Releases
The Washington Post Company Reports 2000 and Fourth Quarter Earnings
WASHINGTON--Jan. 26, 2001--The Washington Post Company (NYSE:WPO) today reported net income of $136.5 million for its fiscal year ended December 31, 2000, compared with $225.8 million for the fiscal year ended January 2, 2000. Diluted earnings per share totaled $14.32 in 2000, compared to $22.30 in 1999. Revenue for 2000 was $2,412.2 million, up 9 percent from $2,215.6 million in 1999. Operating income decreased 13 percent to $339.9 million, from $388.5 million in 1999.
The decline in 2000 earnings was primarily caused by increased costs associated with the development of new businesses (impact of $28.9 million or $3.47 per share), a one-time charge arising from an early retirement program at The Washington Post (impact of $16.5 million or $1.74 per share), higher interest expense (impact of $16.6 million or $1.85 per share), and a reduced pension credit (impact of $11.7 million or $0.92 per share). In addition, 1999 earnings included gains from the sale of marketable equity securities which did not recur in 2000 (impact of $18.6 million or $1.81 per share). These factors were offset in part by improved operating results at The Washington Post and the company's television broadcasting division.
Net income for the fourth quarter of 2000, which included a $16.5 million ($1.74 per share) charge for the early retirement program at The Post, totaled $37.7 million ($3.98 per share), compared with net income of $61.0 million ($6.09 per share) for the same period in 1999. Revenue for the fourth quarter of 2000 was $671.4 million, up 12 percent over revenue of $598.4 million for the same period of 1999. Operating income declined 24 percent to $90.0 million, from $118.1 million in 1999. Consistent with the company's 2000 annual results, the decrease in the company's fourth quarter earnings is primarily attributable to the non-recurring charge arising from the early retirement program completed at The Washington Post, an increase in new business development costs, higher interest expense, and a reduced pension credit, offset in part by higher operating results at The Washington Post and the television broadcasting division.
The company's 2000 and 1999 operating income includes $62.7 million and $81.7 million of pension credits, respectively; $16.6 million and $17.7 million for the fourth quarter of 2000 and 1999.
"As anticipated, The Washington Post Company invested heavily in new business development in 2000, expending about $125 million in key areas we believe will provide strong growth. The anticipated level of such expenditures for 2001 is expected to be about $85 million," said Donald E. Graham, chairman and CEO. "This is consistent with our focus on building the intrinsic value of the company over time."
The increased spending for new business initiatives during 2000 occurred mainly at Kaplan, Inc., and Washingtonpost.Newsweek Interactive (WPNI). Kaplan opened 42 new Score! Educational Centers and dramatically expanded its distance learning capabilities. WPNI increased marketing and sales initiatives for washingtonpost.com, whose average monthly page views rose 33 percent during the year.
The company also absorbed greater losses from the development of web-delivered recruiting and hiring management services at BrassRing, in which Kaplan has a 42 percent interest.
"Operating results continued strong, particularly at Post-Newsweek Stations, Kaplan's test-prep business, and The Post," Graham said.
Divisional Results
------------------
Newspaper Publishing
Newspaper publishing division revenues in 2000 increased 5 percent to $918.2 million, from $875.1 million in 1999; revenues increased 2 percent to $237.8 million for the fourth quarter of 2000. Division operating income for 2000 totaled $114.4 million, a decrease of 27 percent from operating income of $156.7 million in 1999; operating income decreased 86 percent in the fourth quarter of 2000.
The 2000 decline in operating income resulted mostly from the $27.5 million, pre-tax, one-time charge recognized in the fourth quarter of 2000 in connection with the early retirement program completed at The Washington Post, increased spending for the marketing and advancement of washingtonpost.com, a lower pension credit, and higher newsprint expense. These factors were offset in part by higher print and online advertising revenues.
Print advertising revenues at The Washington Post newspaper grew 4 percent in 2000. Daily circulation at The Post remained essentially unchanged, while Sunday circulation declined 1 percent. Newsprint expense at the newspaper publishing division increased 8 percent for 2000, due mostly to price increases.
Online advertising revenues for 2000 totaled $27.1 million, a 108 percent increase above 1999 online advertising revenues.
Television Broadcasting
Broadcasting division revenues totaled $364.8 million for 2000, a 7 percent increase from 1999; revenues increased 15 percent in the fourth quarter of 2000 to $107.7 million. Operating income for 2000 rose 6 percent to $177.4 million; fourth quarter operating income totaled $60.3 million, a 14 percent increase over the same period of 1999. Political and Olympics advertising in the third and fourth quarters of 2000 totaled approximately $42 million, accounting for most of the improvement in the 2000 operating results.
Magazine Publishing
Revenue for the magazine publishing division totaled $416.4 million for 2000, a 4 percent increase over 1999; revenue increased 2 percent to $120.2 million for the fourth quarter of 2000. Operating income totaled $49.1 million for 2000, a decrease of 21 percent from 1999; division operating income rose 4 percent to $21.1 million in the fourth quarter of 2000. The decline in 2000 operating income occurred primarily at Newsweek, where reduced pension credits and higher subscription acquisition costs at the domestic edition outpaced revenue and operating income improvements at the international edition.
Cable Television
Cable division revenue of $358.9 million for 2000 represents a 7 percent increase over 1999; revenue totaled $92.1 million for the fourth quarter of 2000, a 5 percent increase over the same period of 1999. Cable division cash flow (operating income excluding depreciation and amortization expense) was $143.7 million for 2000, an increase of 2 percent from 1999. Cable cash flow for the fourth quarter of 2000 totaled $39.3 million, an increase of 5 percent over the fourth quarter of 1999. Cable division operating income decreased 2 percent for 2000 and increased 1 percent in the fourth quarter. The decline in 2000 operating income is mostly due to an increase in programming expense, additional costs associated with the launch of new services, and higher depreciation expense. These factors were offset in part by higher subscriber revenues.
The increase in depreciation expense is due to recent capital spending for system rebuilds and upgrades, which will enable the cable division to offer new digital and high-speed cable modem services to its subscribers. The cable division began its roll-out plan for these services in the second and third quarters of this year.
At the end of 2000, there were 735,400 basic subscribers, a 1 percent decline from 739,700 basic subscribers at the end of 1999.
Education
Excluding the operating results of the career fair and HireSystems businesses from 1999 (these businesses were contributed to BrassRing at the end of the third quarter of 1999), education division revenue increased 47 percent to $353.8 million for 2000, compared to $240.0 million for 1999; revenue increased 74 percent to $113.6 million for the fourth quarter of 2000. Operating losses for 2000 totaled $41.8 million, compared to operating losses of $16.0 million for 1999. For the fourth quarter of 2000, operating losses totaled $9.2 million, compared to $10.0 million for the fourth quarter of 1999. Approximately 70 percent of the 2000 and fourth quarter 2000 revenue increase is attributable to acquisitions. The remaining increase in revenue is attributable to growth at Score! and the test preparation business. The decline in 2000 operating results is primarily attributable to marketing and expansion activities at Score!, start-up costs associated with eSCORE.com, and the development of various distance learning initiatives (primarily kaplancollege.com and kaptest.com). These factors were offset in part by operating income generated by acquisitions and the test preparation business.
At the end of 2000, Score! operated 142 learning centers, compared to 100 centers at the end of 1999.
Including the operating results of the career fair and HireSystems businesses in 1999, revenues increased 37 percent to $353.8 million for 2000, compared to $257.5 million for 1999. Operating losses increased 10 percent in 2000 to $41.8 million, from $38.0 million in 1999.
Other Businesses and Corporate Office
Operating losses for 2000 totaled $25.2 million, representing a 7 percent improvement over 1999. Fourth quarter 2000 operating losses totaled $7.6 million, compared to $6.4 million for the same period in 1999. The reduction in 2000 losses is primarily attributable to the absence of losses generated by Legi-Slate (sold in June 1999) and reduced spending at the company's corporate office.
Equity in Losses of Affiliates, net
-----------------------------------
The company's equity in losses of affiliates for 2000 was $36.5 million, compared to losses of $8.8 million for 1999. The company's affiliate investments consist of a 42 percent interest in BrassRing, Inc. (formed in late September 1999), a 50 percent interest in the International Herald Tribune, and a 49 percent interest in Bowater Mersey Paper Company Limited. For the fourth quarter of 2000, the company's equity in losses of affiliates totaled $6.8 million, compared to $7.0 million for the same period of 1999. The decline in 2000 affiliate results is attributable to BrassRing, Inc., which is in the integration and marketing phase of its operations. BrassRing accounted for approximately $37.0 million and $8.9 million of the company's 2000 annual and fourth quarter equity in affiliate losses, respectively.
Other Non-Operating (Expense) Income
------------------------------------
The company recorded other non-operating expense of $19.8 million in 2000, compared to $21.4 million in non-operating income for 1999. For the fourth quarter of 2000, the company recorded non-operating expense of $14.6 million, compared to $2.5 million in non-operating expense for the fourth quarter of 1999. The 1999 non-operating income was comprised mostly of non-recurring gains arising from the sale of marketable securities (mostly various Internet-related securities). The 2000 non-operating expense resulted mostly from the write-downs of certain of the company's e-commerce focused cost method investments.
Net Interest Expense
--------------------
The company incurred net interest expense of $53.8 million in 2000, compared to $25.7 million in 1999; net interest expense totaled $14.7 million for the fourth quarter of 2000, compared to $7.6 million for the same period of 1999. At January 2, 2000, the company had $924.7 million in borrowings outstanding at an average interest rate of 6.1 percent.
Earnings Per Share
------------------
The calculation of diluted earnings per share for 2000 and the fourth quarter of 2000 were based on 9,460,000 and 9,470,000 weighted average shares outstanding, respectively, compared to 10,082,000 and 10,008,000 shares in 1999.
Forward-looking Statements
--------------------------
This report contains certain forward-looking statements that are based largely on the company's current expectations. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results and achievements to differ materially from those expressed in the forward-looking statements. For more information about these forward-looking statements and related risks, please refer to the section titled "Forward-looking Statements" in Part I of the company's Annual Report on Form 10-K.
THE WASHINGTON POST COMPANY
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(In thousands, except share and per share amounts)
Fourth Quarter (unaudited) Fiscal Year
---------------------------- ---------------------------
% 2000 %
2000(1) 1999 Change (unaudited) 1999 Change
---------- ---------- --- ---------- ---------- ---
Operating
revenues $ 671,386 $ 598,400 +12 $2,412,150 $2,215,571 +9
Operating costs
and expenses
Operating
expenses (533,323) (438,009) +22 (1,891,686)(1,664,320) +14
Depreciation ( 30,905) ( 27,547) +12 ( 117,948)( 104,235) +13
Amortization ( 17,204) ( 14,706) +17 ( 62,634)( 58,563) +7
---------- ---------- ---------- ----------
Operating
income 89,954 118,138 -24 339,882 388,453 -13
Equity in
losses of
affiliates,
net ( 6,800) ( 6,975) ( 36,466)( 8,814)
Interest
income 241 452 967 1,097
Interest
expense ( 14,974) ( 8,059) ( 54,731)( 26,786)
Other income
(expense),
net ( 14,613) ( 2,458) ( 19,782) 21,435
---------- ---------- ---------- ----------
Income before
income
taxes 53,808 101,098 -47 229,870 375,385 -39
Provision
for income
taxes ( 16,100) ( 40,100) -60 ( 93,400)( 149,600) -38
---------- ---------- ---------- ----------
Net
income 37,708 60,998 -38 136,470 225,785 -40
Redeemable
preferred
stock
dividends - - ( 1,026)( 950)
---------- ---------- ---------- ----------
Net income
available for
common
stock $ 37,708 $ 60,998 -38 $ 135,444 $ 224,835 -40
========== ========== ========== ==========
Basic
earnings
per
share $ 3.99 $ 6.11 -35 $ 14.34 $ 22.35 -36
========== ========== ========== ==========
Diluted
earnings
per share $ 3.98 $ 6.09 -35 $ 14.32 $ 22.30 -36
========== ========== ========== ==========
Basic
average shares
outstanding 9,452 9,988 -5 9,445 10,061 -6
Diluted average
shares
outstanding 9,470 10,008 -5 9,460 10,082 -6
(1) For 2000 and the fourth quarter of 2000, the company's net
income includes a one-time, after tax charge of $16.5 million ($1.74
per share-diluted basis) arising from an early retirement program
completed at The Washington Post newspaper.
THE WASHINGTON POST COMPANY
QUARTERLY PER SHARE AMOUNTS (UNAUDITED)
(in thousands, except per share amounts)
First Second Third Fourth
Quarter Quarter Quarter Quarter(1)
------- ------- ------- -------
2000
----
Net income
available for
common
stockholders $23,569 $40,915 $33,253 $37,708
======= ======= ======= =======
Basic earnings
per share $ 2.50 $ 4.33 $ 3.52 $ 3.99
======= ======= ======= =======
Diluted
earnings
per share $ 2.49 $ 4.33 $ 3.51 $ 3.98
======= ======= ======= =======
Basic average
shares
outstanding 9,440 9,443 9,448 9,452
Diluted average
shares
outstanding 9,458 9,458 9,463 9,470
1999
----
Net income
available for
common
stockholders $44,715 $67,672 $51,452 $60,998
======= ======= ======= =======
Basic earnings
per share $ 4.43 $ 6.70 $ 5.12 $ 6.11
======= ======= ======= =======
Diluted
earnings
per share $ 4.41 $ 6.67 $ 5.10 $ 6.09
======= ======= ======= =======
Basic average
shares
outstanding 10,098 10,098 10,060 9,988
Diluted average
shares
outstanding 10,143 10,140 10,101 10,008
The sum of the four quarters may not necessarily be equal to the
amounts reported for the full year due to rounding.
(1) The company's 2000 fourth quarter net income includes a
one-time, after tax charge of $16.5 million ($1.74 per share-diluted
basis) arising from an early retirement program completed at The
Washington Post newspaper.
THE WASHINGTON POST COMPANY
BUSINESS SEGMENT INFORMATION
----------------------------
(In thousands)
Fourth Quarter (unaudited) Fiscal Year
---------------------------- ---------------------------
% 2000 %
2000(1) 1999 Change (unaudited) 1999 Change
---------- ---------- --- ---------- ---------- ---
Operating Revenues:
Newspaper
publishing $ 237,786 $ 233,898 +2 $ 918,234 $ 875,109 +5
Television
broadcasting 107,741 93,767 +15 364,758 341,761 +7
Magazine
publishing 120,196 117,943 +2 416,421 401,096 +4
Cable
television 92,103 87,541 +5 358,916 336,259 +7
Education 113,560 65,251 +74 353,821 257,503 +37
Other
businesses
and corporate
office -- -- -- -- 3,843 -100
---------- ---------- ---------- ----------
$ 671,386 $ 598,400 +12 $2,412,150 $2,215,571 +9
========== ========== ========== ==========
Operating Income:
Newspaper
publishing $ 5,980 $ 42,001 -86 $ 114,435 $ 156,731 -27
Television
broadcasting 60,346 53,103 +14 177,396 167,639 +6
Magazine
publishing 21,106 20,212 +4 49,119 62,057 -21
Cable
television 19,315 19,169 +1 65,967 67,145 -2
Education ( 9,196) ( 9,987) +8 ( 41,846) ( 37,998) -10
Other
businesses and
corporate
office ( 7,597) ( 6,360) -19 ( 25,189) ( 27,121) +7
---------- ---------- ---------- ----------
$ 89,954 $ 118,138 -24 $ 339,882 $ 388,453 -13
========== ========== ========== ==========
Depreciation:
Newspaper
publishing $ 9,840 $ 10,046 -2 $ 38,579 $ 35,363 +9
Television
broadcasting 3,315 3,148 +5 12,991 11,719 +11
Magazine
publishing 1,212 1,245 -3 5,059 4,972 +2
Cable
television 12,145 10,768 +13 47,670 43,092 +11
Education 4,393 2,340 +88 13,649 8,850 +54
Other
businesses and
corporate
office -- -- -- -- 239 -100
---------- ---------- ---------- ----------
$ 30,905 $ 27,547 +12 $ 117,948 $ 104,235 +13
========== ========== ========== ==========
Amortization:
Newspaper
publishing $ 419 $ 388 +8 $ 1,588 $ 1,535 +3
Television
broadcasting 3,534 3,559 -- 14,135 14,248 --
Magazine
publishing 1,667 1,478 +13 6,758 5,912 +14
Cable
television 7,865 7,613 +3 30,069 30,007 --
Education 3,719 1,668 +123 10,084 6,861 +47
Other
businesses and
corporate
office -- -- -- -- -- --
---------- ---------- ---------- ----------
$ 17,204 $ 14,706 +17 $ 62,634 $ 58,563 +7
========== ========== ========== ==========
(1) For 2000 and the fourth quarter of 2000, the operating income
of the newspaper division includes a one-time, pre-tax charge of $27.5
million arising from an early retirement program completed at the
Washington Post newspaper.
| CONTACT: | The Washington Post Company |
|---|---|
| John B. Morse, Jr., (202) 334-6662 | |