The Washington Post Company Reports Third Quarter Earnings

The Washington Post Company (NYSE: WPO) reported net income of $17.1 million ($1.81 per share) for its third quarter ended September 27, 2009, compared to net income of $10.4 million ($1.08 per share) for the third quarter of last year.

Items included in the Company’s results for the third quarter of 2009:

* $6.1 million in accelerated depreciation at The Washington Post (after-tax impact of $3.8 million, or $0.40 per share);
* A $25.4 million goodwill and other long-lived assets impairment charge related to Kaplan Ventures (after-tax impact of $18.8 million, or $2.00 per share); and
* A decline in equity in earnings (losses) of affiliates associated with $29.0 million in impairment charges at two of the Company’s affiliates (after-tax impact of $18.8 million, or $2.00 per share).

Items included in the Company’s results for the third quarter of 2008:

* A $59.7 million goodwill impairment charge at the Company’s community newspapers and The Herald (after-tax impact of $41.9 million, or $4.48 per share);
* $12.5 million in accelerated depreciation at The Washington Post (after-tax impact of $7.9 million, or $0.84 per share); and
* $20.6 million in non-operating unrealized foreign currency losses arising from the strengthening of the U.S. dollar (after-tax impact of $13.0 million, or $1.39 per share).

Revenue for the third quarter of 2009 was $1,148.7 million, up 2% from $1,128.7 million in the third quarter of 2008. The increase is due to revenue growth at the education and cable television divisions. Revenues were down at the Company’s newspaper publishing, magazine publishing and television broadcasting divisions.

Operating income increased in the third quarter of 2009 to $61.2 million, from $40.3 million in the third quarter of 2008. Excluding the operating items discussed above, the education division reported improved results for the quarter, and the newspaper publishing division reported increased losses. The magazine publishing division reported an operating loss for the third quarter, and operating results were down at the television broadcasting division. Cable television division results declined modestly for the third quarter of 2009.

For the first nine months of 2009, net income totaled $9.0 million ($1.08 per share), compared with $47.0 million ($4.86 per share) for the same period of 2008.

Items included in the Company’s results for the first nine months of 2009:

* $63.4 million in early retirement program expense at The Washington Post and Newsweek (after-tax impact of $39.3 million, or $4.18 per share);
* $33.0 million in restructuring charges related to Kaplan’s Score and Test Prep operations (after-tax impact of $20.5 million, or $2.18 per share);
* $33.8 million in accelerated depreciation at The Washington Post (after-tax impact of $21.0 million, or $2.23 per share);
* A $25.4 million goodwill and other long-lived assets impairment charge related to Kaplan Ventures (after-tax impact of $18.8 million, or $2.00 per share);
* A decline in equity in earnings (losses) of affiliates associated with $29.0 million in impairment charges at two of the Company’s affiliates (after-tax impact of $18.8 million, or $2.00 per share); and
* $18.4 million in non-operating unrealized foreign currency gains arising from the weakening of the U.S. dollar (after-tax impact of $11.4 million, or $1.21 per share).

Items included in the Company’s results for the first nine months of 2008:

* Charges of $112.0 million related to early retirement program expense at The Washington Post newspaper, the corporate office and Newsweek (after-tax impact of $67.8 million, or $7.13 per share);
* A $59.7 million goodwill impairment charge at the Company’s community newspapers and The Herald (after-tax impact of $41.9 million, or $4.48 per share);
* $13.7 million in accelerated depreciation at The Washington Post (after-tax impact of $8.6 million, or $0.91 per share);
* Expenses and charges of $3.9 million in connection with restructuring at certain Test Prep operations (after-tax impact of $2.4 million, or $0.26 per share);
* A decline in equity in earnings (losses) of affiliates associated with $6.8 million in impairment charges at two of the Company’s affiliates (after-tax impact of $4.1 million, or $0.43 per share); and
* $13.4 million in non-operating unrealized foreign currency losses arising from the strengthening of the U.S. dollar (after-tax impact of $8.4 million, or $0.89 per share).

Revenue for the first nine months of 2009 was $3,331.3 million, up 1% from $3,298.0 in the first nine months of 2008, due to increased revenues at the Company’s education and cable television divisions, partially offset by revenue declines at the Company’s newspaper publishing, magazine publishing and television broadcasting divisions.

The Company reported operating income of $47.8 million for the first nine months of 2009, compared to operating income of $112.0 million for the first nine months of 2008. Excluding the operating items discussed above, the education division reported improved results for the period, and the newspaper publishing and magazine publishing divisions reported increased losses. Operating results were down at the television broadcasting division, while the cable television division reported improved results for the period.

The Company’s operating income for the third quarter and first nine months of 2009 included $2.3 million and $5.2 million of net pension credits, respectively, compared to $6.4 million and $19.6 million of net pension credits, respectively, for the same periods of 2008, excluding charges related to early retirement programs.