,052,678 | 1,051,373 | |||||||
| Investments in marketable equity securities |
271,654 | 245,335 | ||||||
| Investments in affiliates |
58,938 | 61,312 | ||||||
| Goodwill, net |
1,011,879 | 965,694 | ||||||
| Indefinite-lived intangible assets, net |
487,356 | 486,656 | ||||||
| Amortized intangible assets, net |
4,900 | 5,226 | ||||||
| Prepaid pension cost |
524,842 | 514,801 | ||||||
| Deferred charges and other assets |
79,380 | 75,325 | ||||||
| $ | 3,951,825 | $ | 3,901,558 | |||||
| Liabilities and Shareholders’ Equity |
||||||||
| Current liabilities |
||||||||
| Accounts payable and accrued liabilities |
$ | 328,982 | $ | 339,239 | ||||
| Deferred revenue |
198,617 | 164,014 | ||||||
| Dividends declared |
16,750 | — | ||||||
| Federal and state income taxes payable |
22,561 | — | ||||||
| Short-term borrowings |
133,963 | 208,620 | ||||||
| 700,873 | 711,873 | |||||||
| Postretirement benefits other than pensions |
142,477 | 140,740 | ||||||
| Other liabilities |
223,353 | 235,169 | ||||||
| Deferred income taxes |
318,938 | 303,824 | ||||||
| Long-term debt |
427,907 | 422,471 | ||||||
| 1,813,548 | 1,814,077 | |||||||
| Redeemable preferred stock |
12,540 | 12,540 | ||||||
| Preferred stock |
— | — | ||||||
| Common shareholders’ equity |
||||||||
| Common stock |
20,000 | 20,000 | ||||||
| Capital in excess of par value |
174,093 | 166,951 | ||||||
| Retained earnings |
3,390,127 | 3,364,407 | ||||||
| Accumulated other comprehensive income |
||||||||
| Cumulative foreign currency translation adjustment |
3,877 | 4,272 | ||||||
| Unrealized gain on available-for-sale securities |
52,980 | 37,205 | ||||||
| Cost of Class B common stock held in treasury |
(1,515,340 | ) | (1,517,894 | ) | ||||
| 2,125,737 | 2,074,941 | |||||||
| $ | 3,951,825 | $ | 3,901,558 | |||||
5.
The Washington Post Company
Condensed Consolidated Statements of Cash Flows (Unaudited)
| Thirteen Weeks Ended |
||||||||
| (In thousands) | March 28, 2004 |
March 30, 2003 |
||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 59,426 | $ | 73,062 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation of property, plant and equipment |
43,859 | 43,395 | ||||||
| Amortization of intangible assets |
2,380 | 149 | ||||||
| Net pension credit |
(10,044 | ) | (13,425 | ) | ||||
| Gain from sale of affiliate |
— | (49,762 | ) | |||||
| Cost method and other investment write-downs |
677 | 1,112 | ||||||
| Equity in losses of affiliates, net of distributions |
1,716 | 2,642 | ||||||
| Provision for deferred income taxes |
4,895 | 3,827 | ||||||
| Change in assets and liabilities: |
||||||||
| Decrease in accounts receivable, net |
16,985 | 16,991 | ||||||
| Increase in inventories |
(2,355 | ) | (2,342 | ) | ||||
| Decrease in accounts payable and accrued liabilities |
(11,970 | ) | (28,588 | ) | ||||
| Increase in deferred revenue |
25,875 | 11,880 | ||||||
| Increase in income taxes payable |
27,868 | 27,916 | ||||||
| (Increase) decrease in other assets and other liabilities, net |
(11,993 | ) | 3,356 | |||||
| Other |
(1,924 | ) | (37 | ) | ||||
| Net cash provided by operating activities |
145,395 | 90,176 | ||||||
| Cash flows from investing activities: |
||||||||