##### 



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SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 30, 2001

Commission file number 1-6714

The Washington Post Company

(Exact name of registrant as specified in its charter)


|                                                                               |  |                                                
|------------------------------------------------------------------------------ |  | -----------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization)        |  | 53-0182885
(I.R.S. Employer
Identification No.)
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               |  |                                                
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|1150 15th St., N.W., Washington, D.C.
(Address of principal executive offices) |  | 20071
(Zip Code)                               

Registrants telephone number, including area code: (202) 334-6000

Securities registered pursuant to Section 12(b) of the Act:

|                                                |  |                         
|----------------------------------------------- |  | ------------------------
|                                                |  | Name of each exchange on
|Title of each class                             |  | which registered        
|                                                |  |                         
|Class B Common Stock, par value
$1.00 per share |  | New York Stock Exchange 

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 (XBOX) No (BOX).

Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. (BOX)

Aggregate market value of the Companys voting stock held by
non-affiliates on February 28, 2002, based on the closing price for the
Companys Class B Common Stock on the New York Stock Exchange on such
date: approximately $3,030,000,000.

Shares of common stock outstanding at February 28, 2002:

Class A Common Stock  1,722,250 shares
Class B Common Stock  7,778,253 shares

Documents partially incorporated by reference:



| |  |  | Definitive Proxy Statement for the Companys 2002 Annual
Meeting of Stockholders (incorporated in Part III to the extent
provided in Items 10, 11, 12 and 13 hereof).
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### 



PART I

Item 1. Business.

The principal business activities of The Washington Post Company (the
Company) consist of newspaper publishing (principally The Washington Post),
television broadcasting (through the ownership and operation of six
network-affiliated stations), the ownership and operation of cable television
systems, magazine publishing (principally Newsweekmagazine), and (through its
Kaplan subsidiary) the provision of educational services.

Information concerning the consolidated operating revenues, consolidated
income from operations and identifiable assets attributable to the principal
segments of the Companys business for the last three fiscal years is contained
in Note L to the Companys Consolidated Financial Statements appearing
elsewhere in this Annual Report on Form 10-K. (Revenues for each segment are
shown in such Note L net of intersegment sales, which did not exceed 0.1% of
consolidated operating revenues.)

During each of the last three years the Companys operations in geographic
areas outside the United States (consisting primarily of the publication of the
international editions of Newsweek) accounted for less than 4% of the Companys
consolidated revenues and the identifiable assets attributable to such
operations represented less than 2% of the Companys consolidated assets.

Newspaper Publishing

The Washington Post

The Washington Postis a morning and Sunday newspaper primarily
distributed by home delivery in the Washington, D.C. metropolitan area,
including large portions of Virginia and Maryland.

The following table shows the average paid daily (including Saturday) and
Sunday circulation of The Postfor the twelve-month periods ended September 30
in each of the last five years, as reported by the Audit Bureau of Circulations
(ABC) for the years 1997-2000 and as estimated by The Postfor the
twelve-month period ended September 30, 2001 (for which period ABC had not
completed its audit as of the date of this report) from the semi-annual
publishers statements submitted to ABC for the six-month periods ended March
31, 2001 and September 30, 2001:

|     |  |                          |         |        |  |  |           | 
|---- |  | ------------------------ | ------- | ------ |  |  | --------- | 
|     |  | Average Paid Circulation
|     |  |                         
|     |  | Daily                    |         | Sunday
|     |  |                          |         |       
|1997 |  |                          | 784,199 |        |  |  | 1,109,344 | 
|    
|    
|    
|    
|1998 |  |                          | 774,414 |        |  |  | 1,095,091 | 
|    
|    
|    
|    
|1999 |  |                          | 775,005 |        |  |  | 1,085,060 | 
|    
|    
|    
|    
|2000 |  |                          | 777,521 |        |  |  | 1,075,918 | 
|    
|    
|    
|    
|2001 |  |                          | 770,579 |        |  |  | 1,065,226 | 

The newsstand price for the daily newspaper was increased from $0.25
(which had been the price since 1981) to $0.35 effective December 31, 2001.
The newsstand price for the Sunday newspaper has been $1.50 since 1992. The
rate charged for home-delivered copies of the daily and Sunday newspaper has
been $11.88 for each four-week period since February 2001, while the
corresponding rate charged for Sunday-only home-delivery has been $6.00 since
1991.

General advertising rates were increased by an average of 5.3% on January
1, 2001, and by another 4.8% on January 1, 2002. Rates for most categories of
classified and retail advertising were increased by an average of 4.5% on
February 1, 2001, and by an additional 4.5% on February 1, 2002.

1



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The following table sets forth The Posts advertising inches (excluding
preprints) and number of preprints for the past five years:

|                            |                 |  |       |       |      |  |       |       |      |  |       |       |  |  |       |       |  |  |       |       | 
|--------------------------- | --------------- |  | ----- | ----- | ---- |  | ----- | ----- | ---- |  | ----- | ----- |  |  | ----- | ----- |  |  | ----- | ----- | 
|                            |                 |  | 1997  |       | 1998 |  | 1999  |       | 2000 |  | 2001 
|                            |                 |  |       |       |      |  |       |       |      |  |      
|Total Inches (in thousands) |                 |  | 3,192 |       |      |  | 3,199 |       |      |  | 3,288 |       |  |  | 3,363 |       |  |  | 2,714 |      
|                           
|                           
|                           
|                           
|                            | Full-Run Inches |  |       | 2,897 |      |  |       | 2,806 |      |  |       | 2,745 |  |  |       | 2,634 |  |  |       | 2,295 | 
|                           
|                           
|                           
|                           
|                            | Part-Run Inches |  |       | 294   |      |  |       | 393   |      |  |       | 543   |  |  |       | 729   |  |  |       | 419   | 
|                           
|                           
|                           
|                           
|Preprints (in millions)     |                 |  | 1,549 |       |      |  | 1,650 |       |      |  | 1,647 |       |  |  | 1,602 |       |  |  | 1,556 |      

The Postalso publishes The Washington Post National Weekly Edition, a
tabloid which contains selected articles and features from The Washington Post
edited for a national audience. The National Weekly Editionhas a basic
subscription price of $78 per year and is delivered by second class mail to
approximately 47,000 subscribers.

The Posthas about 690 full-time editors, correspondents, reporters and
photographers on its staff, draws upon the news reporting facilities of the
major wire services and maintains correspondents in 21 news centers abroad and
in New York City; Los Angeles; Chicago; Miami; and Austin, Texas. The Post
also maintains correspondents in 12 local news bureaus.

Washingtonpost.Newsweek Interactive

Washingtonpost.Newsweek Interactive Company, LLC (WPNI) develops news
and information products for electronic distribution. Since July 1996 this
subsidiary of the Company has produced washingtonpost.com, a World Wide Web
site that features the full editorial text of The Washington Postand most of
The Posts classified advertising as well as original content created by WPNIs
staff and content obtained from other sources. This site is currently
generating more than 140 million page views per month. The washingtonpost.com
site also features comprehensive information about activities, groups and
businesses in the Washington, D.C. area, including an arts and entertainment
section and a news section focusing on regional technology businesses.

WPNI also produces the NewsweekWeb site, which was launched in 1998 and
contains editorial content from the print edition of Newsweekas well as daily
news updates and analysis, photo galleries, Web guides and other features. In
addition, WPNI operates the Newsbytes News Network, a newswire service that
electronically distributes approximately 60 news stories a day about the
information technology, Internet, telecommunications and related industries to
newspapers, magazines, online services and other subscribers around the world.

WPNI holds a minority equity interest in Classified Ventures, LLC, a
company formed to compete in the business of providing nationwide classified
advertising databases on the Internet. The Classified Ventures databases cover
the product categories of automobiles, apartment rentals and real estate.
Listings for these databases come from various sources, including direct sales
and classified listings from the newspapers of participating companies. Links
to the Classified Ventures databases are included in the washingtonpost.com
site.

In June 2000, WPNI, together with certain other business units of the
Company, signed an agreement with NBC News and MSNBC pursuant to which the
parties share certain news material and promotional resources. Among other
things, under this agreement the NewsweekWeb site has become a feature on
MSNBC.com, and MSNBC.com is being provided access to certain content from The
Washington Post. Similarly, washingtonpost.com is being provided access to
certain MSNBC.com multimedia content.

The Herald

The Company owns The Daily Herald Company, publisher of The Heraldin
Everett, Washington, about 30 miles north of Seattle. The Heraldis published
mornings seven days a week and

2



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is primarily distributed by home delivery in Snohomish County. The Daily
Herald Company also provides commercial printing services and publishes six
controlled-circulation weekly community newspapers (collectively know as The
Enterprise Newspapers) that are distributed in south Snohomish and north King
Counties.

The Heralds average paid circulation as reported to ABC for the twelve
months ended September 30, 2001, was 52,366 daily (including Saturday) and
61,096 Sunday. The aggregate average weekly circulation of The Enterprise
Newspapersduring the twelve-month period ended December 31, 2001, was
approximately 71,000 copies.

The Heraldand The Enterprise Newspaperstogether employ approximately 75
editors, reporters and photographers.

Community Newspaper Division of Post-Newsweek Media

The Community Newspaper Division of Post-Newsweek Media, Inc. (which was
created by the merger in 2001 of The Gazette Newspapers, Inc. and Post Newsweek
Tech Media Group, Inc.) publishes two weekly paid-circulation, three
twice-weekly paid circulation and 39 controlled-circulation weekly community
newspapers. This divisions newspapers are divided into two groups: The
Gazette Newspapers, which circulate in Montgomery and Frederick Counties and in
parts of Prince Georges, Carroll, Anne Arundel and Howard Counties, Maryland;
and Southern Maryland Newspapers, which circulate in southern Prince Georges
County and in Charles, St. Marys and Calvert Counties, Maryland. During 2001
these newspapers had a combined average circulation of approximately 669,000
copies. This division also produces 11 military newspapers (most of which are
weekly) under agreements where editorial material is supplied by local military
bases; in 2001 these newspapers had a combined average circulation of over
200,000 copies.

The Gazette Newspapersand Southern Maryland Newspaperstogether employ
approximately 165 editors, reporters and photographers.

This division also operates two commercial printing businesses in suburban
Maryland.

Greater Washington Publishing

The Companys Greater Washington Publishing, Inc. subsidiary publishes
several free-circulation advertising periodicals which have little or no
editorial content and are distributed in the greater Washington, D.C.
metropolitan area using sidewalk distribution boxes. Greater Washington
Publishings two largest periodicals are The Washington Post Apartment
Showcase, which is published monthly and has an average circulation of about
55,000 copies, and New Homes Guide, which is published six times a year and
also has an average circulation of about 55,000 copies.

Television Broadcasting

Through subsidiaries the Company owns six VHF television stations located
in Detroit, Michigan; Houston, Texas; Miami, Florida; Orlando, Florida; San
Antonio, Texas; and Jacksonville, Florida; which are respectively the 10th,
11th, 15th, 20th, 37th and 53rd largest broadcasting markets in the United
States. Each of the Companys stations is affiliated with a national network.
Although network affiliation agreements generally have limited terms, each of
the Companys television stations has maintained a network affiliation
continuously for at least 20 years.

The Companys 2001 net operating revenues from national and local
television advertising and network compensation were as follows:
3

|         |       |   |             |             | 
|-------- | ----- | - | ----------- | ----------- | 
|National |       | $ | 90,914,000  |            
|        
|        
|        
|        
|Local    |       |   | 193,572,000 |            
|        
|        
|        
|        
|Network  |       |   | 28,471,000  |            
|         |       |   |             |            
|         | Total |   | $           | 312,957,000 | 

The following table sets forth certain information with respect to each of
the Companys television stations:

|                     |  |            |  |             |  |         |  |           |  |            |      |                    |  |                  |      |  |  |        |  |        |  |  |  | 
|-------------------- |  | ---------- |  | ----------- |  | ------- |  | --------- |  | ---------- | ---- | ------------------ |  | ---------------- | ---- |  |  | ------ |  | ------ |  |  |  | 
|Station Location and |  |            |  |             |  |         |  |           |  | Expiration |      | Expiration         |  | Total Commercial
|Year Commercial      |  | National   |  |             |  |         |  | Date of   |  | Date of    |      | Stations in DMA(b)
|Operation            |  | Market     |  | Network     |  | FCC     |  | Network   |  |           
|Commenced            |  | Ranking(a) |  | Affiliation |  | License |  | Agreement |  | Allocated  |      | Operating         
|                     |  |            |  |             |  |         |  |           |  |            |      |                   
|WDIV                 |  | 10th       |  | NBC         |  | Oct. 1, |  | Dec. 31,  |  | VHF-4      |      | VHF-4             
|                    
|                    
|                    
|                    
|Detroit, Mich        |  |            |  |             |  |         |  |           |  |            | 2005 |                    |  |                  | 2011 |  |  | UHF-6  |  | UHF-5 
|                    
|                    
|                    
|                    
|1947                 |  |            |  |             |  |         |  |           |  |            |      |                    |  |                  |      |  |  |        |  |        |  |  |  | 
|                    
|                    
|                    
|                    
|KPRC                 |  | 11th       |  | NBC         |  | Aug. 1, |  | Dec. 31,  |  | VHF-3      |      | VHF-3             
|                    
|                    
|                    
|                    
|Houston, Tx          |  |            |  |             |  |         |  |           |  |            | 2006 |                    |  |                  | 2011 |  |  | UHF-11 |  | UHF-11
|                    
|                    
|                    
|                    
|1949                 |  |            |  |             |  |         |  |           |  |            |      |                    |  |                  |      |  |  |        |  |        |  |  |  | 
|                    
|                    
|                    
|                    
|WPLG                 |  | 15th       |  | ABC         |  | Feb. 1, |  | Dec. 31,  |  | VHF-5      |      | VHF-5             
|                    
|                    
|                    
|                    
|Miami, Fla           |  |            |  |             |  |         |  |           |  |            | 2005 |                    |  |                  | 2004 |  |  | UHF-8  |  | UHF-8 
|                    
|                    
|                    
|                    
|1961                 |  |            |  |             |  |         |  |           |  |            |      |                    |  |                  |      |  |  |        |  |        |  |  |  | 
|                    
|                    
|                    
|                    
|WKMG                 |  | 20th       |  | CBS         |  | Feb. 1, |  | Apr. 6,   |  | VHF-3      |      | VHF-3             
|                    
|                    
|                    
|                    
|Orlando, Fla         |  |            |  |             |  |         |  |           |  |            | 2005 |                    |  |                  | 2005 |  |  | UHF-11 |  | UHF-10
|                    
|                    
|                    
|                    
|1954                 |  |            |  |             |  |         |  |           |  |            |      |                    |  |                  |      |  |  |        |  |        |  |  |  | 
|                    
|                    
|                    
|                    
|KSAT                 |  | 37th       |  | ABC         |  | Aug. 1, |  | Dec. 31,  |  | VHF-4      |      | VHF-4             
|                    
|                    
|                    
|                    
|San Antonio, Tx      |  |            |  |             |  |         |  |           |  |            | 2006 |                    |  |                  | 2004 |  |  | UHF-6  |  | UHF-6 
|                    
|                    
|                    
|                    
|1957                 |  |            |  |             |  |         |  |           |  |            |      |                    |  |                  |      |  |  |        |  |        |  |  |  | 
|                    
|                    
|                    
|                    
|WJXT                 |  | 53rd       |  | CBS         |  | Feb. 1, |  | July 10,  |  | VHF-2      |      | VHF-2             
|                    
|                    
|                    
|                    
|Jacksonville, Fla    |  |            |  |             |  |         |  |           |  |            | 2005 |                    |  |                  | 2002 |  |  | UHF-6  |  | UHF-5 
|                    
|                    
|                    
|                    
|1947                 |  |            |  |             |  |         |  |           |  |            |      |                    |  |                  |      |  |  |        |  |        |  |  |  | 



---

|(a) |  | Source: 2001/2002 DMA Market Rankings, Nielsen Media Research,
Fall 2001, based on television homes in DMA (see note (b) below).                                     
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(b) |  | Designated Market Area (DMA) is a market designation of A.C.
Nielsen which defines each television market exclusive of another, based
on measured viewing patterns.

Regulation of Broadcasting and Related Matters

The Companys television broadcasting operations are subject to the
jurisdiction of the Federal Communications Commission under the Communications
Act of 1934, as amended. Under authority of such Act the FCC, among other
things, assigns frequency bands for broadcast and other uses; issues, revokes,
modifies and renews broadcasting licenses for particular frequencies;
determines the location and power of stations and establishes areas to be
served; regulates equipment used by stations; and adopts and implements
regulations and policies which directly or indirectly affect the ownership,
operations and profitability of broadcasting stations.

Each of the Companys television stations holds an FCC license which is
renewable upon application for an eight-year period.

In December 1996 the FCC formally approved technical standards for digital
advanced television (DTV). DTV is a flexible system that permits
broadcasters to utilize a single digital

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channel in various ways, including
providing one channel of high-definition television programming with greatly
enhanced image and sound quality or several channels of lower-definition
television programming (multicasting), and also is capable of accommodating
subscription video and data services. Broadcasters may offer a combination of
services, so long as they transmit at least one stream of free video
programming on the DTV channel. The FCC has assigned to each existing
full-power television station (including each station owned by the Company) a
second channel to implement DTV while present television operations are
continued on that stations existing channel. Although in some cases a
stations DTV channel may only permit operation over a smaller geographic
service area than that available using its existing channel, the FCCs stated
goal in assigning channels was to provide stations with DTV service areas that
are generally consistent with their existing service areas. The FCCs DTV
rules also permit stations to request modifications to their assigned DTV
facilities, allowing them to expand their DTV service areas if certain
interference criteria are met. Under FCC rules and the Balanced Budget Act of
1997, station owners will be required to surrender one channel in 2006 and
thereafter provide service solely in the DTV format if specified DTV household
penetration levels are met.

The Companys Detroit, Houston and Miami stations each commenced DTV
broadcast operations during 1999, while the Companys Orlando station commenced
such operations in 2001. The deadline established by the FCC for the Companys
two other stations (San Antonio and Jacksonville) to begin DTV broadcast
operations is May 1, 2002.

In November 1998 the FCC issued a decision implementing the requirement of
the Telecommunications Act of 1996 that it charge broadcasters a fee for
offering certain ancillary and supplementary services on the DTV channel.
These services include data, video or other services that are offered on a
subscription basis or for which broadcasters receive compensation other than
from advertising revenue. In its decision, the FCC imposed a fee of 5% of the
gross revenues generated by such services. In rules adopted in April 2000, the
FCC also implemented the Community Broadcasters Act of 1999, which provides
interference protection to certain low-power television stations. These rules
provide several hundred low-power stations with the same protection from
interference enjoyed by full-power stations, with the result that it may be
more difficult for some existing full-power stations to alter their analog or
DTV transmission facilities. Separately, in January 2001 the FCC issued an
order governing the mandatory carriage of DTV signals by cable television
operators. The FCC decided that, pending further inquiry, only stations that
broadcast in a DTV-only mode would be entitled to mandatory carriage of their
DTV signals. In defining how a DTV signal should be carried, the FCC ruled
that only a single stream of video (that is, a single channel of programming)
together with any additional program-related material is eligible for
mandatory carriage. The determination of what constitutes program-related
material has not yet been made. Cable operators will be required to carry the
DTV signal of any DTV station eligible for mandatory carriage in the same
definition in which the signal was originally broadcast. However, until this
order is clarified it is unclear whether cable operators will be responsible
for ensuring that their set-top boxes are capable of passing DTV signals in
their full definition to the consumers DTV receiver. The FCC also has issued
a Notice of Inquiry addressing the question of whether special public interest
obligations should be imposed on DTV operations. Specifically, the FCC asked
whether it should require broadcasters to provide free time for political
candidates, increase the amount of programming intended to meet the needs of
minorities and women, and increase communication with the public regarding
programming decisions.

The FCC also is conducting proceedings dealing with such matters as
regulations pertaining to cable television (discussed below under Cable
Television Division  Regulation of Cable Television and Related Matters), and
various proposals affecting the development of alternative video delivery
systems that would compete in varying degrees with both cable television and
television broadcasting operations. In August 1999 the FCC amended its local
ownership rule to permit one company to own

5



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two television stations in the same
market if there are at least eight independently owned full-power television
stations in that market (including non-commercial stations and counting the
co-owned stations as one), and if at least one of the co-owned stations is not
among the top four ranked television stations in that market. The FCC also
decided to permit common ownership of stations in a single market if their
signals do not overlap, and to permit common ownership of certain failing or
unbuilt stations. These rule changes are likely to increase the concentration
of ownership in local markets. For example, all of the Companys stations are
now competing against two-station combinations in their respective markets.
Separately, the rule governing the aggregate number of television stations a
single company can own was relaxed by amendments to the Communications Act
enacted in 1996, and broadcast companies are now permitted to own an unlimited
number of television stations as long as the combined service areas of such
stations do not include more than 35% of nationwide television households. The
35% limit was subject to the FCCs periodic review and the agency subsequently
decided to leave the rule unchanged. However in February 2002 the U.S. Court
of Appeals for the District of Columbia Circuit found that the reasons given by
the FCC for retaining the rule were insufficient as a matter of law and
remanded the matter to the FCC for further consideration. This action could
eventually result in the FCCs either raising the limit or eliminating it
entirely.

The Company is unable to determine what impact the various rule changes
and other matters described in this section may ultimately have on the
Companys television broadcasting operations.

Cable Television Operations

At the end of 2001 the Company (through its Cable One subsidiary) provided
basic cable service to approximately 752,000 subscribers (representing about
62% of the 1,210,000 homes passed by the systems) and had in force more than
500,000 subscriptions to premium program services and more than 32,000
subscriptions to cable modem service. Digital programming and cable modem
services are each currently available in markets serving more than 85% of Cable
Ones subscriber base.

On January 11, 2001, Cable One sold its Greenwood, Indiana cable system to
a joint venture in which AT&T has an interest. In a related transaction, on
March 1, 2001, Cable One transferred its Modesto and Santa Rosa, California
cable systems (which had been its two largest systems), together with a cash
payment, to a unit of AT&T in return for AT&T cable systems serving the
communities of Boise, Idaho Falls, Twin Falls, Pocatello and Lewistown, Idaho,
and the community of Ontario, Oregon. These transactions had the effect of
increasing by approximately 34,000 the number of subscribers being served by
the Companys cable systems.

The Companys cable systems are located in 19 Midwestern, Southern and
Western states and typically serve smaller communities: thus 19 of the
Companys current systems pass fewer than 10,000 dwelling units, 16 pass
10,000-25,000 dwelling units, and 19 pass more than 25,000 dwelling units, of
which the largest is Boise, Idaho with 68,000 subscribers. The largest cluster
of systems (which together serve about 92,000 subscribers) is located on the
Gulf Coast of Mississippi.

Regulation of Cable Television and Related Matters

The Companys cable operations are subject to various requirements imposed
by local, state and federal governmental authorities. The franchises granted
by local governmental authorities are typically nonexclusive and limited in
time and generally contain various conditions and limitations relating to
payment of fees to the local authority, determined generally as a percentage of
revenues. Additionally, franchises often regulate the conditions of service
and technical performance, and contain various types of restrictions on
transferability. Failure to comply with such conditions and limitations may
give rise to rights of termination by the franchising authority.

6



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##### 



The Cable Television Consumer Protection and Competition Act of 1992 (the
1992 Cable Act) requires or authorizes the imposition of a wide range of
regulations on cable television operations. The three major areas of
regulation are (i) the rates charged for certain cable television services,
(ii) required carriage (must carry) of some local broadcast stations, and
(iii) retransmission consent rights for commercial broadcast stations.

Among other things, the Telecommunications Act of 1996 altered the
preexisting regulatory environment by expanding the definition of effective
competition (a condition that precludes any regulation of the rates charged by
a cable system), terminating rate regulation for some small cable systems, and
sunsetting the FCCs authority to regulate the rates charged for optional
tiers of service (which authority expired on March 31, 1999). For cable
systems that do not fall within the effective-competition or small-system
exemptions (including all of the cable systems owned by the Company), monthly
subscription rates for the basic tier of cable service (i.e., the tier that
includes the signals of local over-the-air stations and any public, educational
or governmental channels required to be carried under the applicable franchise
agreement), as well as rates charged for equipment rentals and service calls,
may be regulated by municipalities, subject to procedures and criteria
established by the FCC. Rates charged by cable television systems for
pay-per-view service, for per-channel premium program services and for
advertising are all exempt from regulation.

In April 1993 the FCC adopted a freeze on rate increases for regulated
services (i.e., the basic and, prior to March 1999, optional tiers). Later
that year the FCC promulgated benchmarks for determining the reasonableness of
rates for such services. The benchmarks provided for a percentage reduction in
the rates that were in effect when the benchmarks were announced. Pursuant to
the FCCs rules, cable operators can increase their benchmarked rates for
regulated services to offset the effects of inflation, equipment upgrades, and
higher programming, franchising and regulatory fees. Under the FCCs approach
cable operators may exceed their benchmarked rates if they can show in a
cost-of-service proceeding that higher rates are needed to earn a reasonable
return on investment, which the Commission established in March 1994 to be
11.25%. The FCCs rules also permit franchising authorities to regulate
equipment rentals and service and installation rates on the basis of a cable
operators actual costs plus an allowable profit which is calculated from the
operators net investment, income tax rate and other factors.

Pursuant to the must-carry requirements of the 1992 Cable Act, a
commercial television broadcast station may, under certain circumstances,
insist on carriage of its signal on cable systems located within the stations
market area, while a noncommercial public station may insist on carriage of its
signal on cable systems located within either the stations predicted Grade B
signal contour or 50 miles of the stations transmitter. As a result of these
obligations (the constitutionality of which has been upheld by the U.S. Supreme
Court), certain of the Companys cable systems have had to carry broadcast
stations that they might not otherwise have elected to carry, and the freedom
the Companys systems would otherwise have to drop signals previously carried
has been reduced.

At three-year intervals beginning in October 1993 commercial broadcasters
have had the right to forego must-carry rights and insist instead that their
signals not be carried without their prior consent. Before October 1993 some
of the broadcast stations carried by the Companys cable television systems
opted for retransmission consent and initially took the position that they
would not grant consent without commitments by the Companys systems to make
cash payments. As a result of case-by-case negotiations, the Companys cable
systems were able to continue carrying virtually all of the stations insisting
on retransmission consent without having to agree to pay any stations for the
privilege of carrying their signals. However some commitments were made to
carry other program services offered by a station or an affiliated company, to
provide advertising availabilities on cable for sale by a station and to
distribute promotional announcements with respect to a station. Many of these

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agreements between broadcast stations and the Companys cable systems expired
at the end of 1999 and the expired agreements were replaced by new agreements
having comparable terms.

As noted in the discussion above under Television Broadcasting 
Regulation of Broadcasting and Related Matters, in January 2001 the FCC
determined that, pending further inquiry, only television stations broadcasting
in a DTV-only mode could require local cable systems to carry their DTV
signals. The FCC currently is conducting another inquiry to decide whether it
should require cable systems to carry both the analog and the DTV signals of
local television stations. Such an extension of must-carry requirements could
result in the Companys cable systems being required to delete some existing
programming to make room for broadcasters DTV channels.

Various other provisions in current federal law may significantly affect
the costs or profits of cable television systems. These matters include a
prohibition on exclusive franchises, restrictions on the ownership of competing
video delivery services, restrictions on transfers of cable television
ownership, a variety of consumer protection measures, and various regulations
intended to facilitate the development of competing video delivery services.
Other provisions benefit the owners of cable systems by restricting regulation
of cable television in many significant respects, requiring that franchises be
granted for reasonable periods of time, providing various remedies and
safeguards to protect cable operators against arbitrary refusals to renew
franchises, and limiting franchise fees to 5% of revenues.

Apart from its authority under the 1992 Cable Act and the
Telecommunications Act of 1996, the FCC regulates various other aspects of
cable television operations. Since 1990 cable systems have been required to
black out from the distant broadcast stations they carry syndicated programs
for which local stations have purchased exclusive rights and requested
exclusivity. Other long-standing FCC rules require cable systems to delete
under certain circumstances duplicative network programs broadcast by distant
stations. The FCC also imposes certain technical standards on cable television
operators, exercises the power to license various microwave and other radio
facilities frequently used in cable television operations, and regulates the
assignment and transfer of control of such licenses. In addition, pursuant to
the Pole Attachment Act, the FCC exercises authority to disapprove unreasonable
rates charged to cable operators by telephone and power utilities for utilizing
space on utility poles or in underground conduits (although states may reclaim
exclusive jurisdiction over these matters by certifying to the FCC that they
regulate the rates, terms and conditions of pole attachments, and some states
in which the Company has cable operations have so certified). A number of
cable operators (including the Companys Cable One subsidiary) are using their
cable systems to provide not only television programming but also Internet
access. In January 2002, the U.S. Supreme Court ruled that the FCCs authority
under the Pole Attachment Act extends to all pole attachments by cable
operators, including those attachments used to provide Internet access. Thus,
except where individual states have assumed regulatory responsibility, the
rates charged by utilities for pole or conduit access by cable companies are
subject to FCC rate regulation regardless of
whether or not the cable companies are providing Internet access as well as the
delivery of television programming.

The Copyright Act of 1976 grants to cable television systems, under
certain terms and conditions, the right to retransmit the signals of television
stations pursuant to a compulsory copyright license. Those terms and
conditions include the payment of certain license fees set forth in the statute
or established by subsequent administrative regulations. The compulsory
license fees have been increased on several occasions since this Act went into
effect. In 1994 the availability of the compulsory copyright license was
extended to wireless cable and direct broadcast satellite (DBS) operators,
although in the latter case the license right was limited to stations whose
over-the-air signal was not available at the subscribers location. However,
in November 1999 Congress enacted the Satellite Home Viewer Improvement Act,
which extends the compulsory copyright license to DBS

8



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operators who wish to
distribute the signals of local television stations to satellite subscribers in
the markets served by such stations. This Act continued the other restrictions
contained in the original compulsory license for DBS operators, which permit
the signal of a distant network-affiliated station to be distributed only in
areas where subscribers cannot receive an over-the-air signal of another
station affiliated with the same network.

The general prohibition on telephone companies operating cable systems in
areas where they provide local telephone service was eliminated by the
Telecommunications Act of 1996. Telephone companies now can provide video
services in their telephone service areas under four different regulatory
plans. First, they can provide traditional cable television service and be
subject to the same regulations as the Companys cable television systems
(including compliance with local franchise and any other local or state
regulatory requirements). Second, they can provide wireless cable service,
which is described below, and not be subject to either cable regulations or
franchise requirements. Third, they can provide video services on a
common-carrier basis, under which they would not be required to obtain local
franchises but would be subject to common-carrier regulation (including a
prohibition against exercising control over programming content). Finally,
they can operate so-called open video systems without local franchises
(although local communities can choose to require a franchise) and be subject
to reduced regulatory burdens. The Act contains detailed requirements
governing the operation of open video systems, including the nondiscriminatory
offering of capacity to third parties and limiting to one-third of total system
capacity the number of channels the operator can program when demand exceeds
available capacity. In addition, the rates charged by an open video system
operator to a third party for the carriage of video programming must be just
and reasonable as determined in accordance with standards established by the
FCC. (Cable operators and others not affiliated with a telephone company may
also become operators of open video systems.) The Act also generally prohibits
telephone companies from acquiring or owning an interest in existing cable
systems operating in their service areas.

The Telecommunications Act of 1996 balances this grant of video authority
to telephone companies by removing regulatory barriers to the offering of
telephone services by cable companies and others. The Act preempts state and
local laws that have barred local telephone competition in some states. In
addition, the Act requires local telephone companies to permit cable companies
and other competitors to connect with the telephone network and requires
telephone companies to give competitors access to the essential features and
functionalities of the local telephone network (such as switching capability,
signal carriage from the subscribers residence to the switching center, and
directory assistance) on an unbundled basis. As an alternative method of
providing local telephone service, the Act permits cable companies and others
to purchase telephone service on a wholesale basis and then resell it to their
subscribers.

At various times during the last decade, the FCC adopted rule changes
intended to facilitate the development of multichannel multipoint distribution
systems, also known as wireless cable or MMDS, a video and data service
that is capable of distributing approximately 30 television channels in a local
area by over-the-air microwave transmission using analog technology and a
greater number of channels using digital compression technologies. The use of
digital technology and a 1998 change in the FCCs rules to permit reverse path
over wireless facilities also make it possible for such systems to deliver
additional services, including Internet access. Also, in late 1998 the FCC
auctioned a sizeable amount of spectrum in the 31 gigahertz band for use by a
new wireless service, which is referred to as the Local Multipoint Distribution
Service or LMDS, that can deliver more than 100 channels of digital
programming directly to subscribers homes as well as provide other services
such as Internet access and telephony. In November
2000 the FCC approved the use of spectrum in the 12.2-12.7 gigahertz band
(the same band used by DBS operators) to provide a new land-based interactive
video and data delivery service known as the Multichannel Video Distribution
and Data

9



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Service (MVDDS). MVDDS providers will use reharvested DBS
spectrum to transmit programming on a non-harmful interference basis using
terrestrial microwave transmitters. (While DBS subscribers point their dishes
south to pick up their providers signal, MVDDS customers will aim their
antennas north.) The Commissions order creating MVDDS did not grant any
licenses to operate MVDDS systems. Instead, it requested comments on service,
technical and licensing rules for the technology. Comments and reply comments
to the FCCs order have been filed, and the FCC is continuing to analyze the
interference issues surrounding the use of this spectrum. MVDDS providers,
like providers of other forms of wireless cable, will not be required to obtain
franchises from local governmental authorities and generally will operate under
fewer regulatory requirements than conventional cable systems.

In October 1999 the FCC amended its cable ownership rule, which governs
the number of subscribers an owner of cable systems may reach on a national
basis. Before revision, this rule provided that a single company could not
serve more than 30% of potential cable subscribers (or homes passed by cable)
nationwide. The revised rule allowed a cable operator to provide service to
30% of all actual subscribers to cable, satellite and other competing services
nationwide, rather than to 30% of homes passed by cable. This revision had the
effect of increasing the number of communities that could be served by a single
cable operator and may have resulted in more consolidation in the cable
industry. In March 2001 the U.S. Court of Appeals for the D.C. Circuit voided
the FCCs revised rule on constitutional and procedural grounds and remanded
the matter to the FCC for further proceedings. The FCC has since opened a
proceeding to determine what the ownership limit should be, if any. If the FCC
eliminates the limit or adopts a new rule with a higher percentage of
nationwide subscribers a single cable operator is permitted to serve, that
action could lead to even greater consolidation in the industry.

In 1996 Congress repealed the statutory provision which generally
prohibited a party from owning an interest in both a television broadcast
station and a cable television system within that stations Grade B contour.
However Congress left the FCCs parallel rule in place, subject to a
Congressionally mandated periodic review by the agency. The FCC, in its
subsequent review, decided to retain the prohibition for various competitive
and diversity reasons. However in February 2002 the U.S. Court of Appeals for
the District of Columbia Circuit struck down the rule, holding that the FCCs
decision to retain the rule was arbitrary and capricious.

On March 14, 2002, the FCC issued a declaratory ruling classifying cable
modem service as an interstate information service. Concurrently the FCC
issued a notice of proposed rulemaking to consider the regulatory implications
of this classification. Among the issues to be decided are whether local
authorities can require cable operators to provide competing Internet service
providers with access to the cable operators facilities, the extent to which
local authorities can regulate cable modem service, and whether local
authorities can impose fees on the provision of cable modem service. The
Companys Cable One subsidiary currently offers Internet access on most of its
cable systems and is the sole Internet service provider on those systems.
Thus, depending on the outcome, this proceeding has the potential to interfere
with the Companys ability to deliver Internet access on a profitable basis.

Litigation also is pending in various courts in which various franchise
requirements are being challenged as unlawful under the First Amendment, the
Communications Act, the antitrust laws and on other grounds. One of the issues
raised in these cases is whether local franchising authorities have the power
to regulate the provision of Internet access by cable systems. Depending on
the outcomes, such litigation could facilitate the development of duplicative
cable facilities that would compete with existing cable systems, enable cable
operators to offer certain services outside of cable regulation or otherwise
materially affect cable television operations.

10



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The regulation of certain cable television rates pursuant to the authority
granted to the FCC has negatively impacted the revenues of the Companys cable
systems. The Company is unable to predict what effect the other matters
discussed above may ultimately have on its cable television business.

Magazine Publishing

Newsweek

Newsweekis a weekly news magazine published both domestically and
internationally by Newsweek, Inc., a subsidiary of the Company. In gathering,
reporting and writing news and other material for publication, Newsweek
maintains news bureaus in 9 U.S. and 11 foreign cities.

The domestic edition of Newsweekincludes more than 100 different
geographic or demographic editions which carry substantially identical news and
feature material but enable advertisers to direct messages to specific market
areas or demographic groups. Domestically, Newsweekranks second in
circulation among the three leading weekly news magazines (Newsweek, Timeand
U.S. News & World Report). For each of the last five years Newsweeks average
weekly domestic circulation rate base has been 3,100,000 copies. From 1997
through 1999 Newsweeks percentage of the total weekly domestic circulation
rate base of the three leading weekly news magazines was 33.5%. In both 2000
and 2001 that percentage was 34.0%.

Newsweekis sold on newsstands and through subscription mail order sales
derived from a number of sources, principally direct mail promotion. The basic
one-year subscription price is $41.08. Most subscriptions are sold at a
discount from the basic price. In May 2001, Newsweeks newsstand cover price
was increased from $3.50 per copy (which price had been in effect since April
1999) to $3.95 per copy.

The total number of Newsweeks domestic advertising pages and gross
domestic advertising revenues as reported by Publishers Information Bureau,
Inc., together with Newsweeks percentages of the total number of advertising
pages and total advertising revenues of the three leading weekly news
magazines, for the past five years have been as follows:

|     |  |             |       |               |  |               |      |                |  |   |             |  |  |  |      |  
|---- |  | ----------- | ----- | ------------- |  | ------------- | ---- | -------------- |  | - | ----------- |  |  |  | ---- | -
|     |  |             |       |               |  | Percentage of |      | Newsweek       |  |   |             | 
|     |  | Newsweek    |       | Three Leading |  | Gross         |      | Percentage of 
|     |  | Advertising |       | News          |  | Advertising   |      | Three Leading 
|     |  | Pages*      |       | Magazines     |  | Revenues*     |      | News Magazines
|     |  |             |       |               |  |               |      |               
|1997 |  |             | 2,633 |               |  |               | 35.4 | %              |  | $ | 406,324,000 |  |  |  | 35.1 | %
|    
|    
|    
|    
|1998 |  |             | 2,472 |               |  |               | 34.4 | %              |  |   | 393,168,000 |  |  |  | 33.8 | %
|    
|    
|    
|    
|1999 |  |             | 2,567 |               |  |               | 33.5 | %              |  |   | 432,701,000 |  |  |  | 32.8 | %
|    
|    
|    
|    
|2000 |  |             | 2,383 |               |  |               | 33.8 | %              |  |   | 433,932,000 |  |  |  | 34.2 | %
|    
|    
|    
|    
|2001 |  |             | 1,822 |               |  |               | 33.6 | %              |  |   | 334,179,000 |  |  |  | 32.5 | %



---

|* |  | Advertising pages and gross advertising revenues are those
reported by Publishers Information Bureau, Inc. PIB computes gross
advertising revenues from basic one-time rates and the number of
advertising pages carried. PIB figures therefore materially exceed
actual gross advertising revenues, which reflect lower rates for
multiple insertions. Net revenues as reported in the Companys
Consolidated Statements of Income also exclude agency fees and cash
discounts, which are included in the gross advertising revenues shown
above. Page and revenue figures exclude affiliated advertising.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Newsweeks advertising rates are based on its average weekly circulation
rate base and are competitive with the other weekly news magazines. Effective
with the January 8, 2001 issue, national advertising rates were increased by an
average of 4.0%. Beginning with the issue dated January 14, 2002, national
advertising rates were increased again, by an average of 5.0%.

11



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Newsweek Business Plus, which is published 39 times a year, is a
demographic edition of Newsweekdistributed to high-income professional and
managerial subscribers and subscribers in zip-code-defined areas. Advertising
rates for this edition were increased an average of 4.0% in January 2001 and by
an additional 5.0% in January 2002. The circulation rate base for this edition
is 1,200,000 copies.

Newsweeks other demographic edition, Newsweek Woman, which was published
13 times during 2001, has a circulation rate base of 800,000 selected female
subscribers. At the beginning of 2001 advertising rates for this edition were
increased by an average of 4.0%, with an additional average increase of 5.0%
instituted early in 2002.

Internationally, Newsweekis published in an Atlantic edition covering
Europe, the Middle East and Africa, a Pacific edition covering Japan, Korea and
south Asia, and a Latin American edition, all of which are in the English
language. Editorial copy solely of domestic interest is eliminated in the
international editions and is replaced by other international, business or
national coverage primarily of interest abroad.

Since 1984 a section of Newsweekarticles has been included in The
Bulletin, an Australian weekly news magazine which also circulates in New
Zealand. A Japanese-language edition of Newsweek, Newsweek Nihon Ban,has been
published in Tokyo since 1986 pursuant to an arrangement with a Japanese
publishing company which translates editorial copy, sells advertising in Japan
and prints and distributes the edition. Newsweek Hankuk Pan,a Korean-language
edition of Newsweek,began publication in 1991 pursuant to a similar
arrangement with a Korean publishing company. Since 1996 Newsweek en Español,
a Spanish-language edition of Newsweekdistributed in Latin America, has been
published under an agreement with a Miami-based publishing company which
translates editorial copy, prints and distributes the edition and jointly sells
advertising with Newsweek. In June 2000, Newsweek Bil Logha Al-Arabia, an
Arabic-language edition of Newsweek, was launched under a similar arrangement
with a Kuwaiti publishing company. Also, Newsweek Polska, a Polish-language
newsweekly, was launched in September 2001 under a licensing agreement with a
Polish publishing company which, in addition to translating selected stories
from Newsweeks various U.S. and foreign editions, has established a staff of
Polish reporters and editors for the magazine. In April 2001, Newsweek
terminated its relationship with Itogi, a Russian-language news magazine, due
to a change in the control of the magazine.

The average weekly circulation rate base, advertising pages and gross
advertising revenues of Newsweeks international editions (not including The
Bulletininsertions or the foreign-language editions of Newsweek) for the past
five years have been as follows:

|     |  |                |         |             |  |             |       |       |  |   |             | 
|---- |  | -------------- | ------- | ----------- |  | ----------- | ----- | ----- |  | - | ----------- | 
|     |  | Average Weekly |         |             |  |             |       | Gross
|     |  | Circulation    |         | Advertising |  | Advertising
|     |  | Rate Base      |         | Pages*      |  | Revenues*  
|     |  |                |         |             |  |            
|1997 |  |                | 657,000 |             |  |             | 2,287 |       |  | $ | 89,330,000  | 
|    
|    
|    
|    
|1998 |  |                | 660,000 |             |  |             | 2,120 |       |  |   | 83,051,000  | 
|    
|    
|    
|    
|1999 |  |                | 660,000 |             |  |             | 2,492 |       |  |   | 90,023,000  | 
|    
|    
|    
|    
|2000 |  |                | 663,000 |             |  |             | 2,606 |       |  |   | 104,868,000 | 
|    
|    
|    
|    
|2001 |  |                | 666,000 |             |  |             | 1,979 |       |  |   | 81,453,000  | 



---

|* |  | Advertising pages and gross advertising revenues are those
reported by CMR International. CMR computes gross advertising revenues
from basic one-time rates and the number of advertising pages carried.
CMR figures therefore materially exceed actual gross advertising
revenues, which reflect lower rates for multiple insertions. Net
revenues as reported in the Companys Consolidated Statements of Income
also exclude agency fees and cash discounts, which are included in the
gross advertising revenues shown above. Page and revenue figures
exclude affiliated advertising.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

12



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For 2002 the average weekly circulation rate base for Newsweeks
English-language international editions (not including The Bulletininsertions)
will be 646,000 copies. Newsweeks rate card estimates the average weekly
circulation in 2001 for The Bulletininsertions will be 80,000 copies and for
the Japanese-, Korean-, Arabic- and Spanish- and Polish-language editions will
be 130,000, 90,000, 30,000, 54,000 and 280,000 copies, respectively.

The online version of Newsweek, which includes stories from Newsweeks
print edition as well as other material, became a co-branded feature on the
MSNBC.com Web site in 2000. This feature is being produced by
Washingtonpost.Newsweek Interactive Company, another subsidiary of the Company.

Arthur Frommers Budget Travelmagazine, another Newsweek publication, was
published six times during 2001 and had a circulation of 400,000 copies.
Budget Travelis headquartered in New York City and has its own editorial
staff.

During recent years Congress has considered a range of proposals intended
to restrict the marketing of tobacco products. The Company cannot now predict
what actions may eventually be taken to limit or restrict tobacco advertising.
However such advertising accounts for less than 1% of Newsweeks operating
revenues and negligible revenues at The Washington Postand the Companys other
publications. Moreover, federal law has prohibited the carrying of
advertisements for cigarettes and smokeless tobacco by commercial radio and
television stations for many years. Thus the Company believes that any
restrictions on tobacco advertising which may eventually be put into effect
would not have a material adverse effect on Newsweek or on any of the Companys
other business operations.

PostNewsweek Tech Media

This division of Post-Newsweek Media, Inc. publishes
controlled-circulation trade periodicals and produces trade shows and
conferences for the information technology industry.

Specifically, PostNewsweek Tech Media publishes Washington Technology, a
biweekly tabloid newspaper for government information technology systems
integrators, Government Computer News, a tabloid newspaper published 30 times
per year serving government managers who buy information technology products
and services, and GCN Shopper, a tabloid newspaper published four times per
year providing information technology product reviews and other buying
information for government managers. Washington Technology, Computer
Government News, and GCN Shopperhave circulations of about 40,000, 87,000, and
120,000 copies, respectively.

The other publications of PostNewsweek Tech Media are Washington Techway,
a biweekly news magazine with a circulation of 30,000 copies that addresses the
needs of the private-sector technology business community in the Washington
region, and the Technology Almanac, an annual directory of technology industry
executives. Washington Techwayalso coproduces the annual Greater Washington
High Technology Awards Banquet, which is held each spring in Washington, D.C.
for more than 1,000 technology executives. Together with The Washington Post
and WPNI, PostNewsweek Tech Media contributes to the washtech.com Web site
which serves the Washington Techwaycommunity online.

This division also produces the FOSEtrade show, which is held each spring
in Washington, D.C. for information technology decision makers in government
and industry.

Education

Kaplan, Inc., a subsidiary of the Company, provides an extensive range of
educational services for children, students and professionals. Kaplans
historical focus on test preparation has been

13



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expanded as new educational and
career services businesses have been acquired or initiated.

Through its Test Preparation and Admissions Division, Kaplan prepares
students for a broad range of admissions and licensing examinations including
the SATs, LSATs, GMATs, MCATs, GREs, and nursing and medical boards. This
business can be subdivided into four categories: K-12 (serving primarily high
school students preparing for the SATs and ACTs); Graduate (serving college
students and professionals, primarily with preparation for admission tests to
graduate, medical and law schools); Medical (serving medical professionals
preparing for licensing exams); and English Language Training (serving foreign
students and professionals wishing to study or work in the U.S.). Many of this
divisions test preparation courses have been available to students via the
Internet since 1999. During 2001 the Test Preparation and Admissions Divisions
enrolled over 195,000 students (including almost 28,000 enrolled in online
programs) and provided courses at 157 permanent centers located throughout the
United States and in Canada, Puerto Rico, London and Paris. In addition,
Kaplan licenses material for certain of these courses to third parties who
during 2001 offered such courses at 40 centers located in 15 countries.

The Test Preparation and Admissions Division also includes Kaplans
publishing activities. Kaplan currently co-publishes more than 150 book
titles, predominately in the areas of test preparation, admissions, career
guidance and life skills, through a joint venture with Simon & Schuster, and
also develops educational software for the K through 12 and graduate markets
which is sold through arrangements with a third party who is responsible for
production and distribution. Kaplan also produces a college newsstand guide in
conjunction with Newsweek.

Kaplans Professional Division offers licensing, continuing education,
certification and professional development services for corporations and for
individuals seeking to advance their careers. This division includes Dearborn
Publishing, a provider of pre-licensing training and continuing education for
securities, insurance and real estate professionals; Perfect Access Speer, a
provider of software education and consulting services to law firms and
businesses; Schwesers Study Program, a provider of materials aimed at
preparing individuals for the Chartered Financial Analyst examination; Self
Test Software, a provider of preparation services for software proficiency
certification examinations; and Call Center Solutions, a provider of assessment
and training services for the call-center industry.

Kaplans Score Learning Division offers computer-based learning and
individualized tutoring for children. In 2001, this business, which provides
educational after-school enrichment services through 147 Score centers located
in various areas of the United States, served nearly 60,000 students, up from
50,000 students in 2000. Scores services are provided in facilities separate
from Kaplans test preparation centers due to differing configuration and
equipment requirements. eScore.com, which began operations in early 2000
offering parenting and educational resources online to help parents provide
learning opportunities for their children, now operates as a software
development division of Kaplan.

The Higher Education Division of Kaplan consists of 41 schools in 14
states which provide classroom-based instruction and three institutions which
specialize in distance education. The schools providing classroom-based
instruction (most of which were acquired on August 1, 2000, as part of Kaplans
acquisition of Quest Education Corporation) offer a variety of bachelor degree,
associate degree and diploma programs in the fields of healthcare, business,
information technology, and fashion and design. These schools were serving
more than 14,600 students at year-end 2001 (which total includes the
classroom-based programs of Kaplan College), with approximately 52% of such
students enrolled in accredited bachelor or associate degree programs. Each of
these schools has its own accreditation from one of several regional or
national accrediting agencies recognized by the U.S. Department of Education.
The institutions which specialize in distance education are Kaplan College,

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The
College for Professional Studies, and Concord University School of Law. Kaplan
College offers various bachelor degree, associate degree and certificate
programs, principally in the fields of business and information technology, and
is accredited by the Higher Learning Commission of the North Central
Association of Colleges and Schools. Some of Kaplan Colleges courses are
offered online while others are offered in a traditional classroom format at
the schools Davenport, Iowa campus. The College for Professional Studies
offers bachelor and associate degree and diploma correspondence programs in the
fields of legal nurse consulting, paralegal studies and criminal justice, and
is accredited by the Accrediting Commission of the Distance Education and
Training Council (DETC). The College for Professional Studies had over 7,400
students enrolled at year-end 2001. Concord University School of Law, the
nations first online law school, offers Juris Doctor and LLM degrees wholly
online. At year-end 2001, approximately 900 students were enrolled at Concord.
Concord is accredited by DETC and has received operating approval from the
California Bureau of Private Post-Secondary and Vocational Education. Concord
also has complied with the registration requirements of the State Bar of
California; graduates are, therefore, able to apply for admission to the
California Bar.

Title IV Student Financial Assistance Programs

Prior to the acquisition of Quest Education Corporation in August 2000,
none of Kaplans educational offerings were eligible to participate in any of
the student financial assistance programs that have been created under Title IV
of the Higher Education Act of 1965, as amended. However funds provided under
Title IV programs historically have been responsible for a majority of the net
revenues of the schools in Kaplans Higher Education Division which provide
classroom-based instruction (including Kaplan College), accounting, for
example, for slightly more than $100 million of the net revenues of such
schools for the 12-month period ended December 31, 2001, and the significant
role of Title IV funding in the operations of these schools is expected to
continue.

To maintain Title IV eligibility a school must comply with extensive
statutory and regulatory requirements relating to its financial aid management,
educational programs, financial strength, recruiting practices and various
other matters. Among other things, the school must be authorized to offer its
educational programs by the appropriate governmental body in the state in which
it is located, be
accredited by an accrediting agency recognized by the U.S. Department of
Education (the Department of Education), and enter into a program
participation agreement with the Department of Education.

A school may lose its eligibility to participate in Title IV programs if
student defaults on the repayment of Title IV loans exceed specified default
rates (referred to as cohort default rates). A school whose cohort default
rate exceeds 40% for any single year may have its eligibility to participate in
Title IV programs limited, suspended or terminated at the discretion of the
Department of Education. A school whose cohort default rate equals or exceeds
25% for three consecutive years will automatically lose its Title IV
eligibility for at least two years unless the school can demonstrate
exceptional circumstances justifying its continued eligibility. Moreover, a
for-profit postsecondary institution, like each of these Kaplan schools, will
lose its Title IV eligibility for at least one year if more than 90% of the
institutions cash receipts for any fiscal year are derived from Title IV
programs.

The Title IV program regulations also provide that not more than 50% of an
eligible institutions courses can be provided online and that, in some cases,
not more than 50% of an eligible institutions students can be enrolled in
online courses, and impose certain other requirements intended to insure that
individual programs (including online programs) eligible for Title IV funding
include minimum amounts of instructional activity. However, Kaplan College
currently is a participant in the distance education demonstration program of
the Department of Education and as a result is exempt from the foregoing
requirements until at least June 30, 2004. Legislation currently is pending in
Congress which, if enacted, would exempt online courses from those requirements
under certain

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circumstances, including the maintenance by the institution
offering such courses of a cohort default rate of less than 10%.

No proceeding is pending to fine any Kaplan school for a failure to comply
with any Title IV requirement, or to limit, suspend or terminate the Title IV
eligibility of any Kaplan school. However no assurance can be given that the
Kaplan schools which currently participate in Title IV programs will maintain
their Title IV eligibility in the future or that the Department of Education
might not successfully assert that one or more of such schools have previously
failed to comply with Title IV requirements. Most schools within Kaplans
Higher Education Division are considered separately for the purpose of
determining compliance with Title IV requirements. Thus if the Department of
Education were to find that one or more of such schools had failed to comply
with any applicable Title IV requirement and as a result suspended or
terminated the Title IV eligibility of those schools, that action normally
would not affect the Title IV eligibility of other Kaplan schools that had
continued to comply with Title IV requirements.

As a general matter, schools participating in Title IV programs are not
financially responsible for the failure of their students to repay Title IV
loans. However the Department of Education may fine a school for a failure to
comply with Title IV requirements and may require a school to repay Title IV
program funds if it finds that such funds have been improperly disbursed.

Pursuant to Title IV program regulations, a school that undergoes a change
in control must be reviewed and recertified by the Department of Education.
Certifications obtained following a change in control are granted on a
provisional basis which permits the school to continue participating in Title
IV programs but provides fewer procedural protections if the Department of
Education asserts a material violation of Title IV requirements. As a result
of Kaplans acquisition of Quest, all of the schools owned by Quest at that
time were provisionally certified by the Department of Education for a term
expiring in June 2004; Kaplan will be eligible to apply for full certification
for such schools in the spring of 2004. The schools acquired by Kaplans
Higher Education Division subsequent to the Quest acquisition have also been
provisionally certified by the Department of Education, generally for terms
expiring approximately three years after the date of the acquisition.

Several Title IV programs are subject to periodic legislative review and
reauthorization. In addition, the availability of funding for each Title IV
program is wholly contingent upon the outcome of the annual federal
appropriations process.

Whether as a result of changes in the laws and regulations governing Title
IV programs, a reduction in Title IV program funding levels, or a failure of
schools included in Kaplans Higher Education Division to maintain eligibility
to participate in Title IV programs, a material reduction in the amount of
Title IV financial assistance available to the students of these schools
would have a significant negative impact on Kaplans operating results.

Other Activities

International Herald Tribune

The Company beneficially owns 50% of the outstanding common stock of the
International Herald Tribune, S.A.S., a French company which publishes the
International Herald Tribunein Paris, France. This English-language newspaper
has an average daily paid circulation of over 250,000 copies and is distributed
in over 180 countries.

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BrassRing

The Company also beneficially owns a 49.5% equity interest in BrassRing
LLC, an Internet-based career-assistance and hiring management company. The
other principal members of BrassRing are the Tribune Company with a 26.9%
interest, Gannett Co., Inc. with a 12.4% interest, and the venture capital firm
Accel Partners with a 10.5% interest.

Production and Raw Materials

The Washington Postis produced at the Companys printing plants in
Fairfax County, Virginia and Prince Georges County, Maryland. The Heraldand
The Enterprise Newspapersare produced at The Daily Herald Companys plant in
Everett, Washington, while The Gazette Newspapersand the Southern Maryland
Newspapersare all printed at the commercial printing facilities owned by
Post-Newsweek Media, Inc. Greater Washington Publishings periodicals are
produced by independent contract printers with the exception of one periodical
which is printed at one of the commercial printing facilities owned by
Post-Newsweek Media, Inc. All PostNewsweek Tech Media publications are
produced by independent contract printers.

Newsweeks domestic edition is produced by three independent contract
printers at five separate plants in the United States; advertising inserts and
photo-offset films for the domestic edition are also produced by independent
contractors. The international editions of Newsweekare printed in England,
Hong Kong, Singapore, Switzerland, the Netherlands, South Africa and Hollywood,
Florida; insertions for The Bulletinare printed in Australia. Since 1997
Newsweek and a subsidiary of AOL Time Warner have used a jointly owned company
based in England to provide production and distribution services for the
Atlantic editions of both Newsweekand Time. Budget Travelis produced by one
of the independent contract printers that also prints Newsweeks domestic
edition.

In 2001 The Washington Postconsumed about 199,000* tons of newsprint
purchased from a number of suppliers, including Bowater Incorporated, which
supplied approximately 27% of The Posts 2001 newsprint requirements. Although
in prior years some of the newsprint The Postpurchased from Bowater
Incorporated typically was provided by Bowater Mersey Paper Company Limited,
49% of the common stock of which is owned by the Company (the majority interest
being held by a subsidiary of Bowater Incorporated), during 2001 none of the
newsprint consumed by The Postcame from that source. Bowater Mersey owns and
operates a newsprint mill near Halifax, Nova Scotia, and owns extensive
woodlands that provide part of the mills wood requirements. In 2001 Bowater
Mersey produced about 246,000 tons of newsprint.

The announced price of newsprint (excluding discounts) was approximately
$750 per ton throughout 2001. Discounts from the announced price of newsprint
can be substantial and prevailing
discounts increased during the second half of the year. The Postbelieves it
has adequate newsprint available through contracts with its various suppliers.
Over 90% of the newsprint used by The Postincludes some recycled content. The
Company owns 80% of the stock of Capitol Fiber Inc., which handles and sells to
recycling industries old newspapers and other paper collected in Washington,
D.C., Maryland and northern Virginia.

In 2001 the operations of The Daily Herald Company and Post-Newsweek
Media, Inc. consumed approximately 6,900 and 19,600 tons of newsprint,
respectively, which was obtained in each



---

|* |  | All references in this report to newsprint tonnage and prices refer to
short tons (2,000) and not to metric tons (2,204.6 pounds) which are often used
in newsprint price quotations.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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case from various suppliers.
Approximately 80% of the newsprint used by The Daily Herald Company and 45% of
the newsprint used by Post-Newsweek Media, Inc. includes some recycled content.

The domestic edition of Newsweekconsumed about 31,600 tons of paper in
2001, the bulk of which was purchased from six major suppliers. The current
cost of body paper (the principal paper component of the magazine) is
approximately $985 per ton.

Over 90% of the aggregate domestic circulation of Newsweekis delivered by
periodical (formerly second-class) mail, most Newsweeksubscriptions are
solicited by either first-class or standard A (formerly third-class) mail, and
all PostNewsweek Tech Media publications are delivered by periodical mail.
Thus, substantial increases in postal rates for these classes of mail could
have a significant negative impact on the operating income of these business
units. Rate increases of 3.0% for first-class mail, 9.9% for periodical mail,
and 6.0% for standard A mail, went into effect on January 7, 2001, and
additional increases of 2.6% for periodical mail and 1.7% for standard A mail
went into effect on July 1, 2001. These actions increased annual postage costs
by approximately $3.1 million at Newsweek and by nominal amounts at
PostNewsweek Tech Media. Additionally, in January 2002 the U.S. Postal Service
submitted to the Postal Rate Commission a proposed rate increase of
approximately 8% for both periodical and standard A mail and 9% for first-class
mail, each to be effective June 30, 2002. The Board of Governors of the U.S.
Postal Service is expected to vote on this proposal sometime in March 2002. If
this proposal is approved, Newsweeks 2002 postage costs will be increased by
about $1.7 million. On the other hand, since advertising distributed by
standard A mail competes to some degree with newspaper advertising, the Company
believes increases in standard A rates could have a positive impact on the
advertising revenues of The Washington Post, The Herald, The Gazette Newspapers
and Southern Maryland Newspapers, although the Company is unable to quantify
the amount of such impact.

Competition

The Washington Postcompetes in the Washington, D.C. metropolitan area
with The Washington Times, a newspaper which has published weekday editions
since 1982 and Saturday and Sunday editions since 1991. The Postalso
encounters competition in varying degrees from newspapers published in suburban
and outlying areas, other nationally circulated newspapers, and from
television, radio, magazines and other advertising media, including direct mail
advertising. Since 1997 The New York Timeshas produced a Washington Edition
which is printed locally and includes television channel listings and weather
for the Washington, D.C. area.

Washingtonpost.Newsweek Interactive faces competition from many other
Internet services as well as from alternative methods of delivering news and
information. In addition, Internet-based services are carrying increasing
amounts of advertising and over time such services could adversely affect the
Companys print publications and television broadcasting operations, all of
which rely on advertising for the majority of their revenues. Several
companies are offering online services containing information and advertising
tailored for specific metropolitan areas, including the Washington, D.C.
metropolitan area. Digital City (a subsidiary of AOL Time Warner) produces
DigitalCity Washington, which is part of AOLs nationwide network of local
online sites. Other popular Internet sites, such as those of Yahoo! and
Netscape Netcenter, offer their own version of a local, D.C.-area guide.
National online classified advertising is becoming a particularly crowded
field, with competitors such as Yahoo! and eBay aggregating large volumes of
content into a national classified database covering a broad range of product
lines. Other competitors are focusing on vertical niches in specific content
areas: CarPoint, AutoTrader.com and Autobytel.com, for example, aggregate
national car listings; Realtor.com aggregates
national real estate listings; and Monster.com, HotJobs

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(which was acquired by
Yahoo! early in 2002) and CareerBuilder (which acquired Headhunter.net in 2001)
aggregate employment listings.

The Heraldcirculates principally in Snohomish County, Washington; its
chief competitors are the Seattle Timesand the Seattle Post-Intelligencer,
which are daily and Sunday newspapers published in Seattle and whose Snohomish
County circulation is principally in the southwest portion of the county. Since
1983 the two Seattle newspapers have consolidated their business and production
operations and combined their Sunday editions pursuant to a joint operating
agreement, although they continue to publish separate daily newspapers. The
Enterprise Newspapersare distributed in south Snohomish and north King
Counties where their principal competitors are the Seattle Timesand The
Journal Newspapers, a group of weekly controlled-circulation newspapers.
Numerous other weekly and semi-weekly newspapers and shoppers are distributed
in The Heralds and The Enterprise Newspapersprincipal circulation areas.

The circulation of The Gazette Newspapersis limited to Montgomery and
Frederick Counties and parts of Prince Georges, Carroll, Anne Arundel and
Howard Counties, Maryland. The Gazette Newspaperscompete with many other
advertising vehicles available in their service areas, including The Potomac
and Bethesda/Chevy Chase Almanacs, The Western Montgomery Bulletin, The Bowie
Blade-News, The West County Newsand The Laurel Leader, weekly
controlled-circulation community newspapers, The Montgomery Sentinel, a weekly
paid-circulation community newspaper, The Prince Georges Sentinel, a weekly
controlled-circulation community newspaper (which also has a weekly
paid-circulation edition), The Montgomeryand Prince Georges Journals, daily
paid-circulation community newspapers, and The Frederick News-Post, a daily
paid-circulation community newspaper. The Southern Maryland Newspapers
circulate in southern Prince Georges County and in Charles, Calvert and St.
Marys Counties, Maryland, where they also compete with many other advertising
vehicles available in their service areas, including the Calvert County
Independentand St. Marys Today, weekly controlled-circulation community
newspapers.

The advertising periodicals published by Greater Washington Publishing
compete both with many other forms of advertising available in their
distribution area as well as with various other free-circulation advertising
periodicals.

The Companys television stations compete for audiences and advertising
revenues with television and radio stations and cable television systems
serving the same or nearby areas, with direct broadcast satellite services and
to a lesser degree with other video programming providers and with other media
such as newspapers and magazines. Cable television systems operate in
substantial portions of the Companys broadcast markets where they compete for
television viewers by importing out-of-market television signals and by
distributing pay-cable, advertiser-supported and other programming that is
originated for cable systems. In addition, direct broadcast satellite (DBS)
services provide nationwide distribution of television programming (including
in some cases pay-per-view programming and programming packages unique to DBS)
using small receiving dishes and digital transmission technologies. In
November 1999, Congress passed the Satellite Home Viewer Improvement Act, which
gives DBS operators the ability to distribute the signals of local television
stations to subscribers in the stations local market area (local-into-local
service), although since April 2000 the DBS operator has been required to
obtain the consent of each local television station included in such a service.
The Companys television stations in Miami, Detroit, Houston, Orlando and San
Antonio currently are being distributed locally by satellite. Under an FCC
rule implementing provisions of this Act, since January 2002 DBS operators that
offer local-into-local service have been required to carry all full-power
television stations that request such carriage in the markets in which the DBS
operators have chosen to offer local-into-local service. A judicial challenge
to this rule has been unsuccessful thus far. The FCC has also adopted rules
that require certain program-exclusivity rules

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applicable to cable television
to be applied to DBS operators, although certain of these rules, primarily
relating to sports blackouts, are subject to reconsideration by the FCC. The
Satellite Home Viewer Improvement Act also continues restrictions on the
transmission of distant network stations by DBS operators. Under these
restrictions, DBS operators are prohibited from distributing in a local market
the signals of any distant network-affiliated television station except in
areas where the over-the-air signal of the same networks local affiliate is
not available or where the local affiliate grants a waiver. Several lawsuits
were filed beginning in 1996 in which plaintiffs (including all four major
broadcast networks and network-affiliated stations including one of the
Companys Florida stations) alleged that certain DBS operators had not been
complying with this restriction. The plaintiffs have entered into a settlement
with
DBS operator DirecTV, under which it will discontinue distant-network service
to certain subscribers and alter the method by which it determines eligibility
for this service. Litigation against DBS operator EchoStar is continuing. The
Satellite Home Viewer Improvement Act also provides that certain
distant-network subscribers whose service would have been discontinued as a
result of this litigation will continue to have access to distant-network
service through 2004. In addition to the matters discussed above, the
Companys television stations may also become subject to increased competition
from low-power television stations, wireless cable services, satellite master
antenna systems (which can carry pay-cable and similar program material) and
prerecorded video programming. Further, the deployment of digital and other
improved television technologies may enhance the ability of some of these other
video providers to compete more effectively for viewers with the local
television broadcasting stations owned by the Company.

Cable television systems operate in a highly competitive environment. In
addition to competing with the direct reception of television broadcast signals
by the viewers own antenna, such systems (like existing television stations)
are subject to competition from various other forms of television program
delivery. In particular, DBS services (which are discussed in more detail in
the preceding paragraph) have been growing rapidly and are now a significant
competitive factor. The ability of DBS operators to provide local-into-local
service (as described above) has increased competition between cable and DBS
operators in markets where local-into-local service is provided. DBS operators
are not required to provide local-into-local service, and some smaller markets
may not receive this service for several years. However, in December 2000
Congress passed and the President signed legislation to provide $1.25 billion
in federal loan guarantees to help satellite carriers (and cable operators)
provide local TV signals to rural areas, and DBS operators have stated that
they intend to provide local-into-local service in a greater number of markets
in the future. In addition, if the Department of Justice and the FCC approve
the proposed merger of EchoStar and Direct TV, the combined entity would be
able to expand local-into-local service into many more markets by using
satellite transmission capacity currently taken up by duplicative national and
local channels. Local-into-local service is not yet offered in most markets in
which the Company provides cable television service, but such services could be
launched by DBS operators at any time. The Companys cable television systems
also compete with wireless cable services in several of their markets and may
face additional competition from such services in the future. Moreover, the
Telecommunications Act of 1996 permits telephone companies to own and operate
cable television systems in the same areas where they provide telephone
services and thus may lead to the provision of competing program delivery
services by local telephone companies.

According to figures compiled by Publishers Information Bureau, Inc., of
the 263 magazines reported on by the Bureau, Newsweekranked seventh in total
advertising revenues in 2001, when it received approximately 2.1% of all
advertising revenues of the magazines included in the report. The magazine
industry is highly competitive both within itself and with other advertising
media which compete for audience and advertising revenue.

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PostNewsweek Tech Medias publications and trade show compete with many
other advertising vehicles and sources of similar information.

Kaplan competes in each of its test preparation product lines with a
variety of regional and national test preparation businesses, as well as with
individual tutors and in-school preparation for standardized tests. Kaplans
Score Learning subsidiary competes with other regional and national learning
centers, individual tutors and other educational businesses that target parents
and students. Kaplans Professional Division competes with other companies
which provide alternative or similar professional training, test-preparation
and consulting services. Kaplans Higher Education Division competes with both
facilities-based and other distance learning providers of similar educational
services, including not-for-profit colleges and universities and for-profit
businesses.

The Companys publications and television broadcasting and cable
operations also compete for readers and viewers time with various other
leisure-time activities.

The future of the Companys various business activities depends on a
number of factors, including the general strength of the economy, population
growth and the level of economic activity in the particular geographic and
other markets it serves, the impact of technological innovations on
entertainment, news and
information dissemination systems, overall advertising revenues, the relative
efficiency of publishing and broadcasting compared to other forms of
advertising and, particularly in the case of television broadcasting and cable
operations, the extent and nature of government regulations.

Executive Officers

The executive officers of the Company, each of whom is elected for a
one-year term at the meeting of the Board of Directors immediately following
the Annual Meeting of Stockholders held in May of each year, are as follows:

Donald E. Graham, age 56, has been Chairman of the Board of the Company
since September 1993 and Chief Executive Officer of the Company since May 1991.
Mr. Graham served as President of the Company from May 1991 until September
1993 and prior to that had been a Vice President of the Company for more than
five years. Mr. Graham also served as Publisher of The Washington Postfrom
1979 until September 2000.

Diana M. Daniels, age 52, has been Vice President and General Counsel of
the Company since November 1988 and Secretary of the Company since September
1991. Ms. Daniels served as General Counsel of the Company from January 1988
to November 1988 and prior to that had been Vice President and General Counsel
of Newsweek, Inc. since 1979.

Ann L. McDaniel, age 46, became Vice President-Human Resources of the
Company in September 2001. Ms. McDaniel had previously served as Senior
Director of Human Resources of the Company since January 2001, and prior to
that held various editorial positions at Newsweekfor more than five years,
most recently as Managing Editor, a position she assumed in November 1998.

John B. Morse, Jr., age 55, has been Vice President-Finance of the Company
since November 1989. He joined the Company as Vice President and Controller in
July 1989, and prior to that had been a partner of Price Waterhouse.

Gerald M. Rosberg, age 55, was named Vice President-Planning and
Development of the Company in February 1999. Mr. Rosberg had previously served
as Vice President-Affiliates at The Washington Post, a position he assumed in
November 1997. Mr. Rosberg joined the Company in January 1996 as The Posts
Director of Affiliate Relations.

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Employees

The Company and its subsidiaries employ approximately 12,300 persons on a
full-time basis.

The Washington Posthas approximately 2,680 full-time employees. About
1,615 of The Posts full-time employees and about 500 part-time employees are
represented by one or another of seven unions. Collective bargaining
agreements are currently in effect with locals of the following unions covering
the full-time and part-time employees and expiring on the dates indicated:
1,489 editorial, newsroom and commercial department employees represented by
the Communications Workers of America (May 18, 2002); 76 paperhandlers and
general workers represented by the Graphic Communications International Union
(November 20, 2004); 43 machinists represented by the International Association
of Machinists (January 10, 2004); 33 photoengravers-platemakers represented by
the Graphic Communications International Union (February 14, 2004); 28
electricians represented by the International Brotherhood of Electrical Workers
(June 17, 2004); 36 engineers, carpenters and painters represented by the
International Union of Operating Engineers (March 31, 2002); and 297 mailers
and 111 mailroom helpers represented by the Communications Workers of America
(May 18, 2003).

Washingtonpost.Newsweek Interactive has approximately 240 full-time and 35
part-time employees, none of whom is represented by a union.

Of the approximately 280 full-time and 105 part-time employees at The
Daily Herald Company, about 65 full-time and 25 part-time employees are
represented by one or another of three unions. The newspapers collective
bargaining agreement with the Graphic Communications International Union, which
represents press operators, expires on March 15, 2005 and its agreement
with the International Brotherhood of Teamsters, which represents bundle
haulers, will expire on September 22, 2003. The Newspapers agreement with the
Communications Workers of America, which represents printers and mailers,
expired on October 31, 2001, and a new agreement is currently being negotiated.

Newsweek has approximately 750 full-time employees (including about 155
editorial employees represented by the Communications Workers of America under
a collective bargaining agreement which will expire in December 2003).

The Companys broadcasting operations have approximately 965 full-time
employees, of whom about 240 are union-represented. Of the eight collective
bargaining agreements covering union-represented employees, two have expired
and are being renegotiated. Two other collective bargaining agreements will
expire in 2002.

The Companys Cable Television Division has approximately 1,600 full-time
employees. Kaplan and its subsidiary companies together employ approximately
4,990 persons on a full-time basis (which number does not include substantial
numbers of part-time employees who serve in instructional and clerical
capacities). Post-Newsweek Media, Inc. has approximately 675 full-time and 130
part-time employees. Robinson Terminal Warehouse Corporation (the Companys
newsprint warehousing and distribution subsidiary) and Greater Washington
Publishing each employ fewer than 100 persons. None of these units employees
is represented by a union.

Forward-Looking Statements

All public statements made by the Company and its representatives which
are not statements of historical fact, including certain statements in this
Annual Report on Form 10-K and in the Companys 2001 Annual Report to
Stockholders, are forward-looking statements within the meaning of the

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Private Securities Litigation Reform Act of 1995. Forward-looking statements
include comments about the Companys business strategies and objectives, the
prospects for growth in the Companys various business operations, and the
Companys future financial performance. As with any projection or forecast,
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. In addition to the various matters discussed
elsewhere in this Annual Report on Form 10-K (including the financial
statements and other items filed herewith), specific factors identified by the
Company that might cause such a difference include the following: changes in
prevailing economic conditions, particularly in the specific geographic and
other markets served by the Company; actions of competitors, including price
changes and the introduction of competitive service offerings; changes in the
preferences of readers, viewers and advertisers, particularly in response to
the growth of Internet-based media; changes in communications and broadcast
technologies; the effects of changing cost or availability of raw materials,
including changes in the cost or availability of newsprint and magazine body
paper; changes in the extent to which standardized tests are used in the
admissions process by colleges and graduate schools; changes in the extent to
which licensing or proficiency examinations are used to qualify individuals to
pursue certain careers; changes in laws or regulations, including changes that
affect the way business entities are taxed; and changes in accounting
principles or in the way such principles are applied.

Item 2. Properties.

The Company owns the principal offices of The Washington Postin downtown
Washington, D.C., including both a seven-story building in use since 1950 and a
connected nine-story office building on contiguous property completed in 1972
in which the Companys principal executive offices are located. Additionally,
the Company owns land on the corner of 15th and L Streets, N.W., in Washington,
D.C., adjacent to The Washington Postoffice building. This land is leased on
a long-term basis to the owner of a multi-story office building which was
constructed on the site in 1982. The Company rents a number of floors in this
building. The Company also owns and occupies a small office building on L
Street which is next to The Posts downtown office building.

In 1980 the Company built a printing plant on 13 acres of land owned by
the Company in Fairfax County, Virginia, and in 1998 completed an expansion of
that facility. Also in 1998 the Company completed construction of a new
printing plant and distribution facility for The Poston a 17-acre tract of
land in Prince Georges County, Maryland which was purchased by the Company in
1996. In addition, the Company owns undeveloped land near Dulles Airport in
Fairfax County, Virginia (39 acres) and in Prince Georges County, Maryland (34
acres).

The Heraldowns its plant and office building in Everett, Washington; it
also owns two warehouses adjacent to its plant and a small office building in
Lynnwood, Washington.

Post-Newsweek Media, Inc. owns a two-story brick building that serves as
its headquarters and as headquarters for The Gazette Newspapersand a separate
two-story brick building that houses its Montgomery County commercial printing
business. All of these properties are located in Gaithersburg, Maryland. In
addition, Post-Newsweek Media, Inc. owns a one-story brick building in Waldorf,
Maryland that houses its Charles County commercial printing business and also
serves as the headquarters for two of the Southern Maryland Newspapers. The
other editorial and sales offices for The Gazette Newspapersand the Southern
Maryland Newspapersare located in leased premises. The PostNewsweek Tech
Media Division leases office space in Washington, D.C., Silver Spring,
Maryland, Fairfax, Virginia and San Francisco, California.

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The principal offices of Newsweek are located at 251 West 57th Street in
New York City, where Newsweek rents space on nine floors. The lease on this
space will expire in 2009 but is renewable for a 15-year period at Newsweeks
option at rentals to be negotiated or arbitrated. Budget Travels offices are
also located in New York City where they occupy premises under a lease which
expires in 2010. In 1997 Newsweek sold its Mountain Lakes, N.J. facility to a
third party and leased back a portion of this building to house its accounting,
production and distribution departments. The lease on this space will expire
in 2007 but is renewable for two 5-year periods at Newsweeks option.

The headquarters offices of the Companys broadcasting operations are
located in Detroit, Michigan in the same facilities that house the offices and
studios of WDIV. That facility and those that house the operations of each of
the Companys other television stations are all owned by subsidiaries of the
Company, as are the related tower sites (except in Houston, Orlando and
Jacksonville where the tower sites are 50% owned).

The headquarters offices of the Cable Television Division are located in a
three-story office building in Phoenix, Arizona which was purchased by Cable
One in 1998. The majority of the offices and head-end facilities of the
Divisions individual cable systems are located in buildings owned by Cable
One. Substantially all the tower sites used by the Division are leased.

Robinson Terminal Warehouse Corporation owns two wharves and several
warehouses in Alexandria, Virginia. These facilities are adjacent to the
business district and occupy approximately seven acres of land. Robinson also
owns two partially developed tracts of land in Fairfax County, Virginia,
aggregating about 22 acres. These tracts are near The Washington Posts
Virginia printing plant and include several warehouses. In 1992 Robinson
purchased approximately 23 acres of undeveloped land on the Potomac River in
Charles County, Maryland, for the possible construction of additional warehouse
capacity.

Kaplan owns a total of eight buildings including a six-story building
located at 131 West 56th Street in New York City, which serves as an
educational center primarily for foreign students, and a 2,300 square foot
office condominium in Chapel Hill, North Carolina which it utilizes for its
Test Prep business. Kaplan also owns a 15,000 square foot three-story building
in Berkeley, California utilized for its foreign and Test Prep businesses.
Kaplans Quest subsidiary owns a 39,000 square foot four-story brick building
and a 19,000 square foot two-story brick building in Lincoln, Nebraska which
are used by the Lincoln School of Commerce, a 25,000 square foot one-story
building in Omaha, Nebraska used by the Nebraska College of Business, a 131,000
square foot five-story brick building in Manchester, New Hampshire used by
Hesser College, and an 18,000 square foot one-story brick building in Dayton,
Ohio used by the Ohio Institute of Photography and Technology. Kaplans
principal educational center in New York City for other than international
students is located at 16 Cooper Square, where Kaplan rents two floors under a
lease expiring in 2013. Kaplans distribution facilities are located in a
169,000 square foot warehouse in Aurora, Illinois which has been rented under a
lease which expires in 2010. Kaplans headquarters offices are located at 888
Seventh Avenue in New York City, where Kaplan rents space on three floors under
a lease which expires in 2007. All other Kaplan facilities (including
administrative offices and instructional locations) occupy leased premises.

The offices of Washingtonpost.Newsweek Interactive are located in
Arlington, Virginia, and the offices of Greater Washington Publishing are
located in Fairfax, Virginia. The office space for each of these units is
leased.

24



---



##### 



Item 3. Legal Proceedings.

The Company, its wholly owned subsidiary The Gazette Newspapers, Inc. (now
Post-Newsweek Media, Inc.), and the Washington Suburban Press Network, Inc. (a
corporation jointly owned by the Gazette and another media investor), are
parties to an antitrust lawsuit filed on February 28, 2001, by the owners of
several local Maryland newspapers in the United States District Court for the
District of Maryland. This suit, which followed the Gazettes acquisition of
the Southern Maryland Newspapers, alleges that the Company, the Gazette, and
the Washington Suburban Press Network, Inc. have combined to restrain trade in
the community newspaper market in Montgomery, Prince Georges, and several
other counties in Maryland in violation of federal and state antitrust
statutes. The suit also includes state law claims against the Company and the
Gazette of unfair competition, tortious interference with contract, and
tortious interference with advantageous economic relations. The suit seeks
unspecified damages (which in certain instances may be trebled by statute) and
attorneys fees, as well as injunctive relief (including the divestiture of the
Gazette by the Company). On August 9, 2001, the Court dismissed several of
plaintiffs claims. On August 17, 2001, plaintiffs filed an Amended Complaint
alleging substantially similar violations of law and seeking similar relief.
On September 10, 2001, the Company and the Gazette filed an answer denying all
allegations of illegal conduct. The Court set a discovery deadline of April 9,
2002, and a motions deadline of May 15, 2002; a trial date has not been set.
In addition, the Company has learned that both the Antitrust Division of the
United States Department of Justice and the Antitrust Division of the Maryland
Attorney Generals Office were asked in early 2001 to review the Gazettes
acquisition of the Southern Maryland Newspapers, and later in 2001 the Maryland
Attorney Generals Office requested certain information from the Company
concerning the commercial printing business in suburban Maryland. However to
date neither agency has challenged the acquisition of the Southern Maryland
Newspapers. The Company and its subsidiaries are also defendants in various
other civil lawsuits that have arisen in the ordinary course of their
businesses, including actions for libel and invasion of privacy. While it is
not possible to predict the outcome of these lawsuits and other matters, in the
opinion of management their ultimate dispositions should not have a material
adverse effect on the financial position, liquidity or results of operations of
the Company.

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

Not applicable.

PART II

Item 5. Market for the Registrants Common Equity and Related Stockholder Matters.

The Companys Class B Common Stock is traded on the New York Stock
Exchange under the symbol WPO. The Companys Class A Common Stock is not
publicly traded.

The high and low sales prices of the Companys Class B Common Stock during
the last two years were:
25

|                   |  |      |     |      |  |      |     |     |  |   |     |  |  |   |     | 
|------------------ |  | ---- | --- | ---- |  | ---- | --- | --- |  | - | --- |  |  | - | --- | 
|                   |  | 2001 |     | 2000
|                   |  |      |     |     
|Quarter            |  | High |     | Low  |  | High |     | Low
|                   |  |      |     |      |  |      |     |    
|January  March    |  | $    | 652 |      |  | $    | 524 |     |  | $ | 587 |  |  | $ | 472 | 
|                  
|                  
|                  
|                  
|April  June       |  |      | 608 |      |  |      | 542 |     |  |   | 541 |  |  |   | 471 | 
|                  
|                  
|                  
|                  
|July  September   |  |      | 599 |      |  |      | 470 |     |  |   | 528 |  |  |   | 467 | 
|                  
|                  
|                  
|                  
|October  December |  |      | 540 |      |  |      | 479 |     |  |   | 629 |  |  |   | 508 | 

During 2001 the Company repurchased 714 shares of its Class B Common
Stock.

At February 19, 2002, there were 29 holders of record of the Companys
Class A Common Stock and 1,063 holders of record of the Companys Class B
Common Stock.

Both classes of the Companys Common Stock participate equally as to
dividends. Quarterly dividends were paid at the rate of $1.40 per share during
2001 and $1.35 per share during 2000.

Item 6. Selected Financial Data.

See the information for the years 1997 through 2001 contained in the table
titled Ten-Year Summary of Selected Historical Financial Data which is
included in this Annual Report on Form 10-K and listed in the index to
financial information on page 30 hereof (with only the information for such
years to be deemed filed as part of this Annual Report on Form 10-K).

Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.

See the information contained under the heading Managements Discussion
and Analysis of Results of Operations and Financial Condition which is
included in this Annual Report on Form 10-K and listed in the index to
financial information on page 30 hereof.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

The Company is exposed to market risk in the normal course of its business
due primarily to its ownership of marketable equity securities which are
subject to equity price risk and to its borrowing activities which are subject
to interest rate risk.

Equity Price Risk

The Company has common stock investments in several publicly traded
companies (as discussed in Note C to the Companys consolidated Financial
Statements) that are subject to market price volatility. The fair value of
these common stock investments totaled $235,405,000 at December 30, 2001.

The following table presents the hypothetical change in the aggregate fair
value of the Companys common stock investments in publicly traded companies
assuming hypothetical stock price fluctuations of plus or minus 10%, 20% and
30% in the market price of each stock included therein:

| |  |                                   |             |                                   |  |      |             |      |  |      |             |      |  |   |             |  |  |   |             |  |  |   |             | 
| |  | --------------------------------- | ----------- | --------------------------------- |  | ---- | ----------- | ---- |  | ---- | ----------- | ---- |  | - | ----------- |  |  | - | ----------- |  |  | - | ----------- | 
| |  | Value of Common Stock Investments |             | Value of Common Stock Investments
| |  | Assuming Indicated Decrease in    |             | Assuming Indicated Increase in   
| |  | Each Stock's Price                |             | Each Stock's Price               
| |  |                                  
| |  | -30%                              |             | -20%                              |  | -10% |             | +10% |  | +20% |             | +30%
| |  |                                   |             |                                   |  |      |             |      |  |     
| |  | $                                 | 164,783,500 |                                   |  | $    | 188,324,000 |      |  | $    | 211,864,500 |      |  | $ | 258,945,500 |  |  | $ | 282,486,000 |  |  | $ | 306,026,500 | 

During the 12 quarters since the end of the Companys 1998 fiscal year,
market price movements caused the aggregate fair value of the Companys common
stock investments in publicly

26



---



##### 



traded companies to change by approximately 20%
in one quarter, 15% in two quarters and by less then 10% in each of the other
nine quarters.

Interest Rate Risk

At December 30, 2001, the Company had short-term commercial paper
borrowings outstanding of $533,896,000 at an average interest rate of 2.0%. At
December 31, 2000, the Company had commercial paper borrowings outstanding of
$525,367,000 at an average interest rate of 6.6%. The Company is
exposed to interest rate risk with respect to such borrowings since an increase
in commercial paper borrowing rates would increase the Companys interest
expense on its commercial paper borrowings. Assuming a hypothetical 100 basis
point increase in its average commercial paper borrowing rates from those that
prevailed during the Companys 2001 and 2000 fiscal years, the Companys
interest expense would have been greater by approximately $5,700,000 in fiscal
2001 and by approximately $4,600,000 in fiscal 2000.

The Companys long-term debt consists of $400,000,000 principal amount of
5.5% unsecured notes due February 15, 2009 (the Notes). At December 30,
2001, the aggregate fair value of the Notes, based upon quoted market prices,
was $387,720,000. An increase in the market rate of interest applicable to the
Notes would not increase the Companys interest expense with respect to the
Notes since the rate of interest the Company is required to pay on the Notes is
fixed, but such an increase in rates would affect the fair value of the Notes.
Assuming, hypothetically, that the market interest rate applicable to the Notes
was 100 basis points higher than the Notes stated interest rate of 5.5%, the
fair value of the Notes would be approximately $377,464,000. Conversely, if
the market interest rate applicable to the Notes was 100 basis points lower
than the Notes stated interest rate, the fair value of the Notes would then be
approximately $424,107,000.

Item 8. Financial Statements and Supplementary Data.

See the Companys Consolidated Financial Statements at December 30, 2001,
and for the periods then ended, together with the report of
PricewaterhouseCoopers LLP thereon and the information contained in Note M to
said Consolidated Financial Statements titled Summary of Quarterly Operating
Results and Comprehensive Income (Unaudited), which are included in this
Annual Report on Form 10-K and listed in the index to financial information on
page 30 hereof.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Not applicable.

PART III

Item 10. Directors and Executive Officers of the Registrant.

The information contained under the heading Executive Officers in Item 1
hereof and the information contained under the headings Nominees for Election
by Class A Stockholders, Nominees for Election by Class B Stockholders and
Section 16(a) Beneficial Ownership Reporting Compliance in the definitive
Proxy Statement for the Companys 2002 Annual Meeting of Stockholders is
incorporated herein by reference thereto.

Item 11. Executive Compensation.

The information contained under the headings Compensation of Directors,
Executive Compensation, Retirement Plans, Compensation Committee Report on
Executive Compensation, Compensation Committee Interlocks and Insider
Participation, and Performance Graph in the

27



---



##### 



definitive Proxy Statement for
the Companys 2002 Annual Meeting of Stockholders is incorporated herein by
reference thereto.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

The information contained under the heading Stock Holdings of Certain
Beneficial Owners and Management in the definitive Proxy Statement for the
Companys 2002 Annual Meeting of Stockholders is incorporated herein by
reference thereto.

Item 13. Certain Relationships and Related Transactions.

The information contained under the heading Certain Relationships and
Related Transactions in the definitive Proxy Statement for the Companys 2002
Annual Meeting of Stockholders is incorporated herein by reference thereto.

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a)  The following documents are filed as part of this report:



| |                                                           
| | ----------------------------------------------------------
| | (i) Financial Statements and Financial Statement Schedules



| |                                                                   
| | ------------------------------------------------------------------
| | As listed in the index to financial information on page 30 hereof.



| |              
| | -------------
| | (ii) Exhibits



| |                                                      
| | -----------------------------------------------------
| | As listed in the index to exhibits on page 62 hereof.

(b)  Reports on Form 8-K.



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

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, on March 25, 2002.

| |                                          |                                                             | 
| | ---------------------------------------- | ----------------------------------------------------------- | 
| | THE WASHINGTON POST COMPANY
(Registrant)
|
| | By                                       | John B. Morse, Jr.John B. Morse, Jr.
Vice President-Finance

28



---



##### 



Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on March 25, 2002:

|                         |  |                                                                                             
|------------------------ |  | --------------------------------------------------------------------------------------------
|Donald E. Graham         |  | Chairman of the Board and Chief
Executive Officer (Principal Executive
Officer) and Director
|                        
|John B. Morse, Jr.       |  | Vice President-Finance (Principal
Financial and Accounting Officer)                         
|                        
|Warren E. Buffett        |  | Director                                                                                    
|                        
|Daniel B. Burke          |  | Director                                                                                    
|                        
|Barry Diller             |  | Director                                                                                    
|                        
|John L. Dotson, Jr.      |  | Director                                                                                    
|                        
|George J. Gillespie, III |  | Director                                                                                    
|                        
|Ralph E. Gomory          |  | Director                                                                                    
|                        
|Donald R. Keough         |  | Director                                                                                    
|                        
|Richard D. Simmons       |  | Director                                                                                    
|                        
|George W. Wilson         |  | Director                                                                                    

| |    |                                                             | 
| | -- | ----------------------------------------------------------- | 
| | By | John B. Morse, Jr.John B. Morse, Jr.
Vice President-Finance

An original power of attorney authorizing Donald E. Graham, John B. Morse,
Jr. and Diana M. Daniels, and each of them, to sign all reports required to be
filed by the Registrant pursuant to the Securities Exchange Act of 1934 on
behalf of the above-named directors and officers has been filed with the
Securities and Exchange Commission.

29



---



##### 



INDEX TO FINANCIAL INFORMATION



---

THE WASHINGTON POST COMPANY

|                                                                                                  |                                                                                                                      |                                        |    |      |    | 
|------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------- | -------------------------------------- | -- | ---- | -- | 
|                                                                                                  |                                                                                                                      |                                        |    | Page
|                                                                                                  |                                                                                                                      |                                        |    |     
|Financial Statements and Schedules:                                                               |                                                                                                                      |                                        |    |     
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Report of Independent Accountants                                                                                    |                                        |    | 31   |   
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Consolidated Statements of Income for the Three Fiscal Years
Ended December 30, 2001                                 |                                        |    | 32   |   
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Consolidated Statements of Comprehensive Income for the Three
Fiscal Years Ended December 30, 2001                   |                                        |    | 32   |   
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Consolidated Balance Sheets at December 30, 2001 and December 31, 2000                                               |                                        |    | 33   |   
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Consolidated Statements of Cash Flows for the Three Fiscal Years
Ended December 30, 2001                             |                                        |    | 35   |   
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Consolidated Statements of Changes in Common Shareholders Equity for
the Three Fiscal Years Ended December 30, 2001 |                                        |    | 36   |   
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Notes to Consolidated Financial Statements                                                                           |                                        |    | 37   |   
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Financial Statement Schedules for the Three Fiscal Years Ended
December 30, 2001:                                    |                                        |    |      |   
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  |                                                                                                                      | II  Valuation and Qualifying Accounts |    |      | 50 | 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Managements Discussion and Analysis of Results of Operations and Financial
Condition (Unaudited) |                                                                                                                      |                                        | 51 |     
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Ten-Year Summary of Selected Historical Financial Data (Unaudited)                                |                                                                                                                      |                                        | 60 |     



---

All other schedules have been omitted either because they are not
applicable or because the required information is included in the consolidated
financial statements or the notes thereto referred to above.

30



---



##### 



REPORT OF INDEPENDENT ACCOUNTANTS

To The Board of Directors and Shareholders of
The Washington Post Company

In our opinion, the consolidated financial statements referred to under Item
14(a)(i) on page 28 and listed in the index on page 30 present fairly, in all
material respects, the financial position of The Washington Post Company and
its subsidiaries at December 30, 2001 and December 31, 2000, and the results of
their operations and their cash flows for each of the three fiscal years in the
period ended December 30, 2001, in conformity with accounting principles
generally accepted in the United States of America. In addition, in our
opinion, the financial statement schedule referred to under Item 14(a)(i) on
page 28 presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements. These financial statements and financial statement schedule are the responsibility of the Companys
management; our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States of
America which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.



PricewaterhouseCoopers LLP

Washington, D.C.
January 25, 2002

31



---



##### 



CONSOLIDATED STATEMENTS OF INCOME

|                                         |                                                |      |                   |           |              |      |            |           |   |   |           |           |  
|---------------------------------------- | ---------------------------------------------- | ---- | ----------------- | --------- | ------------ | ---- | ---------- | --------- | - | - | --------- | --------- | -
|                                         |                                                |      | Fiscal year ended
|                                         |                                                |      |                  
|                                         |                                                |      | December 30,      |           | December 31, |      | January 2,
|(in thousands, except per share amounts) |                                                | 2001 |                   | 2000      |              | 2000
|                                         |                                                |      |                   |           |              |     
|                                         |                                                |      |                   |           |              |      |            |           |   |   |           |          
|                                        
|                                        
|                                        
|                                        
|Operating Revenues                       |                                                |      |                   |           |              |      |            |           |   |   |           |          
|                                        
|                                        
|                                        
|                                        
|                                         | Advertising                                    |      | $                 | 1,209,327 |              |      | $          | 1,396,583 |   |   | $         | 1,330,560 |  
|                                        
|                                        
|                                        
|                                        
|                                         | Circulation and subscriber                     |      |                   | 658,620   |              |      |            | 601,258   |   |   |           | 579,693   |  
|                                        
|                                        
|                                        
|                                        
|                                         | Education                                      |      |                   | 493,271   |              |      |            | 352,753   |   |   |           | 240,075   |  
|                                        
|                                        
|                                        
|                                        
|                                         | Other                                          |      |                   | 55,455    |              |      |            | 61,556    |   |   |           | 65,243    |  
|                                         |                                                |      |                   |           |              |      |            |           |   |   |           |           |  
|                                         |                                                |      | 2,416,673         |           |              |      | 2,412,150  |           |   |   | 2,215,571 |          
|                                         |                                                |      |                   |           |              |      |            |           |   |   |           |           |  
|Operating Costs and Expenses             |                                                |      |                   |           |              |      |            |           |   |   |           |          
|                                        
|                                        
|                                        
|                                        
|                                         | Operating                                      |      |                   | 1,392,750 |              |      |            | 1,308,063 |   |   |           | 1,189,734 |  
|                                        
|                                        
|                                        
|                                        
|                                         | Selling, general, and administrative           |      |                   | 586,758   |              |      |            | 583,623   |   |   |           | 474,586   |  
|                                        
|                                        
|                                        
|                                        
|                                         | Depreciation of property, plant, and equipment |      |                   | 138,300   |              |      |            | 117,948   |   |   |           | 104,235   |  
|                                        
|                                        
|                                        
|                                        
|                                         | Amortization of goodwill and other intangibles |      |                   | 78,933    |              |      |            | 62,634    |   |   |           | 58,563    |  
|                                         |                                                |      |                   |           |              |      |            |           |   |   |           |           |  
|                                         |                                                |      | 2,196,741         |           |              |      | 2,072,268  |           |   |   | 1,827,118 |          
|                                         |                                                |      |                   |           |              |      |            |           |   |   |           |           |  
|Income from Operations                   |                                                |      | 219,932           |           |              |      | 339,882    |           |   |   | 388,453   |          
|                                        
|                                        
|                                        
|                                        
|                                         | Equity in losses of affiliates                 |      |                   | (68,659   | )            |      |            | (36,466   | ) |   |           | (8,814    | )
|                                        
|                                        
|                                        
|                                        
|                                         | Interest income                                |      |                   | 2,167     |              |      |            | 967       |   |   |           | 1,097     |  
|                                        
|                                        
|                                        
|                                        
|                                         | Interest expense                               |      |                   | (49,640   | )            |      |            | (54,731   | ) |   |           | (26,786   | )
|                                        
|                                        
|                                        
|                                        
|                                         | Other income (expense), net                    |      |                   | 283,739   |              |      |            | (19,782   | ) |   |           | 21,435    |  
|                                         |                                                |      |                   |           |              |      |            |           |   |   |           |           |  
|Income Before Income Taxes               |                                                |      | 387,539           |           |              |      | 229,870    |           |   |   | 375,385   |          
|                                        
|                                        
|                                        
|                                        
|Provision for Income Taxes               |                                                |      | 157,900           |           |              |      | 93,400     |           |   |   | 149,600   |          
|                                         |                                                |      |                   |           |              |      |            |           |   |   |           |           |  
|                                        
|                                        
|                                        
|                                        
|Net Income                               |                                                |      | 229,639           |           |              |      | 136,470    |           |   |   | 225,785   |          
|                                        
|                                        
|                                        
|                                        
|Redeemable Preferred Stock Dividends     |                                                |      | (1,052            | )         |              |      | (1,026     | )         |   |   | (950      | )        
|                                         |                                                |      |                   |           |              |      |            |           |   |   |           |           |  
|Net Income Available for Common Shares   |                                                | $    | 228,587           |           |              | $    | 135,444    |           |   | $ | 224,835   |          
|                                         |                                                |      |                   |           |              |      |            |           |   |   |           |           |  
|Basic Earnings per Common Share          |                                                | $    | 24.10             |           |              | $    | 14.34      |           |   | $ | 22.35     |          
|                                         |                                                |      |                   |           |              |      |            |           |   |   |           |           |  
|Diluted Earnings per Common Share        |                                                | $    | 24.06             |           |              | $    | 14.32      |           |   | $ | 22.30     |          
|                                         |                                                |      |                   |           |              |      |            |           |   |   |           |           |  

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

|                                  |                                                                                     |      |                   |        |              |      |            |        |   |   |         |         |  
|--------------------------------- | ----------------------------------------------------------------------------------- | ---- | ----------------- | ------ | ------------ | ---- | ---------- | ------ | - | - | ------- | ------- | -
|                                  |                                                                                     |      | Fiscal year ended
|                                  |                                                                                     |      |                  
|                                  |                                                                                     |      | December 30,      |        | December 31, |      | January 2,
|(in thousands)                    |                                                                                     | 2001 |                   | 2000   |              | 2000
|                                  |                                                                                     |      |                   |        |              |     
|Net Income                        |                                                                                     | $    | 229,639           |        |              | $    | 136,470    |        |   | $ | 225,785 |        
|                                 
|                                 
|                                 
|                                 
|Other Comprehensive Income (Loss) |                                                                                     |      |                   |        |              |      |            |        |   |   |         |        
|                                 
|                                 
|                                 
|                                 
|                                  | Foreign currency translation adjustments                                            |      |                   | (3,104 | )            |      |            | (1,685 | ) |   |         | (3,289  | )
|                                 
|                                 
|                                 
|                                 
|                                  | Change in net unrealized gain on available-for-sale securities                      |      | 14,528            |        |              |      | 13,527     |        |   |   | (48,176 | )      
|                                 
|                                 
|                                 
|                                 
|                                  | Less reclassification adjustment for
realized losses (gains) included in net income |      |                   | 3,238  |              |      |            | (197   | ) |   |         | (11,995 | )
|                                  |                                                                                     |      |                   |        |              |      |            |        |   |   |         |        
|                                  |                                                                                     |      | 14,662            |        |              |      | 11,645     |        |   |   | (63,460 | )      
|                                 
|                                 
|                                 
|                                 
|                                  | Income tax (expense) benefit related to other
comprehensive income (loss)           |      |                   | (6,987 | )            |      |            | (5,097 | ) |   |         | 23,460  |  
|                                  |                                                                                     |      |                   |        |              |      |            |        |   |   |         |        
|                                  |                                                                                     |      | 7,675             |        |              |      | 6,548      |        |   |   | (40,000 | )      
|                                  |                                                                                     |      |                   |        |              |      |            |        |   |   |         |        
|Comprehensive Income              |                                                                                     | $    | 237,314           |        |              | $    | 143,018    |        |   | $ | 185,785 |        
|                                  |                                                                                     |      |                   |        |              |      |            |        |   |   |         |        

The information on pages 37 through 49 is an integral part of the financial statements.

32



---



##### 



CONSOLIDATED BALANCE SHEETS

|                                                                                      |                                             |      |              |           |              |   |           |           |  
|------------------------------------------------------------------------------------- | ------------------------------------------- | ---- | ------------ | --------- | ------------ | - | --------- | --------- | -
|                                                                                      |                                             |      | December 30, |           | December 31,
|(in thousands)                                                                        |                                             | 2001 |              | 2000     
|                                                                                      |                                             |      |              |          
|                                                                                      |                                             |      |              |           |              |   |           |          
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Assets                                                                                |                                             |      |              |           |              |   |           |          
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Current Assets                                                                        |                                             |      |              |           |              |   |           |          
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      | Cash and cash equivalents                   |      | $            | 31,480    |              |   | $         | 20,345    |  
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      | Investments in marketable equity securities |      |              | 16,366    |              |   |           | 10,948    |  
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      | Accounts receivable, net                    |      |              | 279,328   |              |   |           | 306,016   |  
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      | Federal and state income taxes              |      |              | 10,253    |              |   |           | 12,370    |  
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      | Inventories                                 |      |              | 19,042    |              |   |           | 15,178    |  
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      | Other current assets                        |      |              | 40,388    |              |   |           | 40,210    |  
|                                                                                      |                                             |      |              |           |              |   |           |           |  
|                                                                                      |                                             |      | 396,857      |           |              |   | 405,067   |          
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Property, Plant, and Equipment                                                        |                                             |      |              |           |              |   |           |          
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      | Buildings                                   |      |              | 267,658   |              |   |           | 263,311   |  
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      | Machinery, equipment, and fixtures          |      |              | 1,422,228 |              |   |           | 1,217,282 |  
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      | Leasehold improvements                      |      |              | 79,108    |              |   |           | 70,706    |  
|                                                                                      |                                             |      |              |           |              |   |           |           |  
|                                                                                      |                                             |      | 1,768,994    |           |              |   | 1,551,299 |          
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      | Less accumulated depreciation               |      |              | (794,596  | )            |   |           | (736,781  | )
|                                                                                      |                                             |      |              |           |              |   |           |           |  
|                                                                                      |                                             |      | 974,398      |           |              |   | 814,518   |          
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      | Land                                        |      |              | 34,733    |              |   |           | 38,000    |  
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      | Construction in progress                    |      |              | 89,080    |              |   |           | 74,543    |  
|                                                                                      |                                             |      |              |           |              |   |           |           |  
|                                                                                      |                                             |      | 1,098,211    |           |              |   | 927,061   |          
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Investments in Marketable Equity Securities                                           |                                             |      | 219,039      |           |              |   | 210,189   |          
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Investments in Affiliates                                                             |                                             |      | 80,936       |           |              |   | 131,629   |          
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Goodwill and Other Intangibles,
less accumulatedamortization of $443,282 and $404,513 |                                             |      | 1,205,747    |           |              |   | 1,007,720 |          
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Prepaid Pension Cost                                                                  |                                             |      | 447,688      |           |              |   | 374,084   |          
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Deferred Charges and Other Assets                                                     |                                             |      | 110,620      |           |              |   | 144,993   |          
|                                                                                      |                                             |      |              |           |              |   |           |           |  
|                                                                                      |                                             | $    | 3,559,098    |           |              | $ | 3,200,743 |          
|                                                                                      |                                             |      |              |           |              |   |           |           |  

The information on pages 37 through 49 is an integral part of the financial statements.

33



---



##### 



|                                                                                                                                                                                          |                                                                                   |                                                                                                                                                       |           |              |        |              |           |            |        |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | ------------ | ------ | ------------ | --------- | ---------- | ------ | -
|                                                                                                                                                                                          |                                                                                   |                                                                                                                                                       |           | December 30, |        | December 31,
|(in thousands, except share amounts)                                                                                                                                                      |                                                                                   | 2001                                                                                                                                                  |           | 2000        
|                                                                                                                                                                                          |                                                                                   |                                                                                                                                                       |           |             
|                                                                                                                                                                                         
|Liabilities and Shareholders Equity                                                                                                                                                      |                                                                                   |                                                                                                                                                       |           |              |        |              |           |           
|                                                                                                                                                                                         
|Current Liabilities                                                                                                                                                                       |                                                                                   |                                                                                                                                                       |           |              |        |              |           |           
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                          | Accounts payable and accrued liabilities                                          |                                                                                                                                                       | $         | 298,565      |        |              | $         | 273,076    |       
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                          | Deferred subscription revenue                                                     |                                                                                                                                                       |           | 85,525       |        |              |           | 85,721     |       
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                          | Short-term borrowings                                                             |                                                                                                                                                       |           | 50,000       |        |              |           | 50,000     |       
|                                                                                                                                                                                          |                                                                                   |                                                                                                                                                       |           |              |        |              |           |            |       
|                                                                                                                                                                                          |                                                                                   |                                                                                                                                                       | 434,090   |              |        |              | 408,797   |           
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|Postretirement Benefits Other Than Pensions                                                                                                                                               |                                                                                   |                                                                                                                                                       | 130,824   |              |        |              | 128,764   |           
|                                                                                                                                                                                         
|Other Liabilities                                                                                                                                                                         |                                                                                   |                                                                                                                                                       | 192,540   |              |        |              | 178,029   |           
|                                                                                                                                                                                         
|Deferred Income Taxes                                                                                                                                                                     |                                                                                   |                                                                                                                                                       | 221,949   |              |        |              | 117,731   |           
|                                                                                                                                                                                         
|Long-Term Debt                                                                                                                                                                            |                                                                                   |                                                                                                                                                       | 883,078   |              |        |              | 873,267   |           
|                                                                                                                                                                                          |                                                                                   |                                                                                                                                                       |           |              |        |              |           |            |       
|                                                                                                                                                                                          |                                                                                   |                                                                                                                                                       | 1,862,481 |              |        |              | 1,706,588 |           
|                                                                                                                                                                                          |                                                                                   |                                                                                                                                                       |           |              |        |              |           |            |       
|Commitments and Contingencies                                                                                                                                                             |                                                                                   |                                                                                                                                                       |           |              |        |              |           |           
|                                                                                                                                                                                         
|Redeemable Preferred Stock,Series A, $1 par value, with
a redemption and liquidation value of $1,000 per share;
23,000 shares authorized; 13,132 and 13,148 shares issued
and outstanding |                                                                                   |                                                                                                                                                       | 13,132    |              |        |              | 13,148    |           
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|Preferred Stock,$1 par value; 977,000 shares authorized,
none issued                                                                                                                      |                                                                                   |                                                                                                                                                       |          |              |        |              |          |           
|                                                                                                                                                                                          |                                                                                   |                                                                                                                                                       |           |              |        |              |           |            |       
|Common Shareholders Equity                                                                                                                                                               |                                                                                   |                                                                                                                                                       |           |              |        |              |           |           
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                          | Common stock                                                                      |                                                                                                                                                       |           |              |        |              |           |            |       
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                          |                                                                                   | Class A common stock, $1 par value; 7,000,000 shares
authorized; 1,722,250 and 1,739,250 shares issued and outstanding                                |           |              | 1,722  |              |           |            | 1,739  |  
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                          |                                                                                   | Class B common stock, $1 par value; 40,000,000 shares authorized;
18,277,750 and 18,260,750 shares issued; 7,772,616 and
7,721,225 shares outstanding |           |              | 18,278 |              |           |            | 18,261 |  
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                          | Capital in excess of par value                                                    |                                                                                                                                                       |           | 142,814      |        |              |           | 128,159    |       
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                          | Retained earnings                                                                 |                                                                                                                                                       |           | 3,029,595    |        |              |           | 2,854,122  |       
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                          | Accumulated other comprehensive income (loss), net of taxes                       |                                                                                                                                                       |           |              |        |              |           |            |       
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                          |                                                                                   | Cumulative foreign currency translation adjustment                                                                                                    |           |              | (9,678 | )            |           |            | (6,574 | )
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                          |                                                                                   | Unrealized gain on available-for-sale securities                                                                                                      |           |              | 24,281 |              |           |            | 13,502 |  
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                          | Cost of 10,505,134 and 10,539,525 shares of Class B common stock
held in treasury |                                                                                                                                                       |           | (1,523,527   | )      |              |           | (1,528,202 | )     
|                                                                                                                                                                                          |                                                                                   |                                                                                                                                                       |           |              |        |              |           |            |       
|                                                                                                                                                                                          |                                                                                   |                                                                                                                                                       | 1,683,485 |              |        |              | 1,481,007 |           
|                                                                                                                                                                                          |                                                                                   |                                                                                                                                                       |           |              |        |              |           |            |       
|                                                                                                                                                                                          |                                                                                   | $                                                                                                                                                     | 3,559,098 |              |        | $            | 3,200,743 |           
|                                                                                                                                                                                          |                                                                                   |                                                                                                                                                       |           |              |        |              |           |            |       

The information on pages 37 through 49 is an integral part of the financial statements.

34



---



##### 



CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                     |                                                                                   |                                                                                             |                                                                 |          |                   |         |              |          |            |         |        |          |          |         |  
|---------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | --------------------------------------------------------------- | -------- | ----------------- | ------- | ------------ | -------- | ---------- | ------- | ------ | -------- | -------- | ------- | -
|                                                     |                                                                                   |                                                                                             |                                                                 |          | Fiscal year ended
|                                                     |                                                                                   |                                                                                             |                                                                 |          |                  
|                                                     |                                                                                   |                                                                                             |                                                                 |          | December 30,      |         | December 31, |          | January 2,
|(in thousands)                                       |                                                                                   | 2001                                                                                        |                                                                 | 2000     |                   | 2000   
|                                                     |                                                                                   |                                                                                             |                                                                 |          |                   |        
|                                                     |                                                                                   |                                                                                             |                                                                 |          |                   |         |              |          |            |         |        |         
|                                                    
|                                                    
|                                                    
|                                                    
|Cash Flows from Operating Activities:                |                                                                                   |                                                                                             |                                                                 |          |                   |         |              |          |            |         |        |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Net income                                                                        |                                                                                             | $                                                               | 229,639  |                   |         | $            | 136,470  |            |         | $      | 225,785  |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Adjustments to reconcile net income to net
cash provided by operating activities: |                                                                                             |                                                                 |          |                   |         |              |          |            |         |        |          |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Depreciation of property, plant, and equipment                                              |                                                                 |          | 138,300           |         |              |          | 117,948    |         |        |          | 104,235  |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Amortization of goodwill and other intangibles                                              |                                                                 |          | 78,933            |         |              |          | 62,634     |         |        |          | 58,563   |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Net pension benefit                                                                         |                                                                 |          | (76,945           | )       |              |          | (65,312    | )       |        |          | (84,416  | )      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Early retirement program expense                                                            |                                                                 |          | 3,344             |         |              |          | 29,049     |         |        |          | 2,733    |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Gain from sale or exchange of certain businesses                                            |                                                                 |          | (321,091          | )       |              |          |           |         |        |          |         |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Loss (gain) on disposition of marketable equity
securities and cost method investments, net |                                                                 |          | 511               |         |              |          | (11,588    | )       |        |          | (38,799  | )      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Cost method investment and other write-downs                                                |                                                                 |          | 36,672            |         |              |          | 23,097     |         |        |          | 13,555   |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Equity in losses of affiliates, net of distributions                                        |                                                                 |          | 68,659            |         |              |          | 37,406     |         |        |          | 9,744    |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Provision for deferred income taxes                                                         |                                                                 |          | 97,302            |         |              |          | (7,743     | )       |        |          | 29,988   |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Change in assets and liabilities:                                                           |                                                                 |          |                   |         |              |          |            |         |        |          |          |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   |                                                                                             | Decrease (increase) in accounts receivable, net                 |          |                   | 28,803  |              |          |            | (44,413 | )      |          |          | (28,194 | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   |                                                                                             | (Increase) decrease in inventories                              |          |                   | (3,390  | )            |          |            | (1,265  | )      |          |          | 6,264   |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   |                                                                                             | Increase (decrease) in accounts payable and accrued liabilities |          |                   | 24,756  |              |          |            | 22,192  |        |          |          | (7,749  | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   |                                                                                             | Decrease (increase) in income taxes receivable                  |          |                   | 1,591   |              |          |            | 36,227  |        |          |          | (2,909  | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   |                                                                                             | Decrease in other assets and other liabilities, net             |          |                   | 38,294  |              |          |            | 23,141  |        |          |          | 3,314   |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Other                                                                                       |                                                                 |          | 3,452             |         |              |          | 10,701     |         |        |          | (1,521   | )      
|                                                     |                                                                                   |                                                                                             |                                                                 |          |                   |         |              |          |            |         |        |          |         
|                                                     |                                                                                   |                                                                                             | Net cash provided by operating activities                       |          |                   | 348,830 |              |          |            | 368,544 |        |          |          | 290,593 |  
|                                                     |                                                                                   |                                                                                             |                                                                 |          |                   |         |              |          |            |         |        |          |         
|Cash Flows from Investing Activities:                |                                                                                   |                                                                                             |                                                                 |          |                   |         |              |          |            |         |        |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Investments in certain businesses                                                 |                                                                                             |                                                                 | (104,356 | )                 |         |              | (212,274 | )          |         |        | (90,455  | )       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Net proceeds from sale of businesses                                              |                                                                                             |                                                                 | 61,921   |                   |         |              | 1,650    |            |         |        | 2,000    |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Purchases of property, plant, and equipment                                       |                                                                                             |                                                                 | (224,227 | )                 |         |              | (172,383 | )          |         |        | (130,045 | )       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Purchases of marketable equity securities                                         |                                                                                             |                                                                 |         |                   |         |              |         |            |         |        | (23,332  | )       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Purchases of cost method investments                                              |                                                                                             |                                                                 | (11,675  | )                 |         |              | (42,459  | )          |         |        | (33,549  | )       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Investments in affiliates                                                         |                                                                                             |                                                                 | (21,112  | )                 |         |              | (12,430  | )          |         |        |         |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Proceeds from sale of marketable equity securities                                |                                                                                             |                                                                 | 145      |                   |         |              | 6,332    |            |         |        | 54,805   |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Other                                                                             |                                                                                             |                                                                 | 1,477    |                   |         |              | 8,036    |            |         |        | 12,605   |         
|                                                     |                                                                                   |                                                                                             |                                                                 |          |                   |         |              |          |            |         |        |          |         
|                                                     |                                                                                   | Net cash used in investing activities                                                       |                                                                 |          | (297,827          | )       |              |          | (423,528   | )       |        |          | (207,971 | )      
|                                                     |                                                                                   |                                                                                             |                                                                 |          |                   |         |              |          |            |         |        |          |         
|Cash Flows from Financing Activities:                |                                                                                   |                                                                                             |                                                                 |          |                   |         |              |          |            |         |        |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Issuance of commercial paper, net                                                 |                                                                                             |                                                                 | 10,072   |                   |         |              | 35,071   |            |         |        | 34,087   |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Issuance of notes                                                                 |                                                                                             |                                                                 |         |                   |         |              |         |            |         |        | 397,620  |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Dividends paid                                                                    |                                                                                             |                                                                 | (54,166  | )                 |         |              | (52,024  | )          |         |        | (53,326  | )       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Common shares repurchased                                                         |                                                                                             |                                                                 | (445     | )                 |         |              | (96      | )          |         |        | (425,865 | )       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Proceeds from exercise of stock options                                           |                                                                                             |                                                                 | 4,671    |                   |         |              | 7,056    |            |         |        | 25,151   |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Other                                                                             |                                                                                             |                                                                 |         |                   |         |              | 9,843    |            |         |        |         |         
|                                                     |                                                                                   |                                                                                             |                                                                 |          |                   |         |              |          |            |         |        |          |         
|                                                     |                                                                                   | Net cash used in financing activities                                                       |                                                                 |          | (39,868           | )       |              |          | (150       | )       |        |          | (22,333  | )      
|                                                     |                                                                                   |                                                                                             |                                                                 |          |                   |         |              |          |            |         |        |          |         
|Net Increase (Decrease) in Cash and Cash Equivalents |                                                                                   |                                                                                             | 11,135                                                          |          |                   |         | (55,134      | )        |            |         | 60,289 |         
|                                                    
|                                                    
|                                                    
|                                                    
|Cash and Cash Equivalents at Beginning of Year       |                                                                                   |                                                                                             | 20,345                                                          |          |                   |         | 75,479       |          |            |         | 15,190 |         
|                                                     |                                                                                   |                                                                                             |                                                                 |          |                   |         |              |          |            |         |        |          |         
|Cash and Cash Equivalents at End of Year             |                                                                                   | $                                                                                           | 31,480                                                          |          |                   | $       | 20,345       |          |            | $       | 75,479 |         
|                                                     |                                                                                   |                                                                                             |                                                                 |          |                   |         |              |          |            |         |        |          |         
|Supplemental Cash Flow Information:                  |                                                                                   |                                                                                             |                                                                 |          |                   |         |              |          |            |         |        |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Cash paid during the year for:                                                    |                                                                                             |                                                                 |          |                   |         |              |          |            |         |        |          |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Income taxes                                                                                |                                                                 | $        | 52,600            |         |              | $        | 95,000     |         |        | $        | 125,000  |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Interest, net of amounts capitalized                                                        |                                                                 | $        | 48,000            |         |              | $        | 52,700     |         |        | $        | 16,000   |        

The information on pages 37 through 49 is an integral part of the financial statements.

35



---



##### 



CONSOLIDATED STATEMENTS OF CHANGES IN COMMON SHAREHOLDERS EQUITY

|                           |                                                                                              |       |         |       |         |           |            |          |          |            |             |            |          |       |            |         |   |   |            |        |            |   |        |         |   |   |            |          |  
|-------------------------- | -------------------------------------------------------------------------------------------- | ----- | ------- | ----- | ------- | --------- | ---------- | -------- | -------- | ---------- | ----------- | ---------- | -------- | ----- | ---------- | ------- | - | - | ---------- | ------ | ---------- | - | ------ | ------- | - | - | ---------- | -------- | -
|                           |                                                                                              |       |         |       |         |           |            |          |          |            |             |            |          |       |            |         |   |   | Cumulative |        | Unrealized |   |        |         |  
|                           |                                                                                              |       |         |       |         |           |            |          |          |            |             |            |          |       |            |         |   |   | Foreign    |        | Gain on    |   |        |         |  
|                           |                                                                                              |       | Class A |       | Class B |           | Capital in |          |          |            |             |            | Currency |       | Available- |         |   |   |           
|                           |                                                                                              |       | Common  |       | Common  |           | Excess of  |          | Retained |            | Translation |            | for-Sale |       | Treasury  
|(in thousands)             |                                                                                              | Stock |         | Stock |         | Par Value |            | Earnings |          | Adjustment |             | Securities |          | Stock
|                           |                                                                                              |       |         |       |         |           |            |          |          |            |             |            |          |      
|Balance, January 3, 1999   |                                                                                              | $     | 1,739   |       |         | $         | 18,261     |          |          | $          | 46,199      |            |          | $     | 2,597,217  |         |   | $ | (1,600     | )      |            | $ | 41,980 |         |   | $ | (1,115,693 | )       
|                          
|                          
|                          
|                          
|                           | Net income for the year                                                                      |       |         |       |         |           |            |          |          |            |             |            |          |       |            | 225,785 |   |   |            |        |            |   |        |         |   |   |            |          |  
|                          
|                          
|                          
|                          
|                           | Dividends paid on common stock
$5.20 per share                                              |       |         |       |         |           |            |          |          |            |             |            |          |       |            | (52,376 | ) |   |            |        |            |   |        |         |   |   |            |          |  
|                          
|                          
|                          
|                          
|                           | Dividends paid on redeemable preferred stock                                                 |       |         |       |         |           |            |          |          |            |             |            |          |       |            | (950    | ) |   |            |        |            |   |        |         |   |   |            |          |  
|                          
|                          
|                          
|                          
|                           | Repurchase of 744,095 shares of
Class B common stock                                         |       |         |       |         |           |            |          |          |            |             |            |          |       |            |         |   |   |            |        |            |   |        |         |   |   |            | (425,865 | )
|                          
|                          
|                          
|                          
|                           | Issuance of 90,247 shares of Class B
common stock, net of restricted stock
award forfeitures |       |         |       |         |           |            |          |          |            |             | 16,023     |          |       |            |         |   |   |            |        |            |   |        |         |   |   |            | 10,425   |  
|                          
|                          
|                          
|                          
|                           | Change in foreign currency translation
adjustment (net of taxes)                             |       |         |       |         |           |            |          |          |            |             |            |          |       |            |         |   |   |            | (3,289 | )          |   |        |         |   |   |            |          |  
|                          
|                          
|                          
|                          
|                           | Change in unrealized gain on
available-for-sale securities (net of taxes)                    |       |         |       |         |           |            |          |          |            |             |            |          |       |            |         |   |   |            |        |            |   |        | (36,711 | ) |   |            |          |  
|                          
|                          
|                          
|                          
|                           | Issuance of subsidiary stock (net of taxes)                                                  |       |         |       |         |           |            |          |          |            |             | 34,571     |          |       |            |         |   |   |            |        |            |   |        |         |   |   |            |          |  
|                          
|                          
|                          
|                          
|                           | Tax benefits arising from employee stock plans                                               |       |         |       |         |           |            |          |          |            |             | 12,074     |          |       |            |         |   |   |            |        |            |   |        |         |   |   |            |          |  
|                           |                                                                                              |       |         |       |         |           |            |          |          |            |             |            |          |       |            |         |   |   |            |        |            |   |        |         |   |   |            |         
|Balance, January 2, 2000   |                                                                                              |       | 1,739   |       |         |           | 18,261     |          |          |            | 108,867     |            |          |       | 2,769,676  |         |   |   | (4,889     | )      |            |   | 5,269  |         |   |   | (1,531,133 | )       
|                          
|                          
|                          
|                          
|                           | Net income for the year                                                                      |       |         |       |         |           |            |          |          |            |             |            |          |       |            | 136,470 |   |   |            |        |            |   |        |         |   |   |            |          |  
|                          
|                          
|                          
|                          
|                           | Dividends paid on common stock
$5.40 per share                                              |       |         |       |         |           |            |          |          |            |             |            |          |       |            | (50,998 | ) |   |            |        |            |   |        |         |   |   |            |          |  
|                          
|                          
|                          
|                          
|                           | Dividends paid on redeemable preferred stock                                                 |       |         |       |         |           |            |          |          |            |             |            |          |       |            | (1,026  | ) |   |            |        |            |   |        |         |   |   |            |          |  
|                          
|                          
|                          
|                          
|                           | Repurchase of 200 shares of
Class B common stock                                             |       |         |       |         |           |            |          |          |            |             |            |          |       |            |         |   |   |            |        |            |   |        |         |   |   |            | (96      | )
|                          
|                          
|                          
|                          
|                           | Issuance of 21,279 shares of Class B
common stock, net of restricted stock
award forfeitures |       |         |       |         |           |            |          |          |            |             | 4,433      |          |       |            |         |   |   |            |        |            |   |        |         |   |   |            | 3,027    |  
|                          
|                          
|                          
|                          
|                           | Change in foreign currency translation
adjustment (net of taxes)                             |       |         |       |         |           |            |          |          |            |             |            |          |       |            |         |   |   |            | (1,685 | )          |   |        |         |   |   |            |          |  
|                          
|                          
|                          
|                          
|                           | Change in unrealized gain on
available-for-sale securities (net of taxes)                    |       |         |       |         |           |            |          |          |            |             |            |          |       |            |         |   |   |            |        |            |   |        | 8,233   |   |   |            |          |  
|                          
|                          
|                          
|                          
|                           | Issuance of subsidiary stock (net of taxes)                                                  |       |         |       |         |           |            |          |          |            |             | 13,332     |          |       |            |         |   |   |            |        |            |   |        |         |   |   |            |          |  
|                          
|                          
|                          
|                          
|                           | Tax benefits arising from employee stock plans                                               |       |         |       |         |           |            |          |          |            |             | 1,527      |          |       |            |         |   |   |            |        |            |   |        |         |   |   |            |          |  
|                           |                                                                                              |       |         |       |         |           |            |          |          |            |             |            |          |       |            |         |   |   |            |        |            |   |        |         |   |   |            |         
|Balance, December 31, 2000 |                                                                                              |       | 1,739   |       |         |           | 18,261     |          |          |            | 128,159     |            |          |       | 2,854,122  |         |   |   | (6,574     | )      |            |   | 13,502 |         |   |   | (1,528,202 | )       
|                          
|                          
|                          
|                          
|                           | Net income for the year                                                                      |       |         |       |         |           |            |          |          |            |             |            |          |       |            | 229,639 |   |   |            |        |            |   |        |         |   |   |            |          |  
|                          
|                          
|                          
|                          
|                           | Dividends paid on common stock
$5.60 per share                                              |       |         |       |         |           |            |          |          |            |             |            |          |       |            | (53,114 | ) |   |            |        |            |   |        |         |   |   |            |          |  
|                          
|                          
|                          
|                          
|                           | Dividends paid on redeemable preferred stock                                                 |       |         |       |         |           |            |          |          |            |             |            |          |       |            | (1,052  | ) |   |            |        |            |   |        |         |   |   |            |          |  
|                          
|                          
|                          
|                          
|                           | Repurchase of 714 shares of
Class B common stock                                             |       |         |       |         |           |            |          |          |            |             |            |          |       |            |         |   |   |            |        |            |   |        |         |   |   |            | (445     | )
|                          
|                          
|                          
|                          
|                           | Issuance of 35,105 shares of Class B
common stock, net of restricted stock
award forfeitures |       |         |       |         |           |            |          |          |            |             | 10,639     |          |       |            |         |   |   |            |        |            |   |        |         |   |   |            | 5,120    |  
|                          
|                          
|                          
|                          
|                           | Change in foreign currency translation
adjustment (net of taxes)                             |       |         |       |         |           |            |          |          |            |             |            |          |       |            |         |   |   |            | (3,104 | )          |   |        |         |   |   |            |          |  
|                          
|                          
|                          
|                          
|                           | Change in unrealized gain on
available-for-sale securities (net of taxes)                    |       |         |       |         |           |            |          |          |            |             |            |          |       |            |         |   |   |            |        |            |   |        | 10,779  |   |   |            |          |  
|                          
|                          
|                          
|                          
|                           | Conversion of Class A common stock
to Class B common stock                                   |       |         | (17   | )       |           |            | 17       |          |            |             |            |          |       |            |         |   |   |            |        |            |   |        |         |   |   |            |          |  
|                          
|                          
|                          
|                          
|                           | Tax benefits arising from employee stock plans                                               |       |         |       |         |           |            |          |          |            |             | 4,016      |          |       |            |         |   |   |            |        |            |   |        |         |   |   |            |          |  
|                           |                                                                                              |       |         |       |         |           |            |          |          |            |             |            |          |       |            |         |   |   |            |        |            |   |        |         |   |   |            |         
|Balance, December 30, 2001 |                                                                                              | $     | 1,722   |       |         | $         | 18,278     |          |          | $          | 142,814     |            |          | $     | 3,029,595  |         |   | $ | (9,678     | )      |            | $ | 24,281 |         |   | $ | (1,523,527 | )       
|                           |                                                                                              |       |         |       |         |           |            |          |          |            |             |            |          |       |            |         |   |   |            |        |            |   |        |         |   |   |            |         

The information on pages 37 through 49 is an integral part of the financial statements.

36



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[A] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Washington Post Company (the Company) is a diversified media
organization whose principal operations consist of newspaper publishing
(primarily The Washington Post newspaper), television broadcasting (through
the ownership and operation of six network-affiliated television stations),
the ownership and operation of cable television systems, and magazine
publishing (primarily Newsweek magazine). Through its subsidiary Kaplan, Inc.,
the Company provides educational services for individuals, schools, and
businesses. The Company also owns and operates a number of media web sites for
the primary purpose of developing the Companys newspaper and magazine
publishing businesses on the World Wide Web.

Fiscal Year.The Company reports on a 5253 week fiscal year ending on the
Sunday nearest December 31. The fiscal years 2001, 2000, and 1999, which ended
on December 30, 2001, December 31, 2000, and January 2, 2000, respectively,
included 52 weeks. With the exception of the newspaper publishing operations,
subsidiaries of the Company report on a calendar-year basis.

Principles of Consolidation.The accompanying financial statements include the
accounts of the Company and its subsidiaries; significant intercompany
transactions have been eliminated.

Presentation.Certain amounts in previously issued financial statements have
been reclassified to conform to the 2001 presentation.

Use of Estimates.The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements.
Actual results could differ from those estimates.

Cash Equivalents.Short-term investments with original maturities of 90 days
or less are considered cash equivalents.

Investments in Marketable Equity Securities.The Companys investments in
marketable equity securities are classified as available-for-sale and
therefore are recorded at fair value in the Consolidated Balance Sheets, with
the change in fair value during the period excluded from earnings and recorded
net of tax as a separate component of comprehensive income. Marketable equity
securities that the Company expects to hold long-term are classified as
non-current assets.

Inventories.Inventories are valued at the lower of cost or market. Cost of
newsprint is determined by the first-in, first-out method, and cost of
magazine paper is determined by the specific-cost method.

Property, Plant, and Equipment.Property, plant, and equipment is recorded at
cost and includes interest capitalized in connection with major long-term
construction projects. Replacements and major improvements are capitalized;
maintenance and repairs are charged to operations as incurred.

Depreciation is calculated using the straight-line method over the estimated
useful lives of the property, plant, and equipment: 3 to 20 years for
machinery and equipment, and 20 to 50 years for buildings. The costs of
leasehold improvements are amortized over the lesser of the useful lives or
the terms of the respective leases.

Investments in Affiliates.The Company uses the equity method of accounting
for its investments in and earnings or losses of affiliates that it does not
control but over which it does exert significant influence.

Cost Method Investments.The Company uses the cost method of accounting for
its minority investments in non-public companies where it does not have
significant influence over the operations and management of the investee.
Investments are recorded at the lower of cost or fair value as estimated by
management. Charges recorded to write-down cost method investments to
estimated fair value and gross realized gains or losses upon the sale of cost
method investments are included in Other income (expense), net in the
Consolidated Statements of Income.

Goodwill and Other Intangibles.Goodwill and other intangibles represent the
unamortized excess of the cost of acquiring subsidiary companies over the fair
values of such companies net tangible assets at the dates of acquisition.
Goodwill and other intangibles are being amortized by use of the straight-line
method over periods ranging from 15 to 40 years (with the majority being
amortized over 15 to 25 years). See New Accounting Pronouncements below for
additional discussion.

Long-lived Assets.The recoverability of long-lived assets, including goodwill
and other intangibles, is assessed whenever adverse events and changes in
circumstances indicate that previously anticipated undiscounted cash flows
warrant assessment.

Program Rights.The broadcast subsidiaries are parties to agreements that
entitle them to show syndicated and other programs on television. The costs of
such program rights are recorded when the programs are available for
broadcasting, and such costs are charged to operations as the programming is
aired.

37



---



##### 



Revenue Recognition.Revenue from media advertising is recognized, net of
agency commissions, when the underlying advertisement is published or
broadcast. Revenues from newspaper and magazine subscriptions are recognized
upon delivery. Revenues from newspaper retail sales are recognized upon
delivery, and revenues from magazine retail sales are recognized on the later
of delivery or cover date, with adequate provision made for anticipated sales
returns. Cable subscriber revenue is recognized monthly as services are
delivered. Education revenue is recognized ratably over the period during
which educational services are delivered.

The Company bases its estimates for sales returns on historical experience and
has not experienced significant fluctuations between estimated and actual
return activity. Amounts received from customers in advance of revenue
recognition are deferred as liabilities. Deferred revenue to be earned after
one year is included in Other Liabilities in the Consolidated Balance
Sheets.

Postretirement Benefits Other Than Pensions.The Company provides healthcare
and life insurance benefits for certain retired employees. The expected cost
of providing these postretirement benefits is accrued over the years that
employees render services.

Income Taxes.The provision for income taxes is determined using the asset and
liability approach. Under this approach, deferred income taxes represent the
expected future tax consequences of temporary differences between the carrying
amounts and tax bases of assets and liabilities.

Foreign Currency Translation.Gains and losses on foreign currency
transactions and the translation of the accounts of the Companys foreign
operations where the U.S. dollar is the functional currency are recognized
currently in the Consolidated Statements of Income. Gains and losses on
translation of the accounts of the Companys foreign operations, where the
local currency is the functional currency, and the Companys equity
investments in its foreign affiliates are accumulated and reported as a
separate component of equity and comprehensive income.

Stock-based Compensation.The Company accounts for stock-based compensation
using the intrinsic value method prescribed by Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees. Pro forma
disclosures of net income and earnings per share as if the fair value based
method prescribed by Statement of Financial Accounting Standards (SFAS) No.
123, Accounting for Stock-Based Compensation, had been applied in measuring
compensation expense are provided in Note G.

Sale of Subsidiary/Affiliate Securities.The Company records investment basis
gains arising from the sale of equity interests in subsidiaries and affiliates
that are in the early stages of building their operations as additional
paid-in capital, net of taxes.

New Accounting Pronouncements.In July 2001, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards (SFAS) No.
142, Goodwill and Other Intangible Assets. SFAS No. 142 supersedes APB 17
and provides, among other provisions, that (1) goodwill and indefinite lived
intangible assets will no longer be amortized, (2) goodwill will be tested for
impairment at least annually at the reporting unit level, (3) intangible
assets deemed to have an indefinite life will be tested for impairment at
least annually, and (4) the amortization period of intangible assets with
finite lives will no longer be limited to 40 years. The Company adopted SFAS
No. 142 effective in fiscal 2002 and estimates that the application of its
requirements will result in the cessation of most of the periodic charges
presently being recorded from the amortization of goodwill and other
intangible assets.

[B] ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts receivable at December 30, 2001 and December 31, 2000 consist of the following:

|                                                                                                            |  |      |         |      |  |   |         | 
|----------------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | 
|(in thousands)                                                                                              |  | 2001 |         | 2000
|                                                                                                            |  |      |         |     
|Trade accounts receivable, less estimated
returns, doubtful accounts, and
allowances of $73,248 and $65,198 |  | $    | 261,898 |      |  | $ | 277,788 | 
|                                                                                                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|Other accounts receivable                                                                                   |  |      | 17,430  |      |  |   | 28,228  | 
|                                                                                                            |  |      |         |      |  |   |         | 
|                                                                                                            |  | $    | 279,328 |      |  | $ | 306,016 | 
|                                                                                                            |  |      |         |      |  |   |         | 

Accounts payable and accrued liabilities at December 30, 2001 and December 31, 2000
consist of the following:

|                                          |  |      |         |      |  |   |         | 
|----------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | 
|(in thousands)                            |  | 2001 |         | 2000
|                                          |  |      |         |     
|Accounts payable and accrued expenses     |  | $    | 158,744 |      |  | $ | 163,197 | 
|                                         
|                                         
|                                         
|                                         
|Accrued compensation and related benefits |  |      | 89,061  |      |  |   | 66,169  | 
|                                         
|                                         
|                                         
|                                         
|Deferred tuition revenue                  |  |      | 45,219  |      |  |   | 36,414  | 
|                                         
|                                         
|                                         
|                                         
|Due to affiliates (newsprint)             |  |      | 5,541   |      |  |   | 7,296   | 
|                                          |  |      |         |      |  |   |         | 
|                                          |  | $    | 298,565 |      |  | $ | 273,076 | 
|                                          |  |      |         |      |  |   |         | 

[C] INVESTMENTS

Investments In Marketable Equity Securities.Investments in marketable equity
securities at December 30, 2001 and December 31, 2000 consist of the
following:

|                     |  |      |         |      |  |   |         | 
|-------------------- |  | ---- | ------- | ---- |  | - | ------- | 
|(in thousands)       |  | 2001 |         | 2000
|                     |  |      |         |     
|Total cost           |  | $    | 195,661 |      |  | $ | 199,159 | 
|                    
|                    
|                    
|                    
|Net unrealized gains |  |      | 39,744  |      |  |   | 21,978  | 
|                     |  |      |         |      |  |   |         | 
|Total fair value     |  | $    | 235,405 |      |  | $ | 221,137 | 
|                     |  |      |         |      |  |   |         | 

38



---



##### 



At December 30, 2001 and December 31, 2000, the Companys ownership of 2,634
shares of Berkshire Hathaway Inc. (Berkshire) Class A common stock and 9,845
shares of Berkshire Class B common stock accounted for $219,039,000, or 93
percent, and $210,189,000, or 95 percent, respectively, of the total fair
value of the Companys investments in marketable equity securities. The
remaining investments in marketable equity securities at December 30, 2001 and
December 31, 2000 consisted of common stock investments in various publicly
traded companies, most of which have concentrations in Internet business
activities. In most cases, the Company obtained ownership of these common
stocks as a result of merger or acquisition transactions in which these
companies merged or acquired various small Internet-related companies in which
the Company held minor investments.

Berkshire is a holding company owning subsidiaries engaged in a number of
diverse business activities; the most significant of which consist of property
and casualty insurance business conducted on both a direct and reinsurance
basis. Berkshire also owns approximately 18 percent of the common stock of the
Company. The chairman, chief executive officer, and largest shareholder of
Berkshire, Mr. Warren Buffett, is a member of the Companys Board of
Directors. Neither Berkshire nor Mr. Buffett participated in the Companys
evaluation, approval, or execution of its decision to invest in Berkshire
common stock. The Companys investment in Berkshire common stock is less than
1 percent of the consolidated equity of Berkshire. At December 30, 2001 and at
December 31, 2000, the gross unrealized gain related to the Companys
Berkshire stock investment totaled $34,121,000 and $25,271,000, respectively.
The Company presently intends to hold the Berkshire common stock investment
long term; thus the investment has been classified as a non-current asset in
the Consolidated Balance Sheets.

During 2001, 2000, and 1999 proceeds from sales of marketable equity
securities were $145,000, $6,332,000, and $54,805,000, respectively, and gross
realized (losses) gains on such sales were ($354,000), $4,929,000, and
$38,799,000, respectively. Gross realized gains or losses upon the sale of
marketable equity securities are included in Other income (expense), net in
the Consolidated Statements of Income. For purposes of computing realized
gains and losses, the cost basis of securities sold is determined by specific
identification.

Investments in Affiliates.The Companys investments in affiliates at December
30, 2001 and December 31, 2000 include the following:

|                             |  |      |        |      |  |   |         | 
|---------------------------- |  | ---- | ------ | ---- |  | - | ------- | 
|(in thousands)               |  | 2001 |        | 2000
|                             |  |      |        |     
|BrassRing                    |  | $    | 19,992 |      |  | $ | 73,310  | 
|                            
|                            
|                            
|                            
|Bowater Mersey Paper Company |  |      | 45,822 |      |  |   | 40,227  | 
|                            
|                            
|                            
|                            
|International Herald Tribune |  |      | 14,480 |      |  |   | 17,561  | 
|                            
|                            
|                            
|                            
|Other                        |  |      | 642    |      |  |   | 531     | 
|                             |  |      |        |      |  |   |         | 
|                             |  | $    | 80,936 |      |  | $ | 131,629 | 
|                             |  |      |        |      |  |   |         | 

The Companys investments in affiliates consist of a 39.7 percent common
equity interest in BrassRing LLC, which provides recruiting, career
development, and hiring management services for employers and job candidates;
a 49 percent interest in the common stock of Bowater Mersey Paper Company
Limited, which owns and operates a newsprint mill in Nova Scotia; a 50 percent
common stock interest in the International Herald Tribune Newspaper, published
near Paris, France; and a 50 percent common stock interest in the Los Angeles
Times-Washington Post News Service, Inc.

Summarized financial data for the affiliates operations are as follows:

|                       |                                |      |   |          |   |      |   |         |   |  |   |         |  
|---------------------- | ------------------------------ | ---- | - | -------- | - | ---- | - | ------- | - |  | - | ------- | -
|(in thousands)         |                                | 2001 |   | 2000     |   | 1999
|                       |                                |      |   |          |   |     
|Financial Position:    |                                |      |   |          |   |      |   |         |   |  |   |        
|                      
|                      
|                      
|                      
|                       | Working capital                |      | $ | (8,767   | ) |      | $ | 29,427  |   |  | $ | 69,155  |  
|                      
|                      
|                      
|                      
|                       | Property, plant, and
equipment |      |   | 126,682  |   |      |   | 143,749 |   |  |   | 133,425 |  
|                      
|                      
|                      
|                      
|                       | Total assets                   |      |   | 246,321  |   |      |   | 432,458 |   |  |   | 365,694 |  
|                      
|                      
|                      
|                      
|                       | Long-term debt                 |      |   |         |   |      |   |        |   |  |   |        |  
|                      
|                      
|                      
|                      
|                       | Net equity                     |      |   | 125,211  |   |      |   | 291,481 |   |  |   | 236,597 |  
|                      
|                      
|                      
|                      
|                       |                                |      |   |          |   |      |   |         |   |  |   |        
|                      
|                      
|                      
|                      
|Results of Operations: |                                |      |   |          |   |      |   |         |   |  |   |        
|                      
|                      
|                      
|                      
|                       | Operating revenues             |      | $ | 317,389  |   |      | $ | 345,913 |   |  | $ | 267,788 |  
|                      
|                      
|                      
|                      
|                       | Operating loss                 |      |   | (14,793  | ) |      |   | (27,505 | ) |  |   | (37,889 | )
|                      
|                      
|                      
|                      
|                       | Net loss                       |      |   | (157,409 | ) |      |   | (77,739 | ) |  |   | (40,035 | )

The following table summarizes the status and results of the
Companys investments in affiliates:

|                                     |  |      |         |      |  |   |         |  
|------------------------------------ |  | ---- | ------- | ---- |  | - | ------- | -
|(in thousands)                       |  | 2001 |         | 2000
|                                     |  |      |         |     
|Beginning investment                 |  | $    | 131,629 |      |  | $ | 140,669 |  
|                                    
|                                    
|                                    
|                                    
|Issuance of stock by BrassRing, Inc. |  |      |        |      |  |   | 21,973  |  
|                                    
|                                    
|                                    
|                                    
|Additional investment                |  |      | 21,112  |      |  |   | 12,480  |  
|                                    
|                                    
|                                    
|                                    
|Equity in losses                     |  |      | (68,659 | )    |  |   | (36,466 | )
|                                    
|                                    
|                                    
|                                    
|Dividends and distributions received |  |      |        |      |  |   | (940    | )
|                                    
|                                    
|                                    
|                                    
|Foreign currency translation         |  |      | (3,122  | )    |  |   | (1,685  | )
|                                    
|                                    
|                                    
|                                    
|Other                                |  |      | (24     | )    |  |   | (4,402  | )
|                                     |  |      |         |      |  |   |         |  
|Ending investment                    |  | $    | 80,936  |      |  | $ | 131,629 |  
|                                     |  |      |         |      |  |   |         |  

39



---



##### 



On September 29, 1999, the Company merged its career fair and HireSystems
businesses together and renamed the combined operations BrassRing, Inc. On the
same date, BrassRing issued stock representing a 46 percent equity interest to
two parties under two separate transactions for cash and businesses with an
aggregate fair value of $87,000,000. As a result of this transaction, the
Companys ownership of BrassRing was reduced to 54 percent, and the minority
investors were granted certain participatory rights. As such, the Company
de-consolidated BrassRing on September 29, 1999 and recorded its investment
under the equity method of accounting. The 1999 increase in the basis of the
Companys investment in BrassRing resulting from this transaction of
$34,571,000, net of taxes, was recorded as contributed capital.

During 2000, BrassRing issued stock to various parties in connection with its
acquisitions of various career fair and recruiting services companies. The
effect of these transactions reduced the Companys investment interest in
BrassRing to 42 percent, from 54 percent, at January 2, 2000, and increased
the Companys investment basis in BrassRing by $13,332,000, net of taxes. The
increase in investment basis was recorded as contributed capital.

BrassRing accounted for approximately $75.1 million of the 2001 equity in
losses of affiliates compared to $37.0 million in 2000. The increase in 2001
equity in affiliate losses from BrassRing is largely due to a one-time
non-cash goodwill and other intangibles impairment charge that BrassRing
recorded in 2001 primarily to reduce the carrying value of its career fair
business. As a substantial portion of BrassRings losses arose from goodwill
and intangible amortization expense for both 2001 and 2000, the $75.1 million
and $37.0 million of equity in affiliate losses recorded by the Company in
2001 and 2000 did not require significant funding by the Company.

In December 2001, BrassRing, Inc. was restructured, and the Companys interest
in BrassRing, Inc. was converted into an interest in the newly-formed
BrassRing LLC. At December 30, 2001, the Company held a 39.7 percent interest
in the BrassRing LLC common equity and a $14.9 million Subordinated
Convertible Promissory Note from BrassRing LLC.

Cost Method Investments.The Companys cost method investments consist of
minority investments in non-public companies where the Company does not have
significant influence over the investees operating and management decisions.
Most of the companies represented by these cost method investments have
concentrations in Internet-related business activities. At December 30, 2001
and December 31, 2000, the carrying value of the Companys cost method
investments was $29,595,000 and $48,617,000, respectively. Cost method
investments are included in Deferred Charges and Other Assets in the
Consolidated Balance Sheets.

During 2001, 2000, and 1999, the Company invested $11,675,000, $42,459,000 and
$33,549,000, respectively, in companies constituting cost method investments
and recorded charges of $32,415,000, $23,097,000, and $13,555,000,
respectively, to write-down cost method investments to estimated fair value.
Charges recorded to write-down cost method investments are included in Other
income (expense), net in the Consolidated Statements of Income.

During 2001 and 2000, proceeds from sales of cost method investments were
$451,000 and $7,070,000, and gross realized (losses) gains on such sales were
($157,000) and $6,570,000, respectively. There were no sales of cost method
investments in 1999. Gross realized gains or losses upon the sale of cost
method investments are included in Other income (expense), net in the
Consolidated Statements of Income.

[D] INCOME TAXES

The provision for income taxes consists of the following:

|                |  |         |         |          |  |   |         |  
|--------------- |  | ------- | ------- | -------- |  | - | ------- | -
|(in thousands)  |  | Current |         | Deferred
|                |  |         |         |         
|                |  |         |         |          |  |   |         |  
|               
|               
|               
|               
|2001            |  |         |         |          |  |   |         |  
|               
|               
|               
|               
|U.S. Federal    |  | $       | 48,253  |          |  | $ | 86,384  |  
|               
|               
|               
|               
|Foreign         |  |         | 1,270   |          |  |   | 714     |  
|               
|               
|               
|               
|State and local |  |         | 11,075  |          |  |   | 10,204  |  
|                |  |         |         |          |  |   |         |  
|                |  | $       | 60,598  |          |  | $ | 97,302  |  
|                |  |         |         |          |  |   |         |  
|2000            |  |         |         |          |  |   |         |  
|               
|               
|               
|               
|U.S. Federal    |  | $       | 77,517  |          |  | $ | 4,854   |  
|               
|               
|               
|               
|Foreign         |  |         | 1,033   |          |  |   | 75      |  
|               
|               
|               
|               
|State and local |  |         | 22,593  |          |  |   | (12,672 | )
|                |  |         |         |          |  |   |         |  
|                |  | $       | 101,143 |          |  | $ | (7,743  | )
|                |  |         |         |          |  |   |         |  
|1999            |  |         |         |          |  |   |         |  
|               
|               
|               
|               
|U.S. Federal    |  | $       | 94,609  |          |  | $ | 30,346  |  
|               
|               
|               
|               
|Foreign         |  |         | 1,306   |          |  |   | (22     | )
|               
|               
|               
|               
|State and local |  |         | 23,697  |          |  |   | (336    | )
|                |  |         |         |          |  |   |         |  
|                |  | $       | 119,612 |          |  | $ | 29,988  |  
|                |  |         |         |          |  |   |         |  

40



---



##### 



The provision for income taxes exceeds the amount of income tax determined by
applying the U.S. Federal statutory rate of 35 percent to income before taxes
as a result of the following:

|                                                                |  |      |         |      |  |      |        |  |  |   |         |  
|--------------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------ |  |  | - | ------- | -
|(in thousands)                                                  |  | 2001 |         | 2000 |  | 1999
|                                                                |  |      |         |      |  |     
|U.S. Federal statutory taxes                                    |  | $    | 135,639 |      |  | $    | 80,455 |  |  | $ | 131,385 |  
|                                                               
|                                                               
|                                                               
|                                                               
|State and local taxes,
net of U.S. Federal
income tax benefit   |  |      | 13,832  |      |  |      | 6,449  |  |  |   | 15,185  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Amortization of goodwill
not deductible for
income tax purposes |  |      | 6,988   |      |  |      | 5,011  |  |  |   | 4,178   |  
|                                                               
|                                                               
|                                                               
|                                                               
|Other, net                                                      |  |      | 1,441   |      |  |      | 1,485  |  |  |   | (1,148  | )
|                                                                |  |      |         |      |  |      |        |  |  |   |         |  
|Provision for income taxes                                      |  | $    | 157,900 |      |  | $    | 93,400 |  |  | $ | 149,600 |  
|                                                                |  |      |         |      |  |      |        |  |  |   |         |  

Deferred income taxes at December 30, 2001 and December 31, 2000 consist of the following:

|                                                  |  |      |         |      |  |   |         | 
|------------------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | 
|(in thousands)                                    |  | 2001 |         | 2000
|                                                  |  |      |         |     
|Accrued postretirement benefits                   |  | $    | 56,955  |      |  | $ | 55,280  | 
|                                                 
|                                                 
|                                                 
|                                                 
|Other benefit obligations                         |  |      | 73,080  |      |  |   | 60,676  | 
|                                                 
|                                                 
|                                                 
|                                                 
|Accounts receivable                               |  |      | 15,949  |      |  |   | 17,296  | 
|                                                 
|                                                 
|                                                 
|                                                 
|State income tax loss carryforwards               |  |      | 17,218  |      |  |   | 12,013  | 
|                                                 
|                                                 
|                                                 
|                                                 
|Other                                             |  |      | 14,886  |      |  |   | 20,693  | 
|                                                  |  |      |         |      |  |   |         | 
|Deferred tax asset                                |  |      | 178,088 |      |  |   | 165,958 | 
|                                                  |  |      |         |      |  |   |         | 
|Property, plant, and equipment                    |  |      | 110,763 |      |  |   | 84,164  | 
|                                                 
|                                                 
|                                                 
|                                                 
|Prepaid pension cost                              |  |      | 181,434 |      |  |   | 152,609 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Affiliate operations                              |  |      | (1,195  | )    |  |   | 18,365  | 
|                                                 
|                                                 
|                                                 
|                                                 
|Unrealized gain on available-
for-sale securities |  |      | 15,475  |      |  |   | 8,476   | 
|                                                 
|                                                 
|                                                 
|                                                 
|Goodwill and other intangibles                    |  |      | 93,286  |      |  |   | 18,277  | 
|                                                 
|                                                 
|                                                 
|                                                 
|Other                                             |  |      | 274     |      |  |   | 1,798   | 
|                                                  |  |      |         |      |  |   |         | 
|Deferred tax liability                            |  |      | 400,037 |      |  |   | 283,689 | 
|                                                  |  |      |         |      |  |   |         | 
|Deferred income taxes                             |  | $    | 221,949 |      |  | $ | 117,731 | 
|                                                  |  |      |         |      |  |   |         | 

[E] DEBT

At December 30, 2001, the Company had $933,078,000 in total debt outstanding,
which comprised $533,896,000 of commercial paper borrowings, $398,142,000 of
5.5 percent unsecured notes due February 15, 2009, and $1,040,000 in other
debt. At December 30, 2001, the Company has classified $483,896,000 of its
commercial paper borrowings as Long-Term Debt in its Consolidated Balance
Sheets as the Company has the ability and intent to finance such borrowings on
a long-term basis under its credit agreements.

Interest on the 5.5 percent unsecured notes is payable semi-annually on
February 15 and August 15.

At December 30, 2001 and December 31, 2000, the average interest rate on the
Companys outstanding commercial paper borrowings was 2.0 percent and 6.6
percent, respectively. The Companys commercial paper borrowings are supported
by a five-year $500,000,000 revolving credit facility and a one-year
$250,000,000 revolving credit facility, which expire in March 2003 and
September 2002, respectively.

Under the terms of the $500,000,000 revolving credit facility, interest on
borrowings is at floating rates, and the Company is required to pay an annual
facility fee of 0.055 percent and 0.15 percent on the unused and used portions
of the facility, respectively. Under the terms of the $250,000,000 revolving
credit facility, interest on borrowings is at floating rates, and the Company
is required to pay a variable facility fee of 0.05 percent and 0.20 percent
per annum on the unused and used portions of the facility, respectively. Both
revolving credit facilities contain certain covenants, including a financial
covenant that the Company maintain at least $850,000,000 of consolidated
shareholders equity.

The Company incurred interest costs on its borrowing of $47,473,000 and
$53,764,000 during 2001 and 2000, respectively. No interest expense was
capitalized in 2001 or 2000.

At December 30, 2001 and December 31, 2000, the fair value of the Companys
5.5 percent unsecured notes, based on quoted market prices, totaled
$387,720,000 and $376,200,000, respectively, compared with the carrying amount
of $398,142,000 and $397,881,000, respectively.

The carrying value of the Companys commercial paper borrowings at December
30, 2001 and December 31, 2000 approximates fair value.

[F] REDEEMABLE PREFERRED STOCK

In connection with the acquisition of a cable television system in 1996, the
Company issued 11,947 shares of its Series A Preferred Stock. On February 23,
2000, the Company issued an additional 1,275 shares related to this
transaction. From 1998 to 2001, 90 shares of Series A Preferred Stock were
redeemed at the request of a Series A Preferred Stockholder.

The Series A Preferred Stock has a par value of $1.00 per share and a
liquidation preference of $1,000 per share; it is redeemable by the Company at
any time on or after October 1, 2015 at a redemption price of $1,000 per
share. In addition, the holders of such stock have a right to require the
Company to purchase their shares at the redemption price during an annual
60-day election period; the first such period began on February 23, 2001.
Dividends on the Series A Preferred Stock are payable four times a year at the
annual rate of $80.00 per share and in preference to any dividends on the
Companys common stock. The Series A Preferred Stock is not convertible into
any other security of the Company, and the holders

41



---



##### 



thereof have no voting rights except with respect to any proposed changes in
the preferences and special rights of such stock.

[G] CAPITAL STOCK, STOCK AWARDS, AND STOCK OPTIONS

Capital Stock.Each share of Class A common stock and Class B common stock
participates equally in dividends. The Class B stock has limited voting rights
and as a class has the right to elect 30 percent of the Board of Directors;
the Class A stock has unlimited voting rights, including the right to elect a
majority of the Board of Directors.

During 2001, 2000, and 1999, the Company purchased a total of 714, 200, and
744,095 shares, respectively, of its Class B common stock at a cost of
approximately $445,000, $96,000, and $425,865,000.

Stock Awards.In 1982, the Company adopted a long-term incentive compensation
plan, which, among other provisions, authorizes the awarding of Class B common
stock to key employees. Stock awards made under this incentive compensation
plan are subject to the general restriction that stock awarded to a
participant will be forfeited and revert to Company ownership if the
participants employment terminates before the end of a specified period of
service to the Company. At December 30, 2001, there were 70,775 shares
reserved for issuance under the incentive compensation plan. Of this number,
29,895 shares were subject to awards outstanding, and 40,880 shares were
available for future awards. Activity related to stock awards under the
long-term incentive compensation plan for the years ended December 30, 2001,
December 31, 2000, and January 2, 2000 was as follows:

|                   |           |  |        |         |         |   |        |        |         |  |        |        |         |   |        |        |  |  |        |        |   |   |        |        | 
|------------------ | --------- |  | ------ | ------- | ------- | - | ------ | ------ | ------- |  | ------ | ------ | ------- | - | ------ | ------ |  |  | ------ | ------ | - | - | ------ | ------ | 
|                   |           |  | 2001   |         | 2000    |   | 1999  
|                   |           |  |        |         |         |   |       
|                   |           |  | Number |         | Average |   | Number |        | Average |  | Number |        | Average
|                   |           |  | of     |         | Award   |   | of     |        | Award   |  | of     |        | Award  
|                   |           |  | Shares |         | Price   |   | Shares |        | Price   |  | Shares |        | Price  
|                   |           |  |        |         |         |   |        |        |         |  |        |        |        
|Awards Outstanding |           |  |        |         |         |   |        |        |         |  |        |        |         |   |        |        |  |  |        |        |   |   |        |       
|                  
|                  
|                  
|                  
|Beginning of year  |           |  | 30,165 |         |         | $ | 413.28 |        |         |  | 31,360 |        |         | $ | 412.86 |        |  |  | 30,730 |        |   | $ | 405.40 |       
|                  
|                  
|                  
|                  
|                   | Awarded   |  |        | 16,865  |         |   |        | 608.96 |         |  |        | 1,155  |         |   |        | 501.72 |  |  |        | 2,615  |   |   |        | 543.02 | 
|                  
|                  
|                  
|                  
|                   | Vested    |  |        | (15,200 | )       |   |        | 364.13 |         |  |        | (99    | )       |   |        | 330.75 |  |  |        | (167   | ) |   |        | 349.00 | 
|                  
|                  
|                  
|                  
|                   | Forfeited |  |        | (1,935  | )       |   |        | 555.02 |         |  |        | (2,251 | )       |   |        | 456.41 |  |  |        | (1,818 | ) |   |        | 479.90 | 
|                   |           |  |        |         |         |   |        |        |         |  |        |        |         |   |        |        |  |  |        |        |   |   |        |       
|End of year        |           |  | 29,895 |         |         | $ | 539.25 |        |         |  | 30,165 |        |         | $ | 413.28 |        |  |  | 31,360 |        |   | $ | 412.86 |       
|                   |           |  |        |         |         |   |        |        |         |  |        |        |         |   |        |        |  |  |        |        |   |   |        |       

In addition to stock awards granted under the long-term incentive compensation
plan, the Company also made stock awards of 3,300 shares in 2001, 1,950 shares
in 2000, and 1,750 shares in 1999.

For the share awards outstanding at December 30, 2001, the aforementioned
restriction will lapse in 2002 for 1,446 shares, in 2003 for 15,799 shares, in
2004 for 2,450 shares, and in 2005 for 18,430 shares. Stock-based compensation
costs resulting from stock awards reduced net income by $2.6 million ($0.27
per share, basic and diluted), $2.4 million ($0.25 per share, basic and
diluted), and $2.2 million ($0.22 per share, basic and diluted), in 2001,
2000, and 1999, respectively.

Stock Options.The Companys employee stock option plan, which was adopted in
1971 and amended in 1993, reserves 1,900,000 shares of the Companys Class B
common stock for options to be granted under the plan. The purchase price of
the shares covered by an option cannot be less than the fair value on the
granting date. At December 30, 2001, there were 486,700 shares reserved for
issuance under the stock option plan, of which 170,575 shares were subject to
options outstanding, and 316,125 shares were available for future grants.

Changes in options outstanding for the years ended December 30, 2001, December
31, 2000, and January 2, 2000 were as follows:

|                  |           |  |         |         |         |   |        |        |         |  |         |         |         |   |        |        |  |  |         |         |   |   |        |        | 
|----------------- | --------- |  | ------- | ------- | ------- | - | ------ | ------ | ------- |  | ------- | ------- | ------- | - | ------ | ------ |  |  | ------- | ------- | - | - | ------ | ------ | 
|                  |           |  | 2001    |         | 2000    |   | 1999  
|                  |           |  |         |         |         |   |       
|                  |           |  | Number  |         | Average |   | Number |        | Average |  | Number  |         | Average
|                  |           |  | of      |         | Option  |   | of     |        | Option  |  | of      |         | Option 
|                  |           |  | Shares  |         | Price   |   | Shares |        | Price   |  | Shares  |         | Price  
|                  |           |  |         |         |         |   |        |        |         |  |         |         |        
|Beginning of year |           |  | 166,450 |         |         | $ | 465.55 |        |         |  | 156,497 |         |         | $ | 470.64 |        |  |  | 246,072 |         |   | $ | 404.48 |       
|                 
|                 
|                 
|                 
|                  | Granted   |  |         | 24,000  |         |   |        | 522.75 |         |  |         | 89,500  |         |   |        | 544.90 |  |  |         | 3,750   |   |   |        | 516.36 | 
|                 
|                 
|                 
|                 
|                  | Exercised |  |         | (16,875 | )       |   |        | 276.79 |         |  |         | (20,425 | )       |   |        | 345.46 |  |  |         | (87,825 | ) |   |        | 288.43 | 
|                 
|                 
|                 
|                 
|                  | Forfeited |  |         | (3,000  | )       |   |        | 546.04 |         |  |         | (59,122 | )       |   |        | 643.71 |  |  |         | (5,500  | ) |   |        | 450.86 | 
|                  |           |  |         |         |         |   |        |        |         |  |         |         |         |   |        |        |  |  |         |         |   |   |        |       
|End of year       |           |  | 170,575 |         |         | $ | 490.86 |        |         |  | 166,450 |         |         | $ | 465.55 |        |  |  | 156,497 |         |   | $ | 470.64 |       
|                  |           |  |         |         |         |   |        |        |         |  |         |         |         |   |        |        |  |  |         |         |   |   |        |       

Of the shares covered by options outstanding at the end of 2001, 89,388 are
now exercisable, 30,313 will become exercisable in 2002, 25,562 will become
exercisable in 2003, 19,312 will become exercisable in 2004, and 6,000 will
become exercisable in 2005. Information related to stock options outstanding
at December 30, 2001, is as follows:

|                |  |             |         |             |  |          |     |             |  |          |        |  |  |          |        |  |  |  |        | 
|--------------- |  | ----------- | ------- | ----------- |  | -------- | --- | ----------- |  | -------- | ------ |  |  | -------- | ------ |  |  |  | ------ | 
|                |  |             |         |             |  | Weighted |     |             |  |          |        |  |  |          |        |  |  | 
|                |  |             |         |             |  | Average  |     | Weighted    |  |          |        |  |  | Weighted
|                |  | Number      |         | Remaining   |  | Average  |     | Number      |  | Average 
|Range of        |  | Outstanding |         | Contractual |  | Exercise |     | Exercisable |  | Exercise
|Exercise Prices |  | at 12/30/01 |         | Life (yrs.) |  | Price    |     | at 12/30/01 |  | Price   
|                |  |             |         |             |  |          |     |             |  |         
|$222299        |  |             | 13,500  |             |  |          | 2.7 |             |  |          | 251.11 |  |  |          | 13,500 |  |  |  | 251.11 | 
|               
|               
|               
|               
|344             |  |             | 11,500  |             |  |          | 5.0 |             |  |          | 343.94 |  |  |          | 11,500 |  |  |  | 343.94 | 
|               
|               
|               
|               
|472484         |  |             | 30,825  |             |  |          | 6.6 |             |  |          | 473.93 |  |  |          | 25,950 |  |  |  | 472.57 | 
|               
|               
|               
|               
|500596         |  |             | 114,750 |             |  |          | 8.7 |             |  |          | 538.34 |  |  |          | 38,438 |  |  |  | 535.66 | 

All options were granted at an exercise price equal to or greater than the
fair market value of the Companys common stock at the date of grant. The
weighted average fair value for options granted during 2001, 2000, and 1999
was $107.78, $161.15, and $157.77, respectively. The fair value of options at
date of grant was estimated using the Black-Scholes method utilizing the
following assumptions:

|                      |  |      |       |      |  |      |      |   |  |  |      |  
|--------------------- |  | ---- | ----- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                      |  | 2001 |       | 2000 |  | 1999
|                      |  |      |       |      |  |     
|Expected life (years) |  |      | 7     |      |  |      | 7    |   |  |  | 7    |  
|                     
|                     
|                     
|                     
|Interest rate         |  |      | 2.30  | %    |  |      | 5.98 | % |  |  | 6.19 | %
|                     
|                     
|                     
|                     
|Volatility            |  |      | 19.46 | %    |  |      | 17.9 | % |  |  | 16.0 | %
|                     
|                     
|                     
|                     
|Dividend yield        |  |      | 1.1   | %    |  |      | 1.0  | % |  |  | 1.1  | %

42



---



##### 



Had the fair values of options granted after 1995 been recognized as
compensation expense, net income would have been reduced by $3.6 million
($0.38 per share, basic and diluted), $3.8 million ($0.40 per share, basic and
diluted), and $1.9 million ($0.19 per share, basic and diluted) in 2001, 2000,
and 1999, respectively.

The Company also maintains a stock option plan at its Kaplan subsidiary that
provides for the issuance of stock options representing 10.6 percent of
Kaplan, Inc. common stock to certain members of Kaplans management. Under the
provisions of this plan, options are issued with an exercise price equal to
the estimated fair value of Kaplans common stock. Options vest ratably over
five years from issuance, and upon exercise, an option holder has the right to
require the Company to repurchase the Kaplan stock at the stocks then fair
value. The fair value of Kaplans common stock is determined by the Companys
compensation committee. At December 30, 2001, options representing 10.0
percent of Kaplans common stock were issued and outstanding. For 2001, 2000,
and 1999, the Company recorded expense of $25,302,000, $6,000,000, and
$7,250,000, respectively, related to this plan. In 2001, payouts from option
exercises totaled $2.1 million. At December 30, 2001, the Companys
stock-based compensation accrual balance totaled $41.4 million.

Average Number of Shares Outstanding.Basic earnings per share are based on
the weighted average number of shares of common stock outstanding during each
year. Diluted earnings per common share are based upon the weighted average
number of shares of common stock outstanding each year, adjusted for the
dilutive effect of shares issuable under outstanding stock options. Basic and
diluted weighted average share information for 2001, 2000, and 1999 is as
follows:

|     |  |          |            |           |  |          |        |  |  |  |            | 
|---- |  | -------- | ---------- | --------- |  | -------- | ------ |  |  |  | ---------- | 
|     |  | Basic    |            | Dilutive  |  | Diluted 
|     |  | Weighted |            | Effect of |  | Weighted
|     |  | Average  |            | Stock     |  | Average 
|     |  | Shares   |            | Options   |  | Shares  
|     |  |          |            |           |  |         
|2001 |  |          | 9,486,386  |           |  |          | 13,173 |  |  |  | 9,499,559  | 
|    
|    
|    
|    
|2000 |  |          | 9,445,466  |           |  |          | 14,362 |  |  |  | 9,459,828  | 
|    
|    
|    
|    
|1999 |  |          | 10,060,578 |           |  |          | 21,206 |  |  |  | 10,081,784 | 

[H] PENSIONS AND OTHER POSTRETIREMENT PLANS

The Company maintains various pension and incentive savings plans and
contributes to several multi-employer plans on behalf of certain
union-represented employee groups. Substantially all of the Companys
employees are covered by these plans.

The Company also provides healthcare and life insurance benefits to certain
retired employees. These employees become eligible for benefits after meeting
age and service requirements.

The following table sets forth obligation, asset, and funding information for
the Companys defined benefit pension and postretirement plans at December 30,
2001 and December 31, 2000:

|                             |                                           |      |               |           |                      |      |   |           |   |  |   |          |   |  |   |          |  
|---------------------------- | ----------------------------------------- | ---- | ------------- | --------- | -------------------- | ---- | - | --------- | - |  | - | -------- | - |  | - | -------- | -
|                             |                                           |      | Pension Plans |           | Postretirement Plans
|                             |                                           |      |               |           |                     
|(in thousands)               |                                           | 2001 |               | 2000      |                      | 2001 |   | 2000     
|                             |                                           |      |               |           |                      |      |   |          
|Change in benefit obligation |                                           |      |               |           |                      |      |   |           |   |  |   |          |   |  |   |         
|                            
|                            
|                            
|                            
|                             | Benefit obligation at
beginning of year   |      | $             | 391,166   |                      |      | $ | 344,611   |   |  | $ | 93,243   |   |  | $ | 86,938   |  
|                            
|                            
|                            
|                            
|                             | Service cost                              |      |               | 15,393    |                      |      |   | 14,566    |   |  |   | 3,707    |   |  |   | 3,496    |  
|                            
|                            
|                            
|                            
|                             | Interest cost                             |      |               | 27,526    |                      |      |   | 24,962    |   |  |   | 6,811    |   |  |   | 6,338    |  
|                            
|                            
|                            
|                            
|                             | Amendments                                |      |               | 5,182     |                      |      |   | 29,442    |   |  |   |         |   |  |   | 1,968    |  
|                            
|                            
|                            
|                            
|                             | Actuarial loss (gain)                     |      |               | 22,334    |                      |      |   | (5,091    | ) |  |   | 6,519    |   |  |   | (1,199   | )
|                            
|                            
|                            
|                            
|                             | Benefits paid                             |      |               | (30,584   | )                    |      |   | (17,324   | ) |  |   | (4,888   | ) |  |   | (4,298   | )
|                             |                                           |      |               |           |                      |      |   |           |   |  |   |          |   |  |   |          |  
|                             | Benefit obligation at end
of year         |      | $             | 431,017   |                      |      | $ | 391,166   |   |  | $ | 105,392  |   |  | $ | 93,243   |  
|                             |                                           |      |               |           |                      |      |   |           |   |  |   |          |   |  |   |          |  
|Change in plan assets        |                                           |      |               |           |                      |      |   |           |   |  |   |          |   |  |   |         
|                            
|                            
|                            
|                            
|                             | Fair value of assets at
beginning of year |      | $             | 1,314,885 |                      |      | $ | 1,119,916 |   |  |   |         |   |  |   |         |  
|                            
|                            
|                            
|                            
|                             | Actual return on plan
assets              |      |               | 143,253   |                      |      |   | 212,293   |   |  |   |         |   |  |   |         |  
|                            
|                            
|                            
|                            
|                             | Employer contributions                    |      |               |          |                      |      |   |          |   |  | $ | 4,888    |   |  | $ | 4,298    |  
|                            
|                            
|                            
|                            
|                             | Benefits paid                             |      |               | (30,584   | )                    |      |   | (17,324   | ) |  |   | (4,888   | ) |  |   | (4,298   | )
|                             |                                           |      |               |           |                      |      |   |           |   |  |   |          |   |  |   |          |  
|                             | Fair value of assets at
end of year       |      | $             | 1,427,554 |                      |      | $ | 1,314,885 |   |  | $ |         |   |  | $ |         |  
|                             |                                           |      |               |           |                      |      |   |           |   |  |   |          |   |  |   |          |  
|                             | Funded status                             |      | $             | 996,537   |                      |      | $ | 923,719   |   |  | $ | (105,392 | ) |  | $ | (93,243  | )
|                            
|                            
|                            
|                            
|                             | Unrecognized transition
asset             |      |               | (8,852    | )                    |      |   | (15,354   | ) |  |   |         |   |  |   |         |  
|                            
|                            
|                            
|                            
|                             | Unrecognized prior
service cost           |      |               | 16,949    |                      |      |   | 17,230    |   |  |   | (501     | ) |  |   | (663     | )
|                            
|                            
|                            
|                            
|                             | Unrecognized actuarial gain               |      |               | (556,946  | )                    |      |   | (551,511  | ) |  |   | (24,931  | ) |  |   | (34,858  | )
|                             |                                           |      |               |           |                      |      |   |           |   |  |   |          |   |  |   |          |  
|                             | Net prepaid (accrued) cost                |      | $             | 447,688   |                      |      | $ | 374,084   |   |  | $ | (130,824 | ) |  | $ | (128,764 | )
|                             |                                           |      |               |           |                      |      |   |           |   |  |   |          |   |  |   |          |  

The total (income) cost arising from the Companys defined benefit pension and
postretirement plans for the years ended December 30, 2001, December 31, 2000,
and January 2, 2000 consists of the following components:

|                                         |  |               |         |                      |  |      |         |      |  |      |         |      |  |   |        |   |  |   |        |   |  |   |        |  
|---------------------------------------- |  | ------------- | ------- | -------------------- |  | ---- | ------- | ---- |  | ---- | ------- | ---- |  | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|                                         |  | Pension Plans |         | Postretirement Plans
|                                         |  |               |         |                     
|(in thousands)                           |  | 2001          |         | 2000                 |  | 1999 |         | 2001 |  | 2000 |         | 1999
|                                         |  |               |         |                      |  |      |         |      |  |      |         |     
|Service cost                             |  | $             | 15,393  |                      |  | $    | 14,566  |      |  | $    | 14,756  |      |  | $ | 3,707  |   |  | $ | 3,496  |   |  | $ | 3,585  |  
|                                        
|                                        
|                                        
|                                        
|Interest cost                            |  |               | 27,526  |                      |  |      | 24,962  |      |  |      | 23,584  |      |  |   | 6,811  |   |  |   | 6,338  |   |  |   | 6,039  |  
|                                        
|                                        
|                                        
|                                        
|Expected return
on assets                |  |               | (97,567 | )                    |  |      | (85,522 | )    |  |      | (92,566 | )    |  |   |       |   |  |   |       |   |  |   |       |  
|                                        
|                                        
|                                        
|                                        
|Amortization of
transition asset         |  |               | (6,502  | )                    |  |      | (7,585  | )    |  |      | (7,665  | )    |  |   |       |   |  |   |       |   |  |   |       |  
|                                        
|                                        
|                                        
|                                        
|Amortization of prior
service cost       |  |               | 2,122   |                      |  |      | 2,091   |      |  |      | 2,110   |      |  |   | (162   | ) |  |   | (162   | ) |  |   | (162   | )
|                                        
|                                        
|                                        
|                                        
|Recognized
actuarial gain                |  |               | (17,917 | )                    |  |      | (13,824 | )    |  |      | (24,635 | )    |  |   | (3,408 | ) |  |   | (2,870 | ) |  |   | (2,886 | )
|                                         |  |               |         |                      |  |      |         |      |  |      |         |      |  |   |        |   |  |   |        |   |  |   |        |  
|Net periodic
(benefit) cost
for the year |  |               | (76,945 | )                    |  |      | (65,312 | )    |  |      | (84,416 | )    |  |   | 6,948  |   |  |   | 6,802  |   |  |   | 6,576  |  
|                                        
|                                        
|                                        
|                                        
|Early retirement
programs expense        |  |               | 3,344   |                      |  |      | 29,049  |      |  |      | 2,733   |      |  |   |       |   |  |   | 1,968  |   |  |   |       |  
|                                         |  |               |         |                      |  |      |         |      |  |      |         |      |  |   |        |   |  |   |        |   |  |   |        |  
|Total (benefit) cost
for the year        |  | $             | (73,601 | )                    |  | $    | (36,263 | )    |  | $    | (81,683 | )    |  | $ | 6,948  |   |  | $ | 8,770  |   |  | $ | 6,576  |  
|                                         |  |               |         |                      |  |      |         |      |  |      |         |      |  |   |        |   |  |   |        |   |  |   |        |  

43



---



##### 



The costs for the Companys defined benefit pension and postretirement plans
are actuarially determined. Key assumptions utilized at December 30, 2001,
December 31, 2000, and January 2, 2000 include the following:

|                               |  |               |     |                      |  |      |     |      |  |      |     |      |  |  |     |   |  |  |     |   |  |  |     |  
|------------------------------ |  | ------------- | --- | -------------------- |  | ---- | --- | ---- |  | ---- | --- | ---- |  |  | --- | - |  |  | --- | - |  |  | --- | -
|                               |  | Pension Plans |     | Postretirement Plans
|                               |  |               |     |                     
|                               |  | 2001          |     | 2000                 |  | 1999 |     | 2001 |  | 2000 |     | 1999
|                               |  |               |     |                      |  |      |     |      |  |      |     |     
|Discount rate                  |  |               | 7.0 | %                    |  |      | 7.5 | %    |  |      | 7.5 | %    |  |  | 7.0 | % |  |  | 7.5 | % |  |  | 7.5 | %
|                              
|                              
|                              
|                              
|Expected return
on plan assets |  |               | 7.5 | %                    |  |      | 9.0 | %    |  |      | 9.0 | %    |  |  |    |   |  |  |    |   |  |  |    |  
|                              
|                              
|                              
|                              
|Rate of compensation
increase  |  |               | 4.0 | %                    |  |      | 4.0 | %    |  |      | 4.0 | %    |  |  |    |   |  |  |    |   |  |  |    |  

The assumed healthcare cost trend rate used in measuring the postretirement
benefit obligation at December 30, 2001 was 6.3 percent for pre-age 65
benefits (5.9 percent for post-age 65 benefits), decreasing to 5 percent in
the year 2005 and thereafter.

Assumed healthcare cost trend rates have a significant effect on the amounts
reported for the healthcare plans. A change of 1 percentage point in the
assumed healthcare cost trend rates would have the following effects:

|                                  |  |          |        |          |  |   |         |  
|--------------------------------- |  | -------- | ------ | -------- |  | - | ------- | -
|                                  |  | 1%       |        | 1%      
|(in thousands)                    |  | Increase |        | Decrease
|                                  |  |          |        |         
|Benefit obligation at end of year |  | $        | 15,751 |          |  | $ | (14,713 | )
|                                 
|                                 
|                                 
|                                 
|Service cost plus interest cost   |  |          | 1,654  |          |  |   | (1,604  | )

Contributions to multi-employer pension plans, which are generally based on
hours worked, amounted to $1,800,000 in 2001, $1,100,000 in 2000, and
$2,300,000 in 1999.

The Company recorded expense associated with retirement benefits provided
under incentive savings plans (primarily 401(k) plans) of approximately
$14,500,000 in 2001 and $13,300,000 in 2000 and 1999.

[I]  LEASE AND OTHER COMMITMENTS

The Company leases real property under operating agreements. Many of the
leases contain renewal options and escalation clauses that require payments of
additional rent to the extent of increases in the related operating costs.

At December 30, 2001, future minimum rental payments under noncancelable
operating leases approximate the following:

|               |  |   |         | 
|-------------- |  | - | ------- | 
|(in thousands) |  |   |         | 
|              
|2002           |  | $ | 51,770  | 
|              
|              
|              
|              
|2003           |  |   | 46,780  | 
|              
|              
|              
|              
|2004           |  |   | 41,030  | 
|              
|              
|              
|              
|2005           |  |   | 35,253  | 
|              
|              
|              
|              
|2006           |  |   | 30,417  | 
|              
|              
|              
|              
|Thereafter     |  |   | 72,389  | 
|               |  |   |         | 
|               |  | $ | 277,639 | 
|               |  |   |         | 

Minimum payments have not been reduced by minimum sublease rentals of
$4,500,000 due in the future under noncancelable subleases.

Rent expense under operating leases included in operating costs and expenses
was approximately $58,300,000, $49,700,000, and $33,600,000 in 2001, 2000, and
1999, respectively. Sublease income was approximately $1,500,000, $1,150,000,
and $433,000 in 2001, 2000, and 1999, respectively.

The Companys broadcast subsidiaries are parties to certain agreements that
commit them to purchase programming to be produced in future years. At
December 30, 2001, such commitments amounted to approximately $59,550,000. If
such programs are not produced, the Companys commitment would expire without
obligation.

[J] ACQUISITIONS, EXCHANGES, AND DISPOSITIONS

The Company completed business acquisitions and exchanges, having spent
approximately $104,400,000 in 2001, $212,300,000 in 2000 (including assumed
debt and related acquisition costs), and $90,500,000 in 1999. All of these
acquisitions were accounted for using the purchase method, and accordingly,
the assets and liabilities of the companies acquired have been recorded at
their estimated fair values at the date of acquisition. The purchase price
allocations for these acquisitions mostly comprised goodwill and other
intangibles.

The Companys acquisitions in 2001 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.
During 2001, the Company also acquired a provider of CFA exam preparation
services and a company that provides pre-certification training for real
estate, insurance, and securities professionals.

Southern Maryland Newspapers publishes the Maryland Independent in Charles
County, Maryland; The Lexington Park Enterprise in St. Marys County,
Maryland; and The Calvert Recorder in Calvert County, Maryland, with a
combined total paid circulation of approximately 50,000.

44



---



##### 



The cable system exchange with AT&T Broadband was completed on March 1, 2001
and consisted of the exchange by the Company of its cable systems in Modesto
and Santa Rosa, California, and approximately $42.0 million to AT&T Broadband
for cable systems serving approximately 155,000 subscribers principally
located in Idaho. In a related transaction on January 11, 2001, the Company
completed the sale of a cable system serving about 15,000 subscribers in
Greenwood, Indiana, for $61.9 million. The gain resulting from the cable
system sale and exchange transactions increased net income by $196.5 million,
or $20.69 per share. For income tax purposes, substantial components of the
cable system sale and exchange transactions qualify as like-kind exchanges,
and therefore, a large portion of these transactions does not result in a
current tax liability.

On August 2, 2000, the Company acquired Quest Education Corporation (Quest)
for approximately $177,700,000, including assumed debt. The acquisition of
Quest was completed through an all cash tender offer in which the Company
purchased substantially all of the outstanding stock of Quest for $18.35 per
share. The acquisition was financed through the issuance of additional
borrowings. Quest is a provider of post-secondary education offering
Bachelors degrees, Associates degrees, and diploma programs primarily in the
fields of healthcare, business, and information technology.

In addition, the Company acquired two cable systems serving approximately
8,500 subscribers in Nebraska (in June 2000) and Mississippi (in August 2000)
for approximately $16,200,000, as well as various other smaller businesses
throughout 2000 for $18,400,000 (principally consisting of educational
services companies).

During 1999, the Company acquired cable systems serving 10,300 subscribers in
North Dakota, Oklahoma, and Arizona (April and August 1999 for $18,300,000);
two Certified Financial Analyst test preparation companies (November and
December 1999 for $16,000,000), and a travel guide magazine (in December 1999
for $10,200,000). In addition, the Company acquired various other smaller
businesses throughout 1999 for $46,000,000 (principally consisting of
educational services companies).

The results of operations for each of the businesses acquired are included in
the Consolidated Statements of Income from their respective dates of
acquisition. Pro forma results of operations for 2001, 2000, and 1999,
assuming the acquisitions occurred at the beginning of 1999, are not
materially different from reported results of operations.

In June 1999, the Company sold the assets of Legi-Slate, Inc., its online
services subsidiary that covered Federal legislation and regulation. No
significant gain or loss was realized as a result of the sale.

[K] CONTINGENCIES

The Company and its subsidiaries are parties to various civil lawsuits that
have arisen in the ordinary course of their businesses, including actions for
libel and invasion of privacy, and also to an antitrust lawsuit related to the
acquisition by a subsidiary of a group of community newspapers in 2001.
Management does not believe that any litigation pending against the Company
will have a material adverse effect on its business or financial condition.

The Companys education division derives a portion of its net revenues from
financial aid received by its students under Title IV programs (Title IV
Programs) administered by the United States Department of Education pursuant
to the Federal Higher Education Act of 1965 (HEA), as amended. In order to
participate in Title IV Programs, the Company must comply with complex
standards set forth in the HEA and the regulations promulgated thereunder (the
Regulations). The failure to comply with the requirements of HEA or the
Regulations could result in the restriction or loss of the ability to
participate in Title IV Programs and subject the Company to financial
penalties. For the years ended December 30, 2001 and December 31, 2000,
approximately $101,500,000 and $35,000,000, respectively, of the Companys
education division revenues were derived from financial aid received by
students under Title IV Programs. These revenues were earned and recognized by
Quest following the Companys acquisition of Quest in August 2000. Management
believes that the Companys education division schools that participate in
Title IV Programs are in material compliance with the standards set forth in
the HEA and the Regulations.

[L] BUSINESS SEGMENTS

The Company operates principally in four areas of the media business:
newspaper publishing, television broadcasting, magazine publishing, and cable
television. Through its subsidiary Kaplan, Inc., the Company also provides
educational services for individuals, schools, and businesses.

45



---



##### 



Newspaper operations involve the publication of newspapers in the Washington,
D.C., area and Everett, Washington; newsprint warehousing and recycling
facilities; and the Companys electronic media publishing business (primarily
washingtonpost.com).

Magazine operations consist principally of the publication of a weekly news
magazine, Newsweek, which has one domestic and three international editions,
the publication of a travel magazine, and the publication of business
periodicals for the computer services industry and the Washington-area
technology community.

Revenues from both newspaper and magazine publishing operations are derived
from advertising and, to a lesser extent, from circulation.

Broadcast operations are conducted through six VHF television stations. All
stations are network affiliated, with revenues derived primarily from sales of
advertising time.

Cable television operations consist of cable systems offering basic cable and
pay television services to approximately 752,700 subscribers in 19 midwestern,
western, and southern states. The principal source of revenues is monthly
subscription fees charged for services.

Educational products and services are provided through the Companys
wholly-owned subsidiary Kaplan, Inc. Kaplans major lines of businesses
include Test Preparation and Admissions, providing test preparation services
for college and graduate school entrance exams; Kaplan Professional,
providing educational services to business people and other professionals;
Score!, offering multimedia learning and private tutoring to children and
educational resources to parents; and Kaplans higher education division,
which includes Quest, a provider of post-secondary education offering
Bachelors degrees, Associates degrees, and diploma programs primarily in the
fields of healthcare, business, and information technology, and The Kaplan
Colleges, Kaplans distance-learning businesses, including kaplancollege.com.
In early 2002, Kaplan put all of its post-secondary schools (Quest and The
Kaplan Colleges) under a single higher education division.

Other businesses and corporate office includes the Companys corporate office.
Through the first half of 1999, the other businesses and corporate office
segment also includes the results of Legi-Slate, Inc., the assets of which
were sold in June 1999.

Income from operations is the excess of operating revenues over operating
expenses. In computing income from operations by segment, the effects of
equity in earnings of affiliates, interest income, interest expense, other
non-operating income and expense items, and income taxes are not included.

Identifiable assets by segment are those assets used in the Companys
operations in each business segment. Investments in marketable equity
securities and investments in affiliates are discussed in Note C.

46



---



##### 



|                                               |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   |           |           | 
|---------------------------------------------- | -------------------------- | ---------- | --------- | ------------ | ---------- | ---------- | -------- | ---------- | ----- | --------- | ------- | ------ |  | ------------ | ------------- | - |  | - | ------- | - |  | - | ---------- | - |  | - | --------- | --------- | 
|                                               |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   | Other      |   |  |   |          
|                                               |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   | Businesses |   |  |   |          
|                                               |                            |            | Newspaper |              | Television |            | Magazine |            | Cable |           |         |        |  |              | and Corporate |   |  |   |        
|(in thousands)                                 |                            | Publishing |           | Broadcasting |            | Publishing |          | Television |       | Education |         | Office |  | Consolidated
|                                               |                            |            |           |              |            |            |          |            |       |           |         |        |  |             
|2001                                           |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   |           |          
|                                              
|                                              
|                                              
|                                              
|Operating revenues                             |                            | $          | 842,721   |              |            | $          | 314,010  |            |       | $         | 380,224 |        |  | $            | 386,037       |   |  | $ | 493,681 |   |  | $ |           |   |  | $ | 2,416,673 |          
|                                              
|                                              
|                                              
|                                              
|Income (loss) from operations                  |                            | $          | 84,744    |              |            | $          | 131,847  |            |       | $         | 25,306  |        |  | $            | 32,237        |   |  | $ | (28,337 | ) |  | $ | (25,865    | ) |  | $ | 219,932   |          
|                                              
|                                              
|                                              
|                                              
|Equity in losses of affiliates                 |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   | (68,659   | )        
|                                              
|                                              
|                                              
|                                              
|Interest expense, net                          |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   | (47,473   | )        
|                                              
|                                              
|                                              
|                                              
|Other income, net                              |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   | 283,739   |          
|                                               |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   |           |          
|                                               | Income before income taxes |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   | $         | 387,539   | 
|                                               |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   |           |          
|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 | 
|                                               |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   |           |          
|Depreciation of property, plant, and equipment |                            | $          | 37,862    |              |            | $          | 11,932   |            |       | $         | 4,654   |        |  | $            | 64,505        |   |  | $ | 19,347  |   |  | $ |           |   |  | $ | 138,300   |          
|                                              
|                                              
|                                              
|                                              
|Amortization of goodwill                       |                            | $          | 3,864     |              |            | $          | 14,135   |            |       | $         | 6,669   |        |  | $            | 38,553        |   |  | $ | 15,712  |   |  | $ |           |   |  | $ | 78,933    |          
|                                              
|                                              
|                                              
|                                              
|Pension credit (expense)                       |                            | $          | 25,197    |              |            | $          | 6,263    |            |       | $         | 44,989  |        |  | $            | (638          | ) |  | $ | (847    | ) |  | $ | (1,363     | ) |  | $ | 73,601    |          
|                                              
|                                              
|                                              
|                                              
|Kaplan stock-based incentive compensation      |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  | $ | 25,302  |   |  |   |            |   |  | $ | 25,302    |          
|                                              
|                                              
|                                              
|                                              
|Capital expenditures                           |                            | $          | 32,551    |              |            | $          | 11,032   |            |       | $         | 1,737   |        |  | $            | 166,887       |   |  | $ | 12,020  |   |  | $ |           |   |  | $ | 224,227   |          
|                                              
|                                              
|                                              
|                                              
|2000                                           |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   |           |          
|                                              
|                                              
|                                              
|                                              
|Operating revenues                             |                            | $          | 918,234   |              |            | $          | 364,758  |            |       | $         | 416,421 |        |  | $            | 358,916       |   |  | $ | 353,821 |   |  | $ |           |   |  | $ | 2,412,150 |          
|                                              
|                                              
|                                              
|                                              
|Income (loss) from operations                  |                            | $          | 114,435   |              |            | $          | 177,396  |            |       | $         | 49,119  |        |  | $            | 65,967        |   |  | $ | (41,846 | ) |  | $ | (25,189    | ) |  | $ | 339,882   |          
|                                              
|                                              
|                                              
|                                              
|Equity in losses of affiliates                 |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   | (36,466   | )        
|                                              
|                                              
|                                              
|                                              
|Interest expense, net                          |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   | (53,764   | )        
|                                              
|                                              
|                                              
|                                              
|Other expense, net                             |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   | (19,782   | )        
|                                               |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   |           |          
|                                               | Income before income taxes |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   | $         | 229,870   | 
|                                               |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   |           |          
|Identifiable assets                            |                            | $          | 684,908   |              |            | $          | 430,444  |            |       | $         | 452,453 |        |  | $            | 757,083       |   |  | $ | 482,014 |   |  | $ | 41,075     |   |  | $ | 2,847,977 |          
|                                              
|                                              
|                                              
|                                              
|Investments in marketable equity securities    |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   | 221,137   |          
|                                              
|                                              
|                                              
|                                              
|Investments in affiliates                      |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   | 131,629   |          
|                                               |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   |           |          
|                                               | Total assets               |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   | $         | 3,200,743 | 
|                                               |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   |           |          
|Depreciation of property, plant, and equipment |                            | $          | 38,579    |              |            | $          | 12,991   |            |       | $         | 5,059   |        |  | $            | 47,670        |   |  | $ | 13,649  |   |  | $ |           |   |  | $ | 117,948   |          
|                                              
|                                              
|                                              
|                                              
|Amortization of goodwill                       |                            | $          | 1,588     |              |            | $          | 14,135   |            |       | $         | 6,758   |        |  | $            | 30,069        |   |  | $ | 10,084  |   |  | $ |           |   |  | $ | 62,634    |          
|                                              
|                                              
|                                              
|                                              
|Pension credit (expense)                       |                            | $          | (5,579    | )            |            | $          | 5,767    |            |       | $         | 37,341  |        |  | $            | (599          | ) |  | $ | (667    | ) |  | $ |           |   |  | $ | 36,263    |          
|                                              
|                                              
|                                              
|                                              
|Kaplan stock-based incentive compensation      |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  | $ | 6,000   |   |  |   |            |   |  | $ | 6,000     |          
|                                              
|                                              
|                                              
|                                              
|Capital expenditures                           |                            | $          | 33,117    |              |            | $          | 11,672   |            |       | $         | 1,858   |        |  | $            | 96,167        |   |  | $ | 29,569  |   |  | $ |           |   |  | $ | 172,383   |          
|                                              
|                                              
|                                              
|                                              
|1999                                           |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   |           |          
|                                              
|                                              
|                                              
|                                              
|Operating revenues                             |                            | $          | 875,109   |              |            | $          | 341,761  |            |       | $         | 401,096 |        |  | $            | 336,259       |   |  | $ | 257,503 |   |  | $ | 3,843      |   |  | $ | 2,215,571 |          
|                                              
|                                              
|                                              
|                                              
|Income (loss) from operations                  |                            | $          | 156,731   |              |            | $          | 167,639  |            |       | $         | 62,057  |        |  | $            | 67,145        |   |  | $ | (37,998 | ) |  | $ | (27,121    | ) |  | $ | 388,453   |          
|                                              
|                                              
|                                              
|                                              
|Equity in losses of affiliates                 |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   | (8,814    | )        
|                                              
|                                              
|                                              
|                                              
|Interest expense, net                          |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   | (25,689   | )        
|                                              
|                                              
|                                              
|                                              
|Other income, net                              |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   | 21,435    |          
|                                               |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   |           |          
|                                               | Income before income taxes |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   | $         | 375,385   | 
|                                               |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   |           |          
|Identifiable assets                            |                            | $          | 672,609   |              |            | $          | 444,372  |            |       | $         | 409,404 |        |  | $            | 718,230       |   |  | $ | 265,960 |   |  | $ | 132,688    |   |  | $ | 2,643,263 |          
|                                              
|                                              
|                                              
|                                              
|Investments in marketable equity securities    |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   | 203,012   |          
|                                              
|                                              
|                                              
|                                              
|Investments in affiliates                      |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   | 140,669   |          
|                                               |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   |           |          
|                                               | Total assets               |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   | $         | 2,986,944 | 
|                                               |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  |   |         |   |  |   |            |   |  |   |           |          
|Depreciation of property, plant, and equipment |                            | $          | 35,363    |              |            | $          | 11,719   |            |       | $         | 4,972   |        |  | $            | 43,092        |   |  | $ | 8,850   |   |  | $ | 239        |   |  | $ | 104,235   |          
|                                              
|                                              
|                                              
|                                              
|Amortization of goodwill                       |                            | $          | 1,535     |              |            | $          | 14,248   |            |       | $         | 5,912   |        |  | $            | 30,007        |   |  | $ | 6,861   |   |  | $ |           |   |  | $ | 58,563    |          
|                                              
|                                              
|                                              
|                                              
|Pension credit (expense)                       |                            | $          | 26,440    |              |            | $          | 8,191    |            |       | $         | 48,309  |        |  | $            | (597          | ) |  | $ | (603    | ) |  | $ | (57        | ) |  | $ | 81,683    |          
|                                              
|                                              
|                                              
|                                              
|Kaplan stock-based incentive compensation      |                            |            |           |              |            |            |          |            |       |           |         |        |  |              |               |   |  | $ | 7,250   |   |  |   |            |   |  | $ | 7,250     |          
|                                              
|                                              
|                                              
|                                              
|Capital expenditures                           |                            | $          | 19,279    |              |            | $          | 17,839   |            |       | $         | 3,364   |        |  | $            | 62,586        |   |  | $ | 26,977  |   |  | $ |           |   |  | $ | 130,045   |          

47



---



##### 



[M] SUMMARY OF QUARTERLY OPERATING RESULTS AND COMPREHENSIVE INCOME (UNAUDITED)

Quarterly results of operations and comprehensive income for the years ended
December 30, 2001 and December 31, 2000 are as follows:

|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|--------------------------------------------------- | ---------------------------------------------- | ------- | ------- | ------- | ------ | ------- | ------- | ------- | ------ | - | ------- | ------- | - | - | ------- | ------- | -
|                                                    |                                                |         | First   |         | Second |         | Third   |         | Fourth
|(in thousands, except per share amounts)            |                                                | Quarter |         | Quarter |        | Quarter |         | Quarter
|                                                    |                                                |         |         |         |        |         |         |        
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |        
|                                                   
|                                                   
|                                                   
|                                                   
|2001 Quarterly Operating Results                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |        
|                                                   
|                                                   
|                                                   
|                                                   
|Operating revenues                                  |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Advertising                                    |         | $       | 297,974 |        |         | $       | 312,881 |        |   | $       | 277,425 |   |   | $       | 321,047 |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Circulation and subscriber                     |         |         | 148,536 |        |         |         | 156,149 |        |   |         | 177,925 |   |   |         | 176,010 |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Education                                      |         |         | 121,341 |        |         |         | 119,442 |        |   |         | 127,159 |   |   |         | 125,329 |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Other                                          |         |         | 19,125  |        |         |         | 16,063  |        |   |         | 13,007  |   |   |         | 7,260   |  
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|                                                    |                                                |         | 586,976 |         |        |         | 604,535 |         |        |   | 595,516 |         |   |   | 629,646 |        
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|Operating costs and expenses                        |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Operating                                      |         |         | 343,993 |        |         |         | 340,740 |        |   |         | 348,776 |   |   |         | 359,241 |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Selling, general, and administrative           |         |         | 147,915 |        |         |         | 151,409 |        |   |         | 144,954 |   |   |         | 142,480 |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Depreciation of property, plant, and equipment |         |         | 34,632  |        |         |         | 35,867  |        |   |         | 34,765  |   |   |         | 33,036  |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Amortization of goodwill and other intangibles |         |         | 17,192  |        |         |         | 19,926  |        |   |         | 20,068  |   |   |         | 21,748  |  
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|                                                    |                                                |         | 543,732 |         |        |         | 547,942 |         |        |   | 548,563 |         |   |   | 556,505 |        
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|Income from operations                              |                                                |         | 43,244  |         |        |         | 56,593  |         |        |   | 46,953  |         |   |   | 73,141  |        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Equity in losses of affiliates                 |         |         | (12,461 | )      |         |         | (6,641  | )      |   |         | (26,535 | ) |   |         | (23,023 | )
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Interest income                                |         |         | 325     |        |         |         | 1,047   |        |   |         | 226     |   |   |         | 570     |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Interest expense                               |         |         | (14,624 | )      |         |         | (13,240 | )      |   |         | (11,861 | ) |   |         | (9,914  | )
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Other income (expense), net                    |         |         | 308,769 |        |         |         | (10,717 | )      |   |         | (4,365  | ) |   |         | (9,949  | )
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|Income before income taxes                          |                                                |         | 325,253 |         |        |         | 27,042  |         |        |   | 4,418   |         |   |   | 30,825  |        
|                                                   
|                                                   
|                                                   
|                                                   
|Provision for income taxes                          |                                                |         | 126,200 |         |        |         | 12,550  |         |        |   | 2,850   |         |   |   | 16,300  |        
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|Net income                                          |                                                |         | 199,053 |         |        |         | 14,492  |         |        |   | 1,568   |         |   |   | 14,525  |        
|                                                   
|                                                   
|                                                   
|                                                   
|Redeemable preferred stock dividends                |                                                |         | (526    | )       |        |         | (263    | )       |        |   | (263    | )       |   |   |        |        
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|Net income available for common shares              |                                                | $       | 198,527 |         |        | $       | 14,229  |         |        | $ | 1,305   |         |   | $ | 14,525  |        
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|Basic earnings per common share                     |                                                | $       | 20.94   |         |        | $       | 1.50    |         |        | $ | 0.14    |         |   | $ | 1.53    |        
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|Diluted earnings per common share                   |                                                | $       | 20.90   |         |        | $       | 1.50    |         |        | $ | 0.14    |         |   | $ | 1.53    |        
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|Basic average number of common shares outstanding   |                                                |         | 9,479   |         |        |         | 9,485   |         |        |   | 9,489   |         |   |   | 9,492   |        
|                                                   
|                                                   
|                                                   
|                                                   
|Diluted average number of common shares outstanding |                                                |         | 9,499   |         |        |         | 9,502   |         |        |   | 9,502   |         |   |   | 9,501   |        
|                                                   
|                                                   
|                                                   
|                                                   
|2001 Quarterly Comprehensive Income (loss)          |                                                | $       | 187,049 |         |        | $       | 25,860  |         |        | $ | (937    | )       |   | $ | 25,342  |        
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  

The sum of the four quarters may not necessarily be equal to the annual amounts
reported in the Consolidated Statements of Income due to rounding.

A third quarter reclassification of $21 million between other income (expense),
net and equity in losses of affiliates is reflected above related to the
Companys investment in BrassRing.

48



---



##### 



|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|--------------------------------------------------- | ---------------------------------------------- | ------- | ------- | ------- | ------ | ------- | ------- | ------- | ------ | - | ------- | ------- | - | - | ------- | ------- | -
|                                                    |                                                |         | First   |         | Second |         | Third   |         | Fourth
|(in thousands, except per share amounts)            |                                                | Quarter |         | Quarter |        | Quarter |         | Quarter
|                                                    |                                                |         |         |         |        |         |         |        
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |        
|                                                   
|                                                   
|                                                   
|                                                   
|2000 Quarterly Operating Results                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |        
|                                                   
|                                                   
|                                                   
|                                                   
|Operating revenues                                  |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Advertising                                    |         | $       | 318,865 |        |         | $       | 353,514 |        |   | $       | 338,428 |   |   | $       | 385,776 |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Circulation and subscriber                     |         |         | 147,589 |        |         |         | 148,905 |        |   |         | 151,144 |   |   |         | 153,619 |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Education                                      |         |         | 71,450  |        |         |         | 68,803  |        |   |         | 99,428  |   |   |         | 113,072 |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Other                                          |         |         | 8,867   |        |         |         | 20,318  |        |   |         | 13,452  |   |   |         | 18,919  |  
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|                                                    |                                                |         | 546,771 |         |        |         | 591,540 |         |        |   | 602,452 |         |   |   | 671,386 |        
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|Operating costs and expenses                        |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Operating                                      |         |         | 296,072 |        |         |         | 316,252 |        |   |         | 340,733 |   |   |         | 355,006 |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Selling, general, and administrative           |         |         | 135,421 |        |         |         | 138,704 |        |   |         | 131,206 |   |   |         | 178,291 |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Depreciation of property, plant, and equipment |         |         | 28,386  |        |         |         | 28,638  |        |   |         | 30,019  |   |   |         | 30,905  |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Amortization of goodwill and other intangibles |         |         | 14,738  |        |         |         | 14,755  |        |   |         | 15,937  |   |   |         | 17,204  |  
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|                                                    |                                                |         | 474,617 |         |        |         | 498,349 |         |        |   | 517,895 |         |   |   | 581,406 |        
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|Income from operations                              |                                                |         | 72,154  |         |        |         | 93,191  |         |        |   | 84,557  |         |   |   | 89,980  |        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Equity in losses of affiliates                 |         |         | (11,304 | )      |         |         | (9,471  | )      |   |         | (8,890  | ) |   |         | (6,800  | )
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Interest income                                |         |         | 224     |        |         |         | 275     |        |   |         | 228     |   |   |         | 241     |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Interest expense                               |         |         | (12,567 | )      |         |         | (12,573 | )      |   |         | (14,617 | ) |   |         | (14,974 | )
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Other (expense) income, net                    |         |         | (6,938  | )      |         |         | 1,556   |        |   |         | 238     |   |   |         | (14,639 | )
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|Income before income taxes                          |                                                |         | 41,569  |         |        |         | 72,978  |         |        |   | 61,516  |         |   |   | 53,808  |        
|                                                   
|                                                   
|                                                   
|                                                   
|Provision for income taxes                          |                                                |         | 17,500  |         |        |         | 31,800  |         |        |   | 28,000  |         |   |   | 16,100  |        
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|Net income                                          |                                                |         | 24,069  |         |        |         | 41,178  |         |        |   | 33,516  |         |   |   | 37,708  |        
|                                                   
|                                                   
|                                                   
|                                                   
|Redeemable preferred stock dividends                |                                                |         | (500    | )       |        |         | (263    | )       |        |   | (263    | )       |   |   |        |        
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|Net income available for common shares              |                                                | $       | 23,569  |         |        | $       | 40,915  |         |        | $ | 33,253  |         |   | $ | 37,708  |        
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|Basic earnings per common share                     |                                                | $       | 2.50    |         |        | $       | 4.33    |         |        | $ | 3.52    |         |   | $ | 3.99    |        
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|Diluted earnings per common share                   |                                                | $       | 2.49    |         |        | $       | 4.33    |         |        | $ | 3.51    |         |   | $ | 3.98    |        
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  
|Basic average number of common shares outstanding   |                                                |         | 9,440   |         |        |         | 9,443   |         |        |   | 9,448   |         |   |   | 9,452   |        
|                                                   
|                                                   
|                                                   
|                                                   
|Diluted average number of common shares outstanding |                                                |         | 9,458   |         |        |         | 9,458   |         |        |   | 9,463   |         |   |   | 9,470   |        
|                                                   
|                                                   
|                                                   
|                                                   
|2000 Quarterly Comprehensive Income                 |                                                | $       | 21,152  |         |        | $       | 25,492  |         |        | $ | 49,789  |         |   | $ | 46,586  |        
|                                                    |                                                |         |         |         |        |         |         |         |        |   |         |         |   |   |         |         |  

The sum of the four quarters may not necessarily be equal to the annual amounts
reported in the Consolidated Statements of Income due to rounding.

49



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##### 



SCHEDULE II

THE WASHINGTON POST COMPANY

SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS

|                             |                                                          |           |            |            |            |            |             |            |  |   |            |            |  |   |            |            | 
|---------------------------- | -------------------------------------------------------- | --------- | ---------- | ---------- | ---------- | ---------- | ----------- | ---------- |  | - | ---------- | ---------- |  | - | ---------- | ---------- | 
|Column A                     |                                                          | Column B  |            | Column C   |            | Column D   |             | Column E  
|                             |                                                          |           |            |            |            |            |             |           
|                             |                                                          |           |            |            |            |            | Additions - |            |  |   |            |            |  |   |           
|                             |                                                          |           | Balance at |            | Charged to |            |             |            |  |   | Balance at
|                             |                                                          |           | beginning  |            | costs and  |            |             |            |  |   | end of    
|Description                  |                                                          | of period |            | expenses   |            | Deductions |             | period    
|                             |                                                          |           |            |            |            |            |             |           
|Year Ended January 2, 2000   |                                                          |           |            |            |            |            |             |            |  |   |            |            |  |   |            |           
|                            
|                            
|                            
|                            
|                             | Allowance for doubtful accounts and returns              |           | $          | 46,692,000 |            |            | $           | 62,824,000 |  |   | $          | 58,337,000 |  |   | $          | 51,179,000 | 
|                            
|                            
|                            
|                            
|                             | Allowance for advertising rate adjustments and discounts |           |            | 8,358,000  |            |            |             | 9,136,000  |  |   |            | 8,052,000  |  |   |            | 9,442,000  | 
|                             |                                                          |           |            |            |            |            |             |            |  |   |            |            |  |   |            |           
|                             |                                                          | $         | 55,050,000 |            |            | $          | 71,960,000  |            |  | $ | 66,389,000 |            |  | $ | 60,621,000 |           
|                             |                                                          |           |            |            |            |            |             |            |  |   |            |            |  |   |            |           
|Year Ended December 31, 2000 |                                                          |           |            |            |            |            |             |            |  |   |            |            |  |   |            |           
|                            
|                            
|                            
|                            
|                             | Allowance for doubtful accounts and returns              |           | $          | 51,179,000 |            |            | $           | 74,540,000 |  |   | $          | 67,716,000 |  |   | $          | 58,003,000 | 
|                            
|                            
|                            
|                            
|                             | Allowance for advertising rate adjustments and discounts |           |            | 9,442,000  |            |            |             | 2,662,000  |  |   |            | 4,909,000  |  |   |            | 7,195,000  | 
|                             |                                                          |           |            |            |            |            |             |            |  |   |            |            |  |   |            |           
|                             |                                                          | $         | 60,621,000 |            |            | $          | 77,202,000  |            |  | $ | 72,625,000 |            |  | $ | 65,198,000 |           
|                             |                                                          |           |            |            |            |            |             |            |  |   |            |            |  |   |            |           
|Year Ended December 30, 2001 |                                                          |           |            |            |            |            |             |            |  |   |            |            |  |   |            |           
|                            
|                            
|                            
|                            
|                             | Allowance for doubtful accounts and returns              |           | $          | 58,003,000 |            |            | $           | 98,655,000 |  |   | $          | 88,689,000 |  |   | $          | 67,969,000 | 
|                            
|                            
|                            
|                            
|                             | Allowance for advertising rate adjustments and discounts |           |            | 7,195,000  |            |            |             | 4,163,000  |  |   |            | 6,079,000  |  |   |            | 5,279,000  | 
|                             |                                                          |           |            |            |            |            |             |            |  |   |            |            |  |   |            |           
|                             |                                                          | $         | 65,198,000 |            |            | $          | 102,818,000 |            |  | $ | 94,768,000 |            |  | $ | 73,248,000 |           
|                             |                                                          |           |            |            |            |            |             |            |  |   |            |            |  |   |            |           

50



---



##### 



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.

RESULTS OF OPERATIONS  2001 COMPARED TO 2000

Net income for 2001 was $229.6 million, compared with net income of $136.5
million for 2000. Diluted earnings per share totaled $24.06 in 2001, compared
with $14.32 in 2000. The Companys 2001 results include after-tax gains of
$196.5 million, or $20.69 per share, from the sale and exchange of certain
cable systems in the first quarter; a non-cash goodwill and other intangibles
impairment charge recorded by the Companys BrassRing affiliate (after-tax
impact of $19.9 million, or $2.10 per share); and losses from the write-down
of a non-operating parcel of land and certain cost method investments to their
estimated fair value (after-tax impact of $18.3 million, or $1.93 per share).
Excluding these non-operating and principally non-cash transactions in 2001,
net income totaled $71.3 million, or $7.40 per share. The decline in 2001
operating earnings is largely due to a significant decline in advertising
revenue, increased depreciation and amortization expenses, and higher
stock-based compensation expense accruals at the education division. These
factors were offset in part by increased operating income contributed by Quest
Education (acquired in August 2000), higher profits from Kaplans test
preparation and professional training businesses, reduced operating losses at
Kaplans new business development activities, and an increased pension credit.
In addition, 2000 earnings included a fourth quarter after-tax charge of $16.5
million, or $1.74 per share, arising from an early retirement program at The
Washington Post.

Revenue for 2001 totaled $2,416.7 million, or flat compared to revenue of
$2,412.2 million in 2000. Advertising revenue decreased 13 percent in 2001,
and circulation and subscriber revenue increased 10 percent. Education revenue
increased 40 percent in 2001, and other revenue decreased 10 percent. The
large decrease in advertising revenue is due to declines at the newspaper,
television, and magazine divisions. The increase in circulation and subscriber
revenue is due to a 20 percent increase in Newsweek domestic circulation
revenue and a 10 percent increase in subscriber revenue at the cable division.
Revenue growth at Kaplan, Inc. (about two-thirds of which was from
acquisitions) accounted for the increase in education revenue.

Operating costs and expenses for the year increased 6 percent to $2,196.7
million, from $2,072.3 million in 2000. The cost and expense increase is
primarily attributable to companies acquired in 2001 and 2000, higher
depreciation and amortization expense, and higher stock-based compensation
expense accruals at the education division, offset by a higher pension credit
and lower expenses at the newspaper publishing, television broadcasting, and
magazine publishing segments due to extensive cost control initiatives.

Operating income decreased 35 percent to $219.9 million in 2001, from $339.9
million in 2000.

The Companys 2001 operating income includes $76.9 million of net pension
credits, compared to $65.3 million in 2000. These amounts exclude $3.3 million
and $29.0 million in charges related to early retirement programs in 2001 and
2000, respectively.

DIVISION RESULTS

Newspaper Publishing Division.Newspaper publishing division revenue in 2001
decreased 8 percent to $842.7 million, from $918.2 million in 2000. Division
operating income for 2001 totaled $84.7 million, a decrease of 26 percent from
operating income of $114.4 million in 2000.

The decrease in operating income for 2001 is due to a significant decline in
print advertising, offset in part by a higher pension credit, higher online
advertising revenue, lower newsprint cost, cost control initiatives employed
throughout the division, and the $27.5 million charge recorded in the fourth
quarter of 2000 in connection with an early retirement program completed at
The Post.

Print advertising revenue at The Washington Post newspaper decreased 14
percent to $574.3 million, from $664.1 million in 2000. Volume declines of 41
percent in classified recruitment advertising for 2001 caused classified
recruitment advertising revenue declines of 37 percent. The economic
environment surrounding most of the other advertising categories at The Post
(i.e., retail, general, preprints) was also sluggish for fiscal 2001 compared
to the prior year. In these categories, rate increases only partially offset
volume declines ranging from 3 percent to 28 percent during 2001. The soft
advertising climate worsened late in the third quarter of 2001 as the Company
experienced further reductions in advertising revenue and volumes following
the events of September 11.

Daily and Sunday circulation at The Post declined 0.5 percent and 0.7 percent,
respectively, in 2001. For the year ended December 30, 2001, average daily
circulation at The Post totaled 773,000, and average Sunday circulation
totaled 1,067,000. Newsprint expense at the newspaper publishing division
decreased 6 percent for 2001 due to reduced consumption, offset by overall
higher prices during the year.

Revenues generated by the Companys online publishing activities, primarily
washingtonpost.com, increased 12 percent to $30.4 million during the year.

Television Broadcasting Division.Revenue for the television broadcasting
division totaled $314.0 million for 2001, a 14 percent decline from 2000.
Excluding approximately $42 million in political and Olympics advertising in
2000, revenue in 2001 decreased 3 percent due to a general softness in
advertising (particularly national advertising) and several days of
commercial-free coverage following the events of September 11.

Competitive market position remained strong for the Companys television
stations. WJXT in Jacksonville and WDIV in Detroit were ranked number one in
the latest ratings period, sign-on to sign-off, in their respective markets;
KSAT in San Antonio ranked second; WPLG was tied for second among
English-language stations in the Miami

51



---



##### 



market; and KPRC in Houston and WKMG in Orlando ranked third in their
respective markets.

Operating income for 2001 declined 26 percent to $131.8 million, from $177.4
million in 2000 due to revenue declines discussed above. Operating margin at
the broadcast division was 42 percent for 2001 and 49 percent for 2000.
Excluding amortization of goodwill and intangibles, operating margin was 46
percent for 2001 and 53 percent for 2000.

Magazine Publishing Division.Revenue for the magazine publishing division
totaled $380.2 million for 2001, a 9 percent decrease from 2000. Operating
income totaled $25.3 million for 2001, a decrease of 48 percent from 2000. The
decline in 2001 operating income resulted from a 24 percent decrease in
advertising revenue at Newsweek due to fewer advertising pages at both the
domestic and international editions. The decline was offset in part by
increased newsstand sales on regular and special editions related to the
September 11 terrorist attacks, a higher pension credit, and reduced operating
expenses.

Operating margin at the magazine publishing division decreased to 7 percent
for 2001, compared to 12 percent in 2000.

Cable Television Division.Cable division revenue of $386.0 million for 2001
represents an 8 percent increase over 2000. The 2001 revenue increase is due
to rapid growth in the divisions digital and cable modem service revenues,
along with an increased number of basic subscribers from the cable exchange
transactions completed in the first quarter of 2001. Cable division operating
income declined 51 percent in 2001 to $32.2 million, due mostly to a $25.3
million increase in depreciation and amortization expense compared to 2000.

Cable division cash flow (operating income excluding depreciation and
amortization expense) totaled $135.3 million for 2001, a decrease of 6 percent
from 2000. The decline in cable division cash flow is mostly due to higher
programming expense, costs associated with the launch of digital services, and
comparatively lower cash flow margin subscribers acquired in the cable system
exchanges completed in the first quarter of 2001.

The increase in depreciation expense is due to capital spending, which is
enabling the Company to offer digital cable services to its subscribers. The
cable division began its rollout plan for these services in the third quarter
of 2000. At December 31, 2001, the cable division had approximately 239,500
digital cable subscribers, representing a 35 percent penetration of the
subscriber base in the markets where digital services are offered. Digital
services are currently offered in markets serving 91 percent of the cable
divisions subscriber base. The rollout plan for the new digital cable
services includes an offer for the cable divisions customers to obtain these
services free for one year. At the end of December 2001, the cable division
had about 31,000 paying digital subscribers. Of these, 24,000 are from the
new Idaho subscribers and were not offered one-year free digital service. Most
of the benefits from these new services are expected to show beginning in 2002
and thereafter.

At December 31, 2001, the cable division had 752,700 basic subscribers,
compared to 735,400 at the end of December 2000. The increase in basic
subscribers is largely due to a net gain in subscribers arising from cable
system exchanges and sale transactions completed in the first quarter of 2001.
At December 31, 2001, the cable division had 46,400 CableONE.net service
subscribers, compared to 18,200 at the end of 2000, with the increase due to a
large increase in the Companys cable modem deployment (offered to 89 percent
of homes passed at the end of December 2001) and take-up rates. Of these
subscribers, 32,900 and 3,600 were cable modem service subscribers at the end
of 2001 and 2000, respectively, with the remainder being dial-up subscribers.

Education Division.Education revenue in 2001 increased 40 percent to $493.7
million, from $353.8 million in 2000; excluding Quest Education (acquired in
August 2000), education division revenue increased 15 percent to $342.3
million for 2001, compared to $296.9 million for 2000.

Due to the amortization of goodwill and the accounting for stock options at
Kaplan, which unlike most companies includes a charge related to options held
by management, Kaplan reported a loss of $28.3 million in 2001, compared with
a loss of $41.8 million in 2000. Excluding these charges, Kaplans operating
earnings were $12.7 million in 2001, compared to a loss of $25.8 million in
2000. A summary of operating results for 2001 compared to 2000 is as follows:

|                                           |  |      |         |      |  |          |         |   |  |  |      |   
|------------------------------------------ |  | ---- | ------- | ---- |  | -------- | ------- | - |  |  | ---- | --
|(in thousands)                             |  | 2001 |         | 2000 |  | % Change
|                                           |  |      |         |      |  |         
|Revenue                                    |  |      |         |      |  |          |         |   |  |  |      |   
|                                          
|                                          
|                                          
|                                          
|Test prep and professional
training        |  | $    | 271,931 |      |  | $        | 244,189 |   |  |  | 11   | % 
|                                          
|                                          
|                                          
|                                          
|Quest post-secondary
education             |  |      | 151,400 |      |  |          | 56,908  |   |  |  | 166  | % 
|                                          
|                                          
|                                          
|                                          
|New business development
activities        |  |      | 70,350  |      |  |          | 52,724  |   |  |  | 33   | % 
|                                           |  |      |         |      |  |          |         |   |  |  |      |   
|                                           |  | $    | 493,681 |      |  | $        | 353,821 |   |  |  | 40   | % 
|                                           |  |      |         |      |  |          |         |   |  |  |      |   
|Operating income (loss)                    |  |      |         |      |  |          |         |   |  |  |      |   
|                                          
|                                          
|                                          
|                                          
|Test prep and professional
training        |  | $    | 36,391  |      |  | $        | 30,315  |   |  |  | 20   | % 
|                                          
|                                          
|                                          
|                                          
|Quest post-secondary
education             |  |      | 19,858  |      |  |          | 8,359   |   |  |  | 138  | % 
|                                          
|                                          
|                                          
|                                          
|New business development
activities        |  |      | (24,136 | )    |  |          | (55,313 | ) |  |  | 56   | % 
|                                          
|                                          
|                                          
|                                          
|Kaplan corporate overhead                  |  |      | (19,436 | )    |  |          | (9,123  | ) |  |  | (113 | %)
|                                          
|                                          
|                                          
|                                          
|Stock-based incentive
compensation         |  |      | (25,302 | )    |  |          | (6,000  | ) |  |  | (322 | %)
|                                          
|                                          
|                                          
|                                          
|Goodwill and other intangible
amortization |  |      | (15,712 | )    |  |          | (10,084 | ) |  |  | (56  | %)
|                                           |  |      |         |      |  |          |         |   |  |  |      |   
|                                           |  | $    | (28,337 | )    |  | $        | (41,846 | ) |  |  | 32   | % 
|                                           |  |      |         |      |  |          |         |   |  |  |      |   

The improvement in test prep and professional training results for 2001 is due
mostly to higher enrollments and, to a lesser extent, higher rates at Kaplans
traditional test prep business (particularly the GMAT and the LSAT prep
courses) and higher revenues and profits from Kaplans CFA and real estate
exam preparation services. Quests results increased as 2001 includes a full
year versus five months of activity in 2000.

52



---



##### 



New business development activities represent the results of Score! and The
Kaplan Colleges (various distance-learning businesses). The improvement in new
business development revenue is primarily attributable to Score!, with both
increased enrollment from new learning centers opened (147 centers at the end
of 2001, versus 142 centers at the end of 2000) and rate increases implemented
early in 2001. In early 2002, Kaplan put all of its post-secondary schools
(Quest and The Kaplan Colleges) under a single higher education division.

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. The increase in this expense category in 2001 is
principally due to increased spending for these development initiatives.

Kaplan records accrued charges for stock-based incentive compensation arising
from a stock option plan established for certain members of Kaplans
management (the general provisions of which are discussed in Note G to the
Consolidated Financial Statements). 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. The increase
in stock-based incentive compensation for 2001 is due to an increase in
Kaplans estimated value.

Equity in Losses of Affiliates.The Companys equity in losses of affiliates
for 2001 was $68.7 million, compared to losses of $36.5 million for 2000. The
Companys affiliate investments consist of a 39.7 percent common equity
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 for approximately $75.1 million of the 2001 equity in
losses of affiliates, compared to $37.0 million in 2000. The increase in 2001
equity in affiliate losses from BrassRing is largely due to a one-time
non-cash goodwill and other intangibles impairment charge that BrassRing
recorded in 2001 primarily to reduce the carrying value of its career fair
business. As a substantial portion of BrassRings losses arose from goodwill
and intangible amortization expense for both 2001 and 2000, the $75.1 million
and $37.0 million of equity in affiliate losses recorded by the Company in
2001 and 2000, respectively, did not require significant funding by the
Company.

In December 2001, BrassRing, Inc. was restructured, and the Companys interest
in BrassRing, Inc. was converted into an interest in the newly-formed
BrassRing LLC. At December 30, 2001, the Company held a 39.7 percent interest
in the BrassRing LLC common equity and a $14.9 million Subordinated
Convertible Promissory Note (Note) from BrassRing LLC. In February 2002, the
Note was converted into Preferred Units, which are convertible at the
Companys option to BrassRing LLC common equity. Assuming the conversion of
the Preferred Units, the Companys common equity interest in BrassRing LLC
would be approximately 49.5 percent.

Non-operating Items.The Company recorded other non-operating income of $283.7
million in 2001, compared to $19.8 million in non-operating expense for 2000.
The 2001 non-operating income mostly comprises gains arising from the sale and
exchange of certain cable systems completed in January and March of 2001.
Offsetting these gains were losses from the write-downs of a non-operating
parcel of land and certain investments to their estimated fair value. For
income tax purposes, substantial components of the cable system sale and
exchange transactions qualify as like-kind exchanges, and therefore, a large
portion of these transactions does not result in a current tax liability.

The Company incurred net interest expense of $47.5 million in 2001, compared
to $53.8 million in 2000. At December 30, 2001, the Company had $933.1 million
in borrowings outstanding at an average interest rate of 3.5 percent.

Income Taxes.The effective rate was 40.7 percent for 2001, compared to 40.6
percent for 2000. Excluding the effect of the cable gain transactions, the
Companys effective tax rate approximated 50.2 percent for 2001, with the
increase in rate due mostly to the decline in pre-tax income.

RESULTS OF OPERATIONS  2000 COMPARED TO 1999

Net income for 2000 was $136.5 million, compared with net income of $225.8
million for 1999. Diluted earnings per share totaled $14.32 in 2000, compared
with $22.30 in 1999, with fewer average shares outstanding in 2000. The
decline in 2000 net income and diluted earnings per share was primarily caused
by increased costs associated with the development of new businesses (impact
of $28.9 million, or $3.47 per diluted share), a charge arising from an early
retirement program at The Washington Post newspaper (impact of $16.5 million,
or $1.74 per diluted share), higher interest expense (impact of $16.6 million,
or $1.85 per diluted share), and a reduced pension credit (impact of $11.7
million, or $0.92 per diluted share). In addition, 1999 net income included
gains from the sale of marketable equity securities, which did not recur in
2000 (impact of $18.6 million, or $1.81 per share). These factors were offset
in part by improved operating results at The Washington Post newspaper and the
television broadcasting division.

Revenue for 2000 totaled $2,412.2 million, an increase of 9 percent from
$2,215.6 million in 1999. Advertising revenue increased 5 percent in 2000, and
circulation and subscriber revenue increased 4 percent. Education revenue
increased 47 percent in 2000, and other
revenue decreased 6 percent. Increases in advertising revenue at the newspaper
and television broadcasting divisions accounted for most of the increase in
advertising revenue. The increase in circulation and subscriber revenue is
primarily due to a 6 percent increase in sub-

53



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##### 



scriber revenue at the cable division. Revenue growth at Kaplan, Inc. (about
two-thirds of which was from acquisitions) accounted for the increase in
education revenue. The decrease in other revenue is primarily due to the
disposition of Legi-Slate in June of 1999.

Operating costs and expenses for the year increased 13 percent to $2,072.3
million, from $1,827.1 million in 1999. The cost and expense increase is
primarily attributable to the charge arising from the early retirement program
at The Post, companies acquired in 2000 and 1999, greater spending for new
business development at Kaplan, Inc. and washingtonpost.com, higher
depreciation and amortization expense, and a reduced pension credit.

Operating income decreased 13 percent to $339.9 million in 2000, from $388.5
million in 1999.

The Companys 2000 operating income includes $65.3 million of net pension
credits, compared to $84.4 million in 1999. These amounts exclude $29.0
million and $2.7 million in charges related to early retirement programs in
2000 and 1999, respectively.

Division Results

Newspaper Publishing Division.Newspaper division revenue in 2000 increased 5
percent to $918.2 million, from $875.1 million in 1999. Advertising revenue at
the newspaper division rose 5 percent over the previous year; circulation
revenue remained essentially unchanged.

Total print advertising revenue grew 4 percent in 2000 at The Washington Post
newspaper, principally as a result of higher advertising rates. At The Post,
higher advertising rates, offset in part by advertising volume declines,
generated a 4 percent and 2 percent increase in full run retail and classified
print advertising revenue, respectively. Other print advertising revenue
(including general and preprint) at The Post increased 5 percent due mainly to
increased general advertising volume and higher rates.

Newspaper division operating margin in 2000 decreased to 12 percent, from 18
percent in 1999. Excluding the $27.5 million pre-tax charge for the early
retirement program completed at The Washington Post, the 2000 newspaper
division operating margin totaled 15 percent. The decline in operating margin
resulted mostly from increased spending on marketing and sales initiatives at
washingtonpost.com, an 8 percent increase in newsprint expense, and a reduced
pension credit, offset in part by higher advertising revenues.

Daily circulation remained unchanged at The Washington Post; Sunday
circulation declined 1 percent.

Revenue generated by the Companys online publishing activities, primarily
washingtonpost.com, totaled $27.1 million for 2000, versus $15.6 million for
1999.

Television Broadcasting Division.Revenue at the broadcast division increased
7 percent to $364.8 million, from $341.8 million in 1999. Political and
Olympics advertising in the third and fourth quarters of 2000 totaled
approximately $42 million, accounting for the increase in 2000 revenue.

Competitive market position remained strong for the Companys television
stations. WJXT in Jacksonville, KSAT in San Antonio, and WDIV in Detroit were
all ranked number one in the latest ratings period, sign-on to sign-off, in
their respective markets; WPLG was tied for first among English-language
stations in the Miami market; and KPRC in Houston and WKMG in Orlando ranked
third in their respective markets, but continued to make good progress in
improving market share.

Operating margin at the broadcast division was 49 percent for both 2000 and
1999. Excluding amortization of goodwill and intangibles, operating margin was
53 percent for 2000 and 1999.

Magazine Publishing Division.Magazine division revenue was $416.4 million for
2000, up 4 percent over 1999 revenue of $401.1 million. Operating income for
the magazine division totaled $49.1 million for 2000, a decrease of 21 percent
from operating income of $62.1 million in 1999. The 21 percent decrease in
operating income occurred primarily at Newsweek, where reduced pension credits
and higher subscription acquisition costs at the domestic edition outpaced
revenue and operating income improvements at the international edition.

Operating margin at the magazine publishing division decreased to 12 percent
for 2000, compared to 15 percent in 1999.

Cable Television Division.Revenue at the cable division rose 7 percent to
$358.9 million in 2000, compared to $336.3 million in 1999. Basic, tier, and
advertising revenue categories each showed improvement over 1999. The increase
in subscriber revenue is attributable to higher rates. The number of basic
subscribers at the end of 2000 totaled 735,400, a 1 percent decline from
739,850 basic subscribers at the end of 1999.

Cable operating cash flow (operating income excluding depreciation and
amortization expense) increased 2 percent to $143.7 million, from $140.2
million in 1999; operating cash flow margins totaled 40 percent and 42
percent, for 2000 and 1999, respectively.

Operating income at the cable division for 2000 and 1999 totaled $66.0 million
and $67.1 million, respectively. The decline in operating income is primarily
attributable to an increase in programming expense, additional costs
associated with the launch of new services, and higher depreciation expense,
offset in part by higher revenue.

The increase in depreciation expense is due to capital spending for continuing
system rebuilds and upgrades, which will enable the cable division to offer
new digital and high-speed cable modem services to its subscribers. The cable
division began its rollout plan for these services in the second and third
quarters of 2000. The rollout plan for the new digital cable services includes
an offer to provide services free for one year.

54



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Education Division.Excluding the operating results of the career fair and
HireSystems businesses from 1999 (these businesses were contributed to
BrassRing at the end of the third quarter of 1999), 2000 education division
operating results compared with 1999 are as follows:

|                                           |  |      |         |      |  |          |         |   |  |  |      |   
|------------------------------------------ |  | ---- | ------- | ---- |  | -------- | ------- | - |  |  | ---- | --
|(in thousands)                             |  | 2000 |         | 1999 |  | % Change
|                                           |  |      |         |      |  |         
|Revenue                                    |  |      |         |      |  |          |         |   |  |  |      |   
|                                          
|                                          
|                                          
|                                          
|Test prep and professional
training        |  | $    | 244,189 |      |  | $        | 209,964 |   |  |  | 16   | % 
|                                          
|                                          
|                                          
|                                          
|Quest post-secondary
education             |  |      | 56,908  |      |  |          |        |   |  |  | n/   | a 
|                                          
|                                          
|                                          
|                                          
|New business development
activities        |  |      | 52,724  |      |  |          | 30,175  |   |  |  | 75   | % 
|                                           |  |      |         |      |  |          |         |   |  |  |      |   
|                                           |  | $    | 353,821 |      |  | $        | 240,139 |   |  |  | 47   | % 
|                                           |  |      |         |      |  |          |         |   |  |  |      |   
|Operating income (loss)                    |  |      |         |      |  |          |         |   |  |  |      |   
|                                          
|                                          
|                                          
|                                          
|Test prep and professional
training        |  | $    | 30,315  |      |  | $        | 25,733  |   |  |  | 18   | % 
|                                          
|                                          
|                                          
|                                          
|Quest post-secondary
education             |  |      | 8,359   |      |  |          |        |   |  |  | n/   | a 
|                                          
|                                          
|                                          
|                                          
|New business development
activities        |  |      | (55,313 | )    |  |          | (20,128 | ) |  |  | (175 | %)
|                                          
|                                          
|                                          
|                                          
|Kaplan corporate overhead                  |  |      | (9,123  | )    |  |          | (7,153  | ) |  |  | (28  | %)
|                                          
|                                          
|                                          
|                                          
|Stock-based incentive
compensation         |  |      | (6,000  | )    |  |          | (7,250  | ) |  |  | 17   | % 
|                                          
|                                          
|                                          
|                                          
|Goodwill and other intangible
amortization |  |      | (10,084 | )    |  |          | (6,861  | ) |  |  | (47  | %)
|                                           |  |      |         |      |  |          |         |   |  |  |      |   
|                                           |  | $    | (41,846 | )    |  | $        | (15,659 | ) |  |  | (167 | %)
|                                           |  |      |         |      |  |          |         |   |  |  |      |   

Approximately 50 percent of the 2000 increase in test preparation and
professional training revenue is attributable to acquisitions; the remaining
increase is due to higher enrollments and tuition increases. Post-secondary
education represents the results of Quest Education from the date of its
acquisition in August 2000. New business development activities represent the
results of Score!, eScore.com, and The Kaplan Colleges. The increase in new
business development revenue is attributable mostly to new learning centers
opened by Score!, which operated 142 centers at the end of 2000, versus 100
centers at the end of 1999. The increase in new business development losses is
attributable to start-up period spending at eScore.com and kaplancollege.com
(part of The Kaplan Colleges) and to losses associated with the early
operating periods of new Score! centers.

Corporate overhead represents unallocated expenses of Kaplan, Inc.s corporate
office.

Stock-based incentive compensation represents expense arising from a stock
option plan established for certain members of Kaplans management (the
general provisions of which are discussed in Note G to the Consolidated
Financial Statements). Under this plan, the amount of stock-based incentive
compensation expense varies directly with the estimated fair value of Kaplans
common stock.

Including the operating results of the career fair and HireSystems businesses
for the first nine months of 1999 (these businesses were contributed to
BrassRing at the end of the third quarter of 1999), education division revenue
increased 37 percent to $353.8 million for 2000, compared to $257.5 million
for 1999. Operating losses increased 10 percent in 2000 to $41.8 million, from
$38.0 million in 1999.

Other Businesses and Corporate Office.For 2000, other businesses and
corporate office includes the expenses of the Companys corporate office. For
1999, other businesses and corporate office includes the expenses associated
with the corporate office and the operating results of Legi-Slate through June
30, 1999, the date of its sale.

Operating losses for 2000 totaled $25.2 million, representing a 7 percent
improvement over 1999. The reduction in 2000 losses is primarily attributable
to the absence of losses generated by Legi-Slate and reduced spending at the
Companys corporate office.

Equity in Losses of Affiliates.The Companys equity in losses of affiliates
for 2000 was $36.5 million, compared to losses of $8.8 million for 1999. The
Companys affiliate investments consisted of a 42 percent effective interest
in BrassRing, Inc. (formed in late September 1999), a 50 percent interest in
the International Herald Tribune, and a 49 percent interest in Bowater Mersey
Paper Company Limited. The decline in 2000 affiliate results is attributable
to BrassRing, Inc., which was in the integration and marketing phase of its
operations.

BrassRing accounted for approximately $37.0 million of the Companys 2000
equity in affiliate losses. A substantial portion of BrassRings losses arises
from goodwill and intangible amortization expense. Accordingly, the $37.0
million of equity in affiliate losses recorded by the Company in 2000 did not
require significant funding by the Company.

Non-operating Items.In 2000, the Company incurred net interest expense of
$53.8 million, compared to $25.7 million of net interest expense in 1999. The
2000 increase in net interest expense is attributable to borrowings executed
by the Company during 1999 and 2000 to fund capital improvements, acquisition
activities, and share repurchases.

The Company recorded other non-operating expense of $19.8 million in 2000,
compared to $21.4 million in non-operating income for 1999. The 1999
non-operating income mostly comprised non-recurring gains arising from the
sale of marketable securities (mostly various Internet-related securities).
The 2000 non-operating expense resulted mostly from the write-downs of certain
of the Companys e-commerce focused cost method investments.

55



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##### 



Income Taxes.The effective tax rate in 2000 was 40.6 percent, compared to
39.9 percent in 1999. The increase in the effective tax rate is principally
due to the non-recognition of benefits from state net operating loss
carryforwards generated by certain of the Companys new business start-up
activities and an increase in goodwill amortization expense that is not
deductible for income tax purposes.

FINANCIAL CONDITION: CAPITAL RESOURCES AND LIQUIDITY

Acquisitions, Exchanges, and Dispositions.During 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. During 2001, the Company also acquired a
provider of CFA exam preparation services and a company that provides
pre-certification training for real estate, insurance, and securities
professionals.

Southern Maryland Newspapers publishes the Maryland Independent in Charles
County, Maryland; The Enterprise in St. Marys County, Maryland; and The
Calvert Recorder in Calvert County, Maryland, with a combined total paid
circulation of approximately 50,000.

The cable system exchange with AT&T Broadband was completed on March 1, 2001
and consisted of the exchange by the Company of its cable systems in Modesto
and Santa Rosa, California, and approximately $42.0 million to AT&T Broadband
for cable systems serving approximately 155,000 subscribers principally
located in Idaho. In a related transaction on January 11, 2001, the Company
completed the sale of a cable system serving about 15,000 subscribers in
Greenwood, Indiana, for $61.9 million. The gain resulting from the cable
system sale and exchange transactions increased net income by $196.5 million,
or $20.69 per share. For income tax purposes, substantial components of the
cable system sale and exchange transactions qualify as like-kind exchanges,
and therefore, a large portion of these transactions does not result in a
current tax liability.

During 2000, the Company spent $212.3 million on business acquisitions. These
acquisitions included $177.7 million for Quest Education Corporation, a
provider of post-secondary education; $16.2 million for two cable systems
serving 8,500 subscribers; and $18.4 million for various other small
businesses (principally consisting of educational services companies). There
were no significant business dispositions in 2000.

During 1999, the Company acquired various businesses for about $90.5 million,
which included, among others, $18.3 million for cable systems serving
approximately 10,300 subscribers and $61.8 million for various educational and
training companies to expand Kaplan, Inc.s business offerings.

The Company sold the assets of Legi-Slate, Inc. in June 1999; no significant
gain or loss resulted.

Capital Expenditures.During 2001, the Companys capital expenditures totaled
$224.2 million, more than half of which related to the Companys rollout of
digital and cable modem services. The Companys capital expenditures for 2001,
2000, and 1999 are itemized by operating division in Note L to the
Consolidated Financial Statements.

The Company estimates that in 2002 its capital expenditures will decrease to
approximately $130 million, as the Companys rollout of digital and cable
modem service was nearing completion by the end of 2001.

Investments in Marketable Equity Securities.At December 30, 2001, the fair
value of the Companys investments in marketable equity securities was $235.4
million, which includes $219.0 million in Berkshire Hathaway Inc. Class A and
B common stock and $16.4 million of various common stocks of publicly traded
companies with e-commerce business concentrations.

At December 30, 2001, the gross unrealized gain related to the Companys
Berkshire Hathaway Inc. stock investment totaled $34.1 million; the gross
unrealized gain on this investment was $25.3 million at December 31, 2000. The
Company presently intends to hold the Berkshire Hathaway stock long term.

Cost Method Investments.At December 30, 2001 and December 31, 2000, the
Company held minority investments in various non-public companies. The
companies represented by these investments have products or services that in
most cases have potential strategic relevance to the Companys operating
units. The Company records its investment in these companies at the lower of
cost or estimated fair value. During 2001 and 2000, the Company invested $11.7
million and $42.5 million, respectively, in various cost method investees. At
December 30, 2001 and December 31, 2000, the carrying value of the Companys
cost method investments totaled $29.6 million and $48.6 million, respectively.

Common Stock Repurchases and Dividend Rate.During 2001, 2000, and 1999, the
Company repurchased 714, 200, and 744,095 shares, respectively, of its Class B
common stock at a cost of $0.4 million, $0.1 million, and $425.9 million. The
annual dividend rate for 2002 was authorized to remain at $5.60 per share,
consistent with 2001, as compared to $5.40 per share in 2000, and $5.20 per
share in 1999.

Liquidity.At December 30, 2001, the Company had $31.5 million in cash and
cash equivalents.

At December 30, 2001, the Company had $533.9 million in commercial paper
borrowings outstanding at an average interest rate of 2.0 percent with various
maturities throughout the first and second quarters of 2002. In addition, the
Company had outstanding $398.1 million of 5.5 percent, 10-year unsecured notes
due February 2009. These notes require semi-annual interest payments of $11.0
million payable on February 15 and August 15. The Company also had $1.0
million in other debt.

56



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##### 



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 and provide for general corporate purposes. The Company
intends to extend or replace the revolving credit facility agreements prior to
their expiration.

At December 30, 2001, the Company has classified $483.9 million of its
commercial paper borrowings as Long-Term Debt in its Consolidated Balance
Sheets as the Company has the ability and intent to finance such borrowings on
a long-term basis under its credit agreements.

During 2001, the Companys borrowings, net of repayments, increased by $9.8
million. The net increase is principally attributable to significant capital
expenditures in 2001, mostly offset by cash generated by operations.

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 in 2002.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements. In preparing
these financial statements, management has made their best estimates and
judgments of certain amounts included in the financial statements. Actual
results will inevitably differ to some extent from these estimates.

The following are accounting policies that management believes are the most
important to the Companys portrayal of the Companys financial condition and
results and require managements most difficult, subjective, or complex
judgments.

Revenue Recognition and Trade Accounts Receivable, Less Estimated Returns,
Doubtful Accounts, and Allowances.Revenue from media advertising is
recognized, net of agency commissions, when the underlying advertisement is
published or broadcast. Revenues from newspaper and magazine subscriptions are
recognized upon delivery. Revenues from newspaper retail sales are recognized
upon delivery, and revenues from magazine retail sales are recognized on the
later of delivery or the cover date, with adequate provision made for
anticipated sales returns. The Company bases its estimates for sales returns
on historical experience and has not experienced significant fluctuations
between estimated and actual return activity. Cable subscriber revenue is
recognized monthly as services are delivered. Education revenue is recognized
ratably over the period during which educational services are delivered. As
Kaplans businesses and related course offerings have expanded, including
distance-learning businesses, the complexity and significance of management
estimates have increased.

Accounts receivable have been reduced by an allowance for amounts that may be
uncollectible in the future. This estimated allowance is based primarily on
the aging category, historical trends, and managements evaluation of the
financial condition of the customer. Accounts receivable have also been
reduced by an estimate of advertising rate adjustments and discounts, based on
estimates of advertising volumes for contract customers that are eligible for
advertising rate adjustments and discounts.

Pension Costs.Excluding expenses related to early retirement programs, the
companys net pension credit was $76.9 million, $65.3 million, and $84.4
million for 2001, 2000, and 1999, respectively. The Companys pension benefit
costs are actuarially determined and are impacted significantly by the
Companys assumptions related to future events, including the discount rate,
expected return on plan assets, and rate of compensation increases. At
December 30, 2001, the Company modified certain assumptions surrounding the
Companys pension plans. Specifically, the Company reduced its assumptions on
discount rate from 7.5 percent to 7.0 percent and expected return on plan
assets from 9.0 percent to 7.5 percent. These assumption changes are
incorporated into the computation of the total benefit obligation at December
30, 2001, and the combined effect on the 2002 pension credit amount is an
estimated reduction of $20 million to $25 million. However, due to higher than
expected investment returns in 2001, the pension credit for 2002 is expected
to be down by $10 million to $15 million compared to 2001. For each one-half
percent increase or decrease to the Companys assumed discount rate or
expected return on plan assets, the pension credit increases or decreases by
approximately $5 million. Note H to the Consolidated Financial Statements
provides additional details surrounding pension costs and related assumptions.

Cost Method Investments.The Company uses the cost method of accounting for
its minority investments in non-public companies where it does not have
significant influence over the operations and management of the investee. Most
of the companies represented by these cost method investments have
concentrations in Internet-related business activities. Investments are
recorded at the lower of cost or fair value as estimated by management. Fair
value estimates are based on a review of the investees product development
activities, historical financial results, and projected discounted cash flows.
These estimates are highly judgmental, given the inherent lack of
marketability of investments in private companies. The Company has recorded
write-down charges on cost method investments of $32.4 million, $23.1 million,
and $13.6 million in 2001, 2000, and 1999, respectively. Note C to the
Consolidated Financial Statements provides additional details surrounding cost
method investments.

57



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Kaplan Stock Option Plan.The Company maintains a stock option plan at its
Kaplan subsidiary that provides for the issuance of stock options representing
10.6 percent of Kaplan, Inc. common stock to certain members of Kaplans
management. Under the provisions of this plan, options are issued with an
exercise price equal to the estimated fair value of Kaplans common stock.
Options vest ratably over five years from issuance, and upon exercise, an
option holder has the right to require the Company to repurchase the Kaplan
stock at the stocks then fair value. The fair value of Kaplans common stock
is determined by the compensation committee of the Companys Board of
Directors, with input from management and an independent outside valuation
firm. The compensation committee has historically modified the fair value of
Kaplan stock on an annual basis, and management expects this practice to
continue. At December 30, 2001, options representing 10.0 percent of Kaplans
common stock were issued and outstanding. For 2001, 2000, and 1999, the
Company recorded expense of $25,302,000, $6,000,000, and $7,250,000,
respectively, related to this plan. In 2001, payouts from option exercises
totaled $2.1 million. At December 30, 2001, the Companys Kaplan stock-based
compensation accrual balance totaled $41,400,000. Management expects Kaplans
profits and related fair value to increase significantly again in 2002, with a
corresponding increase in the stock-based compensation expense for 2002 as
compared to 2001.

Other.The Company does not have any off-balance sheet arrangements or
financing activities with special-purpose entities (SPEs). Transactions with
related parties, as discussed in Note C to the Consolidated Financial
Statements, are in the ordinary course of business and are conducted on an
arms-length basis.

OTHER

New Accounting Pronouncements.In July 2001, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards (SFAS) No.
142, Goodwill and Other Intangible Assets. SFAS No. 142 supersedes APB 17
and provides, among other provisions, that (1) goodwill and indefinite lived
intangible assets will no longer be amortized, (2) goodwill will be tested for
impairment at least annually at the reporting unit level, (3) intangible
assets deemed to have an indefinite life will be tested for impairment at
least annually, and (4) the amortization period of intangible assets with
finite lives will no longer be limited to 40 years. The Company adopted SFAS
No. 142 effective in fiscal 2002 and estimates that the application of its
requirements will result in the cessation of most of the periodic charges
presently being recorded from the amortization of goodwill and other
intangible assets.

Forward-looking Statements.This annual report contains certain
forward-looking statements that are based largely on the Companys current
expectations. Forward-looking statements are subject to certain risks and
uncertainties that could cause actual results and achievements to differ
materially from those expressed in the forward-looking statements. For more
information about these forward-looking statements and related risks, please
refer to the section titled Forward-looking Statements in Part 1 of the
Companys Annual Report on Form 10-K.

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59



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##### 



TEN-YEAR SUMMARY OF SELECTED HISTORICAL FINANCIAL DATA

See Notes to Consolidated Financial Statements for the summary of significant
accounting policies and additional information relative to the years
19992001.

|                                         |                                                                      |                                                                   |   |           |       |      |   |           |       |  |   |           |        | 
|---------------------------------------- | -------------------------------------------------------------------- | ----------------------------------------------------------------- | - | --------- | ----- | ---- | - | --------- | ----- |  | - | --------- | ------ | 
|(in thousands, except per share amounts) |                                                                      | 2001                                                              |   | 2000      |       | 1999
|                                         |                                                                      |                                                                   |   |           |       |     
|                                         |                                                                      |                                                                   |   |           |       |      |   |           |       |  |   |          
|                                        
|                                        
|                                        
|                                        
|Results of Operations                    |                                                                      |                                                                   |   |           |       |      |   |           |       |  |   |          
|                                        
|                                        
|                                        
|                                        
|                                         | Operating revenues                                                   |                                                                   | $ | 2,416,673 |       |      | $ | 2,412,150 |       |  | $ | 2,215,571 |       
|                                        
|                                        
|                                        
|                                        
|                                         | Income from operations                                               |                                                                   | $ | 219,932   |       |      | $ | 339,882   |       |  | $ | 388,453   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Income before cumulative effect of change in accounting principle    |                                                                   | $ | 229,639   |       |      | $ | 136,470   |       |  | $ | 225,785   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Cumulative effect of change in method of accounting for income taxes |                                                                   |   |          |       |      |   |          |       |  |   |          |       
|                                         |                                                                      |                                                                   |   |           |       |      |   |           |       |  |   |           |       
|                                         | Net income                                                           |                                                                   | $ | 229,639   |       |      | $ | 136,470   |       |  | $ | 225,785   |       
|                                         |                                                                      |                                                                   |   |           |       |      |   |           |       |  |   |           |       
|Per Share Amounts                        |                                                                      |                                                                   |   |           |       |      |   |           |       |  |   |          
|                                        
|                                        
|                                        
|                                        
|                                         | Basic earnings per common share                                      |                                                                   |   |           |       |      |   |           |       |  |   |           |       
|                                        
|                                        
|                                        
|                                        
|                                         |                                                                      | Income before cumulative effect of change in accounting principle |   | $         | 24.10 |      |   | $         | 14.34 |  |   | $         | 22.35  | 
|                                        
|                                        
|                                        
|                                        
|                                         |                                                                      | Cumulative effect of change in accounting principle               |   |           |      |      |   |           |      |  |   |           |       | 
|                                         |                                                                      |                                                                   |   |           |       |      |   |           |       |  |   |           |       
|                                         |                                                                      | Net income                                                        |   | $         | 24.10 |      |   | $         | 14.34 |  |   | $         | 22.35  | 
|                                         |                                                                      |                                                                   |   |           |       |      |   |           |       |  |   |           |       
|                                         |                                                                      | Basic average shares outstanding                                  |   |           | 9,486 |      |   |           | 9,445 |  |   |           | 10,061 | 
|                                        
|                                        
|                                        
|                                        
|                                         | Diluted earnings per share                                           |                                                                   |   |           |       |      |   |           |       |  |   |           |       
|                                        
|                                        
|                                        
|                                        
|                                         |                                                                      | Income before cumulative effect of change in accounting principle |   | $         | 24.06 |      |   | $         | 14.32 |  |   | $         | 22.30  | 
|                                        
|                                        
|                                        
|                                        
|                                         |                                                                      | Cumulative effect of change in accounting principle               |   |           |      |      |   |           |      |  |   |           |       | 
|                                         |                                                                      |                                                                   |   |           |       |      |   |           |       |  |   |           |       
|                                         |                                                                      | Net income                                                        |   | $         | 24.06 |      |   | $         | 14.32 |  |   | $         | 22.30  | 
|                                         |                                                                      |                                                                   |   |           |       |      |   |           |       |  |   |           |       
|                                         |                                                                      | Diluted average shares outstanding                                |   |           | 9,500 |      |   |           | 9,460 |  |   |           | 10,082 | 
|                                        
|                                        
|                                        
|                                        
|                                         | Cash dividends                                                       |                                                                   | $ | 5.60      |       |      | $ | 5.40      |       |  | $ | 5.20      |       
|                                        
|                                        
|                                        
|                                        
|                                         | Common shareholders equity                                          |                                                                   | $ | 177.30    |       |      | $ | 156.55    |       |  | $ | 144.90    |       
|                                        
|                                        
|                                        
|                                        
|Financial Position                       |                                                                      |                                                                   |   |           |       |      |   |           |       |  |   |          
|                                        
|                                        
|                                        
|                                        
|                                         | Current assets                                                       |                                                                   | $ | 396,857   |       |      | $ | 405,067   |       |  | $ | 476,159   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Working capital (deficit)                                            |                                                                   |   | (37,233   | )     |      |   | (3,730    | )     |  |   | (346,389  | )     
|                                        
|                                        
|                                        
|                                        
|                                         | Property, plant, and equipment                                       |                                                                   |   | 1,098,211 |       |      |   | 927,061   |       |  |   | 854,906   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Total assets                                                         |                                                                   |   | 3,559,098 |       |      |   | 3,200,743 |       |  |   | 2,986,944 |       
|                                        
|                                        
|                                        
|                                        
|                                         | Long-term debt                                                       |                                                                   |   | 883,078   |       |      |   | 873,267   |       |  |   | 397,620   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Common shareholders equity                                          |                                                                   |   | 1,683,485 |       |      |   | 1,481,007 |       |  |   | 1,367,790 |       

60



---



##### 





|                                         |                                                                      |                                                                   |   |           |        |      |   |           |        |  |   |           |        |  |   |           |        | 
|---------------------------------------- | -------------------------------------------------------------------- | ----------------------------------------------------------------- | - | --------- | ------ | ---- | - | --------- | ------ |  | - | --------- | ------ |  | - | --------- | ------ | 
|(in thousands, except per share amounts) |                                                                      | 1998                                                              |   | 1997      |        | 1996 |   | 1995     
|                                         |                                                                      |                                                                   |   |           |        |      |   |          
|Results of Operations                    |                                                                      |                                                                   |   |           |        |      |   |           |        |  |   |           |        |  |   |          
|                                        
|                                        
|                                        
|                                        
|                                         | Operating revenues                                                   |                                                                   | $ | 2,110,360 |        |      | $ | 1,956,253 |        |  | $ | 1,853,445 |        |  | $ | 1,719,449 |       
|                                        
|                                        
|                                        
|                                        
|                                         | Income from operations                                               |                                                                   | $ | 378,897   |        |      | $ | 381,351   |        |  | $ | 337,169   |        |  | $ | 271,018   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Income before cumulative effect of change in accounting principle    |                                                                   | $ | 417,259   |        |      | $ | 281,574   |        |  | $ | 220,817   |        |  | $ | 190,096   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Cumulative effect of change in method of accounting for income taxes |                                                                   |   |          |        |      |   |          |        |  |   |          |        |  |   |          |       
|                                         |                                                                      |                                                                   |   |           |        |      |   |           |        |  |   |           |        |  |   |           |       
|                                         | Net income                                                           |                                                                   | $ | 417,259   |        |      | $ | 281,574   |        |  | $ | 220,817   |        |  | $ | 190,096   |       
|                                         |                                                                      |                                                                   |   |           |        |      |   |           |        |  |   |           |        |  |   |           |       
|Per Share Amounts                        |                                                                      |                                                                   |   |           |        |      |   |           |        |  |   |           |        |  |   |          
|                                        
|                                        
|                                        
|                                        
|                                         | Basic earnings per common share                                      |                                                                   |   |           |        |      |   |           |        |  |   |           |        |  |   |           |       
|                                        
|                                        
|                                        
|                                        
|                                         |                                                                      | Income before cumulative effect of change in accounting principle |   | $         | 41.27  |      |   | $         | 26.23  |  |   | $         | 20.08  |  |   | $         | 17.16  | 
|                                        
|                                        
|                                        
|                                        
|                                         |                                                                      | Cumulative effect of change in accounting principle               |   |           |       |      |   |           |       |  |   |           |       |  |   |           |       | 
|                                         |                                                                      |                                                                   |   |           |        |      |   |           |        |  |   |           |        |  |   |           |       
|                                         |                                                                      | Net income                                                        |   | $         | 41.27  |      |   | $         | 26.23  |  |   | $         | 20.08  |  |   | $         | 17.16  | 
|                                         |                                                                      |                                                                   |   |           |        |      |   |           |        |  |   |           |        |  |   |           |       
|                                         |                                                                      | Basic average shares outstanding                                  |   |           | 10,087 |      |   |           | 10,700 |  |   |           | 10,964 |  |   |           | 11,075 | 
|                                        
|                                        
|                                        
|                                        
|                                         | Diluted earnings per share                                           |                                                                   |   |           |        |      |   |           |        |  |   |           |        |  |   |           |       
|                                        
|                                        
|                                        
|                                        
|                                         |                                                                      | Income before cumulative effect of change in accounting principle |   | $         | 41.10  |      |   | $         | 26.15  |  |   | $         | 20.05  |  |   | $         | 17.15  | 
|                                        
|                                        
|                                        
|                                        
|                                         |                                                                      | Cumulative effect of change in accounting principle               |   |           |       |      |   |           |       |  |   |           |       |  |   |           |       | 
|                                         |                                                                      |                                                                   |   |           |        |      |   |           |        |  |   |           |        |  |   |           |       
|                                         |                                                                      | Net income                                                        |   | $         | 41.10  |      |   | $         | 26.15  |  |   | $         | 20.05  |  |   | $         | 17.15  | 
|                                         |                                                                      |                                                                   |   |           |        |      |   |           |        |  |   |           |        |  |   |           |       
|                                         |                                                                      | Diluted average shares outstanding                                |   |           | 10,129 |      |   |           | 10,733 |  |   |           | 10,980 |  |   |           | 11,086 | 
|                                        
|                                        
|                                        
|                                        
|                                         | Cash dividends                                                       |                                                                   | $ | 5.00      |        |      | $ | 4.80      |        |  | $ | 4.60      |        |  | $ | 4.40      |       
|                                        
|                                        
|                                        
|                                        
|                                         | Common shareholders equity                                          |                                                                   | $ | 157.34    |        |      | $ | 117.36    |        |  | $ | 121.24    |        |  | $ | 107.60    |       
|                                        
|                                        
|                                        
|                                        
|Financial Position                       |                                                                      |                                                                   |   |           |        |      |   |           |        |  |   |           |        |  |   |          
|                                        
|                                        
|                                        
|                                        
|                                         | Current assets                                                       |                                                                   | $ | 404,878   |        |      | $ | 308,492   |        |  | $ | 382,631   |        |  | $ | 406,570   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Working capital (deficit)                                            |                                                                   |   | 15,799    |        |      |   | (300,264  | )      |  |   | 100,995   |        |  |   | 98,393    |       
|                                        
|                                        
|                                        
|                                        
|                                         | Property, plant, and equipment                                       |                                                                   |   | 841,062   |        |      |   | 653,750   |        |  |   | 511,363   |        |  |   | 457,359   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Total assets                                                         |                                                                   |   | 2,729,661 |        |      |   | 2,077,317 |        |  |   | 1,870,411 |        |  |   | 1,732,893 |       
|                                        
|                                        
|                                        
|                                        
|                                         | Long-term debt                                                       |                                                                   |   | 395,000   |        |      |   |          |        |  |   |          |        |  |   |          |       
|                                        
|                                        
|                                        
|                                        
|                                         | Common shareholders equity                                          |                                                                   |   | 1,588,103 |        |      |   | 1,184,074 |        |  |   | 1,322,803 |        |  |   | 1,184,204 |       

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                         |                                                                      |                                                                   |   |           |        |      |   |           |        |  |   |           |        | 
|---------------------------------------- | -------------------------------------------------------------------- | ----------------------------------------------------------------- | - | --------- | ------ | ---- | - | --------- | ------ |  | - | --------- | ------ | 
|(in thousands, except per share amounts) |                                                                      | 1994                                                              |   | 1993      |        | 1992
|                                         |                                                                      |                                                                   |   |           |        |     
|Results of Operations                    |                                                                      |                                                                   |   |           |        |      |   |           |        |  |   |          
|                                        
|                                        
|                                        
|                                        
|                                         | Operating revenues                                                   |                                                                   | $ | 1,613,978 |        |      | $ | 1,498,191 |        |  | $ | 1,450,867 |       
|                                        
|                                        
|                                        
|                                        
|                                         | Income from operations                                               |                                                                   | $ | 274,875   |        |      | $ | 238,980   |        |  | $ | 232,112   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Income before cumulative effect of change in accounting principle    |                                                                   | $ | 169,672   |        |      | $ | 153,817   |        |  | $ | 127,796   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Cumulative effect of change in method of accounting for income taxes |                                                                   |   |          |        |      |   | 11,600    |        |  |   |          |       
|                                         |                                                                      |                                                                   |   |           |        |      |   |           |        |  |   |           |       
|                                         | Net income                                                           |                                                                   | $ | 169,672   |        |      | $ | 165,417   |        |  | $ | 127,796   |       
|                                         |                                                                      |                                                                   |   |           |        |      |   |           |        |  |   |           |       
|Per Share Amounts                        |                                                                      |                                                                   |   |           |        |      |   |           |        |  |   |          
|                                        
|                                        
|                                        
|                                        
|                                         | Basic earnings per common share                                      |                                                                   |   |           |        |      |   |           |        |  |   |           |       
|                                        
|                                        
|                                        
|                                        
|                                         |                                                                      | Income before cumulative effect of change in accounting principle |   | $         | 14.66  |      |   | $         | 13.10  |  |   | $         | 10.81  | 
|                                        
|                                        
|                                        
|                                        
|                                         |                                                                      | Cumulative effect of change in accounting principle               |   |           |       |      |   |           | 0.98   |  |   |           |       | 
|                                         |                                                                      |                                                                   |   |           |        |      |   |           |        |  |   |           |       
|                                         |                                                                      | Net income                                                        |   | $         | 14.66  |      |   | $         | 14.08  |  |   | $         | 10.81  | 
|                                         |                                                                      |                                                                   |   |           |        |      |   |           |        |  |   |           |       
|                                         |                                                                      | Basic average shares outstanding                                  |   |           | 11,577 |      |   |           | 11,746 |  |   |           | 11,827 | 
|                                        
|                                        
|                                        
|                                        
|                                         | Diluted earnings per share                                           |                                                                   |   |           |        |      |   |           |        |  |   |           |       
|                                        
|                                        
|                                        
|                                        
|                                         |                                                                      | Income before cumulative effect of change in accounting principle |   | $         | 14.65  |      |   | $         | 13.10  |  |   | $         | 10.80  | 
|                                        
|                                        
|                                        
|                                        
|                                         |                                                                      | Cumulative effect of change in accounting principle               |   |           |       |      |   |           | 0.98   |  |   |           |       | 
|                                         |                                                                      |                                                                   |   |           |        |      |   |           |        |  |   |           |       
|                                         |                                                                      | Net income                                                        |   | $         | 14.65  |      |   | $         | 14.08  |  |   |           | 10.80  | 
|                                         |                                                                      |                                                                   |   |           |        |      |   |           |        |  |   |           |       
|                                         |                                                                      | Diluted average shares outstanding                                |   |           | 11,582 |      |   |           | 11,750 |  |   |           | 11,830 | 
|                                        
|                                        
|                                        
|                                        
|                                         | Cash dividends                                                       |                                                                   | $ | 4.20      |        |      | $ | 4.20      |        |  | $ | 4.20      |       
|                                        
|                                        
|                                        
|                                        
|                                         | Common shareholders equity                                          |                                                                   | $ | 99.32     |        |      | $ | 92.84     |        |  | $ | 84.17     |       
|                                        
|                                        
|                                        
|                                        
|Financial Position                       |                                                                      |                                                                   |   |           |        |      |   |           |        |  |   |          
|                                        
|                                        
|                                        
|                                        
|                                         | Current assets                                                       |                                                                   | $ | 375,879   |        |      | $ | 625,574   |        |  | $ | 524,975   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Working capital (deficit)                                            |                                                                   |   | 102,806   |        |      |   | 367,041   |        |  |   | 242,627   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Property, plant, and equipment                                       |                                                                   |   | 411,396   |        |      |   | 363,718   |        |  |   | 390,804   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Total assets                                                         |                                                                   |   | 1,696,868 |        |      |   | 1,622,504 |        |  |   | 1,568,121 |       
|                                        
|                                        
|                                        
|                                        
|                                         | Long-term debt                                                       |                                                                   |   | 50,297    |        |      |   | 51,768    |        |  |   | 51,842    |       
|                                        
|                                        
|                                        
|                                        
|                                         | Common shareholders equity                                          |                                                                   |   | 1,126,933 |        |      |   | 1,087,419 |        |  |   | 993,005   |       

61



---



##### 



INDEX TO EXHIBITS

|        |  |   |  |                                                                                                                                                                                                                                                                                                                                           
|------- |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |   |  |                                                                                                                                                                                                                                                                                                                                           
|Number  |  |   |  | Description                                                                                                                                                                                                                                                                                                                               
|        |  |   |  |                                                                                                                                                                                                                                                                                                                                           
|3.1     |  |  |  | Certificate of Incorporation of the Company as amended
through May 12, 1988, 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 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)                                                                                                                                               
|       
|       
|       
|       
|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.          
|       
|       
|       
|       
|4.3     |  |  |  | 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     |  |  |  | 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     |  |  |  | 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
4.4 to the Companys Quarterly Report on Form 10-Q for the
quarter ended October 1, 2000)                                                                    
|       
|       
|       
|       
|4.6     |  |  |  | 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)
|       
|       
|       
|       
|10.1    |  |  |  | The Washington Post Company Annual Incentive Compensation
Plan as amended and restated effective June 30, 1995
(incorporated by reference to Exhibit 10.1 to the
Companys Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996).*                                                                                          
|       
|       
|       
|       
|10.2    |  |  |  | The Washington Post Company Long-Term Incentive
Compensation Plan as amended and restated effective March
9, 2000 (incorporated by reference to Exhibit 10.2 to the
Companys Annual Report on Form 10-K for the fiscal year
ended January 2, 2000).*                                                                                     

[Index Continued on Next Page]

62



---



##### 



INDEX TO EXHIBITS (CONTINUED)

|        |  |   |  |                                                                                                                                                                                                                                               
|------- |  | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |   |  |                                                                                                                                                                                                                                               
|Number  |  |   |  | Description                                                                                                                                                                                                                                   
|        |  |   |  |                                                                                                                                                                                                                                               
|10.3    |  |  |  | The Washington Post Company Stock Option Plan as amended and
restated through March 12, 1998 (corrected copy) (incorporated
by reference to Exhibit 10.1 to the Companys Quarterly Report
on Form 10-Q for the quarter ended April 1, 2001).*
|       
|       
|       
|       
|10.4    |  |  |  | The Washington Post Company Supplemental Executive Retirement
Plan as amended and restated through March 14, 2002.*                                                                                                                           
|       
|       
|       
|       
|10.5    |  |  |  | The Washington Post Company Deferred Compensation Plan as
amended and restated effective March 9, 2000 (incorporated by
reference to Exhibit 10.5 to the Companys Annual Report on
Form 10-K for the fiscal year ended January 2, 2000).*    
|       
|       
|       
|       
|11      |  |  |  | Calculation of earnings per share of common stock.                                                                                                                                                                                            
|       
|       
|       
|       
|21      |  |  |  | List of subsidiaries of the Company.                                                                                                                                                                                                          
|       
|       
|       
|       
|23      |  |  |  | Consent of independent accountants.                                                                                                                                                                                                           
|       
|       
|       
|       
|24      |  |  |  | Power of attorney dated March 14, 2002.                                                                                                                                                                                                       



---

|* |  | A management contract or compensatory plan or arrangement required to be
included as an exhibit hereto pursuant to Item 14(c) of Form 10-K.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------

63