Fair Value Measurements

9 Months Ended

Sep. 27, 2020

FAIR VALUE MEASUREMENTS

Fair value is the price that would be received upon the sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. The transaction would be in the principal or most advantageous market for the asset or liability, based on assumptions that a market participant would use in pricing the asset or liability. The fair value hierarchy consists of three levels:

Level 1–quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date;

Level 2–inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

Level 3–unobservable inputs for the asset or liability.

Assets/Liabilities Measured and Recorded at Fair Value on a Recurring Basis

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of September 27, 2020, and December 29, 2019:


(In thousands)	September 27, 2020								December 29, 2019
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Short-term AFS securities (1)
Corporate debt securities	$	119,586	$	—	$	119,586	$	—	$	99,126	$	—	$	99,126	$	—
U.S. Treasury securities	97,802		—		97,802		—		43,095		—		43,095		—
U.S. governmental agency securities	47,823		—		47,823		—		37,502		—		37,502		—
Commercial paper	43,523		—		43,523		—		12,561		—		12,561		—
Certificates of deposit	—		—		—		—		9,501		—		9,501		—
Total short-term AFS securities	$	308,734	$	—	$	308,734	$	—	$	201,785	$	—	$	201,785	$	—
Long-term AFS securities (1)
Corporate debt securities	$	120,381	$	—	$	120,381	$	—	$	103,737	$	—	$	103,737	$	—
U.S. Treasury securities	90,402		—		90,402		—		101,438		—		101,438		—
U.S. governmental agency securities	64,866		—		64,866		—		46,521		—		46,521		—
Total long-term AFS securities	$	275,649	$	—	$	275,649	$	—	$	251,696	$	—	$	251,696	$	—
Liabilities:
Deferred compensation (2)(3)	$	19,797	$	19,797	$	—	$	—	$	23,702	$	23,702	$	—	$	—
Contingent consideration(4)	$	8,431	$	—	$	—	$	8,431	$	—	$	—	$	—	$	—

(1) We classified these investments as Level 2 since the fair value is based on market observable inputs for investments with similar terms and maturities.

(2) The deferred compensation liability, included in Other liabilities—other in our Condensed Consolidated Balance Sheets, consists of deferrals under The New York Times Company Deferred Executive Compensation Plan (the “DEC”), which previously enabled certain eligible executives to elect to defer a portion of their compensation on a pre-tax basis. The deferred amounts are invested at the executives’ option in various mutual funds. The fair value of deferred compensation is based on the mutual fund investments elected by the executives and on quoted prices in active markets for identical assets. Participation in the DEC was frozen effective December 31, 2015.

(3) The Company invests the assets associated with the deferred compensation liability in life insurance products. Our investments in life insurance products are included in Miscellaneous assets in our Condensed Consolidated Balance Sheets, and were $46.8 million as of September 27, 2020, and $46.0 million as of December 29, 2019. The fair value of these assets is measured using the net asset value per share (or its equivalent) and has not been classified in the fair value hierarchy.

(4) The contingent consideration represents contingent payments in connection with the Serial acquisition. The Company estimated the fair value of the contingent consideration liability using a probability-weighted discounted cash flow model. The estimate of the fair value of contingent consideration requires subjective assumptions to be made regarding probabilities assigned to operational targets and the discount rate. During the three months ended September 27, 2020, the Company made payments of $0.9 million related to the contingent consideration. The remaining balance of $8.4 million is included in Accrued expenses and other, for the current portion of the liability, and Other non-current liabilities, for the long-term portion of the liability, in our Condensed Consolidated Balance Sheets. See Note 5 for more information.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details