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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March, 20 1998
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THE WASHINGTON POST COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 1-6714 53-0182885
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1150 15th Street, N.W. Washington, D.C. 20071
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(Address of principal executive offices) (Zip Code)
(202) 334-6000
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(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets
On March 20, 1998, Cowles Media Company ("Cowles") and McClatchy Newspapers,
Inc. ("McClatchy") completed a series of transactions resulting in the merger of
Cowles into a subsidiary of a newly created McClatchy holding company ("New
McClatchy"). In the merger, each share of Cowles common stock was converted
(based upon elections of Cowles stockholders) into shares of New McClatchy stock
or a combination of cash and New McClatchy stock.
As of the date of the Cowles and McClatchy merger transaction, a wholly-owned
subsidiary of the Registrant owned 3,893,796 shares (equal to about 28%) of the
outstanding common stock of Cowles, most of which was acquired in 1985. As a
result of this transaction, the Registrant's subsidiary received $330,472,811 in
cash from New McClatchy and 730,525 shares of New McClatchy Class A common
stock. The market value of the New McClatchy stock received approximated
$21,550,000, based upon publicly quoted market prices.
The Registrant expects to record in its first fiscal 1998 quarter an after-tax
gain resulting from the transaction described above of approximately $155.0
million, or approximately $15.30 per share on a diluted basis.
Item 7. Financial Statements and Exhibits
Listed below is the pro forma financial information filed as part of this
report.
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1) Introduction..........................................................................1
2) Unaudited Pro Forma Condensed Consolidated Balance Sheet
of The Washington Post Company as of December 28, 1997................................2
3) Unaudited Pro Forma Condensed Consolidated Statement of
Income of The Washington Post Company for the fiscal year ended December 28, 1997.....3
4) Notes to unaudited pro forma financial information
of The Washington Post Company........................................................4
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THE WASHINGTON POST COMPANY
Introduction to Unaudited Pro Forma Financial Information
The following Unaudited Pro Forma Condensed Consolidated Balance Sheet at
December 28, 1997 presents, on a pro forma basis, the Registrant's consolidated
financial position assuming the sale of its consolidated holdings of Cowles
common stock had been consummated on December 28, 1997. The following Unaudited
Pro Forma Condensed Consolidated Statement of Income for the fiscal year ended
December 28, 1997 presents, on a pro forma basis, the Registrant's consolidated
results of operations assuming the sale of the Cowles stock had been consummated
on December 30, 1996 (the first day of fiscal 1997).
The unaudited pro forma financial information gives effect to certain pro forma
adjustments which are described in the notes to these statements. The
nonrecurring gain that will result from the sale is not included in the
Unaudited Pro Forma Statement of Income, but will be reflected in the
Registrant's results of operations during its fiscal quarter ended March 29,
1998.
The unaudited pro forma financial information is presented for informational
purposes only and is not intended to reflect the results of operations or
financial position which would have actually resulted had the sale been
effective on the dates indicated or the results of operations or financial
position which may be obtained in the future.
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THE WASHINGTON POST COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
AS OF DECEMBER 28, 1997
(IN THOUSANDS)
Unaudited
Pro Forma
The Washington Pro Forma The Washington
Post Company Adjustments Post Company
------------ ----------- ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 21,117 $ 34,079 [a] $ 55,196
Accounts receivable, net 244,203 244,203
Inventories 19,213 19,213
Other current assets 23,959 23,959
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308,492 34,079 342,571
INVESTMENT IN AFFILIATES 154,791 (91,903)[c] 62,888
PROPERTY, PLANT AND EQUIPMENT, NET 653,750 653,750
GOODWILL AND OTHER
INTANGIBLES, NET 679,714 679,714
DEFERRED CHARGES AND
OTHER ASSETS 280,570 21,551 [b] 302,121
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$ 2,077,317 $ (36,273) $ 2,041,044
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and
accrued liabilities $ 213,824 $ 213,824
Federal and state income tax 18,352 $ 101,967 [d] 120,319
Deferred subscription revenue 80,186 80,186
Short-term borrowings 296,394 (296,394)[a] --
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608,756 (194,427) 414,329
OTHER LIABILITIES 241,234 241,234
DEFERRED INCOME TAXES 31,306 31,306
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881,296 (194,427) 686,869
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REDEEMABLE PREFERRED STOCK 11,947 11,947
PREFERRED STOCK -- --
COMMON SHAREHOLDERS' EQUITY
Common stock 20,000 20,000
Capital in excess of par value 33,415 33,415
Retained earnings 2,231,341 158,154 [e] 2,389,495
Cumulative foreign currency
translation adjustment (464) (464)
Unrealized gain on available-
for-sale securities 31 31
Treasury stock (1,100,249) (1,100,249)
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1,184,074 158,154 1,342,228
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$ 2,077,317 $ (36,273) $ 2,041,044
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THE WASHINGTON POST COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME FOR THE
FISCAL YEAR ENDED DECEMBER 28, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Unaudited
Pro Forma
The Washington Pro Forma The Washington
Post Company Adjustments Post Company
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OPERATING REVENUES
Advertising $1,236,877 $1,236,877
Circulation and subscriber 519,620 519,620
Other 199,756 199,756
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1,956,253 1,956,253
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OPERATING COSTS AND EXPENSES
Operating 1,019,869 1,019,869
Selling, general and
administrative 449,996 449,996
Depreciation and amortization
of property, plant and
equipment 71,478 71,478
Amortization of goodwill and
other intangibles 33,559 33,559
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1,574,902 1,574,902
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INCOME FROM OPERATIONS 381,351 381,351
Equity in earnings of
affiliates 9,955 $(8,426)[f] 1,529
Interest income 3,471 3,471
Interest expense (1,252) 102 [g] (1,150)
Other income 69,549 69,549
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INCOME BEFORE INCOME TAXES 463,074 (8,324) 454,750
PROVISION FOR INCOME TAXES 181,500 (3,280)[h] 178,220
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NET INCOME 281,574 (5,044) 276,530
REDEEMABLE PREFERRED STOCK
DIVIDENDS (956) (956)
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NET INCOME AVAILABLE FOR
COMMON SHARES $ 280,618 $ (5,044) $ 275,574
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BASIC EARNINGS PER COMMON
SHARE $ 26.23 $ (.47) $ 25.76
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DILUTED EARNINGS PER COMMON
SHARE $ 26.15 $ (.47) $ 25.68
========= ========= ==========
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THE WASHINGTON POST COMPANY
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
Note 1 - Basis of Presentation
The Unaudited Pro Forma Condensed Consolidated Balance Sheet presents the
financial position of the Registrant as of December 28, 1997, assuming the sale
of the Registrant's consolidated holdings of Cowles common stock had been
consummated on December 28, 1997. Such pro forma information is based on the
historical balance sheet of the Registrant.
The Unaudited Pro Forma Condensed Consolidated Statement of Income for the
fiscal year ended December 28, 1997 has been prepared assuming the sale of the
Cowles Stock occurred on December 30, 1996 (the first day of fiscal 1997). Such
pro forma information is based on the historical statement of income of the
Registrant. The nonrecurring gain that will result from the above sale has not
been included in the Unaudited Pro Forma Condensed Consolidated Statement of
Income, but will be reflected in the Registrant's results of operations in its
fiscal quarter ended March 29, 1998.
Pursuant to the Securities and Exchange Commission's rules surrounding the
preparation of pro forma financial statements, the Unaudited Pro Forma Statement
of Income does not include any adjustment for investment income that may have
been earned from the investment of the cash proceeds received.
The Registrant believes the assumptions used in preparing the unaudited pro
forma financial information provide a reasonable basis for presenting all of the
significant effects of the above sale and the application of the net proceeds
thereof and that the pro forma adjustments give effect to those assumptions in
the unaudited pro forma financial information.
Note 2 - Pro Forma Adjustments
Pro forma adjustments to the Condensed Consolidated Balance Sheet are as
follows:
a) Adjustment to reflect the receipt of the $330,472,811 in cash proceeds and
the partial use of such proceeds to repay the short-term borrowings then
outstanding.
b) Adjustment to reflect the receipt of the 730,525 shares of New McClatchy
Class A common stock.
c) Adjustment to reflect the disposition of the carrying value of the Cowles
investment.
d) Adjustment to accrue estimated Federal and state income taxes payable
arising from the sale of the Cowles investment.
e) Adjustment to increase retained earnings by the estimated gain on the sale
of the Cowles investment.
Pro forma adjustments to the Condensed Consolidated Statement of Income are as
follows:
f) Adjustment to eliminate the equity in earnings of Cowles that was recorded
during fiscal 1997.
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g) Adjustment to reflect the estimated decrease in interest expense incurred on
borrowings that would have been avoided as a result of the proceeds received
from the sale.
h) Adjustment to reflect the estimated decrease in tax expense resulting from
the pro forma adjustments described in notes [f] and [g].
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
The Washington Post Company
(Registrant)
Date April 2, 1998 /s/ JOHN B. MORSE, JR.
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John B. Morse, Jr., Vice
President - Finance
(Principal Financial Officer)
