SUMMARY OF QUARTERLY OPERATING RESULTS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

Quarterly results of operations and comprehensive income (loss) for the year ended December 31, 2018, is as follows:



(in thousands, except per share amounts)	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Operating Revenues	$	659,436		$	672,677		$	674,766		$	689,087
Operating Costs and Expenses
Operating	365,151			440,655			448,920			432,706
Selling, general and administrative	225,045			141,378			131,081			152,624
Depreciation of property, plant and equipment	14,642			13,619			13,648			14,813
Amortization of intangible assets	10,384			11,399			12,269			13,362
Impairment of goodwill and other long-lived assets	—			—			8,109			—
	615,222			607,051			614,027			613,505
Income from Operations	44,214			65,626			60,739			75,582
Equity in earnings of affiliates, net	2,579			931			9,537			1,426
Interest income	1,372			1,901			611			1,469
Interest expense	(8,071		)	(17,165		)	(6,135		)	(6,531		)
Debt extinguishment costs	—			(11,378		)	—			—
Non-operating pension and postretirement benefit income, net	21,386			23,041			22,214			53,900
(Loss) gain on marketable equity securities, net	(14,102		)	(2,554		)	44,962			(44,149		)
Other income (expense), net	9,187			2,333			3,142			(12,559		)
Income Before Income Taxes	56,565			62,735			135,070			69,138
Provision for Income Taxes	13,600			16,100			10,000			12,400
Net Income	42,965			46,635			125,070			56,738
Net Income Attributable to Noncontrolling Interests	(74		)	(69		)	(6		)	(53		)
Net Income Attributable to Graham Holdings Company Common Stockholders	$	42,891		$	46,566		$	125,064		$	56,685
Quarterly Comprehensive Income (Loss)	$	53,703		$	13,345		$	119,862		$	(52,541	)

Per Share Information Attributable to Graham Holdings Company Common Stockholders
Basic net income per common share	$	7.84		$	8.69		$	23.43		$	10.69
Basic average number of common shares outstanding	5,436			5,325			5,302			5,270
Diluted net income per common share	$	7.78		$	8.63		$	23.28		$	10.61
Diluted average number of common shares outstanding	5,473			5,362			5,337			5,309

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, 2017, is as follows:



(in thousands, except per share amounts)	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Operating Revenues	$	582,717		$	676,087		$	657,225		$	675,817
Operating Costs and Expenses
Operating	325,687			381,747			374,987			371,922
Selling, general and administrative	225,289			208,973			228,051			225,477
Depreciation of property, plant and equipment	14,652			15,871			16,002			15,984
Amortization of intangible assets	6,836			10,531			10,923			12,897
Impairment of goodwill and other long-lived assets	—			9,224			312			78
	572,464			626,346			630,275			626,358
Income from Operations	10,253			49,741			26,950			49,459
Equity in earnings (losses) of affiliates, net	649			1,331			(532		)	(4,697		)
Interest income	1,363			1,173			861			3,184
Interest expense	(8,129		)	(9,035		)	(8,619		)	(8,103		)
Non-operating pension and postretirement benefit income, net	18,801			18,620			17,621			17,657
Other income (expense), net	849			4,069			1,963			(2,640		)
Income Before Income Taxes	23,786			65,899			38,244			54,860
Provision for (Benefit From) Income Taxes	2,700			23,900			13,400			(159,700		)
Net Income	21,086			41,999			24,844			214,560
Net Income Attributable to Noncontrolling Interests	—			(3		)	(60		)	(382		)
Net Income Attributable to Graham Holdings Company Common Stockholders	$	21,086		$	41,996		$	24,784		$	214,178
Quarterly Comprehensive Income	$	39,368		$	59,135		$	64,029		$	367,648

Per Share Information Attributable to Graham Holdings Company Common Stockholders
Basic net income per common share	$	3.77		$	7.51		$	4.45		$	38.76
Basic average number of common shares outstanding	5,535			5,539			5,518			5,473
Diluted net income per common share	$	3.75		$	7.46		$	4.42		$	38.52
Diluted average number of common shares outstanding	5,569			5,577			5,554			5,509

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.

In the fourth quarter of 2017, an unfavorable $2.8 million net out of period expense adjustment was included that related to prior periods from the third quarter of 2016 through the third quarter of 2017. With respect to this error, the Company has concluded that it was not material to the Company’s financial position or results of operations for 2017 and 2016 and related interim periods, based on its consideration of quantitative and qualitative factors.

Quarterly impact from certain items in 2018 and 2017 (after-tax and diluted EPS amounts):



		First Quarter			Second Quarter			Third Quarter			Fourth Quarter
2018
Ÿ	Intangible asset impairment charge of $5.8 million at the healthcare business							$	(1.08	)
Ÿ	A $3.0 million reduction to operating expenses from property, plant, and equipment gains in connection with the spectrum repacking mandate of the FCC ($0.2 million, $0.6 million, $0.8 million and $1.4 million in the first, second, third and fourth quarters, respectively)	$	0.04		$	0.11		$	0.14		$	0.26
Ÿ	Interest expense of $6.2 million related to the settlement of a mandatorily redeemable noncontrolling interest				$	(1.14	)
Ÿ	Debt extinguishment costs of $8.6 million				$	(1.60	)
Ÿ	A $22.2 million settlement gain related to a bulk lump sum pension offering and curtailment gain related to changes in the Company’s postretirement healthcare benefit plan										$	4.11
Ÿ	Losses, net, of $12.6 million on marketable equity securities ($10.7 million loss, $1.9 million loss, $33.6 million gain, and $33.6 million loss in the first, second, third and fourth quarters, respectively)	$	(1.94	)	$	(0.36	)	$	6.26		$	(6.28	)
Ÿ	Non-operating gain, net, of $5.7 million from sales, write-ups and impairments of cost method and equity method investments, and related to sales of land and businesses, including losses on guarantor lease obligations ($3.6 million gain, $1.8 million gain, $8.0 million gain, and $7.7 million loss in the first, second, third and fourth quarters, respectively)	$	0.65		$	0.34		$	1.48		$	(1.43	)
Ÿ	Gain of $1.8 million on the Kaplan University Transaction	$	0.33
Ÿ	Losses, net, of $2.9 million for non-operating foreign currency (losses) gains ($0.1 million gain, $1.7 million loss, $0.1 million loss, and $1.2 million loss in the first, second, third and fourth quarters, respectively)	$	0.02		$	(0.32	)	$	(0.02	)	$	(0.23	)
Ÿ	A nonrecurring discrete $17.8 million deferred state tax benefit related to the release of valuation allowances							$	3.31
Ÿ	Income tax benefit of $1.8 million related to stock compensation	$	0.33



2017
Ÿ	Charges of $6.3 million related to restructuring and non-operating Separation Incentive Program charges at the education division ($0.3 million, $0.4 million, $1.1 million and $4.5 million in the first, second, third and fourth quarters, respectively)	$	(0.05	)	$	(0.06	)	$	(0.20	)	$	(0.81	)
Ÿ	Goodwill and long-lived assets impairment charges of $5.8 million at other businesses				$	(1.03	)
Ÿ	Gains, net, of $2.1 million for non-operating foreign currency gains (losses) ($1.1 million gain, $2.2 million gain, $0.9 million gain and $2.1 million loss in the first, second, third and fourth quarters, respectively)	$	0.19		$	0.39		$	0.16		$	(0.37	)
Ÿ	Net deferred tax benefits of $177.5 million related to the Tax Act										$	31.68
Ÿ	Income tax benefit of $5.9 million related to stock compensation	$	1.06