SUMMARY OF QUARTERLY OPERATING RESULTS AND COMPREHENSIVE INCOME (UNAUDITED)

Quarterly results of operations and comprehensive income for the year ended December 31, 2013, is as follows:



(in thousands, except per share amounts)	First Quarter			Second Quarter			Third Quarter ⁽¹⁾			Fourth Quarter
Operating Revenues
Education	$	527,815		$	548,230		$	546,452		$	555,011
Subscriber	186,790			192,273			190,302			186,297
Advertising	82,994			96,670			84,444			102,208
Other	39,241			52,423			51,331			45,383
	836,840			889,596			872,529			888,899
Operating Costs and Expenses
Operating	381,965			400,515			400,939			381,492
Selling, general and administrative	337,865			323,182			331,247			335,028
Depreciation of property, plant and equipment	59,895			57,816			55,633			59,874
Amortization of intangible assets	3,717			3,313			2,837			3,731
Impairment of intangibles and other long-lived assets	—			—			—			3,250
	783,442			784,826			790,656			783,375
Income from Operations	53,398			104,770			81,873			105,524
Equity in earnings of affiliates, net	3,418			3,868			5,892			37
Interest income	510			522			642			590
Interest expense	(8,960		)	(9,048		)	(9,221		)	(8,838		)
Other (expense) income, net	(4,083		)	(12,858		)	8,110			(14,920		)
Income from Continuing Operations Before Income Taxes	44,283			87,254			87,296			82,393
Provision for Income Taxes	17,800			34,500			31,000			26,700
Income from Continuing Operations	26,483			52,754			56,296			55,693
(Loss) Income from Discontinued Operations, Net of Tax	(21,224		)	(7,620		)	(25,872		)	100,835
Net Income	5,259			45,134			30,424			156,528
Net Income Attributable to Noncontrolling Interests	(97		)	(253		)	(75		)	(55		)
Net Income Attributable to Graham Holdings Company	5,162			44,881			30,349			156,473
Redeemable Preferred Stock Dividends	(444		)	(206		)	(205		)	—
Net Income Attributable to Graham Holdings Company Common Stockholders	$	4,718		$	44,675		$	30,144		$	156,473

Amounts Attributable to Graham Holdings Company Common Stockholders
Income from continuing operations	$	25,942		$	52,295		$	56,016		$	55,638
(Loss) income from discontinued operations, net of tax	(21,224		)	(7,620		)	(25,872		)	100,835
Net income attributable to Graham Holdings Company common stockholders	$	4,718		$	44,675		$	30,144		$	156,473

Per Share Information Attributable to Graham Holdings Company Common Stockholders
Basic income per common share from continuing operations	$	3.50		$	7.05		$	7.55		$	7.54
Basic (loss) income per common share from discontinued operations	(2.86		)	(1.03		)	(3.48		)	13.66
Basic net income per common share	$	0.64		$	6.02		$	4.07		$	21.20

Diluted income per common share from continuing operations	$	3.50		$	7.05		$	7.53		$	7.52
Diluted (loss) income per common share from discontinued operations	(2.86		)	(1.03		)	(3.48		)	13.62
Diluted net income per common share	$	0.64		$	6.02		$	4.05		$	21.14
Basic average number of common shares outstanding	7,227			7,229			7,231			7,266
Diluted average number of common shares outstanding	7,266			7,283			7,337			7,347
2013 Quarterly comprehensive income	$	29,129		$	61,125		$	37,533		$	555,695

⁽¹⁾ Other revenue and operating expenses of $29.9 million from the third quarter of 2013 have been revised to correctly present revenue on a net basis for certain third quarter contracts that were previously reported on a gross basis. The amounts did not impact net income, and the Company concluded that the amounts were not material to the Company’s consolidated financial statements.

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

Quarterly results of operations and comprehensive income for the year ended December 31, 2012, is as follows:



(in thousands, except per share amount)	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Operating Revenues
Education	$	546,685		$	551,774		$	551,696		$	546,341
Subscriber	178,022			182,639			185,326			186,383
Advertising	82,600			94,649			105,855			117,696
Other	20,305			25,368			34,760			45,471
	827,612			854,430			877,637			895,891
Operating Costs and Expenses
Operating	382,106			387,167			407,364			389,620
Selling, general and administrative	347,841			335,054			314,359			336,262
Depreciation of property, plant and equipment	56,165			56,594			57,588			73,731
Amortization of intangible assets	3,839			4,407			5,090			7,610
Impairment of goodwill and other long-lived assets	—			—			—			111,593
	789,951			783,222			784,401			918,816
Income (Loss) from Operations	37,661			71,208			93,236			(22,925		)
Equity in earnings of affiliates, net	3,888			3,314			4,099			2,785
Interest income	1,069			775			648			901
Interest expense	(9,163		)	(8,979		)	(8,738		)	(9,064		)
Other income (expense), net	8,588			(635		)	4,163			(17,572		)
Income (Loss) from Continuing Operations Before Income Taxes	42,043			65,683			93,408			(45,875		)
Provision for Income Taxes	17,200			23,900			37,000			5,100
Income (Loss) from Continuing Operations	24,843			41,783			56,408			(50,975		)
Income from Discontinued Operations, Net of Tax	6,725			10,264			37,539			5,600
Net Income (Loss)	31,568			52,047			93,947			(45,375		)
Net (Income) Loss Attributable to Noncontrolling Interests	(70		)	(11		)	71			(64		)
Net Income (Loss) Attributable to Graham Holdings Company	31,498			52,036			94,018			(45,439		)
Redeemable Preferred Stock Dividends	(451		)	(222		)	(222		)	—
Net Income (Loss) Attributable to Graham Holdings Company Common Stockholders	$	31,047		$	51,814		$	93,796		$	(45,439	)

Amounts Attributable to Graham Holdings Company Common Stockholders
Income (loss) from continuing operations	$	24,322		$	41,550		$	56,257		$	(51,039	)
Income from discontinued operations, net of tax	6,725			10,264			37,539			5,600
Net income (loss) attributable to Graham Holdings Company common stockholders	$	31,047		$	51,814		$	93,796		$	(45,439	)

Per Share Information Attributable to Graham Holdings Company Common Stockholders
Basic income (loss) per common share from continuing operations	$	3.17		$	5.48		$	7.58		$	(7.35	)
Basic income per common share from discontinued operations	0.90			1.36			5.06			0.78
Basic net income (loss) per common share	$	4.07		$	6.84		$	12.64		$	(6.57	)

Diluted income (loss) per common share from continuing operations	$	3.17		$	5.48		$	7.58		$	(7.35	)
Diluted income per common share from discontinued operations	0.90			1.36			5.06			0.78
Diluted net income (loss) per common share	$	4.07		$	6.84		$	12.64		$	(6.57	)
Basic average number of common shares outstanding	7,514			7,431			7,272			7,223
Diluted average number of common shares outstanding	7,615			7,545			7,376			7,223
2012 Quarterly comprehensive income	$	59,907		$	47,085		$	95,760		$	16,857

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

Quarterly impact from certain items in 2013 and 2012 (after-tax and diluted EPS amounts):



		First Quarter			Second Quarter			Third Quarter			Fourth Quarter
2013
Ÿ	Charges of $25.3 million in connection with severance and restructuring at the education division ($6.1 million, $3.9 million, $3.1 million and $12.2 million in the first, second, third and fourth quarters, respectively)	$	(0.85	)	$	(0.54	)	$	(0.42	)	$	(1.66	)
Ÿ	Intangible and other long-lived assets impairment charge of $3.2 million at Kaplan										$	(0.44	)
Ÿ	Write-down of marketable equity security of $6.7 million										$	(0.91	)
Ÿ	Losses, net, of $8.6 million for non-operating unrealized foreign currency (losses) gains ($3.0 million loss, $8.1 million loss, $5.0 million gain and $2.6 million loss in the first, second, third and fourth quarters, respectively)	$	(0.41	)	$	(1.11	)	$	0.69		$	(0.35	)



2012
Ÿ	Goodwill and other long-lived assets impairment charge of $81.9 million at Kaplan Test Preparation									$	(11.33	)
Ÿ	Charges of $32.9 million in connection with severance and restructuring at the education division ($3.1 million, $2.7 million and $27.1 million in the second, third and fourth quarters, respectively)			$	(0.41	)	$	(0.37	)	$	(3.75	)
Ÿ	Write-down of a marketable equity security of $11.2 million									$	(1.54	)
Ÿ	Gain on sale of cost method investment of $3.7 million	$	0.48
Ÿ	Gains, net, of $2.0 million for non-operating unrealized foreign currency gains (losses) ($1.7 million gain, $1.6 million loss and $1.9 million gain in the first, second and third quarters, respectively)	$	0.22	$	(0.21	)	$	0.26