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32 THE WASHINGTON POST COMPANY
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
OF THE WASHINGTON POST COMPANY.
In our opinion, the consolidated financial statements appearing on pages 39 through 55 of this report present fairly, in all
material respects, the financial position of The Washington Post Company and its subsidiaries at January 2, 2000 and
January 3, 1999, and the results of their operations and their cash flows for each of the three fiscal years in the period ended
January 2, 2000, in conformity with accounting principles generally accepted in the United States. These financial statements
are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in
the United States which require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for the opinion expressed above.
Washington, D.C.
January 25, 2000

Table of contents

  • Page 1
    ... consolidated financial statements appearing on pages 39 through 55 of this report present fairly, in all material respects, the financial position of The Washington Post Company and its subsidiaries at J anuar y 2, 2000 and J anuary 3, 1999, and the results of their operations and their cash flows...

  • Page 2
    ... due mainly to increased general advertising volume and higher rates. Circulation revenues for the newspaper division declined by 3 percent in 1999 due primarily to the extra week in 1998 versus 1999. At The Washington Post, daily circulation for 1999 remained essentially even with 1998; Sunday...

  • Page 3
    ... online educational resources and services to parents and children. For the first nine months of 1999 and all of 1998, Kaplan, through its career services division, was the leading provider of career fairs in North America, bringing together technical, sales and diversity candidates with corporate...

  • Page 4
    ...per share remained essentially unchanged with fewer average shares outstanding. Revenues for 1998 totaled $2,110.4 million, an increase of 8 percent from $1,956.3 million in 1997. Advertising revenues increased 5 percent in 1998, and circulation and subscriber revenues increased 5 percent. Education...

  • Page 5
    ... broadcast division in advertising at the international editions of Newsweek (particularly the Asian and Latin American editions). Total circulation revenue for the magazine division decreased 6 percent in 1998 due predominantly to the newsstand sales of two Newsweek domestic edition special issues...

  • Page 6
    ... quarters of 1998, the Company sold 464,700 shares of the McClatchy stock (64 percent of the total shares received) for $15.4 million. In J uly 1998, the Company completed the sale of 14 small cable systems in Texas, Missouri and Kansas serving approximately 29,000 subscribers for $41.9 million. In...

  • Page 7
    ... issuance of its short-term commercial paper and to provide for general corporate purposes. The Company expects to fund its estimated capital needs primarily through internally generated funds, and, to a lesser extent, commercial paper borrowings. In management's opinion, the Company will have ample...

  • Page 8
    ... I N COM E (in thousands, except share amounts) J anuary 2, 2000 Fiscal year ended J anuary 3, 1999 December 28, 1997 Operating Revenues Advertising ...$ 1,330,560 Circulation and subscriber ...579,693 Education ...240,075 Other ...65,243 2,215,571 Operating Costs and Expenses $ 1,297,621 547...

  • Page 9
    ... 2000 J anuary 3, 1999 Assets Current Assets Cash and cash equivalents ...$ Investments in marketable equity securities ...Accounts receivable, net ...Federal ... of $341,879 and $286,135 ... 886,060 883,232 Prepaid Pension Cost ... 337,818 256,134 Deferred Charges and Other Assets... 125,548 $...

  • Page 10
    (in thousands, except share amounts) J anuary 2, 2000 J anuary 3, 1999 Liabilities and Shareholders' Equity Current Liabilities Accounts payable and accrued liabilities ...$ Deferred subscription revenue ...Short-term borrowings ... 254,105 80,766 487,677 822,548 273,110 114,003 397,620 1,607,...

  • Page 11
    ...affiliates, net of distributions ...Provision for deferred income taxes ...Change in assets and liabilities: (Increase) decrease in accounts receivable, net ...Decrease (increase) in inventories ...(Decrease) increase in accounts payable and accrued liabilities ...Increase in income taxes receivable...

  • Page 12
    ... adjustment (net of taxes) ...Change in unrealized gain on available-for-sale securities (net of taxes) ...Tax benefits arising from employee stock plans ...Balance, January 3, 1999 ...1,739 Net income for the year ...Dividends paid on common stock-$5.20 per share ...Dividends paid on redeemable...

  • Page 13
    ... (primarily Newsweek magazine). Through its subsidiary Kaplan, Inc., the Company provides educational and career services for individuals, schools and businesses. The Company also owns and operates a number of media web sites for the primary purpose of developing the Company's newspaper and magazine...

  • Page 14
    ...'s equity investments in its foreign affiliates are accumulated and reported as a separate component of equity and comprehensive income. Stock-Based Compensation. The Company accounts for stock-based Total cost ...$ 194,364 $ 187,297 Net unrealized gains ...8,648 68,819 Total fair value ...$ 203...

  • Page 15
    ...The International Herald Tribune Newspaper, published near Paris, France; and a 50 percent common stock interest in the Los Angeles Times-Washington Post News Service, Inc. Operating costs and expenses of the Company include newsprint supplied by Bowater, Inc. (parent to Bowater Mersey Paper Company...

  • Page 16
    ... has unlimited voting rights including the right to elect a majority of the Board of Directors. During 1999, 1998 and 1997, the Company purchased a total of 744,095, 41,033 and 846,290 shares, respectively, of its Class B common stock at a cost of approximately $425,865,000, $20,512,000 and $368,565...

  • Page 17
    ... future grants. Changes in options outstanding for the years ended J anuary 2, 2000, J anuary 3, 1999 and December 28, 1997 were as follows: 1999 Number of Shares Average Option Price Number of Shares 1998 Average Option Price Number of Shares 1997 Average Option Price Had the fair values of option...

  • Page 18
    ... under outstanding stock options. Basic and diluted weighted average share information for 1999, 1998 and 1997 is as follows: Basic Weighted Average Shares Dilutive Effect of Stock Options Diluted Weighted Average Shares The total (income) cost arising from the Company's defined benefit pension and...

  • Page 19
    ... training for securities, insurance and real estate professionals (in J uly 1998 for $35,200,000). In addition, the Company acquired various other smaller businesses throughout 1998 for $72,700,000 (principally consisting of educational and career service companies and small cable systems). In...

  • Page 20
    ... also provides educational and career services for individuals, schools and businesses. Newspaper operations involve the publication of newspapers in the Washington, D.C. area and Everett, Washington, newsprint warehousing and recycling facilities, and the Company's electronic media publishing...

  • Page 21
    ..., providing test preparation services for college and graduate school entrance exams; Kaplan Professional, providing education and career services to business people and other professionals; SCORE!, offering multimedia learning and private tutoring to children in kindergarten through twelfth grade...

  • Page 22
    ... Education and Career Services Other Businesses and Corporate Office Consolidated 1999 Operating revenues ...Income (loss) from operations ...Equity in losses of affiliates ...Interest expense, net ...Other income, net ...Income before income taxes ...Identifiable assets ...Investments...

  • Page 23
    ... ended J anuary 2, 2000 and J anuary 3, 1999 are as follows (in thousands, except per share amounts): First Quarter Second Quarter Third Quarter Fourth Quarter 1999 Quarterly Operating Results Operating revenues Advertising ...$ Circulation and subscriber ...Education ...Other ... 300,002 141,431...

  • Page 24
    ... average number of common shares outstanding ...Diluted average number of common shares outstanding ...20.57 20.47 10,084 10,131 1998 Quarterly Comprehensive I ncome...$ 207,814 $ 64,253 $ 74,503 $ 111,502 The sum of the four quarters may not necessarily be equal to the annual amounts reported...

  • Page 25
    ...changes in accounting principle ...$ 225,785 Cumulative effect of change in method of accounting for income taxes ...- Cumulative effect of change in method of accounting for postretirement benefits other than pensions ...- Net income ...$ 225,785 Per Share...equipment ...854,906 Total assets ...2,986,...

  • Page 26
    ... 183,959 390,313 1,487,661 51,915 924,285 $ 471,669 175,807 394,979 1,496,509 126,988 905,112 TH E W A S H I N GTON P OS T C OM P A N Y 5 7

  • Page 27
    ...Chief Executive Officer Publisher, The Washington Post Patrick Butler Vice President Diana M. Daniels Katharine Graham (3,4) Chairman of the Executive Committee Vice President, General Counsel, and Secretary Beverly R. Keil Warren E. Buffett (3) Chairman of the Board, Berkshire Hathaway Inc. Vice...