SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

~~QUARTERLY REPORT PURSUANT TO SECTION~~

Quarterly Report Pursuant to Section 13 ORor 15(d) OF
~~THE SECURITIES EXCHANGE ACT OF~~

of the Securities Exchange Act of 1934

For the Quarterly Period Ended ~~June~~March 30, ~~2002~~2003

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 ~~office and zip Code)~~offices)

~~Registrant's telephone number, including area code:~~ ~~(202) 334-6000~~(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 x. No¨.

Shares outstanding at May 8, 2003:

Class A Common Stock		1,722,250 Shares ~~outstanding at August 2, 2002:~~
Class B Common Stock		7,804,370 Shares

THE WASHINGTON POST COMPANY

Index to Form 10-Q


PART I. FINANCIAL INFORMATION

Item 1.		Financial Statements
	~~Class A Common Stock~~	~~1,722,250 Shares~~

	~~Class B Common Stock~~	~~7,781,453 Shares~~

~~THE WASHINGTON POST COMPANY~~ ~~Index to Form 10-Q~~
			~~PAGE~~

~~PART I.~~	~~FINANCIAL INFORMATION~~

~~Item 1.~~	~~Financial Statements~~
	a.	Condensed Consolidated Statements of Income (Unaudited) for the Thirteen ~~and Twenty-six~~ Weeks Ended ~~June~~March 30, ~~2002~~2003 and ~~July 1, 2001~~ March 31, 2002		3


	b.	Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the Thirteen ~~and Twenty-six~~ Weeks Ended ~~June~~March 30, ~~2002~~2003 and ~~July 1, 2001~~March 31, 2002		4


	c.	Condensed Consolidated Balance Sheets at ~~June~~March 30, ~~2002~~2003 (Unaudited) and December ~~30, 2001~~29, 2002		5


	d.	Condensed Consolidated Statements of Cash Flows (Unaudited) for the ~~Twenty-six~~Thirteen Weeks Ended ~~June~~March 30, ~~2002~~2003 and ~~July 1, 2001~~March 31, 2002		6


	e.	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
		7

Item 2.	~~Management's~~	Management’s Discussion and Analysis of Results of Operations and Financial Condition	13	12

Item 4.		Controls and Procedures		17

PART II. OTHER INFORMATION

~~PART II.~~	~~OTHER INFORMATION~~
Item 6.
~~Item 4.~~	~~Submission of Matters to a Vote of Security Holders~~		23

~~Item 6.~~	Exhibits and Reports on Form 8-K		24
		18

Signatures			25	19

Certifications				20

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

The Washington Post Company

Condensed Consolidated Statements of Income (Unaudited)

Thirteen Weeks Ended

Twenty-six Weeks Ended

June 30,

July 1,

June 30,

July 1,

(In thousands, except per share amounts)
2002

2001

2002

2001

Operating revenues

Advertising
$316,102

$312,881

$ 589,671

$610,856

Circulation and subscriber
168,614

161,260

329,755

309,276

Education
149,695

119,442

296,776

240,783

Other
13,292

10,326

   31,823

   29,393

647,703

603,909

1,248,025

1,190,308

Operating costs and expenses

Operating
335,443

340,114

668,683

683,530

Selling, general and administrative
160,387

151,409

337,252

299,323

Depreciation of property, plant and equipment
41,286

35,867

82,459

70,499

Amortization of goodwill and other intangibles
     159

19,926

      311

   37,118

537,275

547,316

1,088,705

1,090,470

Income from operations
110,428

56,593

159,320

99,838

Other income (expense)

Equity in losses of affiliates
(9,183
)
(6,641
)
(15,689
)
(19,102
)

Interest income
59

1,047

192

1,371

Interest expense
(8,797
)
(13,240
)
(17,664
)
(27,864
)

Other, net
(5,963
)
(10,717
)
     491

298,053

Income before income taxes and cumulative
effect of change in accounting principle 86,544 27,042 126,650 352,296
Provision for income taxes
35,400

12,550

51,800

138,750

Income before cumulative effect of change in accounting principle
51,144 14,492 74,850 213,546
Cumulative effect of change in method of accounting for goodwill and
other intangible assets, net of taxes
       -

       -

(12,100
)
       -

Net income
51,144

14,492

62,750

213,546

Redeemable preferred stock dividends
    (259
)
    (263
)
   (784
)
    (789
)
Net income available for common shares
$ 50,885
$ 14,229
$ 61,966
$212,757

Basic earnings per share:

Before cumulative effect of change in accounting principle
$ 5.38

$ 1.53

$ 7.87

$22.52

Cumulative effect of change in accounting principle
   –

   –

(1.27
)
   –

Redeemable preferred stock dividends
(0.03
)
(0.03
)
(0.08
)
(0.08
)

Net income available for common stock
$ 5.35
$ 1.50
$ 6.52
$22.44

Diluted earnings per share:

Before cumulative effect of change in accounting principle
$ 5.37

$ 1.53

$ 7.86

$ 22.47

Cumulative effect of change in accounting principle
–

–

(1.27
)
–

Redeemable preferred stock dividends
(0.03
)
(0.03
)
(0.08
)
(0.08
)

Net income available for common stock
$ 5.34
$ 1.50
$ 6.51
$ 22.39

Dividends declared per common share
$ 1.40
$ 1.40
$ 4.20
$ 4.20

Basic average number of common shares outstanding
9,503

9,485

9,501

9,482

Diluted average number of common shares outstanding
9,521

9,502

9,516

9,500

(In thousands, except per share amounts)	March 30, 2003			March 31, 2002
Operating revenues
Advertising	$	279,796		$	273,564
Circulation and subscriber		172,036			161,298
Education		177,778			146,929
Other		10,830			18,531

		640,440			600,322

Operating costs and expenses
Operating		348,634			333,239
Selling, general and administrative		169,170			176,866
Depreciation of property, plant and equipment		43,395			41,173
Amortization of intangible assets		149			152

		561,348			551,430

Income from operations		79,092			48,892

Other income (expense)
Equity in losses of affiliates		(2,642	)		(6,506	)
Interest income		114			133
Interest expense		(7,237	)		(8,867	)
Other, net		48,135			6,454

Income before income taxes and cumulative effect of change in accounting principle		117,462			40,106
Provision for income taxes		44,400			16,400

Income before cumulative effect of change in accounting principle		73,062			23,706
Cumulative effect of change in method of accounting for goodwill and other intangible assets, net of taxes		—			(12,100	)

Net income		73,062			11,606
Redeemable preferred stock dividends		(517	)		(525	)

Net income available for common shares	$	72,545		$	11,081

Basic earnings per common share:
Before cumulative effect of change in accounting principle	$	7.62		$	2.44
Cumulative effect of change in accounting principle		—			(1.27	)

Net income available for common stock	$	7.62		$	1.17

Diluted earnings per share:
Before cumulative effect of change in accounting principle	$	7.59		$	2.43
Cumulative effect of change in accounting principle		—			(1.27	)

Net income available for common stock.	$	7.59		$	1.16

Dividends declared per common share	$	2.90		$	2.80

Basic average number of common shares outstanding		9,526			9,498

Diluted average number of common shares outstanding		9,553			9,512

The Washington Post Company

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

Thirteen Weeks Ended
Twenty-six Weeks Ended

June 30,

July 1,

June 30,

July 1,

(In thousands)
2002

2001

    2002

   2001

Net income
$ 51,144

$ 14,492

$ 62,750

$ 213,546

Other comprehensive income (loss)

     Foreign currency translation adjustment
4,318

893

4,417

(3,376
)

     Change in unrealized gain on available-for-sale securities
(13,049
)
16,767

(15,430
)
1,372

     Less: reclassification adjustment for realized (gains) losses
      included in net income

        –

    394

(11,209
)

   3,214

(8,731
)
18,054

(22,222
)
1,210

Income tax benefit (expense) related to other comprehensive income
   5,080

(6,686
)
10,345

(1,846
)

(3,651
)
11,368

(11,877
)
    (636
)

Comprehensive income
$ 47,493

$ 25,860

$ 50,873

$212,910

(In thousands)	March 30, 2003			March 31, 2002
Net income	$	73,062		$	11,606

Other comprehensive income (loss)
Foreign currency translation adjustment		3,105			99
Less: reclassification adjustment on sale of affiliate investment		(1,633	)		—
Change in unrealized gain on available-for-sale securities		(21,718	)		(2,381	)
Less: reclassification adjustment for realized losses (gains) included in net income		214			(11,209	)

		(20,032	)		(13,491	)
Income tax benefit related to other comprehensive income		8,387			5,265

		(11,645	)		(8,226	)

Comprehensive income	$	61,417		$	3,380

The Washington Post Company

Condensed Consolidated Balance Sheets

(In thousands)
June 30,2002 December 30,

(unaudited)

2001

Assets

Current assets

Cash and cash equivalents
$   22,717

$   31,480

Investments in marketable equity securities
2,329

16,366

Accounts receivable, net
272,845

279,328

Federal and state income taxes receivable
–

10,253

Inventories
29,288

19,042

Other current assets
   34,579

   40,388

361,758

396,857

Property, plant and equipment

Buildings
269,205

267,658

Machinery, equipment and fixtures
1,518,447

1,422,228

Leasehold improvements
     81,246

    79,108

1,868,898

1,768,994

Less accumulated depreciation
   (879,066
)
  (794,596
)

989,832

974,398

Land
34,733

34,733

Construction in progress
     83,002

    89,080

1,107,567

1,098,211

Investments in marketable equity securities

197,945

219,039

Investments in affiliates

77,284

80,936

Goodwill, net

771,391

754,554

Indefinite-lived intangible assets, net

453,306

450,759

Other intangible assets, net

2,267

1,448

Prepaid pension cost

466,683

447,688

Deferred charges and other assets

     78,228

   109,606

$3,516,429

$3,559,098

Liabilities and Shareholders' Equity

Current liabilities

Accounts payable and accrued liabilities
$ 303,928

$ 253,346

Deferred revenue
142,420

130,744

Dividends declared
13,550

–

Federal and state income taxes payable
3,267

–

Short-term borrowings
   400,457

   50,000

863,622

434,090

Postretirement benefits other than pensions

133,580

130,824

Other liabilities

192,093

192,540

Deferred income taxes

211,458

221,949

Long-term debt

    405,779

      883,078

1,806,532

  1,862,481

Redeemable preferred stock

     12,916

    13,132

Preferred stock

         —

         —

Common shareholders' equity

Common stock
20,000

20,000

Capital in excess of par value
145,124

142,814

Retained earnings
3,051,672

3,029,595

Accumulated other comprehensive income (loss)

Cumulative foreign currency translation adjustment
(5,260
)
(9,678
)

Unrealized gain on available-for-sale securities
7,986

24,281

Cost of Class B common stock held in treasury
(1,522,541
)
(1,523,527
)

1,696,981

1,683,485

$3,516,429

$3,559,098

	March 30, 2003			December 29, 2002
(In thousands)	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	36,311		$	28,771
Investments in marketable equity securities		1,431			1,753
Accounts receivable, net		278,511			285,374
Inventories		29,972			27,629
Other current assets		41,771			39,428

		387,996			382,955
Property, plant and equipment
Buildings		283,318			283,233
Machinery, equipment and fixtures		1,596,044			1,551,931
Leasehold improvements		92,597			85,720

		1,971,959			1,920,884
Less accumulated depreciation		(973,288	)		(926,385	)

		998,671			994,499
Land		34,530			34,530
Construction in progress		47,779			65,371

		1,080,980			1,094,400
Investments in marketable equity securities		193,384			214,780
Investments in affiliates		63,142			70,703
Goodwill, net		856,274			770,861
Indefinite-lived intangible assets, net		482,419			482,419
Amortized intangible assets, net		2,004			2,153
Prepaid pension cost		507,126			493,786
Deferred charges and other assets		79,843			71,837

	$	3,653,168		$	3,583,894

Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and accrued liabilities	$	315,411		$	336,582
Deferred revenue		156,417			135,419
Dividends declared		13,912			—
Federal and state income taxes payable		32,769			4,853
Short-term borrowings		217,436			259,258

		735,945			736,112
Postretirement benefits other than pensions		137,440			136,393
Other liabilities		197,466			194,480
Deferred income taxes		256,347			261,153
Long-term debt		431,029			405,547

		1,758,227			1,733,685
Redeemable preferred stock		12,916			12,916

Preferred stock		—			—

Common shareholders’ equity
Common stock		20,000			20,000
Capital in excess of par value		157,976			149,090
Retained earnings		3,224,798			3,179,607
Accumulated other comprehensive income(loss)
Cumulative foreign currency translation adjustment		(6,039	)		(7,511	)
Unrealized gain on available-for-sale securities		4,796			17,913
Cost of Class B common stock held in treasury		(1,519,506	)		(1,521,806	)

		1,882,025			1,837,293

	$	3,653,168		$	3,583,894

The Washington Post Company

Condensed Consolidated Statements of Cash Flows (Unaudited)

Twenty-six Weeks Ended

June 30,

July 1,

(In thousands)
2002

2001

Cash flows from operating activities:

Net income
$ 62,750

$213,546

Adjustments to reconcile net income to net cash provided by operating activities:

Cumulative effect of change in method of accounting for
      goodwill and other intangibles

12,100

–

Depreciation of property, plant and equipment
82,459

70,499

Amortization of goodwill and other intangibles
311

37,118

Net pension benefit
(32,164
)
(39,800
)

Early retirement program expense
12,986

-

Gain from disposition of businesses
–

(321,091
)

(Gain) loss on sale of marketable securities
(13,209
)
344

Cost method and other investment write-downs
16,694

17,300

Equity in losses of affiliates, net of distributions
15,689

19,102

Provision for deferred income taxes
6,755

76,965

Change in assets and liabilities:

Decrease in accounts receivable, net
10,011

3,429

Increase in inventories
(10,246
)
(8,637
)

Increase in accounts payable and accrued liabilities
42,668

8,809

Decrease in income taxes receivable
10,253

12,370

Increase in income taxes payable
3,267

6,248

Decrease in other assets and other liabilities, net
23,164

35,127

Other
    (404
)
    (894
)

Net cash provided by operating activities
243,084

130,435

Cash flows from investing activities:

Purchases of property, plant and equipment
(79,559
)
(119,922
)

Investments in certain businesses
(26,673
)
(104,356
)

Proceeds from the sale of business
–

61,921

Proceeds from sale of marketable securities
19,701

124

Other investments
(7,610
)
(19,839
)

Other
    (189
)
     311

Net cash used in investing activities
(94,330
)
(181,761
)

Cash flows from financing activities:

Net (repayment) issuance of commercial paper
(133,192
)
106,114

Dividends paid
(27,123
)
(27,070
)

Common shares repurchased
(334
)
(445
)

Proceeds from exercise of stock options
   3,132

   2,990

Net cash (used in) provided by financing activities
(157,517
)
81,589

Net (decrease) increase in cash and cash equivalents
(8,763
)
30,263

Beginning cash and cash equivalents
31,480

20,345

Ending cash and cash equivalents
$ 22,717

$ 50,608

	Thirteen Weeks Ended
(In thousands)	March 30, 2003			March 31, 2002
Cash flows from operating activities:
Net income	$	73,062		$	11,606
Adjustments to reconcile net income to net cash provided by operating activities:
Cumulative effect of change in accounting principle		—			12,100
Depreciation of property, plant and equipment		43,395			41,173
Amortization of intangible assets		149			152
Net pension credit		(13,425	)		(16,082	)
Early retirement program expense		—			10,313
Gain from sale of affiliate		(49,762	)		—
Gain on sale of marketable securities		—			(13,209	)
Cost method and other investment write-downs		1,112			10,050
Equity in losses of affiliates, net of distributions		2,642			6,506
Provision for deferred income taxes		3,827			2,986
Change in assets and liabilities:
Decrease in accounts receivable, net		16,991			33,342
Increase in inventories		(2,342	)		(2,064	)
(Decrease) increase in accounts payable and accrued liabilities		(28,588	)		15,766
Increase (decrease) in deferred revenue		11,880			(1,876	)
Decrease in income taxes receivable		—			10,253
Increase in income taxes payable		27,916			578
Increase (decrease) in other assets and other liabilities, net		3,356			(5,561	)
Other		(37	)		136

Net cash provided by operating activities		90,176			116,169

Cash flows from investing activities:
Purchases of property, plant and equipment		(28,086	)		(37,310	)
Investments in certain businesses		(57,537	)		(16,907	)
Proceeds from the sale of affiliate		65,000			—
Proceeds from sale of marketable securities		—			19,701
Investment in affiliates		(5,977	)		(7,610	)
Other		378			249

Net cash used in investing activities		(26,222	)		(41,877	)

Cash flows from financing activities:
Net repayment of commercial paper		(41,882	)		(69,084	)
Dividends paid		(13,959	)		(13,559	)
Proceeds from exercise of stock options		380			2,394
Other		(953	)		—

Net cash used in financing activities		(56,414	)		(80,249	)

Net increase (decrease) in cash and cash equivalents		7,540			(5,957	)
Beginning cash and cash equivalents		28,771			31,480

Ending cash and cash equivalents	$	36,311		$	25,523

The Washington Post Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

Results of operations, when examined on a quarterly basis, reflect the seasonality of advertising that affects the newspaper, magazine and broadcasting operations. Advertising revenues in the second and fourth quarters are typically higher than first and third quarter revenues. All adjustments reflected in the interim financial statements are of a normal recurring nature. ~~Certain 2001 amounts have been reclassified to conform with current year presentation.~~

The Company generally reports on a 13 week fiscal quarter ending on the Sunday nearest the calendar quarter-end. With the exception of the newspaper publishing operations, subsidiaries of the Company report on a calendar-quarter basis.

Note 1: Acquisitions ~~Exchanges~~ and Dispositions.

In March 2003, Kaplan completed its acquisition of the stock of FTC Holdings Limited (FTC), for £55.3 million ($87.4 million). Headquartered in London, FTC is a leader in test preparation services for accountants and financial services professionals, with 18 training centers in the United Kingdom and a growing presence in Asia, including operations in Hong Kong and Singapore. The acquisition was financed through cash and debt with $26.5 million remaining to be paid, primarily to employees of the business (included in long-term debt at March 30, 2003). Most of the purchase price has been allocated to goodwill, on a preliminary basis.

On January 1, 2003, the Company sold its 50 percent interest in the International Herald Tribune for $65 million and the Company recorded an after-tax non-operating gain of $32.3 million in the first quarter of 2003.

In the first ~~six months~~quarter of 2002, Kaplan acquired several businesses in their higher education and test preparation divisions, totaling $37.9 million, with most of the aggregate purchase price allocated to goodwill. About $9.5 million remains to be paid on these acquisitions, of which $2.1 million has been classified in current liabilities and $7.4 million as long-term debt at June 30, 2002. $23.2 million.

During the first six months of 2001, the Company spent approximately $104.4 million on business acquisitions and exchanges, which principally included the purchase of Southern Maryland Newspapers, a division of Chesapeake Publishing Corporation, and amounts paid as part of a cable system exchange with AT&T Broadband. Kaplan also acquired two businesses that are part of their professional division.

The gain resulting from the cable system sale and exchange transactions, which is included in "Other income, net" in the Condensed Consolidated Statements of Income, increased net income for the first six months of 2001 by $196.5 million, or $20.69 per share. For income tax purposes, the cable system sale and exchange transactions qualified as like-kind exchanges, and therefore, a large portion of these transactions did not result in a current tax liability.

Note 2: Investments.

Investments in marketable equity securities at ~~June~~March 30, ~~2002~~2003 and December ~~30, 2001~~29, 2002 consist of the following (in thousands):

     June 30,
December 30,

2002

   2001
Total cost
$187,169

$195,661
Gross unrealized gains
13,105

  39,744
Total fair value
$200,274
$235,405

	March 30, 2003		December 29, 2002
Total cost	$	186,955	$	187,169
Gross unrealized gains		7,860		29,364

Total fair value	$	194,815	$	216,533

There were no sales of marketable equity securities in the first quarter of 2003. During the first quarter of 2002, the Company sold its shares of Ticketmaster, resulting in a pre-tax gain of $13.2 million. There were no sales of marketable equity securities in the second quarter of 2002. During the first six months of 2001, proceeds from sales of marketable equity securities were $0.1 million. Gross realized losses on such sales were $0.3 million.

At ~~June~~March 30, ~~2002~~2003 and December ~~30, 2001,~~29, 2002, the carrying value of the Company’s cost method investments was ~~$14.9~~$8.6 million and ~~$29.6~~$9.5 million, respectively. There were no investments in companies constituting cost method investments during the first ~~six~~three months of 2003 or 2002. ~~During the second quarter and the first six months of 2001, the Company invested $7.7 million in companies constituting cost method investments.~~

The Company recorded charges of ~~$6.6~~$1.1 million and ~~$16.7~~$10.1 million during the ~~second~~first quarter of 2003 and ~~first six months of~~ 2002, respectively, to write-down certain of its investments to estimated fair ~~value; for the same periods of 2001, the Company recorded charges of $5.5 million and $17.3 million, respectively.~~value.

Note 3: Borrowings.

At ~~June~~March 30, ~~2002,~~2003, the Company had ~~$806.2~~$648.5 million in total debt outstanding, which ~~was~~ comprised ~~of $400.0~~$217.4 million of commercial paper borrowings, ~~$398.2~~$398.5 million of 5.5 percent unsecured notes due February 15, 2009, and ~~$8.0~~$32.6 million in other debt. The Company’s five-year $500 million revolving credit facility, which expires in March 2003, and one-year $250 million revolving credit facility, which expires in September 2002, support the issuance of the Company’s short-term commercial paper. The Company intends to replace the revolving credit facility agreements prior to their expiration.

During the ~~second~~first quarter of ~~2002~~2003 and ~~2001~~2002 the Company had average borrowings outstanding of approximately ~~$830.6~~$601.6 million and ~~$949.1~~$888.3 million, respectively, at average annual interest rates of approximately ~~3.7~~4.2 percent and ~~5.8~~3.5 percent, respectively. During the ~~second~~first quarter of ~~2002~~2003 and ~~2001,~~2002, the Company incurred net interest expense on borrowings of $7.1 million and $8.7 million, ~~and $12.2 million,~~ respectively.

During the first six months of 2002 and 2001 the Company had average borrowings outstanding of approximately $859.5 million and $968.6 million, respectively, at average annual interest rates of approximately 3.6 percent and 5.4 percent, respectively. During the first six months of 2002 and 2001, the Company incurred net interest expense on borrowings of $17.5 million and $26.5 million, respectively.

Note 4: Business Segments.

The following table summarizes financial information related to each of the Company’s business segments. The ~~2002~~2003 and ~~2001~~2002 asset information is as of ~~June~~March 30, ~~2002~~2003 and December ~~30, 2001,~~29, 2002, respectively.

~~Second~~First Quarter Period

(in ~~thousands~~)thousands)

Newspaper
Television
Magazine
Cable
Corporate
Publishing
Broadcasting
Publishing
Television
Education
Office
Consolidated
2002
Operating revenues
$
215,067
$
86,092
$
88,886
$
107,963
$
149,695
$
      –
$
647,703
Income (loss) from
operations
$
37,811
$
43,459
$
13,272
$
21,766
$
    624
$
(6,504
)
$
110,428
Equity in losses of
affiliates
(9,183
)
Interest expense, net
(8,738
)
Other expense, net
   (5,963
)
Income before income
taxes
$
86,544
Depreciation expense

$
10,744
$
2,784
$
1,022
$
20,738
$
5,998
$
       –
$
   41,286
Amortization expense
$
    4
–
–
$
39
$
   116
$
   –
$
     159
Net pension credit (expense)

$

5,492

$

1,220

$

9,894

$

    (226

)

$

   (298

)

$

       –

$

   16,082

Identifiable assets
$
698,538
$
415,080
$
458,883
$
1,117,157
$
537,397
$
11,276
$
3,238,331
Investments in
marketable equity
securities
200,274
Investments in
affiliates
    77,824
Total assets
$
3,516,429

Newspaper
Television

Magazine
Cable
Corporate
Publishing
Broadcasting
Publishing
Television
Education
Office
Consolidated
2001
Operating revenues
$
212,824
$
83,653
$
91,543
$
96,452
$
119,437
$
      –
$
603,909
Income (loss) from
operations
$
23,130
$
37,811
$
8,540
$
5,325
$
(11,507
)
$
(6,706
)
$
56,593
Pro forma income (loss)
   from operations ⁽¹⁾
$
23,816
$
41,344
$
10,207
$
15,524
$
(7,814
)
$
(6,706
)
$
76,371
Equity in losses of
affiliates
(6,641 )
Interest expense, net
(12,193 )
Other expense, net
   (10,717
)
Income before
income taxes
$
27,042
Depreciation expense
$
10,026
$
2,931
$
1,217
$
16,886
$
4,807
$
       –
$
35,867
Amortization expense
$
686
$
3,534
$
1,667
$
10,238
$
3,801
$
       –
$
19,926
Net pension credit (expense)

$
7,123
$
1,663
$
11,416
$
(153
)
$
   (171
)
$
       –
$
   19,878

Identifiable assets
$
703,947
$
419,246
$
486,804
$
1,117,426
$
472,988
$
42,346
$
3,242,757
Investments in
marketable equity
securities
235,405
Investments in
affiliates
    80,936
Total assets
$
3,559,098

⁽¹⁾ ~~Second quarter 2001 results, adjusted as if SFAS 142 had been adopted at the beginning of 2001 — refer to Note 5 for additional information~~

~~10.~~

~~Six Month Period~~ (~~in thousands~~)

Newspaper
Television
Magazine
Cable
Corporate
Publishing
Broadcasting
Publishing
Television
Education
Office
Consolidated
2002
Operating revenues
$
415,839
$
161,510
$
163,904
$
209,996
$
296,776
–
$
1,248,025
Income (loss) from
operations
$
55,354
$
77,010
$
1,694
$
37,808
$
     74
$
(12,620
)
$
159,320
Equity in losses of
affiliates
(15,689 )
Interest expense, net

(17,472
)
Other expense, net
      491
Income before income
taxes
$
126,650
Depreciation expense
$
21,623
$
5,549
$
2,072
$
41,217
$
11,998
–
$
   82,459
Amortization expense
$
8
–
–
$
78
$
    225
–
$
      311
Net pension credit (expense)

$

10,983

$

2,440

$

19,789

$

(451

)

$

   (597

)

–

$

   32,164

	Newspaper Publishing		Television Broadcasting		Magazine Publishing		Cable Television			Education			Corporate Office			Consolidated
2003
Operating revenues	$	204,040	$	70,752	$	77,502	$	110,368		$	177,778		$	—		$	640,440
Income (loss) from operations	$	21,358	$	26,347	$	837	$	20,762		$	15,927		$	(6,139	)	$	79,092
Equity in losses of affiliates																	(2,642	)
Interest expense, net																	(7,123	)
Other, net																	48,135

Income before income taxes																$	117,462

Depreciation expense	$	11,297	$	2,746	$	952	$	22,713		$	5,687		$	—		$	43,395
Amortization expense	$	4	$	—	$	—	$	38		$	107		$	—		$	149
Net pension credit (expense)	$	3,957	$	1,065	$	8,998	$	(243	)	$	(352	)	$	—		$	13,425
Identifiable assets	$	706,539	$	407,619	$	488,573	$	1,136,798		$	647,244		$	8,438		$	3,395,211
Investments in marketable equity securities																	194,815
Investments in affiliates																	63,142

Total assets																$	3,653,168

Newspaper
Television
Magazine
Cable
Corporate
Publishing
Broadcasting
Publishing
Television
Education
Office
Consolidated
2001
Operating revenues
$
431,018
$
157,854
$
174,862
$
185,629
$
240,945
$
–
$
1,190,308
Income (loss) from
operations
$
49,406
$
66,359
$
6,020
$
13,081
$
(21,754
)
$
(13,274 )
$
99,838
Pro forma income (loss)
from operations
$
50,600
$
73,426
$
9,354
$
30,942
$
(14,389
)
$
(13,274
)
$
136,659
Equity in losses of
affiliates
(19,102 )
Interest expense, net
(26,493 )
Other expense, net
298,053

Income before income

taxes
$
352,296
Depreciation expense
$
19,527
$
5,858
$
2,437
$
33,145
$
9,532
$
–
$
70,499
Amortization expense
$
1,195
7,067
3,334
$
17,939
$
7,583
$
–
$
37,118
Net pension credit (expense)

$

14,246

$

3,326

$

22,832

$

(306

)

$

(342

)

–

$

39,756

⁽¹⁾ ~~Fiscal year 2001 results, adjusted as if SFAS 142 had been adopted at the beginning of 2001 — refer to Note 5 for additional information~~

	Newspaper Publishing		Television Broadcasting		Magazine Publishing			Cable Television			Education			Corporate Office			Consolidated
2002
Operating revenues	$	200,772	$	75,418	$	75,018		$	102,033		$	147,081		$	—		$	600,322
Income (loss) from operations	$	17,543	$	33,551	$	(11,578	)	$	16,042		$	(550	)	$	(6,116	)	$	48,892
Equity in losses of affiliates																		(6,506	)
Interest expense, net																		(8,734	)
Other, net																		6,454

Income before income taxes																	$	40,106

Depreciation expense	$	10,879	$	2,765	$	1,050		$	20,479		$	6,000		$	—		$	41,173
Amortization expense	$	4	$	—	$	—		$	39		$	109		$	—		$	152
Net pension credit (expense)	$	5,491	$	1,220	$	9,895		$	(226	)	$	(298	)	$	—		$	16,082
Identifiable assets	$	690,197	$	413,663	$	488,562		$	1,142,995		$	542,251		$	18,990		$	3,296,658
Investments in marketable equity securities																		216,533
Investments in affiliates																		70,703

Total assets																	$	3,583,894

Newspaper publishing includes the publication of newspapers in the Washington, D.C. area (The Washington Post, the Gazettecommunity newspapers, and Southern Maryland newspapers) and Everett, Washington (The Everett Herald). This business division also includes newsprint warehousing, recycling operations and the Company’s electronic media publishing business (primarily washingtonpost.com).

Television broadcasting operations are conducted through six VHF, television stations serving the Detroit, Houston, Miami, San Antonio, Orlando and Jacksonville television markets. ~~Each of the~~All stations isare network-affiliated ~~except~~(except for ~~Jacksonville, which became an independent station on July 15, 2002, when its network affiliation agreement with CBS expired.~~WJXT in Jacksonville).

The magazine publishing division consists of the publication of a weekly news magazine, Newsweek, which has one domestic and three international editions, the publication of Arthur Frommer’s Budget Travel, and the publication of business periodicals for the computer services industry and the Washington-area technology community.

Cable television operations consist of cable systems offering basic cable, digital cable, pay television, cable modem and other services to approximately ~~736,100~~719,000 subscribers in ~~midwestern,~~mid-western, western, and southern states.

~~11.~~

Education products and ~~career~~ services are provided through the Company’s wholly-owned subsidiary Kaplan, Inc. Kaplan’s businesses include supplemental education services, which is made up of test preparation and admissions, providing test preparation services for college and graduate school entrance exams; Kaplan Professional, providing education and career services to business people and other professionals; and Score!, offering ~~multi-media~~multimedia learning and private tutoring to children and educational resources to parents. Kaplan’s businesses also include higher education services, which includes all of Kaplan’s post-secondary education businesses, including the fixed facility colleges that were formerly part of Quest Education, which offers bachelor’s degrees, associate’s degrees and diploma programs primarily in the fields of healthcare, business and information technology; and online post-secondary and ~~care er~~career programs (various distance-learning businesses, including kaplancollege.com).

Corporate office includes the expenses of the Company’s corporate office.

Note 5: ~~New Accounting Pronouncement.~~Goodwill and Other Intangible Assets.

~~The Company adopted~~

In accordance with Statement of Financial Accounting Standards No. ~~142 (SFAS~~142(SFAS 142), “Goodwill and Other Intangible ~~Assets” effective on~~Assets,” the Company has reviewed its goodwill and other intangible assets and classified them in three categories (goodwill, indefinite-lived intangible assets, and amortized intangible assets). The Company’s intangible assets with an indefinite life are from franchise agreements at its cable division. Amortized intangible assets are primarily non-compete agreements, with amortization periods up to five years. The Company’s amortized intangible assets decreased in the first ~~day~~quarter of ~~its 2002 fiscal year. As~~2003 as a result of ~~the adoption~~$149,000 of ~~SFAS 142, the Company ceased most of the periodic charges previously recorded from the~~ amortization ofexpense.

The Company’s goodwill and other ~~intangibles.~~intangible assets as of March 30, 2003 and December 29, 2002 were as follows (in thousands):

10.

	Gross		Accumulated Amortization		Net
2003
Goodwill	$	1,154,676	$	298,402	$	856,274
Indefinite-lived intangible assets		646,225		163,806		482,419
Amortized intangible assets		3,525		1,521		2,004

	$	1,804,426	$	463,729	$	1,340,697

2002
Goodwill	$	1,069,263	$	298,402	$	770,861
Indefinite-lived intangible assets		646,225		163,806		482,419
Amortized intangible assets		3,525		1,372		2,153

	$	1,719,013	$	463,580	$	1,255,433

Activity related to the Company’s goodwill during the quarter ended March 30, 2003 was as follows (in thousands):

	Newspaper Publishing			Television Broadcasting		Magazine Publishing		Cable Television		Education		Total
Goodwill, net
Beginning of year	$	72,738		$	203,165	$	69,556	$	85,666	$	339,736	$	770,861
Acquisitions											86,874		86,874
Disposition		(1,461	)		—		—		—		—		(1,461	)

End of Quarter	$	71,277		$	203,165	$	69,556	$	85,666	$	426,610	$	856,274

There was no activity related to the Company’s indefinite-lived intangible assets during the first quarter of 2003.

As required under SFAS 142, ~~in the first quarter of 2002,~~ the Company completed its transitional impairment review of indefinite-lived intangible assets and ~~no impairment charge was warranted. The Company completed its SFAS 142 transitional~~ goodwill ~~impairment test during the second quarter of~~in 2002. The expected future cash flows for ~~one~~PostNewsweek Tech Media (part of the ~~business units in the Company’s~~ magazine ~~segment,~~publishing segment), on a discounted basis, did not support the net carrying value of the related goodwill. Accordingly, an after-tax goodwill impairment loss of $12.1 million, or $1.27 per share was recorded. ~~As required under SFAS 142, the transitional goodwill impairment~~The loss is ~~recognized~~included in the Company’s 2002 first quarter results as a cumulative effect of change in accounting ~~principle and is reported on a retroactive basis in the first quarter of 2002. Therefore, the loss is included in the Company’s year-to-date results for the six months ended June 30, 2002.~~principle.

On a pro forma basis, the Company’s operating income would have been $76.4 million in the second quarter of 2001, if SFAS 142 had been adopted at the beginning of fiscal 2001, compared to $110.4 for the second quarter of 2002. On a pro forma basis, the Company’s operating income would have been $136.7 million in the first six months of 2001, if SFAS 142 had been adopted at the beginning of fiscal 2001, compared to $159.3 for the first six months of 2002.

~~Other pro forma results for the second quarter of 2002, compared to 2001, adjusted as if SFAS 142 had been adopted at the beginning of 2001, are as follows:~~

Second Quarter

2002
2001

Net income available for common stock as reported
$50,885
$14,229

Amortization of goodwill and other intangibles, net of tax
      –
13,863

Pro forma net income available for common stock
$ 50,885
$ 28,092

Basic earnings per share
$    5.35
$    2.96

Diluted earnings per share
$    5.34
$    2.96

~~12.~~

~~Other pro forma results for the first six months of 2002, compared to 2001, adjusted as if SFAS 142 had been adopted at the beginning of 2001, are as follows:~~

Year-to-Date

2002

2001

Income before cumulative effect of change
     in accounting principle, as reported
$ 74,850
$213,546

Amortization of goodwill and other intangibles, net of tax
     –

26,087

Pro forma income before cumulative
     effect of change in accounting principle
74,850

239,633

Cumulative effect of change in method of accounting for
     goodwill and other intangible assets, net of tax
(12,100
)

Redeemable preferred stock dividends
    (784
)
    (789
)

Pro forma net income available for common stock
$ 61,966
$238,844

Basic earnings per share:

     Before cumulative effect of change in accounting
        principle
$ 7.87

$ 25.27

     Cumulative effect of change in accounting principle
(1.27
)
     –

     Redeemable preferred stock dividends
(0.08
)
(0.08
)

     Net income available for common stock
$ 6.52

$ 25.19

Diluted earnings per share:

     Before cumulative effect of change in accounting
        principle
$ 7.86

$ 25.22

     Cumulative effect of change in accounting principle
(1.27
)
     –

     Redeemable preferred stock dividends
(0.08
)
(0.08
)

     Net income available for common stock
$ 6.51
$ 25.14

In accordance with SFAS 142, the Company has reviewed its goodwill and other intangible assets and reported them on the consolidated balance sheet in three categories (goodwill, indefinite-lived intangible assets, and other intangible assets). The Company’s intangible assets with an indefinite life are from franchise agreements at its cable division. Other intangible assets are primarily non-compete agreements, with amortization periods up to five years. At June 30, 2002, goodwill, indefinite lived intangible assets and other intangible assets were net of accumulated amortization of $298.4 million, $163.8 million and $1.0 million, respectively. At December 30, 2001, goodwill, indefinite lived intangible assets and other intangible assets were net of accumulated amortization of $279.4 million, $163.8 million and $0.7 million, respectively.

Note 6: Change in Accounting Method – Stock Options

Effective the first day of the Company’s 2002 fiscal year, the Company ~~has~~ adopted the fair-value-based method of accounting for ~~company~~Company stock options as outlined in Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (SFAS 123). This change in accounting method ~~will be~~was applied prospectively to all awards granted from the beginning of the Company’s fiscal year 2002 and thereafter. Stock options awarded prior to fiscal 2002 ~~will continue to be~~are accounted for under the intrinsic value method under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees.”

~~No stock options~~The following table presents what the Company’s results would have been ~~awarded~~had the fair values of options granted after 1995, but prior to 2002, been recognized as compensation expense in ~~fiscal year~~the first quarter of 2003 and 2002 through the end of the second quarter; therefore, this change in accounting method has had no impact on the Company’s reported results of operations in 2002. The impact on the Company’s overall 2002 operating results is not expected to be material. (in thousands except per share amounts).

	2003		2002
Company stock-based compensation expense included in net income (pre-tax)	$	142	$	—

Net income available for common shares, as reported	$	72,545	$	11,081
Stock-based compensation expense not included in net income (after-tax)		790		904

Pro forma net income available for common shares	$	71,755	$	10,177

Basic earnings per share, as reported	$	7.62	$	1.17
Pro forma basic earnings per share	$	7.53	$	1.07
Diluted earnings per share, as reported	$	7.59	$	1.16
Pro forma diluted earnings per share	$	7.51	$	1.07

11.

~~13.~~

Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition

This analysis should be read in conjunction with the consolidated financial statements and the notes thereto.

Revenues and expenses in the first and third quarters are customarily lower than those in the second and fourth quarters because of significant seasonal fluctuations in advertising volume.

As discussed above, the Company adopted SFAS 142 effective on the first day of its 2002 fiscal year. All operating income comparisons presented below are on a pro forma basis as if SFAS 142 had been adopted at the beginning of 2001. Therefore, 2001 pro forma operating results exclude amortization charges of goodwill and certain other intangible assets that are no longer amortized under SFAS 142.

~~Second Quarter Comparisons~~Results of Operations

Net income for the ~~second~~first quarter of ~~2002~~2003 was ~~$51.1~~$73.1 million ($~~5.34~~7.59 per share), up from net income of ~~$14.5~~$11.6 million ($~~1.50~~1.16 per share) in the ~~second~~first quarter of last year.

Results for the ~~second~~first quarter of ~~2002~~2003 include ~~net losses on~~an after-tax non-operating gain from the ~~write-down~~sale of ~~certain investments ($3.3~~the Company’s 50 percent interest in the International Herald Tribune (after-tax impact of $32.3 million, or ~~$0.34 per share) and an early retirement program charge at Newsweek ($1.6 million, or $0.17~~$3.38 per share). Results for the second quarter of 2001 include losses on the write-down of a non-operating parcel of land and certain investments to their estimated fair value (totaling $4.7 million, or $0.50 per share) and a charge of $13.9 million, or $1.45 per share, for amortization of goodwill and certain other intangible assets that are no longer amortized under SFAS 142. Excluding these items, net income for the secondfirst quarter of 2002 ~~totaled $56.0~~included a transitional goodwill impairment loss (after-tax impact of $12.1 million, or ~~$5.85~~$1.27 per share, compared to net income of $33.1 million, or $3.45 per share, for the second quarter of 2001. Second quarter 2002 earnings benefited from improved results at all five of the Company’s divisions, with significant increases at The Washing ton Post newspaper and at the Company’s education and cable divisions. These factors were offset in part by increased depreciation expense,share), a ~~reduced net pension credit, an early retirement program~~ charge ~~at Newsweek and higher stock-based compensation expense accruals at the education division.~~

Revenue for the second quarter of 2002 was $647.7 million, up 7 percent from $603.9 million in 2001. Advertising revenue increased 1 percent compared to last year. Circulation and subscriber revenue and education revenue increased 5 percent and 25 percent, respectively.

The 1 percent increase in advertising revenue is the result of modest growth at the television broadcasting division, relatively flat print advertising revenue at The Post, and a decline in Newsweek advertising revenue. The advertising climate at the newspaper and magazine publishing divisions continues to be soft.

~~The 5 percent improvement in circulation and subscriber revenue is attributable to growth in subscriber revenues at Cable One, from rapid growth in cable modem and digital service revenues.~~

The 25 percent increase in education revenue is due to revenue growth in all of Kaplan’s lines of business, particularly the traditional test preparation business and the fixed-facility colleges that were formerly part of Quest Education.

~~14.~~

Costs and expenses for the second quarter of 2002, excluding amortization of goodwill and other intangibles, increased 2 percent to $537.1 million, from $527.4 million in 2001. The increase is due to a $2.7 million pre-tax chargearising from an early retirement program at Newsweek ~~higher stock-based compensation expense accruals~~(after-tax impact of $6.1 million, or $0.64 per share), and a net non-operating gain primarily from the sale of marketable securities (after-tax impact of $3.8 million, or $0.40 per share).

Revenue for the first quarter of 2003 was $640.4 million, up 7 percent from $600.3 million in 2002. The increase in revenue is due mostly to significant revenue growth at the education and cable divisions. Although advertising revenues have suffered due to the war in Iraq, the magazine and newspaper divisions showed modest revenue growth; revenues were down at the broadcast division.

Operating income for the quarter increased 62 percent to $79.1 million, from $48.9 million in 2002. Operating results for 2002 included a $10.3 million pre-tax charge from the Newsweek early retirement program. The Company’s results benefited from significantly improved operating results at the education, cable and newspaper divisions. These factors were offset by a reduction in advertising demand late in the quarter and certain incremental costs due to the war in Iraq, a reduction in operating income at the broadcast division, increased depreciation expense, and a reduced net pension credit. ~~These factors were partially offset by a 30 percent decrease in newsprint expense and general cost control measures employed throughout the Company.~~

The increase in depreciation expense occurred mainly at the cable division, where capital spending in 2001 and 2000 has enabled the cable division to offer digital and broadband cable services to its subscribers.

The Company’s ~~expenses~~operating income for the ~~second~~first quarter of ~~2002 were reduced by $16.1~~2003 includes $13.4 million of net pension credits, compared to ~~$19.9~~$16.1 million in the ~~second~~first quarter of ~~2001.~~2002. At December ~~30, 2001, the Company modified certain assumptions surrounding the Company’s pension plans. Specifically,~~29, 2002, the Company reduced its ~~assumptions~~assumption on discount rate from ~~7.5~~7.0 percent to ~~7.0 percent and expected return on plan assets from 9.0 percent~~6.75 percent. Due to ~~7.5 percent. These assumption changes result in a~~the reduction ~~of approximately $5.5 million~~ in the ~~Company’s~~discount rate and lower than expected investment returns in 2002, the net pension credit ~~each quarter. Management expects the 2002 annual net pension credit~~for 2003 is expected to ~~approximate $65~~be down by about $10 million compared to ~~$76.9 million in 2001,~~2002, excluding charges related to early retirement programs.

~~Operating income for the quarter increased 45 percent to $110.4 million, from $76.4 million in 2001, adjusted as if SFAS 142 had been adopted at the beginning of 2001.~~

Newspaper Publishing Division. Newspaper publishing division revenue totaled ~~$215.1~~$204.0 million for the ~~second~~first quarter of ~~2002, an~~2003, a 2 percent increase ~~of 1 percent~~ from revenue of ~~$212.8~~$200.8 million in the ~~second~~first quarter of ~~2001.~~2002. Division operating income ~~for the second quarter~~ increased 5922 percent to ~~$37.8~~$21.4 million, from ~~pro forma operating income of $23.8~~$17.5 million in ~~the second quarter of 2001.~~2002. The increase in division operating income ~~for the second quarter~~ is ~~due~~primarily attributable to ~~an increase~~increases in print and online advertising ~~cost control initiatives employed throughout the division, and a 30~~revenue, combined with an 11 percent decrease in newsprint expense ~~offset by a reduced pension credit.~~at The Post.

Print advertising revenue at The Washington Post newspaper increased slightly to $132.5 million, from $131.5 million in 2002, due to increases in preprint and zone advertising revenue, which more than offset a decrease in classified advertising revenue from volume declines. Recruitment advertising revenue was down $2.3 million due to a 17 percent volume decline. Advertising demand was down late in the ~~second~~ quarter ~~increased~~due to ~~$143.7 million, from $142.0 million~~the war in ~~2001. The relatively flat print advertising revenues for~~Iraq.

For the ~~second~~first quarter of ~~2002 were~~2003, Post daily and Sunday circulation declined 1.9 percent and 1.1 percent, respectively, compared to the ~~result~~first quarter of ~~higher revenue from several advertising categories, including preprints, general~~2002. For

12.

the three months ended March 30, 2003, average daily circulation at The Post totaled 757,000 and ~~other classified advertising, offset by a continued decline in recruitment advertising revenue, with volume decreases of 29 percent in the second quarter.~~ average Sunday circulation totaled 1,052,000.

~~Revenue~~

Revenues generated by the Company’s online publishing activities, primarily washingtonpost.com, ~~totaled $8.7~~increased 27 percent to $9.5 million for the ~~second~~first quarter of ~~2002,~~2003, versus ~~$8.2~~$7.5 million for ~~2001.~~2002. Local and national online advertising revenues grew 5678 percent ~~for~~in 2003, while revenue at the ~~second quarter, however, revenues at WashingtonJobs.com were flat in the second quarter due to the weak employment market.~~Jobs section of washingtonpost.com increased 17 percent.

Television Broadcasting Division. Revenue for the ~~television broadcasting~~broadcast division ~~increased 3~~decreased 6 percent in the ~~second~~first quarter of ~~2002~~2003 to ~~$86.1~~$70.8 million, from ~~$83.7~~$75.4 million in ~~2001, primarily~~2002, due to ~~an increase~~significant Olympics related advertising at the Company’s NBC affiliates in ~~political advertising, offset by a reduction~~2002 and several days of commercial-free coverage in ~~network compensation due to a new network affiliation agreement~~connection with ~~NBC, which goes through 2011.~~the war in Iraq. Operating income for the ~~second~~first quarter ~~increased 5~~of 2003 decreased 21 percent to ~~$43.5~~$26.3 million, from ~~pro forma operating income of $41.3~~$33.6 million ~~for the second quarter of 2001. Operating income growth for the second quarter of 2002 is due to modest revenue growth and tight cost controls, partially offset by a reduced pension credit.~~ in 2002.

In ~~April~~July 2002, ~~the Company announced that~~WJXT in Jacksonville, Florida began operations as an independent station when its network affiliation with CBS ~~at WJXT in Jacksonville, Florida, would end. On July 15, 2002, WJXT began operations as an independent station.~~ ended.

~~15.~~

Magazine Publishing Division. Revenue for the magazine publishing division totaled ~~$88.9~~$77.5 million for the ~~second~~first quarter of ~~2002,~~2003, a 3 percent ~~decrease~~increase from ~~$91.5~~$75.0 million for the ~~second~~first quarter of ~~2001,~~2002. This increase was primarily due to ~~lower~~an 18 percent increase in advertising revenue at ~~Newsweek. Operating income totaled $13.3 million for~~Newsweek, as a result of increased ad pages at both the ~~second~~domestic and international editions, as well as an additional issue of the magazine in the first quarter of ~~2002,~~2003 versus the first quarter of 2002. This revenue increase was partially offset by reduced advertising demand late in the quarter due to the Iraq war, and a ~~30 percent increase from pro forma operating income of $10.2 million~~decline in revenue at PostNewsweek Tech Media, whose primary trade show is in the second quarter of ~~2001. Excluding~~2003, versus the ~~$2.7~~first quarter in 2002.

Magazine division operating income totaled $0.8 million, ~~pre-tax~~compared to a loss of $11.6 million for the first quarter of 2002. The improvement in operating results is primarily attributable to a $10.3 million charge in connection with an early retirement program at Newsweek ~~operating income increased 56 percent to $15.9 million due to a decline~~ in ~~overall operating expenses, including~~the first quarter of 2002.

During the second quarter of 2003, Newsweek has experienced a reduction in ~~magazine paper rates~~advertising demand and ~~subscription~~increased costs ~~offset by lower revenues and~~due to the Iraq war, along with a ~~reduced pension credit.~~ reduction in travel-related advertising demand at Newsweek International due to the SARS epidemic.

Cable Television Division. Cable division revenue of ~~$108.0~~$110.4 million for the ~~second~~first quarter of ~~2002~~2003 represents ~~a 12~~an 8 percent increase over ~~2001 second~~2002 first quarter revenue of ~~$96.5~~$102.0 million. The ~~2002~~2003 revenue increase is ~~principally~~ due to ~~rapid~~continued growth in the division’s cable modem and digital service revenues, offset by lower pay revenues.

Cable division cash flow (operating income excluding depreciation and amortization expense) totaled $42.5 million for the second quarter of 2002, an increase of 31 percent from $32.4 million for the second quarter of 2001.

Cable division operating income ~~for~~increased 29 percent to $20.8 million in the ~~second quarter increased 40 percent from pro forma operating income of $15.5 million for the second~~first quarter of ~~2001.~~2003, versus $16.0 million in the first quarter of 2002. The increase in operating income is due mostly to the division’s ~~significant~~ revenue growth, offset by higher depreciation expense and increased programming expense.

The increase in depreciation expense is due to significant capital spending ~~primarily~~ in ~~2001 and 2000, which~~recent years that has enabled the cable division to offer digital and broadband cable services to its subscribers. The cable division began its rollout plan for these services in the third quarter of 2000. At ~~June 30, 2002,~~March 31, 2003, the cable division had approximately ~~232,800~~210,500 digital cable subscribers, representing a 3330 percent penetration of the subscriber base in the markets where digital services are offered. Digital services are ~~currently~~ offered in markets serving 9799 percent of the cable division’s subscriber base. The initial rollout plan for the new digital cable services included an offer for the cable division’s customers to obtain these services free for one year. At ~~June 30, 2002,~~the end of March 2003, the cable division had about ~~94,000~~205,300 paying digital subscribers, including 15,600 paying digital subscribers in Idaho systems that it had ass umed from the cable exchange transactions completed in the first quarter of 2001 and who were not offered one-year free digital service by the prior owner. The benefits from these services began to show in the first quarter of 2002 and are expected to continue throughout the year, with the remaining portion of free one-year periods generally ending later in 2002.subscribers.

At ~~June 30, 2002,~~March 31, 2003, the cable division had ~~736,100~~719,300 basic subscribers, ~~compared to 758,000~~lower than 751,700 basic subscribers at the end of ~~June 2001, with~~March 2002 but up slightly from 718,000 basic subscribers at the ~~decrease due primarily to the difficult economic environment over the past year; basic customer disconnects for non-payment~~end of ~~bills have increased significantly.~~December 2002. At ~~June 30, 2002,~~March 31, 2003, the cable division had ~~60,600~~95,800 CableONE.net service subscribers, compared to ~~32,800~~53,100 at the end

13.

of ~~June 2001,~~March 2002, due to a large increase in the Company’s cable modem deployment (offered to 9197 percent of homes passed at the end of ~~June 2002)~~March 2003) and ~~subscriber penetration~~take-up rates. ~~Of these subscribers, 56,000~~

At March 31, 2003, Revenue Generating Units (RGUs), representing the sum of basic, digital and ~~19,000 were~~high-speed data customers, as defined by the NCTA Standard Reporting Categories, totaled 1,020,500, compared to 870,000 as of March 31, 2002. The increase is due to increased paying digital cable ~~modem subscribers at~~and high-speed data customers.

Below are details of Cable division capital expenditures for the ~~end of the second~~first quarter of 2003 and 2002, ~~and 2001, respectively, with~~as defined by the ~~remainder being dial-up subscribers.~~NCTA Standard Reporting Categories (in millions):

~~16.~~

	2003		2002
Customer Premise Equipment	$	2.6	$	14.5
Commercial		0.1		0.1
Scaleable Infrastructure		1.2		0.7
Line Extensions		3.1		1.8
Upgrade/Rebuild		8.1		4.9
Support Capital		1.8		2.1

Total	$	16.9	$	24.1

Education Division. Education division revenue totaled ~~$149.7~~$177.8 million for the ~~second~~first quarter of ~~2002,~~2003, a 2521 percent increase over revenue of ~~$119.4~~$147.1 million for the same period of ~~2001. Including the charges for stock options held by Kaplan management,~~2002. Kaplan reported operating income for the ~~second~~first quarter of 2003 of $15.9 million, compared to an operating loss of $0.6 million ~~compared to a pro forma operating loss of $7.8 million for~~in the ~~second~~first quarter of ~~2001. Excluding these charges,~~2002. Approximately 20 percent of the increase in Kaplan ~~operating earnings were $10.6 million for~~revenue is from acquired businesses, primarily in the ~~second quarter of 2002, compared to operating losses of $0.6 million for the second quarter of 2001.~~higher education division. A summary of ~~second~~first quarter operating results ~~excluding goodwill amortization in 2001,~~ is as follows:

Second Quarter
(In thousands)

2002

2001

% Change

Revenue

Supplemental education
$
92,623
$
81,826

+13

Higher education

57,072

37,611

+52

$
149,695
$
119,437

+25

Operating income (loss)

Supplemental education
$
10,989
$
5,513

+99

Higher education

5,065

(825
)
---

Kaplan corporate overhead

(5,314
)
(5,185
)
(2
)
Other*

(10,116
)
(7,317
)
(38
)
$
624
$
(7,814
)
---

*Other includes charges accrued for stock-based incentive compensation and amortization of certain intangibles.

	First Quarter
(in thousands)	2003			2002			% Change
Revenue
Supplemental education	$	98,182		$	90,750		8
Higher education		79,596			56,331		41

	$	177,778		$	147,081		21

Operating income (loss)
Supplemental education	$	18,552		$	13,204		41
Higher education		14,922			8,886		68
Kaplan corporate overhead		(7,440	)		(5,902	)	(26	)
Other*		(10,107	)		(16,738	)	40

	$	15,927		$	(550	)	—

Other includes charges accrued for stock-based incentive compensation and amortization of certain intangibles.

Supplemental education includes Kaplan’s test preparation, professional training, and Score! businesses. The improvement in supplemental education results for the ~~second~~first quarter of 2003 is due mostly to ~~higher enrollments and to a lesser extent higher prices~~increased enrollment at Kaplan’s traditional test preparation business, ~~(particularly the LSAT, MCAT and GRE prep courses),~~ as well as ~~higher revenues and profits from Kaplan’s CFA and~~a significant increase in the professional real estate ~~exam preparation services.~~courses. Score! also contributed to the improved results, with increased enrollment from existing sites and two new ~~learning~~ centers ~~opened later in 2001 (148 centers at the end of June 2002, versus 145 centers at the end of June 2001), higher prices and strong~~compared to last year, combined with tight cost controls.

Higher education includes all of Kaplan’s post-secondary education businesses, including ~~the~~ fixed-facility colleges ~~that were formerly part of Quest Education,~~ as well as online post-secondary and career programs (various ~~distance learning~~distance-learning businesses). Higher education results are showing significant growth due to student enrollment increases, high student retention rates, and ~~as a result of~~ several acquisitions.

Corporate overhead represents unallocated expenses of Kaplan, Inc.’s corporate office, including expenses associated with the design and development of educational software that, if successfully completed, will benefit all of Kaplan’s business units.

14.

Other expense is comprised of accrued charges for stock-based incentive compensation arising from a stock option plan established for certain members of Kaplan’s management and amortization of certain intangibles. Under the stock-based incentive plan, the amount of compensation expense varies directly with the estimated fair value of Kaplan’s common stock and the number of options outstanding. For the first quarter of 2003 and 2002, the Company recorded expense of $10.0 million and $16.6 million, respectively, related to this plan. The ~~increase~~Company prepares estimates of the Kaplan stock option expense and related accrual balance on a quarterly basis. The trend in ~~other~~Kaplan stock option expense in 2002 ($10.0 million, $6.7 million and $1.2 million for the second, third and fourth quarters of 2002, respectively) is ~~attributable~~not indicative of the expected expense to be recorded for the remainder of 2003.

On March 31, 2003, Kaplan completed its acquisition of the stock of FTC Holdings Limited (FTC) for £55.3 million ($87.4 million), financed through cash and debt. Headquartered in London, FTC is a leader in test preparation services for accountants and financial services professionals, with 18 training centers in the United Kingdom and a growing presence in Asia, including operations in Hong Kong and Singapore.

In May 2003, Kaplan announced it had entered into an ~~increase~~agreement for its higher education division to acquire Heritage College, a career-oriented postsecondary school providing training in ~~stock-based incentive compensation, which~~the fields of allied health, paralegal, travel and information technology. The acquisition is ~~due to an increase in Kaplan’s estimated value.~~contingent upon regulatory approvals.

~~17.~~

Equity in Losses of Affiliates. The Company’s equity in losses of affiliates for the ~~second~~first quarter of ~~2002~~2003 was ~~$9.2~~$2.6 million, compared to losses of ~~$6.6~~$6.5 million for the ~~second~~first quarter of ~~2001.~~2002. The Company’s affiliate investments consist of a 49 percent interest in BrassRing LLC ~~a 50 percent interest in the International Herald Tribune,~~ and a 49 percent interest in Bowater Mersey Paper Company Limited. ~~BrassRing accounted~~The reduction in first quarter 2003 affiliate losses is primarily attributable to improved operating results at BrassRing.

On January 1, 2003, the Company sold its 50 percent interest in the International Herald Tribune for ~~approximately $6.5~~$65 million and the Company recorded an after-tax non-operating gain of ~~the 2002 second quarter equity in losses of affiliates compared to $8.3~~$32.3 million in ~~equity losses for~~ the ~~same period~~first quarter of ~~2001.~~ 2003.

Non-Operating Items. The Company recorded other non-operating ~~expense,~~income, net, of ~~$6.0~~$48.1 million for the ~~second~~first quarter of ~~2002,~~2003, compared to ~~$10.7~~non-operating income, net, of $6.5 million for the first quarter of 2002. The 2003 non-operating ~~expense, net,~~income is comprised mostly of a $49.8 million pre-tax gain from the sale of the Company’s 50 percent interest in the ~~second quarter of 2001.~~International Herald Tribune. The 2002 non-operating ~~expense includes charges for~~income is comprised mostly of a gain from the ~~write-down~~sale of marketable securities, offset by write-downs recorded on certain ~~investments; the 2001 non-operating expense includes charges for the write-down of certain investments and a parcel of non-operating land to their estimated fair value.~~investments.

Net Interest Expense. The Company incurred net interest expense of ~~$8.7~~$7.1 million for the ~~second~~first quarter of ~~2002,~~2003, compared to ~~$12.2~~$8.7 million for the same period of ~~2001.~~the prior year. The reduction is due to ~~both~~ lower average borrowings ~~and lower interest rates.~~in the first quarter of 2003 versus the same period of the prior year. At ~~June~~March 30, ~~2002,~~2003, the Company had ~~$806.2~~$648.5 million in borrowings outstanding at an average interest rate of ~~3.7~~4.0 percent.

Provision for Income Taxes. The effective tax rate for the ~~second~~first quarter of ~~2002~~2003 was ~~40.9~~37.8 percent, compared to ~~46.4~~40.9 percent for the same period of ~~2001.~~2002. The 2003 rate benefited from a lower effective tax rate applicable to the one-time gain arising from the sale of the Company’s interest in the International Herald Tribune. Excluding the effect of the International Herald Tribune gain, the Company’s effective tax rate approximated 39.8 percent for the first quarter of 2003. The effective tax rate for ~~2002~~2003 has declined ~~because~~due to an increase in operating earnings.

Cumulative Effect of Change in Accounting Principle.In 2002, the Company ~~no longer has any permanent difference from goodwill amortization not deductible for tax purposes as a result of the adoption of SFAS 142.~~

~~Earnings Per Share.~~ The calculation of diluted earnings per share for the second quarter of 2002 was based on 9,521,000 weighted average shares outstanding compared to 9,502,000 for the second quarter of 2001. The Company made no significant repurchases of its stock during the second quarter of 2002.

~~Six Month Comparisons~~

~~The Company~~ completed its ~~SFAS 142~~ transitional goodwill impairment test ~~during the second quarter~~required under Statement of ~~2002,~~Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (SFAS 142), resulting in an after-tax impairment loss ~~related to its magazine division~~ of $12.1 million, or $1.27 per ~~share. As required under SFAS 142, the transitional goodwill impairment~~share, related to PostNewsweek Tech Media (part of magazine publishing segment). This loss is ~~recognized~~included in the Company’s 2002 results as a cumulative effect of change in accounting ~~principle and is reported on a retroactive basis in the first quarter of 2002. Therefore, the loss is included in the Company’s year-to-date results for the six months ended June 30, 2002.~~

For the first six months of 2002, net income totaled $62.8 million ($6.51 per share), compared with net income of $213.5 million ($22.39 per share) for the same period of 2001. Results for the first six months of 2002 include the transitional goodwill impairment loss discussed above ($12.1 million, or $1.27 per share), charges from early retirement programs at Newsweek ($7.7 million, or $0.81 per share), and a net non-operating gain from the sale of marketable securities ($0.6 million, or $0.06 per share). Results for the first six months of 2001 include net non-operating gains, principally from the sale and exchange of certain cable systems ($184.7 million, or $19.44 per share), and a charge of $26.1 million, or $2.75 per share, for amortization of goodwill and other intangible assets that are no longer amortized under SFAS 142. Excluding these items, net income for the first six months of 2002 totaled $82.0 million, or $8.53 per share, compared to net income of $54.9 million, or $5.70 per share, for the first six months of 2001. Consistent with the Company’s results for the second quarter of 2002, the Company’s year-to-date results benefited from improved operating results at the education and cable divisions, along with improved earnings at The Washington Post newspaper in the second quarter. These factors were offset in part by increased depreciation expense, a reduced net pension credit, and higher stock-based compensation expense accruals at the education division.

~~18.~~

Revenue for the first half of 2002 was $1,248.0 million, up 5 percent over revenue of $1,190.3 million for the first six months of 2001. Advertising revenue decreased 3 percent compared to last year. Circulation and subscriber revenue and education revenue increased 7 percent and 23 percent, respectively. The decline in advertising revenue is primarily attributable to a $22.1 million (or 37 percent) decline in classified recruitment advertising revenue at The Washington Post. The 7 percent improvement in circulation and subscriber revenue is attributable to growth in subscriber revenues at Cable One, from rapid growth in cable modem and digital service revenues. The 23 percent increase in education revenue is due to revenue growth in all of Kaplan’s lines of business, particularly the traditional test preparation business and the fixed-facility colleges that were formerly part of Quest Education.

Costs and expenses for the first six months of 2002, excluding amortization of goodwill and other intangibles, increased 3 percent to $1,088.4 million, from $1,053.4 million in 2001. The increase is due to $13.0 million in pre-tax charges from early retirement programs at Newsweek, higher stock-based compensation expense accruals at the education division, increased depreciation expense, and a reduced net pension credit. These factors were partially offset by a 25 percent decrease in newsprint expense and general cost control measures employed throughout the Company.

~~The Company’s expenses were reduced for the first six months of 2002 by $32.2 million of net pension credits, compared to $39.8 million during the first six months of 2001.~~

Operating income increased 17 percent to $159.3 million, from $136.7 million in 2001. Excluding the $13.0 million pre-tax charges from Newsweek’s early retirement programs, operating income for the first six months of 2002 was $172.3 million, an increase of 26 percent.

~~Newspaper Publishing Division~~. Newspaper publishing division revenue decreased 4 percent to $415.8 million for the first six months of 2002, from $431.0 million for the first six months of 2001. Division operating income increased 9 percent to $55.4 million for the first six months of 2002, compared to pro forma operating income of $50.6 million for the first six months of 2001. The increase in operating income for the first six months of 2002 is due to increased circulation revenues, a 25 percent decrease in newsprint expense, and cost control initiatives employed throughout the division, offset by a decrease in print advertising revenues and a reduced pension credit.principle.

Print advertising at The Washington Post newspaper decreased 7 percent to $275.3 million for the first six months of 2002, from $294.6 million for the first six months of 2002. The decrease in print advertising revenues for the first six months of 2002 is primarily due to a $22.1 million decline in recruitment advertising revenue, resulting from a 40 percent volume decline, and a continued decline in retail advertising sales and volume. These declines are partially offset by higher revenues from several advertising categories, including preprints and other classified advertising.

For the first six months of 2002, Post daily and Sunday circulation declined 0.1 percent and 0.8 percent, respectively, compared to the same period of the prior year. For the six months ended June 30, 2002, average daily circulation at The Post totaled 759,900 and average Sunday circulation totaled 1,059,700.15.

Revenue generated by the Company’s online publishing activities totaled $16.2 million for the first six months of 2002, versus $15.4 million for 2001. Local and national online advertising revenues grew 47 percent for the first six months of 2002. However, revenues at WashingtonJobs.com were down 13 percent for the first six months of 2002 due to the weak employment market.

~~19.~~

~~Television Broadcasting Division.~~ Revenue for the television broadcasting division for the first six months of 2002 increased 2 percent to $161.5 million, from $157.9 million in 2001, due to an increase in national advertising, including political, and Olympics-related advertising at the Company’s NBC affiliates in the first quarter of 2002, partially offset by reduced network compensation revenues due to a new network affiliation agreement with NBC, which goes through 2011. Operating income for the first six months of 2002 increased to $77.0 million, from pro forma operating income of $73.4 million for the first six months of 2001. Operating income growth for the first six months of 2002 is due to modest revenue growth and tight cost controls, partially offset by a reduced pension credit.

~~Magazine Publishing Division.~~ Revenue for the magazine publishing division totaled $163.9 million for the first six months of 2002, a 6 percent decline from $174.9 million for the first six months of 2001, due primarily to lower advertising revenue at Newsweek. Operating income totaled $1.7 million for the first six months of 2002, down from pro forma operating income of $9.4 million for the first six months of 2001. Excluding the $13.0 million in pre-tax charges in connection with early retirement programs at Newsweek, operating income increased 57 percent to $14.7 million, due to a decline in overall operating expenses, including a reduction in magazine paper rates, print and distribution costs and lower subscription costs, offset by lower revenues and a reduced pension credit.

In the third quarter of 2002, the Company will record an estimated $3.1 million additional charge in connection with an early retirement program recently offered to certain employees in Newsweek’s international operations.

~~Cable Television Division.~~ Cable division revenue for the first six months of 2002 increased 13 percent to $210.0 million, from $185.6 million in 2001, due to rapid growth in the division's cable modem and digital service revenues.

Cable division cash flow (operating income excluding depreciation and amortization expense) for the first six months of 2002 increased 23 percent to $79.1 million, from $64.2 million in 2001. Cable division operating income for the first six months of 2002 increased 22 percent to $37.8 million from pro forma operating income of $30.9 million for the first six months of 2001. The increase in operating income is due mostly to the division’s significant revenue growth, offset by higher depreciation expense and increased programming expense.

~~Education Division.~~ For the first six months of 2002, education division revenue totaled $296.8 million, a 23 percent increase over revenue of $240.9 million for the same period of 2001. Including the charges for stock options held by Kaplan management, Kaplan reported operating income of $0.1 million for the first six months of 2002, compared to a pro forma operating loss of $14.4 million for the first six months of 2001. Excluding these charges, Kaplan operating earnings were $26.7 million for the first six months of 2002, compared to operating earnings of $0.9 million for the first six months of 2001. Excluding goodwill amortization in 2001, a summary of operating results for the first six months of 2002 compared to 2001 is as follows:

~~20.~~

YTD
(In thousands)
2002 2001 % Change

Revenue

Supplemental education
$183,373

$162,700

+13

Higher education
113,403

78,245

+45

$296,776

$240,945

+23

Operating income (loss)

Supplemental education
$ 24,191

$ 11,953

+102

Higher education
13,951

1,419

+883

Kaplan corporate overhead
(11,216
)
(12,280
)
+9

Other*
(26,852
)
(15,481
)
(73
)

$ 74

$ (14,389
)
---

*Other includes charges accrued for stock-based incentive compensation and amortization of certain intangibles.

The improvement in supplemental education results for the first half of 2002 is due mostly to higher enrollments and to a lesser extent higher prices at Kaplan’s traditional test preparation business (particularly the LSAT, MCAT and GRE prep courses), as well as higher revenues and profits from Kaplan’s CFA and real estate exam preparation services. Score! also contributed to the improved results, with increased enrollment from new learning centers opened later in 2001 (148 centers at the end of June 2002, versus 145 centers at the end of June 2001), higher prices and strong cost controls.

~~Higher education results are showing significant growth due to student enrollment increases, high student retention rates, and as a result of several acquisitions.~~

~~The decrease in the corporate overhead expense category in 2002 is due to decreased spending for educational software design and development initiatives.~~

~~The increase in other expense for 2002 is due to higher stock-based compensation accruals due to an increase in Kaplan’s estimated value.~~

~~Equity in Losses of Affiliates.~~ For the first six months of 2002, the Company’s equity in losses of affiliates totaled $15.7 million, compared to losses of $19.1 million for the same period of 2001. BrassRing accounted for approximately $10.7 million of the 2002 first six month equity in losses of affiliates compared to $22.4 million in equity losses for the same period of 2001.

~~Non-Operating Items.~~ The Company recorded non-operating income, net, of $0.5 million for the first six months of 2002, compared to non-operating income, net, of $298.1 million for the same period of the prior year. The 2002 non-operating income, net, includes a gain on the sale of marketable securities, offset by write-downs recorded on certain investments. The 2001 non-operating income is comprised mostly of gains arising from the sale and exchange of certain cable systems completed in the first quarter of 2001, offset by write-downs recorded on certain investments and the non-operating land as previously discussed.

~~Net Interest Expense~~~~. The Company incurred net interest expense of $17.5 million for the first six months of 2002, versus $26.5 million in 2001.~~

~~21.~~

~~Provision for Income Taxes.~~ The effective tax rate was 40.9 percent versus 39.4 percent for the 2002 and 2001 six month periods, respectively. Excluding the effect of the cable gain transactions, the Company’s effective tax rate approximated 45.8 percent for the first six months of 2001. The effective tax rate for 2002 has declined because the Company no longer has any permanent difference from goodwill amortization not deductible for tax purposes as a result of the adoption of SFAS 142.

Earnings Per Share. The calculation of diluted earnings per share for the first ~~six months~~quarter of ~~2002~~2003 was based on ~~9,516,000~~9,553,000 weighted average shares outstanding, compared to ~~9,500,000~~9,512,000 for the first ~~six months~~quarter of ~~2001.~~2002. The Company made no ~~significant~~ repurchases of its stock during the first ~~six months~~quarter of ~~2002.~~2003.

Stock Options – Change in Accounting Method. Effective the first day of the Company’s 2002 fiscal year, the Company adopted the fair-value-based method of accounting for Company stock options as outlined in Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (SFAS 123). This change in accounting method was applied prospectively to all awards granted from the beginning of the Company’s fiscal year 2002 and thereafter. Stock options awarded prior to fiscal 2002 are accounted for under the intrinsic value method under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees.”
The Company recorded $142,000 in Company stock option expense for the first quarter of 2003; there was no Company stock option expense in the first quarter of 2002.
Financial Condition: Capital Resources and Liquidity

Acquisitions. InOn March 31, 2003, Kaplan completed its acquisition of the ~~first six months~~stock of ~~2002, Kaplan acquired several businesses~~FTC Holdings Limited (FTC), for £55.3 million ($87.4 million). Headquartered in ~~their higher education and~~London, FTC is a leader in test preparation ~~divisions, totaling approximately $37.9 million. About $9.5~~services for accountants and financial services professionals, with 18 training centers in the United Kingdom and a growing presence in Asia, including operations in Hong Kong and Singapore. The acquisition was financed through cash and debt with $26.5 million ~~remains~~remaining to be paid, ~~on these acquisitions,~~primarily to employees of ~~which $2.1 million has been classified~~the business (included in ~~current liabilities and $7.4 million as~~ long-term debt at ~~June~~March 30, ~~2002.~~ 2003).

Capital expenditures. During the first ~~six months~~quarter of ~~2002,~~2003, the Company’s capital expenditures totaled ~~$79.6~~$28.1 million. The Company anticipates it will spend ~~approximately $165.0~~$170 – 180 million throughout ~~2002~~2003 for property and equipment.

Liquidity. Throughout the first ~~six~~three months of ~~2002,~~2003, the Company’s borrowings, net of repayments, decreased by ~~$126.8~~$16.3 million, with the decrease primarily due to cash flows from ~~operations.~~operations and proceeds from the sale of the International Herald Tribune, offset in part by borrowings for the purchase of FTC by Kaplan.

At ~~June~~March 30, ~~2002,~~2003, the Company had ~~$806.2~~$648.5 million in total debt outstanding, which was comprised of ~~$400.0~~$217.4 million of commercial paper borrowings, ~~$398.2~~$398.5 million of 5.5 percent unsecured notes due February 15, 2009, and ~~$8.0~~$32.6 million in other debt. The Company’s five year $500 million revolving credit facility, which expires in March 2003, and one-year $250 million revolving credit facility, which expires in September 2002, support the issuance of the Company’s short-term commercial paper. The Company intends to replace the revolving credit facility agreements prior to their expiration, at which time the Company expects to classify a portion of its commercial paper borrowings as “Long-Term Debt” in its Consolidated Balance Sheet. In early May 2002, Moody’s downgraded the Company’s long-term debt ratings to A1 from Aa3 and affirmed the Company’s short-term debt rating at P-1.

During the first ~~six months~~quarter of ~~2002~~2003 and ~~2001~~2002 the Company had average borrowings outstanding of approximately ~~$859.5~~$601.6 million and ~~$968.6~~$888.3 million, respectively, at average annual interest rates of approximately ~~3.6~~4.2 percent and ~~5.4~~3.5 percent, respectively. During the first ~~six months~~quarter of ~~2002~~2003 and ~~2001,~~2002, the Company incurred net interest expense on borrowings of ~~$17.5~~$7.1 million and ~~$26.5~~$8.7 million, respectively.

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 liquidity to meet its various cash needs throughout ~~2002.~~2003.

~~Change in Accounting Method - Stock Options~~

Effective the first day of the Company’s 2002 fiscal year, the Company has adopted the fair-value-based method of accounting for company stock options as outlined in Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (SFAS 123). This change in accounting method will be applied prospectively to all awards granted from the beginning of the Company’s fiscal year 2002 and thereafter. Stock options awarded prior to fiscal 2002 will continue to be accounted for under the intrinsic value method under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees.”

~~22.~~

No stock options have been awarded in fiscal year 2002 through the end of the second quarter; therefore, this change in accounting method has had no impact on the Company’s reported results of operations in 2002. The impact on the Company’s overall 2002 operating results is not expected to be material.

The accounting treatment for the Company’s Kaplan stock option plan is not impacted by this change in accounting method, as the expense related to the Kaplan stock option plan has been and will continue to be recorded in the Company’s results of operations.

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 various risks and uncertainties that could cause actual results or events to differ materially from those anticipated in such 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 for the fiscal year ended December ~~30, 2001.~~29, 2002.

16.

~~23.~~Item 4. Controls and Procedures

A review and evaluation was performed by the Company’s management, at the direction of the Company’s Chief Executive Officer (the Company’s principal executive officer) and Vice President-Finance (the Company’s principal financial officer), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) as of a date within 90 days prior to the filing of this quarterly report. Based on that review and evaluation, the Company’s Chief Executive Officer and Vice President-Finance have concluded that the Company’s disclosure controls and procedures, as designed and implemented, are effective in ensuring that all material information required to be disclosed in the reports that the Company files or submits under the Exchange Act have been made known to them in a timely fashion. There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect the Company’s internal controls subsequent to the date of such evaluation.

17.

PART II -– OTHER INFORMATION

~~Item 4. Submission of Matters to a Vote of Security Holders.~~

At the Company’s May 9, 2002 Annual Meeting of Stockholders, the stockholders elected each of the nominees named in the Company’s proxy statement dated March 28, 2002 to its Board of Directors. The voting results are set forth below:

Class A Directors

Nominee

Votes For
Votes
Withheld
Broker
Non-Votes

Warren E. Buffett
1,722,250
-0-
-0-
Barry Diller
1,722,250
-0-
-0-
George J. Gillespie, III
1,722,250
-0-
-0-
Donald E. Graham
1,722,250
-0-
-0-
Richard D. Simmons
1,722,250
-0-
-0-
George W. Wilson
1,722,250
-0-
-0-

Class B Directors

Nominee

Votes For
Votes
Withheld
Broker
Non-Votes

Daniel B. Burke
6,512,664
59,270
-0-
John L. Dotson Jr.
6,368,354
203,580
-0-
Ralph E. Gomory
6,520,364
51,570
-0-

~~24.~~

Item 6. Exhibits and Reports on Form ~~8-K~~.8-K.

~~(a) The following documents are filed as exhibits to this report:~~

~~Exhibit~~
~~Number~~

(a)

~~Description~~The following documents are filed as exhibits to this report:

Exhibit Number		Description
3.1		Certificate of Incorporation of the Company as amended through May 12, 1998, and the Certificate of Designation for the Company’s Series A Preferred Stock filed January 22, 1996 (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1995).

3.2		By-Laws of the Company as amended through ~~March~~May 8, ~~2001 (incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000).~~2003.
~~4.1~~		Credit Agreement dated as of March 17, 1998 among the Company, Citibank, N.A., Wachovia Bank of Georgia, N.A., and the other Lenders named therein (incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 1997).
~~4.2~~		Assignment and Acceptance Agreement and Assumption Agreement, each dated as of February 28, 2002, pursuant to which GE Capital CFE, Inc. became an Assuming Lender under the Credit Agreement dated as of March 17, 1998, among the Company, Citibank, N.A., Wachovia Bank of Georgia, N.A., and the other Lenders named therein (incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2001).
~~4.3~~ 4.1		Form of the Company’s 5.50% Notes due February 15, 2009, issued under the Indenture dated as of February 17, 1999, between the Company and The First National Bank of Chicago, as Trustee (incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 1999).
~~4.4~~
4.2		Indenture dated as of February 17, 1999, between the Company and The First National Bank of Chicago, as Trustee (incorporated by reference to Exhibit 4.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 1999).
~~4.5~~
4.3		364-Day Credit Agreement dated as of ~~September 20, 2000,~~August 14, 2002, among the Company, Citibank, N.A., ~~Suntrust~~Wachovia Bank, National Association, SunTrust Bank, JPMorgan Chase Bank, Bank One, N.A., The Bank of New York and Riggs Bank (incorporated by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 29, 2002).

4.4		5-Year Credit Agreement dated as of August 14, 2002, among the Company, Citibank, N.A., Wachovia Bank, National Association, SunTrust Bank, JPMorgan Chase Bank, Bank One, N.A., The ~~Chase Manhattan~~Bank of New York and Riggs Bank (incorporated by reference to Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~October 1, 2000)~~September 29, 2002).
~~4.6~~
11		Amendment and Restatement dated as of September 19, 2001, to the 364-Day Credit Agreement dated as of September 20, 2000, among the Company, Citibank, N.A., SunTrust Bank and The Chase Manhattan Bank (incorporated by reference to Exhibit 4.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001).
11		Calculation of Earnings per Share of Common Stock.
18		~~Preference letter from independent accountants.~~
99.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b)

No reports on Form 8-K were filed during the period covered by this report.

18.

~~25.~~SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	~~SIGNATURES~~ THE WASHINGTON POST COMPANY (Registrant)

Date:
~~Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.~~May 12, 2003	/s/ DONALD E. GRAHAM
		Donald E. Graham Chairman & Chief Executive Officer (Principal Executive Officer)


Date:		May 12, 2003			~~THE WASHINGTON POST COMPANY~~ ~~(Registrant)~~/s/ JOHN B. MORSE, JR.

~~Date:~~	~~August 9, 2002~~		~~/s/ Donald E. Graham~~

			~~Donald E. Graham, Chairman & Chief Executive Officer~~ ~~(Principal Executive Officer)~~


~~Date:~~	~~August 9, 2002~~		~~/s/~~ John B. Morse, Jr.	Vice President-Finance (Principal Financial Officer)

19.

CERTIFICATION PURSUANT TO

RULES 13A-14 AND 15D-14 OF THE SECURITIES EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Donald E. Graham, Chief Executive Officer (principal executive officer) of The Washington Post Company (the “Registrant”), certify that:

1. I have reviewed this quarterly report on Form 10-Q of the Registrant;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

(a)

designed such disclosure controls and procedures to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b)

evaluated the effectiveness of the Registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

(c)

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):

(a)

all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant’s ability to record, process, summarize and report financial data and have identified for the Registrant’s auditors any material weaknesses in internal controls; and

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls; and

6. The Registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

/s/ DONALD E. GRAHAM

Donald E. Graham

Chief Executive Officer

May 12, 2003

20.

CERTIFICATION PURSUANT TO

RULES 13A-14 AND 15D-14 OF THE SECURITIES EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John B. Morse, Jr., Vice President-Finance (principal financial officer) of The Washington Post Company (the “Registrant”), certify that:

1. I have reviewed this quarterly report on Form 10-Q of the Registrant;

(a)

(b)

evaluated the effectiveness of the Registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

(c)

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

(a)

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls; and

/s/ JOHN B. MORSE, JR.

John B. Morse, Jr.,

Vice President-Finance
~~(Principal Financial Officer)~~

May 12, 2003

21.

		Thirteen Weeks Ended				Twenty-six Weeks Ended
		June 30,		July 1,		June 30,		July 1,
(In thousands, except per share amounts)		2002		2001		2002		2001
Operating revenues
	Advertising	$316,102		$312,881		$ 589,671		$610,856
	Circulation and subscriber	168,614		161,260		329,755		309,276
	Education	149,695		119,442		296,776		240,783
	Other	13,292		10,326		31,823		29,393
		647,703		603,909		1,248,025		1,190,308
Operating costs and expenses
	Operating	335,443		340,114		668,683		683,530
	Selling, general and administrative	160,387		151,409		337,252		299,323
	Depreciation of property, plant and equipment	41,286		35,867		82,459		70,499
	Amortization of goodwill and other intangibles	159		19,926		311		37,118
		537,275		547,316		1,088,705		1,090,470
Income from operations		110,428		56,593		159,320		99,838

Other income (expense)
	Equity in losses of affiliates	(9,183	)	(6,641	)	(15,689	)	(19,102	)
	Interest income	59		1,047		192		1,371
	Interest expense	(8,797	)	(13,240	)	(17,664	)	(27,864	)
	Other, net	(5,963	)	(10,717	)	491		298,053
Income before income taxes and cumulative
	effect of change in accounting principle	86,544		27,042		126,650		352,296
Provision for income taxes		35,400		12,550		51,800		138,750
Income before cumulative effect of change in accounting principle		51,144		14,492		74,850		213,546
Cumulative effect of change in method of accounting for goodwill and
	other intangible assets, net of taxes	-		-		(12,100	)	-
Net income		51,144		14,492		62,750		213,546
Redeemable preferred stock dividends		(259	)	(263	)	(784	)	(789	)
Net income available for common shares		$ 50,885		$ 14,229		$ 61,966		$212,757
Basic earnings per share:
	Before cumulative effect of change in accounting principle	$ 5.38		$ 1.53		$ 7.87		$22.52
	Cumulative effect of change in accounting principle	–		–		(1.27	)	–
	Redeemable preferred stock dividends	(0.03	)	(0.03	)	(0.08	)	(0.08	)
	Net income available for common stock	$ 5.35		$ 1.50		$ 6.52		$22.44

Diluted earnings per share:
	Before cumulative effect of change in accounting principle	$ 5.37		$ 1.53		$ 7.86		$ 22.47
	Cumulative effect of change in accounting principle	–		–		(1.27	)	–
	Redeemable preferred stock dividends	(0.03	)	(0.03	)	(0.08	)	(0.08	)
	Net income available for common stock	$ 5.34		$ 1.50		$ 6.51		$ 22.39
Dividends declared per common share		$ 1.40		$ 1.40		$ 4.20		$ 4.20
Basic average number of common shares outstanding		9,503		9,485		9,501		9,482
Diluted average number of common shares outstanding		9,521		9,502		9,516		9,500

(In thousands)			June 30,2002		December 30,
			(unaudited)		2001
Assets

Current assets
	Cash and cash equivalents		$ 22,717		$ 31,480
	Investments in marketable equity securities		2,329		16,366
	Accounts receivable, net		272,845		279,328
	Federal and state income taxes receivable		–		10,253
	Inventories		29,288		19,042
	Other current assets		34,579		40,388
			361,758		396,857

Property, plant and equipment
	Buildings		269,205		267,658
	Machinery, equipment and fixtures		1,518,447		1,422,228
	Leasehold improvements		81,246		79,108
			1,868,898		1,768,994
	Less accumulated depreciation		(879,066	)	(794,596	)
			989,832		974,398
	Land		34,733		34,733
	Construction in progress		83,002		89,080
			1,107,567		1,098,211

Investments in marketable equity securities			197,945		219,039
Investments in affiliates			77,284		80,936
Goodwill, net			771,391		754,554
Indefinite-lived intangible assets, net			453,306		450,759
Other intangible assets, net			2,267		1,448
Prepaid pension cost			466,683		447,688
Deferred charges and other assets			78,228		109,606
			$3,516,429		$3,559,098

Liabilities and Shareholders' Equity

Current liabilities
	Accounts payable and accrued liabilities		$ 303,928		$ 253,346
	Deferred revenue		142,420		130,744
	Dividends declared		13,550		–
	Federal and state income taxes payable		3,267		–
	Short-term borrowings		400,457		50,000
			863,622		434,090

Postretirement benefits other than pensions			133,580		130,824
Other liabilities			192,093		192,540
Deferred income taxes			211,458		221,949
Long-term debt			405,779		883,078
			1,806,532		1,862,481

Redeemable preferred stock			12,916		13,132

Preferred stock			—		—
Common shareholders' equity
	Common stock		20,000		20,000
	Capital in excess of par value		145,124		142,814
	Retained earnings		3,051,672		3,029,595
	Accumulated other comprehensive income (loss)
		Cumulative foreign currency translation adjustment	(5,260	)	(9,678	)
		Unrealized gain on available-for-sale securities	7,986		24,281
	Cost of Class B common stock held in treasury		(1,522,541	)	(1,523,527	)
			1,696,981		1,683,485
			$3,516,429		$3,559,098

		Newspaper		Television		Magazine		Cable						Corporate
		Publishing		Broadcasting		Publishing		Television			Education			Office			Consolidated
2002
Operating revenues	$	215,067	$	86,092	$	88,886	$	107,963		$	149,695		$	–		$	647,703
Income (loss) from
operations	$	37,811	$	43,459	$	13,272	$	21,766		$	624		$	(6,504	)	$	110,428
Equity in losses of
affiliates																	(9,183	)
Interest expense, net																	(8,738	)
Other expense, net																	(5,963	)
Income before income
taxes																$	86,544

Depreciation expense	$	10,744	$	2,784	$	1,022	$	20,738		$	5,998		$	–		$	41,286
Amortization expense	$	4		–		–	$	39		$	116		$	–		$	159
Net pension credit (expense)	$	5,492	$	1,220	$	9,894	$	(226	)	$	(298	)	$	–		$	16,082


Identifiable assets	$	698,538	$	415,080	$	458,883	$	1,117,157		$	537,397		$	11,276		$	3,238,331

Investments in
marketable equity
securities																	200,274
Investments in
affiliates																	77,824
Total assets																$	3,516,429

	Second Quarter
	2002	2001

Net income available for common stock as reported	$50,885	$14,229

Amortization of goodwill and other intangibles, net of tax	–	13,863

Pro forma net income available for common stock	$ 50,885	$ 28,092

Basic earnings per share	$ 5.35	$ 2.96

Diluted earnings per share	$ 5.34	$ 2.96

	Year-to-Date
	2002		2001
Income before cumulative effect of change in accounting principle, as reported	$ 74,850		$213,546

Amortization of goodwill and other intangibles, net of tax	–		26,087

Pro forma income before cumulative effect of change in accounting principle	74,850		239,633

Cumulative effect of change in method of accounting for goodwill and other intangible assets, net of tax	(12,100	)

Redeemable preferred stock dividends	(784	)	(789	)

Pro forma net income available for common stock	$ 61,966		$238,844

Basic earnings per share:
Before cumulative effect of change in accounting principle	$ 7.87		$ 25.27

Cumulative effect of change in accounting principle	(1.27	)	–

Redeemable preferred stock dividends	(0.08	)	(0.08	)

Net income available for common stock	$ 6.52		$ 25.19

Diluted earnings per share:
Before cumulative effect of change in accounting principle	$ 7.86		$ 25.22

Cumulative effect of change in accounting principle	(1.27	)	–

Redeemable preferred stock dividends	(0.08	)	(0.08	)

Net income available for common stock	$ 6.51		$ 25.14

	YTD
(In thousands)	2002		2001		% Change

Revenue
Supplemental education	$183,373		$162,700		+13
Higher education	113,403		78,245		+45
	$296,776		$240,945		+23

Operating income (loss)
Supplemental education	$ 24,191		$ 11,953		+102
Higher education	13,951		1,419		+883
Kaplan corporate overhead	(11,216	)	(12,280	)	+9
Other*	(26,852	)	(15,481	)	(73	)
	$ 74		$ (14,389	)	---


*Other includes charges accrued for stock-based incentive compensation and amortization of certain intangibles.

Class A Directors
Nominee	Votes For	Votes Withheld	Broker Non-Votes

Warren E. Buffett	1,722,250	-0-	-0-
Barry Diller	1,722,250	-0-	-0-
George J. Gillespie, III	1,722,250	-0-	-0-
Donald E. Graham	1,722,250	-0-	-0-
Richard D. Simmons	1,722,250	-0-	-0-
George W. Wilson	1,722,250	-0-	-0-


Class B Directors
Nominee	Votes For	Votes Withheld	Broker Non-Votes

Daniel B. Burke	6,512,664	59,270	-0-
John L. Dotson Jr.	6,368,354	203,580	-0-
Ralph E. Gomory	6,520,364	51,570	-0-