-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MLhkkgSj8PKcCg2d5EbPS9QMropaE5cJhq4QqAUA9kQB0RUWHppz0z8T/nEHJorE 849YwGR7Dbxs7xKoSKpNwA== /in/edgar/work/20000809/0001005477-00-005579/0001005477-00-005579.txt : 20000921 0001005477-00-005579.hdr.sgml : 20000921 ACCESSION NUMBER: 0001005477-00-005579 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000625 FILED AS OF DATE: 20000809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW YORK TIMES CO CENTRAL INDEX KEY: 0000071691 STANDARD INDUSTRIAL CLASSIFICATION: [2711 ] IRS NUMBER: 131102020 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-05837 FILM NUMBER: 689893 BUSINESS ADDRESS: STREET 1: 229 W 43RD ST CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2125561234 MAIL ADDRESS: STREET 1: 229 W 43RD STREET CITY: NEW YORK STATE: NY ZIP: 10036 10-Q 1 0001.txt FORM 10-Q FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For Quarter Ended June 25, 2000 ------------- Commission file number 1-5837 ------------- THE NEW YORK TIMES COMPANY -------------------------- (Exact name of registrant as specified in its charter) NEW YORK 13-1102020 - ------------------------------- ---------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 229 WEST 43RD STREET, NEW YORK, NEW YORK ---------------------------------------- (Address of principal executive offices) 10036 ---------- (Zip Code) Registrant's telephone number, including area code 212-556-1234 ------------ 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, and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_|. Number of shares of each class of the registrant's common stock outstanding as of August 4, 2000 (exclusive of treasury shares): Class A Common Stock 166,125,783 shares Class B Common Stock 847,158 shares PART I. FINANCIAL INFORMATION Item 1. Financial Statements THE NEW YORK TIMES COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars and shares in thousands, except per share data)
Three Months Ended Six Months Ended ---------------------------- ---------------------------- June 25, June 27, June 25, June 27, 2000 1999 2000 1999 ---------------------------- ---------------------------- (13 Weeks) (26 Weeks) Revenues Advertising .............................. $ 658,320 $ 562,170 $1,275,073 $1,085,056 Circulation .............................. 180,185 172,801 360,609 344,857 Other .................................... 47,083 44,414 92,838 88,530 ---------- ---------- ---------- ---------- Total ................................. 885,588 779,385 1,728,520 1,518,443 ---------- ---------- ---------- ---------- Production costs Raw materials ............................ 87,915 82,468 173,504 169,760 Wages and benefits ....................... 163,950 159,173 329,407 310,395 Other .................................... 113,106 104,904 222,821 209,514 ---------- ---------- ---------- ---------- Total ................................. 364,971 346,545 725,732 689,669 Selling, general and administrative expenses 334,739 277,979 661,977 558,672 ---------- ---------- ---------- ---------- Total ................................. 699,710 624,524 1,387,709 1,248,341 ---------- ---------- ---------- ---------- Operating profit ........................... 185,878 154,861 340,811 270,102 Income from joint ventures ................. 3,622 3,265 7,249 7,468 Interest expense - net ..................... 15,190 12,841 30,532 24,737 ---------- ---------- ---------- ---------- Income before income taxes ................. 174,310 145,285 317,528 252,833 Income taxes ............................... 72,572 61,822 132,727 107,960 ---------- ---------- ---------- ---------- Net income ................................. $ 101,738 $ 83,463 $ 184,801 $ 144,873 ========== ========== ========== ========== Average number of common shares outstanding Basic .................................... 169,501 176,083 171,233 177,885 Diluted .................................. 173,047 179,331 175,110 181,225 Per share of common stock Basic earnings ........................... $ .60 $ .47 $ 1.08 $ .81 ========== ========== ========== ========== Diluted earnings ......................... $ .59 $ .47 $ 1.06 $ .80 ========== ========== ========== ========== Dividends ................................ $ .115 $ .105 $ .220 $ .200 ========== ========== ========== ==========
See Notes to Condensed Consolidated Financial Statements. 2 THE NEW YORK TIMES COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
June 25, December 26, 2000 1999 ---------- ------------ ASSETS (Unaudited) Current Assets Cash and cash equivalents ..................... $ 37,549 $ 63,861 Accounts receivable-net ....................... 370,613 366,754 Inventories Newsprint and magazine paper ............... 26,866 23,666 Work-in-process and other .................. 5,429 4,984 ---------- ---------- Total inventories ....................... 32,295 28,650 Deferred income taxes ......................... 53,611 53,611 Assets held for sale .......................... 36,581 37,796 Other current assets .......................... 66,818 64,236 ---------- ---------- Total current assets .................... 597,467 614,908 ---------- ---------- Other Assets Investments in joint ventures ................. 121,216 121,940 Property, plant and equipment (less accumulated depreciation of $1,038,025 in 2000 and $976,767 in 1999) ....................... 1,216,475 1,218,396 Intangible assets acquired Cost in excess of net assets acquired (less accumulated amortization of $292,898 in 2000 and $270,235 in 1999) ............... 1,090,633 953,709 Other intangible assets acquired (less accumulated amortization of $96,151 in 2000 and $85,365 in 1999) ................ 441,023 351,309 Miscellaneous assets .......................... 240,863 235,540 ---------- ---------- TOTAL ASSETS ..................................... $3,707,677 $3,495,802 ========== ==========
See Notes to Condensed Consolidated Financial Statements. 3 THE NEW YORK TIMES COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
June 25, December 26, 2000 1999 ----------- ------------ LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited) Current Liabilities Commercial paper outstanding .................................... $ 363,480 $ -- Accounts payable ................................................ 194,973 191,706 Accrued payroll and other related liabilities ................... 93,262 105,257 Accrued expenses ................................................ 203,044 193,553 Unexpired subscriptions ......................................... 81,369 80,161 Current portion of long-term debt and capital lease obligations ................................... 2,593 102,837 ----------- ----------- Total current liabilities ................................... 938,721 673,514 ----------- ----------- Other Liabilities Long-term debt .................................................. 553,009 512,627 Capital lease obligations ....................................... 84,433 85,700 Deferred income taxes ........................................... 125,946 141,033 Other ........................................................... 663,160 634,270 ----------- ----------- Total other liabilities ..................................... 1,426,548 1,373,630 ----------- ----------- Total liabilities ........................................... 2,365,269 2,047,144 ----------- ----------- Stockholders' Equity Capital stock of $.10 par value Class A - authorized 300,000,000 shares; issued: 2000 - 179,019,788; 1999 - 177,971,194 (including treasury shares: 2000 - 11,592,263; 1999 - 5,000,000) ...................... 17,902 17,797 Class B - convertible - authorized 847,158 shares; issued: 2000 - 847,158; 1999 - 847,240 ............................ 85 85 Additional paid-in capital ...................................... 27,055 -- Accumulated other comprehensive (loss) income ................... (4,442) 3,170 Retained earnings ............................................... 1,752,819 1,600,743 Common stock held in treasury, at cost .......................... (451,011) (173,137) ----------- ----------- Total stockholders' equity .................................... 1,342,408 1,448,658 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ......................... $ 3,707,677 $ 3,495,802 =========== ===========
See Notes to Condensed Consolidated Financial Statements. 4 THE NEW YORK TIMES COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands)
Six Months Ended --------------------------- June 25, June 27, 2000 1999 --------------------------- (26 Weeks) OPERATING ACTIVITIES Net cash provided by operating activities ............ $ 299,140 $ 228,290 --------- --------- INVESTING ACTIVITIES Additions to property, plant and equipment ........... (28,157) (29,291) Business acquired .................................... (296,278) -- Net proceeds from dispositions ....................... -- 11,434 Other-net ............................................ (9,634) (10,238) --------- --------- Net cash used in investing activities ................ (334,069) (28,095) --------- --------- FINANCING ACTIVITIES Commercial paper borrowings .......................... 363,480 82,530 Long-term debt Proceeds ......................................... 40,000 -- Payments ......................................... (101,433) (684) Capital shares Issuances ........................................ 23,329 7,447 Repurchases ...................................... (279,160) (257,965) Dividends paid to stockholders ....................... (37,599) (35,602) --------- --------- Net cash provided by/(used in) financing activities .. 8,617 (204,274) --------- --------- Decrease in cash and cash equivalents ................ (26,312) (4,079) Cash and cash equivalents at the beginning of the year 63,861 35,991 --------- --------- Cash and cash equivalents at the end of the quarter .. $ 37,549 $ 31,912 ========= =========
SUPPLEMENTAL CASH FLOW INFORMATION NONCASH FINANCING AND INVESTING TRANSACTIONS In 1999 the Company purchased a minority interest in TheStreet.com for $15.6 million, of which $3.6 million was in cash and $12.0 million represents an irrevocable credit for services to be used by TheStreet.com through February 2003. Investment and deferred revenue accounts were increased by $12.0 million accordingly. As of June 25, 2000, approximately $2.3 million of advertising credits have been utilized. BUSINESS ACQUIRED In January of 2000 the Company acquired certain assets ($313.8 million) and assumed certain liabilities ($17.5 million) of a newspaper, the Worcester Telegram & Gazette, for $296.3 million in cash (see Note 3). OTHER Amounts in these statements of cash flows are presented on a cash basis and may differ from those shown in other sections of the financial statements. See Notes to Condensed Consolidated Financial Statements. 5 THE NEW YORK TIMES COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. General The accompanying Notes to Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements included in the annual report on Form 10-K for the year ended December 26, 1999, for The New York Times Company (the "Company") filed with the Securities and Exchange Commission (the "SEC"). In the opinion of management, all adjustments necessary for a fair presentation of the financial position and results of operations, as of and for the interim period ended, have been included. Due to the seasonal nature of the Company's business, results for the interim periods are not necessarily indicative of a full year's operations. The fiscal periods included herein comprise 13 weeks for the three-month periods and 26 weeks for the six-month periods. Certain reclassifications have been made to the 1999 Condensed Consolidated Financial Statements to conform with classifications used at June 25, 2000. 2. Proposed Tracking Stock On January 20, 2000, the Board of Directors of the Company authorized, subject to shareholder approval, the issuance of a new class of stock ("Class C Stock"). On January 28, 2000, the Company filed a registration statement with the SEC on Form S-3 (the "Form S-3") related to a proposed initial public offering of Class C Stock, which is intended to track the performance of the Company's Internet business division, New York Times Digital ("NYTD group"). At the Annual Meeting of Stockholders held on May 23, 2000, stockholders authorized the filing of an amendment to the Company's certificate of incorporation to create this new class of stock. As of the date of this report, the Form S-3 has not become effective and the amendment to the certificate of incorporation has not been filed with the Secretary of State. The Company is currently evaluating market conditions. The Company separates for financial reporting purposes the NYT group and the NYTD group (see Note 11). The NYT group includes all of the other business segments of the Company: Newspaper, Broadcast and Magazine, except for the businesses of the NYTD group. The NYT group also includes a retained interest in the NYTD group, which is currently 100%. This retained interest will decline upon any issuance of Class C Stock. The NYTD group includes NYTimes.com, NYToday.com, Boston.com, WineToday.com, GolfDigest.com and Abuzz. The NYTD group's operating results as presented in the financial statements included in Note 11 of the Notes to Condensed Consolidated Financial Statements reflect the effect of various inter-group arrangements and policies for license fees, inter-group services and income taxes. Beginning in 2000, and coinciding with the effective date of these various arrangements (January 1, 2000), the Company's management determined that its reportable segments consist of newspapers, broadcast, magazines and the NYTD group. These segments will be evaluated regularly by key management in assessing performance and allocating resources. 6 3. Acquisitions/Dispositions On January 7, 2000, the Company acquired certain assets and assumed certain liabilities of a newspaper, the Worcester Telegram & Gazette ("T&G"), in Worcester, Mass., for $296.3 million in cash. The cost of this acquisition was funded through the Company's commercial paper program. This transaction was accounted for as a purchase and, accordingly, the T&G has been included in the Company's Condensed Consolidated Financial Statements (as of January 7, 2000). A portion of the purchase price was allocated to goodwill ($163.2 million), a portion to other intangibles ($100.5 million) (principally advertising and subscriber relationships) and the remainder to other assets acquired net of liabilities assumed. The amount allocated to goodwill will be amortized over a 40-year period and the amount allocated to other intangibles will be amortized over an average of 19 years. The purchase price allocation is preliminary and further adjustments are possible based on the completion of a final valuation. If this acquisition had occurred in the beginning of 1999, it would not have had a material impact on the results of operations for periods presented herein. On February 17, 2000, the Company made a decision to offer for sale the Santa Barbara News-Press in Santa Barbara, Calif., the Daily World in Opelousas, La., the Daily News in Palatka, Fla., the Lake City Reporter in Lake City, Fla., The News-Sun in Sebring/Avon Park, Fla., The News-Leader in Fernandina Beach, Fla., the Marco Island Eagle in Marco Island, Fla., and the operations of all nine of its telephone directories, which were a part of the Regional Newspaper Group. The net assets of these newspapers and telephone directory operations have been included in the caption "Assets held for sale" in the Company's Condensed Consolidated Balance Sheets at their carrying value of $36.6 million at June 25, 2000, and $37.8 million at December 26, 1999. The sales are expected to be completed by December 31, 2000. The operations of these newspapers and telephone directories are not material to the Company. On June 26, 2000, the Company agreed to sell to TransWestern Publishing Company, LLC, all nine telephone directories. This transaction closed on July 18, 2000. On July 7, 2000, the Company agreed to sell the Santa Barbara News-Press to Ampersand Publishing, LLC. This sale, which is subject to regulatory approval, is expected to close in the third quarter of 2000. 4. Income Taxes Reconciliations between the effective rate on income before income taxes and the federal statutory rate are as follows:
Three Months Ended Six Months Ended - ------------------------------------------------------------------------------------------------------------------------------------ June 25, 2000 June 27, 1999 June 25, 2000 June 27, 1999 - ------------------------------------------------------------------------------------------------------------------------------------ % of % of % of % of (Dollars in thousands) Amount Pre-tax Amount Pre-tax Amount Pre-tax Amount Pre-tax - ------------------------------------------------------------------------------------------------------------------------------------ Tax at the federal statutory rate ................. $ 61,009 35.0% $ 50,850 35.0% $ 111,135 35.0% $ 88,492 35.0% State and local income taxes-net of federal benefit 8,572 4.9% 8,378 5.8% 16,266 5.1% 15,045 6.0% Amortization of nondeductible intangible assets acquired ................................... 3,156 1.8% 2,594 1.8% 5,734 1.8% 4,572 1.8% Other-net ......................................... (165) -0.1% -- -- (408) -0.1% (149) -0.1% ------------------------------------------------------------------------------ Income tax expense ................................ $ 72,572 41.6% $ 61,822 42.6% $ 132,727 41.8% $ 107,960 42.7% ==============================================================================
7 5. Debt Obligations In June 2000 total available funds under revolving credit agreements were increased to $600.0 million from $400.0 million. The Company's one-year agreement was renewed and increased to $300.0 million from $200.0 million and will now mature in June 2001. The Company's multi-year agreement was renewed and increased to $300.0 million from $200.0 million and will now mature in June 2005. The revolving credit agreements require, among other provisions, specified levels of stockholders' equity. Approximately $356.7 million of stockholders' equity was unrestricted under these agreements as of June 25, 2000, and $509.2 million was unrestricted at December 26, 1999. The decline in the level of unrestricted stockholders' equity was primarily due to stock repurchases. As of June 25, 2000, the amount outstanding under the Company's commercial paper program, which is supported by these revolving credit agreements, was $363.5 million. The amount available under these facilities was $236.5 million as of June 25, 2000. No amounts were outstanding under the Company's revolving credit agreements as of June 25, 2000. In March 2000 the Company issued $40.0 million of 7% subordinated notes due March 21, 2003, to three venture capital firms. After the consummation of the proposed initial public offering of Class C stock, this debt will be convertible, at the election of the venture capital firms, into shares of Class C stock intended to represent approximately 6.7% of the pre-offering equity of the NYTD group. If there is no offering, this debt will not be convertible. The Company has agreed to give the venture capital firms piggyback and demand registration rights for Class C stock issued upon conversion. As of June 25, 2000, and December 26, 1999, the Company had outstanding $1.0 billion and $701.2 million in total debt including commercial paper and capital leases. The increase is primarily attributable to higher levels of commercial paper outstanding. On April 28, 2000, the Company repaid $100.0 million due on its six and one-half year senior notes. The remainder of the Company's debt and capital leases generally mature between March 2003 and March 2025. 6. Stock Repurchase Program During the first six months of 2000, the Company repurchased 6.6 million shares of Class A Common Stock at a cost of $279.2 million. The average price of these repurchases was $42 per share. As of August 4, 2000, the remaining amount of repurchase authorization from the Company's Board of Directors was $97.7 million. 7. Voluntary Staff Reductions No charges for work force reductions were recorded for the first six months of 2000 or for the first quarter of 1999. A $4.0 million work force reduction charge was recorded in the second quarter of 1999. Work force reduction accruals are included in "Accrued expenses" on the Company's Condensed Consolidated Balance Sheets and amounted to $10.8 million at June 25, 2000, and $20.0 million at December 26, 1999. Most of the accruals outstanding at June 25, 2000, will be paid within one year. 8 8. Comprehensive Income Comprehensive income for the Company principally includes unrealized gains/(losses) on available-for-sale securities, as defined under SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities," foreign currency translation adjustments, as well as net income reported in the Company's Condensed Consolidated Statements of Income. Comprehensive income for 2000 and 1999 was as follows:
------------------------------------------------------------------------------------------------------------------------ Three Months Ended Six Months Ended ------------------------------------------------------------------------------------------------------------------------ June 25, June 27, June 25, June 27, (Dollars in thousands) 2000 1999 2000 1999 ------------------------------------------------------------------------------------------------------------------------ Net Income $ 101,738 $ 83,463 $ 184,801 $ 144,873 Foreign currency translation gains 1,127 825 888 1,443 Change in unrealized (losses)/gains on marketable securities (8,539) 24,968 (15,768) 24,968 Income tax benefit/(charge) 4,035 (11,587) 7,268 (11,852) ------------------------------------------------------------------------------------------------------------------------ Comprehensive income $ 98,361 $ 97,669 $ 177,189 $ 159,432 ------------------------------------------------------------------------------------------------------------------------
The Accumulated other comprehensive (loss) income on the Company's Condensed Consolidated Balance Sheets was net of a deferred income tax asset of $4.7 million as of June 25, 2000, and net of a deferred income tax liability of $2.6 million as of December 26, 1999. 9. Dividend Rate Increase On April 27, 2000, the Board of Directors authorized a $.01 per share increase in the quarterly dividend on its Class A and Class B Common Stock from $.105 per share to $.115 per share, effective with the June 2000 dividend. 9 10. Segment Statements of Income
----------------------------------------------------------------------------------------------------- Three Months Ended Six Months Ended ----------------------------------------------------------------------------------------------------- June 25, June 27, June 25, June 27, (Dollars in thousands) 2000 1999 2000 1999 ----------------------------------------------------------------------------------------------------- REVENUES Newspapers ....................... $ 798,203 $ 701,900 $ 1,568,808 $ 1,377,060 Broadcast ........................ 41,322 40,804 75,673 73,897 Magazines ........................ 35,583 32,584 64,491 60,299 New York Times Digital ........... 13,464 5,009 25,033 8,832 Intersegment eliminations (A) (2,984) (912) (5,485) (1,645) -------------------------------------------------------------- Total ............................ $ 885,588 $ 779,385 $ 1,728,520 $ 1,518,443 ============================================================== OPERATING PROFIT (LOSS) Newspapers ....................... $ 187,673 $ 148,568 $ 350,742 $ 265,968 Broadcast ........................ 13,625 14,705 21,010 21,691 Magazines ........................ 9,592 8,191 14,097 12,722 New York Times Digital ........... (15,472) (4,619) (25,521) (9,719) Unallocated corporate expensess... (9,540) (11,984) (19,517) (20,560) -------------------------------------------------------------- Total ............................ 185,878 154,861 340,811 270,102 Income from joint ventures ....... 3,622 3,265 7,249 7,468 Interest expense, net ............ 15,190 12,841 30,532 24,737 -------------------------------------------------------------- Income before income taxes ....... 174,310 145,285 317,528 252,833 Income taxes ..................... 72,572 61,822 132,727 107,960 -------------------------------------------------------------- NET INCOME ....................... $ 101,738 $ 83,463 $ 184,801 $ 144,873 ==============================================================
See Management's Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q for more information on the Company's reportable operating segments. (A) Intersegment eliminations primarily include revenues between New York Times Digital and other segments. 10 11. Consolidating Information Below is the consolidating financial information of the NYT group and the NYTD group. The financial information reflects the businesses of the NYT group and the NYTD group, including the allocation of revenues and expenses between the NYT group and the NYTD group in accordance with the Company's allocation policies. The NYT group presented below excludes its retained interest in the NYTD group, which is currently 100%. This retained interest will decline upon any issuance of Class C Stock. The allocations are as follows: a) Inter-group advertising revenues between the NYT and NYTD groups, b) a portion of classified advertising revenues from the NYT group to the NYTD group, c) license fees charged by the NYT group to the NYTD group for the electronic use of the trademarks and copyrights owned by the NYT group, d) a portion of NYT group expenses for general and administrative services and shared processing services from the NYT group to the NYTD group. Additionally, the income tax benefit relating to the operations of the NYTD group, which could be utilized on a consolidated basis, were allocated to the NYTD group. The Company believes that the aforementioned allocations were made on a reasonable basis. 11 CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Three Months Ended June 25, 2000 Three Months Ended June 27, 1999 - ------------------------------------------------------------------------------------- -------------------------------------------- The New The New The NYT The NYTD Elimina- York Times The NYT The NYTD Elimina- York Times (In thousands) Group Group tions Company Group Group tions Company - ------------------------------------------------------------------------------------- -------------------------------------------- REVENUES External non-internet revenues $ 872,057 $ -- $ -- $ 872,057 $ 773,835 $ -- $ -- $ 773,835 External internet revenues 785 12,746 -- 13,531 541 5,009 -- 5,550 Inter-group revenue 2,266 718 (2,984) -- 912 -- (912) -- - ------------------------------------------------------------------------------------- -------------------------------------------- Total 875,108 13,464 (2,984) 885,588 775,288 5,009 (912) 779,385 - ------------------------------------------------------------------------------------- -------------------------------------------- COSTS AND EXPENSES Production costs: External expenses 357,878 7,093 -- 364,971 342,822 3,723 -- 346,545 Inter-group expense 219 1,310 (1,529) -- -- 912 (912) -- Selling, general and administrative expenses: External expenses 315,572 19,167 -- 334,739 273,564 4,415 -- 277,979 Inter-group allocated expenses 89 1,366 (1,455) -- (578) 578 -- -- - ------------------------------------------------------------------------------------- -------------------------------------------- Total 673,758 28,936 (2,984) 699,710 615,808 9,628 (912) 624,524 - ------------------------------------------------------------------------------------- -------------------------------------------- OPERATING PROFIT (LOSS) 201,350 (15,472) -- 185,878 159,480 (4,619) -- 154,861 Income from joint ventures 3,622 -- -- 3,622 3,265 -- -- 3,265 Interest expense, net 15,048 142 -- 15,190 12,841 -- -- 12,841 - ------------------------------------------------------------------------------------- -------------------------------------------- Income (loss) before income taxes 189,924 (15,614) -- 174,310 149,904 (4,619) -- 145,285 - ------------------------------------------------------------------------------------- -------------------------------------------- Income tax expense (benefit) 79,130 (6,558) -- 72,572 63,804 (1,982) -- 61,822 - ------------------------------------------------------------------------------------- -------------------------------------------- NET INCOME/(LOSS) $ 110,794 $ (9,056) $ -- $ 101,738 $ 86,100 $ (2,637) $ -- $ 83,463
Six Months Ended June 25, 2000 Six Months Ended June 27, 1999 - ------------------------------------------------------------------------------------- -------------------------------------------- The New The New The NYT The NYTD Elimina- York Times The NYT The NYTD Elimina- York Times (In thousands) Group Group tions Company Group Group tions Company - ------------------------------------------------------------------------------------- -------------------------------------------- REVENUES External non-internet revenues $ 1,703,513 $ -- $ -- $ 1,703,513 $1,508,597 $ -- $ -- $1,508,597 External internet revenues 1,502 23,505 -- 25,007 1,014 8,832 -- 9,846 Inter-group revenue 3,957 1,528 (5,485) -- 1,645 -- (1,645) -- - ------------------------------------------------------------------------------------- -------------------------------------------- Total 1,708,972 25,033 (5,485) 1,728,520 1,511,256 8,832 (1,645) 1,518,443 - ------------------------------------------------------------------------------------- -------------------------------------------- COSTS AND EXPENSES Production costs: External expenses 712,608 13,124 -- 725,732 682,648 7,021 -- 689,669 Inter-group expense 433 2,340 (2,773) -- -- 1,645 (1,645) -- Selling, general and administrative expenses: External expenses 629,324 32,653 -- 661,977 549,946 8,726 -- 558,672 Inter-group allocated expenses 275 2,437 (2,712) -- (1,159) 1,159 -- -- - ------------------------------------------------------------------------------------- -------------------------------------------- Total 1,342,640 50,554 (5,485) 1,387,709 1,231,435 18,551 (1,645) 1,248,341 - ------------------------------------------------------------------------------------- -------------------------------------------- OPERATING PROFIT (LOSS) 366,332 (25,521) -- 340,811 279,821 (9,719) -- 270,102 Income from joint ventures 7,249 -- -- 7,249 7,468 -- -- 7,468 Interest expense, net 30,390 142 -- 30,532 24,737 -- -- 24,737 - ------------------------------------------------------------------------------------- -------------------------------------------- Income (loss) before income taxes 343,191 (25,663) -- 317,528 262,552 (9,719) -- 252,833 - ------------------------------------------------------------------------------------- -------------------------------------------- Income tax expense (benefit) 143,505 (10,778) -- 132,727 112,130 (4,170) -- 107,960 - ------------------------------------------------------------------------------------- -------------------------------------------- NET INCOME/(LOSS) $ 199,686 $ (14,885) $ -- $ 184,801 $ 150,422 $ (5,549) $ -- $ 144,873 - ------------------------------------------------------------------------------------- --------------------------------------------
12 CONDENSED CONSOLIDATING BALANCE SHEETS
June 25, 2000 December 26, 1999 ------------------------------------------------- ------------------------------------------------ Reclassifi- The New Reclassifi- The New The NYT The NYTD cations/ York Times The NYT The NYTD cations/ York Times (In thousands) Group Group Eliminations Company Group Group Eliminations Company - ------------------------------------------------------------------------------- ------------------------------------------------ ASSETS Current assets $ 588,595 $ 8,872 $ -- $ 597,467 $ 605,350 $ 9,558 $ -- $ 614,908 Investments in joint ventures 121,216 -- -- 121,216 121,940 -- -- 121,940 Funds allocated to the NYTD group, net 46,363 -- (46,363) -- 80,440 -- (80,440) -- Property plant & equipment, net 1,204,955 11,520 -- 1,216,475 1,208,601 9,795 -- 1,218,396 Intangible assets acquired, net 1,505,895 25,761 -- 1,531,656 1,276,134 28,884 -- 1,305,018 Miscellaneous assets 239,663 1,200 -- 240,863 235,052 488 -- 235,540 - ------------------------------------------------------------------------------- ------------------------------------------------ Total $3,706,687 $ 47,353 $ (46,363) $3,707,677 $3,527,517 $ 48,725 $ (80,440) $3,495,802 - ------------------------------------------------------------------------------- ------------------------------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ 918,351 $ 20,370 $ -- $ 938,721 $ 660,978 $ 12,536 $ -- $ 673,514 Other liabilities 1,385,035 41,513 -- 1,426,548 1,371,873 1,757 -- 1,373,630 Funds allocated from the NYT group, net -- 46,363 (46,363) -- -- 80,440 (80,440) -- Common stock 17,987 -- -- 17,987 17,882 -- -- 17,882 Additional paid-in capital 27,055 -- -- 27,055 -- -- -- -- Retained earnings (accumulated losses) 1,813,712 (60,893) -- 1,752,819 1,646,751 (46,008) -- 1,600,743 Common stock held in treasury, at cost, and other (455,453) -- -- (455,453) (169,967) -- -- (169,967) - ------------------------------------------------------------------------------- ------------------------------------------------ Total $3,706,687 $ 47,353 $ (46,363) $3,707,677 $3,527,517 $ 48,725 $ (80,440) $3,495,802 - ------------------------------------------------------------------------------- ------------------------------------------------
13 SUPPLEMENTAL INFORMATION TO THE CONDENSED CONSOLIDATING BALANCE SHEETS FUNDS ALLOCATED TO/FROM THE NYTD GROUP
Debt Funds Funds proceeds allocated allocated advanced to to/from the from the NYT the NYT NYT group, (In thousands) group group net --------------------------------------------- Balance at December 26, 1999 ................. $ 80,440 $ -- $ 80,440 Funds allocated from the NYT group ........ 2,446 3,477 5,923 Debt proceeds advanced to the NYT group (A) -- (40,000) (40,000) --------------------------------------------- Balance at June 25, 2000 ..................... $ 82,886 $(36,523) $ 46,363 ===========================================
(A) The Company will make the proceeds of this debt (see Note 5) available to the NYTD group as they are needed and as such the NYTD group will accrue interest income on the amount of proceeds still available to the NYTD group at the Company's short-term interest rate. Advertising Credits On March 3, 2000, the NYT group committed to provide $30.0 million in advertising credits to the NYTD group to be utilized in any of the NYT group's print publications. It is the NYTD group's current intention to use these credits as consideration to effect strategic alliances, investments and acquisitions. The advertising credits will be recorded on the NYTD group's financial statements as they are committed to independent third parties. The fair market value of what is received or the value of the advertising given up, whichever is more readily determinable, will be recorded as an asset with a corresponding amount recorded as funds allocated from the NYT group to the NYTD group, in the NYTD group's financial statements. As of June 25, 2000, none of the advertising credits have been utilized. 14 CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Six Months Ended June 25, 2000 Six Months Ended June 27, 1999 --------------------------------------------- ----------------------------------------------- The New The New The NYT The NYTD Elimina- York Times The NYT The NYTD Elimina- York Times (In thousands) Group Group tions Company Group Group tions Company - ------------------------------------------------------------------------------- ----------------------------------------------- OPERATING ACTIVITIES Net cash provided by/(used in) operating activities $ 300,191 $ (1,051) $ -- $ 299,140 $ 228,080 $ 210 $ -- $ 228,290 - ------------------------------------------------------------------------------- ----------------------------------------------- INVESTING ACTIVITIES Additions to property, plant and equipment (24,246) (3,911) -- (28,157) (28,053) (1,238) -- (29,291) Business acquired (296,278) -- -- (296,278) -- -- -- -- Net proceeds from dispositions -- -- -- -- 11,434 -- -- 11,434 Other-net (9,634) -- -- (9,634) (10,238) -- -- (10,238) - ------------------------------------------------------------------------------- ----------------------------------------------- Net cash used in investing activities (330,158) (3,911) -- (334,069) (26,857) (1,238) -- (28,095) - ------------------------------------------------------------------------------- ----------------------------------------------- FINANCING ACTIVITIES Commercial paper borrowings 363,480 -- -- 363,480 82,530 -- -- 82,530 Long-term debt Proceeds -- 40,000 -- 40,000 -- -- -- -- Payments (100,850) (583) -- (101,433) (684) -- -- (684) Capital shares Issuances 23,329 -- -- 23,329 7,447 -- -- 7,447 Repurchases (279,160) -- -- (279,160) (257,965) -- -- (257,965) Dividends paid to stockholders (37,599) -- -- (37,599) (35,602) -- -- (35,602) Funds allocated between the NYT group and the NYTD group, net 34,569 (34,569) -- -- (807) 807 -- -- - ------------------------------------------------------------------------------- ----------------------------------------------- Net cash provided by/(used in) financing activities 3,769 4,848 -- 8,617 (205,081) 807 -- (204,274) - ------------------------------------------------------------------------------- ----------------------------------------------- Net (decrease) increase in cash and short-term investments (26,198) (114) -- (26,312) (3,858) (221) -- (4,079) Cash and cash equivalents at the beginning of the year 63,677 184 -- 63,861 35,950 41 -- 35,991 - ------------------------------------------------------------------------------- ----------------------------------------------- Cash and cash equivalents at the end of the quarter $ 37,479 $ 70 $ -- $ 37,549 $ 32,092 $ (180) $ -- $ 31,912 - ------------------------------------------------------------------------------- -----------------------------------------------
15 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Advertising revenues accounted for approximately 74% and circulation revenues accounted for 21% of the Company's revenues in the second quarter and for the first six months of 2000. Advertising revenues influence the pattern of the Company's consolidated revenues because they are seasonal in nature. Traditionally, second-quarter and fourth-quarter advertising volume is higher than that which occurs in the first and third quarters when economic activity tends to be lower after the holiday season and in the summer period. Quarterly trends are also affected by the overall economy and economic conditions that may exist in specific markets served by each of the Company's business segments. Newsprint is the major component of the Company's cost of raw materials. Newsprint market prices began increasing in the second quarter of 2000 over 1999 levels and for the remainder of the year are expected to continue to rise over 1999 levels. The Company's consolidated financial results for the quarter and six months ended June 25, 2000, compared with the quarter and six months ended June 27, 1999, were as follows:
--------------------------------------------------------------------------------------------------------------------------- Three Months Ended Six Months Ended --------------------------------------------------------------------------------------------------------------------------- June 25, June 27, June 25, June 27, (Dollars in thousands, except per share data) 2000 1999 % Change 2000 1999 % Change --------------------------------------------------------------------------------------------------------------------------- Revenues $885,588 $779,385 13.6% $1,728,520 $1,518,443 13.8% --------------------------------------------------------------------------------------------------------------------------- Operating profit $185,878 $154,861 20.0% $ 340,811 $ 270,102 26.2% --------------------------------------------------------------------------------------------------------------------------- Net Income before special items $101,738 $ 85,755 18.6% $ 184,801 $ 147,165 25.6% Special items -- (2,292) N/A -- (2,292) N/A --------------------------------------------------------------------------------------------------------------------------- Net Income $101,738 $ 83,463 21.9% $ 184,801 $ 144,873 27.6% --------------------------------------------------------------------------------------------------------------------------- Diluted earnings per share: $ 0.59 $ 0.48 22.9% $ 1.06 $ 0.81 30.9% Net Income before special items Special items -- (0.01) N/A -- (0.01) N/A --------------------------------------------------------------------------------------------------------------------------- Diluted earnings per share $ 0.59 $ 0.47 25.5% $ 1.06 $ 0.80 32.5% ---------------------------------------------------------------------------------------------------------------------------
The 2000 second-quarter net income increased 18.6% compared with the second quarter of 1999, excluding special items. For the first six months of 2000, net income increased 25.6% compared with the first six months of 1999, excluding special items. Including special items, the 2000 second-quarter net income increased 21.9% compared with the second quarter of 1999. For the first six months of 2000 net income, including special items, increased 27.6% compared with the first six months of 1999. Revenues for the second quarter of 2000 were $885.6 million, a 13.6% increase over 1999 second-quarter revenues of $779.4 million. Revenues for the first six months of 2000 were $1,728.5 million, a 13.8% increase from $1,518.4 million for the same period in 1999. Excluding revenues from the Worcester Telegram & Gazette (T&G), which was acquired on January 7, 2000, total revenues in the second quarter of 2000 grew 10.9% and advertising revenues grew 14.3% over the second quarter of 1999. In the first six months of 2000 total revenues grew 11.3% and advertising revenues grew 14.9% compared with the same period a year ago, excluding the T&G. The increase was primarily due to strong national and help-wanted advertising at the Newspaper Group with the largest increases at The New York Times and The Boston Globe. 16 Operating profit in the second quarter of 2000 increased 17.0% to $185.9 million from $158.9 million, excluding special items. On the same basis, operating profit for the first half of the year rose 24.3% to $340.8 million from $274.1 million in the corresponding period of 1999. The operating profit increases were principally from strong revenue growth. Operating profit increased to 20.0% in the second quarter of 2000 including special items. On the same basis, for the first six months of 2000 operating profit increased 26.2% from the corresponding period of 1999. There were no special items in the first half of 2000 or in the first quarter of 1999. Special items in the second quarter of 1999 included a $4.0 million pre-tax charge ($.01 diluted earnings per share) for work force reduction expenses at The Boston Globe. Excluding special items, EBITDA (earnings before interest, taxes, depreciation and amortization) in the second quarter of 2000 rose to $241.9 million from $210.7 million in the 1999 second quarter. On the same basis, EBITDA for the first six months of 2000 was $452.2 million compared with $378.7 million in the same period of 1999. EBITDA in the 2000 second quarter rose to $241.9 million from $206.7 million in the second quarter of 1999, including special items. On the same basis, EBITDA for the first six months of 2000 was $452.2 million compared with $374.7 million in the same period of 1999. EBITDA is presented since it is a widely accepted indicator of funds available to service debt, although it is not a measure of liquidity or of financial performance under generally accepted accounting principles ("GAAP"). The EBITDA presented may not be comparable to similarly titled measures reported by other companies. The Company believes that EBITDA, while providing useful information, should not be considered in isolation or as an alternative to net income or cash flows as determined under GAAP. Consolidated operating expenses for the second quarter and first half of 2000 and 1999 were as follows:
---------------------------------------------------------------------------------------------------- Three Months Ended Six Months Ended ---------------------------------------------------------------------------------------------------- June 25, June 27, June 25, June 27, (Dollars in thousands) 2000 1999 % Change 2000 1999 % Change ---------------------------------------------------------------------------------------------------- Production costs Raw materials $ 87,915 $ 82,468 6.6% $ 173,504 $ 169,760 2.2% Wages and benefits 163,950 159,173 3.0% 329,407 310,395 6.1% Other 113,106 104,904 7.8% 222,821 209,514 6.4% ---------------------------------------------------------------------------------------------------- Total production costs 364,971 346,545 5.3% 725,732 689,669 5.2% Selling, general and administrative expenses 334,739 277,979 20.4% 661,977 558,672 18.5% ---------------------------------------------------------------------------------------------------- Total expenses $ 699,710 $ 624,524 12.0% $1,387,709 $1,248,341 11.2% ----------------------------------------------------------------------------------------------------
Production costs for the second quarter of 2000 increased 5.3% from the second quarter of 1999 and for the first six months of 2000 production costs increased 5.2% from the comparable period in 1999. Excluding the T&G, production costs for the second quarter and for the first six months of 2000 increased 2.9% and 3.0%. In the second quarter of 2000, the Company's newsprint expense rose 4.6% compared with the 1999 second quarter, excluding the T&G. Of this increase, 0.6% resulted from an increase in the average cost of newsprint and 4.0% resulted from an increase in consumption. For the first six months of 2000 compared with the first six months of 1999, excluding the T&G, the Company's newsprint expense declined by 0.8%. This decline resulted from a decrease in the average cost of newsprint of 5.8%, offset by an increase in consumption of 5.0%. 17 Selling, general and administrative expenses ("SGA expenses") in the second quarter and the first six months of 2000 increased 20.4% and 18.5%, compared with the corresponding periods in the prior year. Excluding the T&G, SGA expenses increased 17.2% and 15.4% for the same periods. The higher level of SGA expenses, excluding the addition of the T&G, is partly attributable to the continuing national expansion of The New York Times newspaper, increased costs for the expansion of New York Times Digital and higher incentive pay linked to strong performance. SGA expenses for the second quarter and the first six months of 1999 include a $4.0 million work force reduction charge for The Boston Globe. The Company currently expects growth in its total expenses, excluding the effects of newsprint, New York Times Digital and the T&G, to be in the range of four to six percent for 2000. Other Items Interest expense-net increased to $15.2 million in the 2000 second quarter and $30.5 million in the first six months of 2000 compared with $12.8 million and $24.7 million in the comparable 1999 periods principally due to additional borrowings to fund the purchase of the T&G and the Company's share repurchase program. The effective income tax rate for the second quarter of 2000 was 41.6% compared with 42.6% in the 1999 second quarter. For the first six months of 2000 the effective income tax rate was 41.8% compared with 42.7% in the first six months of 1999. The decreases for both the quarter and for the first six months of 2000 were primarily due to lower state and local income taxes. 18 Consolidated revenues, EBITDA, depreciation and amortization and operating profit by business segment were as follows:
- ------------------------------------------------------------------------------------------------------------------------------ Three Months Ended Six Months Ended ------------------------------------------------------------------------------------------ June 25, June 27, June 25, June 27, (Dollars in thousands) 2000 1999 % Change 2000 1999 % Change - ------------------------------------------------------------------------------------------------------------------------------ REVENUES Newspapers ................... $ 798,203 $ 701,900 13.7% $ 1,568,808 $ 1,377,060 13.9% Broadcast .................... 41,322 40,804 1.3% 75,673 73,897 2.4% Magazines .................... 35,583 32,584 9.2% 64,491 60,299 7.0% New York Times Digital ....... 13,464 5,009 168.8% 25,033 8,832 183.4% Intersegment eliminations (A) (2,984) (912) -227.2% (5,485 )(1,645) -233.4% ------------------------------------------------------------------------------------------ Total ..................... $ 885,588 $ 779,385 13.6% $ 1,728,520 $ 1,518,443 13.8% ========================================================================================== EBITDA Newspapers ................... $ 229,727 $ 189,303 21.4% $ 434,692 $ 347,586 25.1% Broadcast .................... 17,926 19,068 -6.0% 29,612 30,423 -2.7% Magazines .................... 9,911 8,555 15.9% 14,745 13,434 9.8% New York Times Digital ....... (12,594) (4,318) -191.7% (20,226) (9,117) -121.9% Unallocated corporate expenses (6,745) (9,227) 26.9% (14,000) (15,311) 8.6% Joint ventures ............... 3,710 3,353 10.7% 7,337 7,644 -4.0% ------------------------------------------------------------------------------------------ Total ..................... $ 241,935 $ 206,734 17.0% $ 452,160 $ 374,659 20.7% ========================================================================================== DEPRECIATION AND AMORTIZATION Newspapers ................... $ 42,054 $ 40,735 3.2% $ 83,950 $ 81,616 2.9% Broadcast .................... 4,301 4,362 -1.4% 8,602 8,732 -1.5% Magazines .................... 318 364 -12.6% 648 712 -9.0% New York Times Digital ....... 2,878 301 856.2% 5,296 603 778.3% Corporate .................... 2,795 2,756 1.4% 5,428 5,051 7.5% Joint ventures ............... 88 88 N/A 175 175 N/A ------------------------------------------------------------------------------------------ Total ..................... $ 52,434 $ 48,606 7.9% $ 104,099 $ 96,889 7.4% ========================================================================================== OPERATING PROFIT (LOSS) Newspapers ................... $ 187,673 $ 148,568 26.3% $ 350,742 $ 265,968 31.9% Broadcast .................... 13,625 14,705 -7.3% 21,010 21,691 -3.1% Magazines .................... 9,592 8,191 17.1% 14,097 12,722 10.8% New York Times Digital ....... (15,472) (4,619) -235.0% (25,521) (9,719) -162.6% Unallocated corporate expenses (9,540) (11,984) 20.4% (19,517) (20,560) 5.1% ------------------------------------------------------------------------------------------ Total ..................... $ 185,878 $ 154,861 20.0% $ 340,811 $ 270,102 26.2% ==========================================================================================
(A) Intersegment eliminations primarily include revenues between New York Times Digital and other segments. Newspaper Group: The Newspaper Group consists of The New York Times ("The Times"), The Boston Globe ("The Globe"), 22 other newspapers, newspaper distributors, a news service, a features syndicate, TimesFax, licensing operations of the New York Times databases and microfilm.
----------------------------------------------------------------------------------------------------------- Three Months Ended Six Months Ended -------------------------------------------------------------------------------- June 25, June 27, June 25, June 27, (Dollars in thousands) 2000 1999 % Change 2000 1999 % Change ----------------------------------------------------------------------------------------------------------- Revenues $ 798,203 $ 701,900 13.7% $1,568,808 $1,377,060 13.9% ----------------------------------------------------------------------------------------------------------- EBITDA $ 229,727 $ 189,303 21.4% $ 434,692 $ 347,586 25.1% ----------------------------------------------------------------------------------------------------------- Operating profit $ 187,673 $ 148,568 26.3% $ 350,742 $ 265,968 31.9% -----------------------------------------------------------------------------------------------------------
19 Total Newspaper Group revenues in the second quarter and the first six months of 2000 increased 13.7% and 13.9%, over the comparable periods in 1999. Excluding the T&G, total Newspaper Group revenues increased 10.7% and 11.2% for the quarter and the first six months of 2000. Performance was strongest at The Times and The Globe where advertising revenues increased 16.5% and 14.8% for the second quarter of 2000 and 18.2% and 14.1% in the first six months of 2000. Both newspapers benefited from increased national and help-wanted advertising. Second-quarter operating profit for the Newspaper Group increased 23.0% compared to the 1999 second quarter, excluding special items. For the first half of the year, operating profit increased 29.9% from the comparable 1999 period, excluding special items. Excluding the T&G, total Newspaper Group operating profit increased 23.8% and 29.7% for the second quarter and the first six months of 2000. The Company currently expects advertising revenue growth in the Newspaper Group, excluding the T&G, to be in the range of seven to nine percent for 2000. 20 Advertising, circulation and other revenue, by major product of the Newspaper Group, were as follows:
- ------------------------------------------------------------------------------------------------------------------------- Three Months Ended Six Months Ended ------------------------------------- ------------------------------------- June 25, June 27, June 25, June 27, (Dollars in thousands) 2000 1999 % Change 2000 1999 % Change - ---------------------------------------------------------------------------------- ------------------------------------- The New York Times Advertising $ 337,731 $ 289,878 16.5% $ 665,578 $ 563,307 18.2% Circulation 117,123 114,148 2.6% 234,251 227,594 2.9% Other 36,873 33,993 8.5% 73,064 68,415 6.8% - ---------------------------------------------------------------------------------- ------------------------------------- Total $ 491,727 $ 438,019 12.3% $ 972,893 $ 859,316 13.2% - ---------------------------------------------------------------------------------- ------------------------------------- New England Newspaper Group The Boston Globe Advertising $ 132,043 $ 115,013 14.8% $ 253,529 $ 222,266 14.1% Circulation 33,057 33,578 -1.6% 65,785 65,904 -0.2% Other 2,997 2,448 22.4% 5,578 4,763 17.1% - ---------------------------------------------------------------------------------- ------------------------------------- Subtotal $ 168,097 $ 151,039 11.3% $ 324,892 $ 292,933 10.9% - ---------------------------------------------------------------------------------- ------------------------------------- Worcester Telegram & Gazette Advertising $ 15,851 N/A N/A $ 28,357 N/A N/A Circulation 4,943 N/A N/A 9,339 N/A N/A Other 287 N/A N/A 468 N/A N/A - ---------------------------------------------------------------------------------- ------------------------------------- Subtotal $ 21,081 N/A N/A $ 38,164 N/A N/A - ---------------------------------------------------------------------------------- ------------------------------------- Total New England Newspaper Group Advertising $ 147,894 $ 115,013 28.6% $ 281,886 $ 222,266 26.8% Circulation 38,000 33,578 13.2% 75,124 65,904 14.0% Other 3,284 2,448 34.1% 6,046 4,763 26.9% - ---------------------------------------------------------------------------------- ------------------------------------- Total $ 189,178 $ 151,039 25.3% $ 363,056 $ 292,933 23.9% - ---------------------------------------------------------------------------------- ------------------------------------- Regional Newspapers Advertising $ 94,328 $ 89,767 5.1% $ 185,447 $ 177,658 4.4% Circulation 18,913 19,112 -1.0% 39,199 39,347 -0.4% Other 4,057 3,963 2.4% 8,213 7,806 5.2% - ---------------------------------------------------------------------------------- ------------------------------------- Total $ 117,298 $ 112,842 3.9% $ 232,859 $ 224,811 3.6% - ---------------------------------------------------------------------------------- ------------------------------------- Total Newspaper Group Advertising $ 579,953 $ 494,658 17.2% $1,132,911 $ 963,231 17.6% Circulation 174,036 166,838 4.3% 348,574 332,845 4.7% Other 44,214 40,404 9.4% 87,323 80,984 7.8% - ---------------------------------------------------------------------------------- ------------------------------------- Total $ 798,203 $ 701,900 13.7% $1,568,808 $1,377,060 13.9% - ---------------------------------------------------------------------------------- -------------------------------------
21 Advertising volume was as follows:
- --------------------------------------------------------------------------------------------------------------------------------- Three Months Ended Six Months Ended -------------------------------------------------------------------- (Inches in thousands, preprints in thousands of copies) June 25, June 27, June 25, June 27, 2000 1999 % Change 2000 1999 % Change - --------------------------------------------------------------------------------------------------------------------------------- The New York Times Retail 142.7 137.1 4.1% 268.1 262.2 2.3% National 426.5 380.5 12.1% 837.4 731.5 14.5% Classified 255.0 260.3 -2.0% 506.9 513.1 -1.2% Zoned 275.5 279.9 -1.6% 523.2 505.9 3.4% - --------------------------------------------------------------------------------------------------------------------------------- Total 1,099.7 1,057.8 4.0% 2,135.6 2,012.7 6.1% - --------------------------------------------------------------------------------------------------------------------------------- Preprints 104,760 96,547 8.5% 203,015 193,056 5.2% - --------------------------------------------------------------------------------------------------------------------------------- New England Newspaper Group The Boston Globe Retail 156.0 156.7 -0.5% 281.4 295.3 -4.7% National 210.1 180.9 16.2% 401.6 354.1 13.4% Classified 358.1 357.3 0.2% 703.6 694.7 1.3% Zoned 71.6 75.1 -4.5% 127.8 130.8 -2.2% - --------------------------------------------------------------------------------------------------------------------------------- Total 795.8 770.0 3.4% 1,514.4 1,474.9 2.7% - --------------------------------------------------------------------------------------------------------------------------------- Preprints 199,536 190,836 4.6% 385,041 377,198 2.1% - --------------------------------------------------------------------------------------------------------------------------------- Worcester Telegram & Gazette Retail 86.9 N/A N/A 150.5 N/A N/A National 23.1 N/A N/A 35.4 N/A N/A Classified 144.4 N/A N/A 270.5 N/A N/A Zoned 145.1 N/A N/A 243.0 N/A N/A - --------------------------------------------------------------------------------------------------------------------------------- Total 399.5 N/A N/A 699.4 N/A N/A - --------------------------------------------------------------------------------------------------------------------------------- Preprints 49,637 N/A N/A 91,884 N/A N/A - --------------------------------------------------------------------------------------------------------------------------------- Regional Newspapers Retail 1,834.7 1,857.2 -1.2% 3,653.8 3,706.0 -1.4% National 76.4 72.4 5.5% 149.0 140.9 5.8% Classified 2,053.7 2,037.0 0.8% 4,023.2 3,954.8 1.7% Legal 248.3 189.4 31.1% 334.3 273.4 22.3% - --------------------------------------------------------------------------------------------------------------------------------- Total 4,213.1 4,156.0 1.4% 8,160.3 8,075.1 1.1% - --------------------------------------------------------------------------------------------------------------------------------- Preprints 279,327 269,634 3.6% 552,977 539,856 2.4% - ---------------------------------------------------------------------------------------------------------------------------------
22 Average circulation for The Times, The Globe, the T&G and the Regional Newspapers (excluding non-dailies) for the quarter and six months ended June 25, 2000, compared with the second quarter and six months ended June 27, 1999, was as follows:
------------------------------------------------------------------------------------ Three Months Ended June 25, 2000 ------------------------------------------------------------------------------------ (Copies in thousands) Weekday % Change Sunday % Change ------------------------------------------------------------------------------------ Average Net Paid Circulation The New York Times 1,093.7 -0.8% 1,689.4 1.1% New England Newspaper Group The Boston Globe 461.6 -0.1% 714.9 -1.1% Worcester Telegram & Gazette 105.9 N/A 130.1 N/A Regional Newspapers 710.0 -2.0% 751.9 -1.8% ------------------------------------------------------------------------------------
------------------------------------------------------------------------------------ Six Months Ended June 25, 2000 ------------------------------------------------------------------------------------ (Copies in thousands) Weekday % Change Sunday % Change ------------------------------------------------------------------------------------ Average Net Paid Circulation The New York Times 1,124.1 0.8% 1,707.6 1.1% New England Newspaper Group The Boston Globe 464.0 0.4% 716.4 -1.1% Worcester Telegram & Gazette 105.1 N/A 129.7 N/A Regional Newspapers 737.8 -1.6% 784.0 -1.5% ------------------------------------------------------------------------------------
For the first six months of 2000 circulation growth for The Times was primarily due to additional availability and promotion in major markets across the nation combined with programs to improve the quality and levels of its home delivery circulation base. Additionally, The Times and The Globe are continuing to make improvements in delivery and customer service to attract new readers and retain existing ones. Broadcast Group: The Broadcast Group is comprised of eight network-affiliated television stations and two radio stations.
----------------------------------------------------------------------------------------------- Three Months Ended Six Months Ended --------------------------------------------------------------------- June 25, June 27, June 25, June 27, (Dollars in thousands) 2000 1999 % Change 2000 1999 % Change ----------------------------------------------------------------------------------------------- Revenues $41,322 $40,804 1.3% $75,673 $73,897 2.4% ----------------------------------------------------------------------------------------------- EBITDA $17,926 $19,068 -6.0% $29,612 $30,423 -2.7% ----------------------------------------------------------------------------------------------- Operating Profit $13,625 $14,705 -7.3% $21,010 $21,691 -3.1% -----------------------------------------------------------------------------------------------
Revenues increased 1.3% in the 2000 second quarter to $41.3 million from $40.8 million in the 1999 second quarter, while operating profit decreased 7.3% to $13.6 million from $14.7 million in the second quarter of last year. For the first half of 2000, revenues and operating profit totaled $75.7 million (a 2.4% increase) and $21.0 million (a 3.1% decrease) compared with $73.9 million and $21.7 million in the same period of 1999. Operating profit decreased mainly due to higher personnel costs. Magazine Group: The Magazine Group is comprised of four golf publications and related activities in the golf field.
----------------------------------------------------------------------------------------------- Three Months Ended Six Months Ended --------------------------------------------------------------------- June 25, June 27, June 25, June 27, (Dollars in thousands) 2000 1999 % Change 2000 1999 % Change ----------------------------------------------------------------------------------------------- Revenues $35,583 $32,584 9.2% $64,491 $60,299 7.0% ----------------------------------------------------------------------------------------------- EBITDA $ 9,911 $ 8,555 15.9% $14,745 $13,434 9.8% ----------------------------------------------------------------------------------------------- Operating Profit $ 9,592 $ 8,191 17.1% $14,097 $12,722 10.8% -----------------------------------------------------------------------------------------------
23 Second-quarter 2000 revenues increased 9.2% to $35.6 million from $32.6 million in the 1999 second quarter. Operating profit in the 2000 second quarter increased 17.1% to $9.6 million from $8.2 million in the second quarter of 1999. For the first half of 2000, revenues and operating profit were $64.5 million (a 7.0% increase) and $14.1 million (a 10.8% increase) compared with $60.3 million and $12.7 million in the first half of 1999. Revenues rose primarily due to the 50th Anniversary issue of Golf Digest magazine. New York Times Digital: New York Times Digital ("NYTD group") is the Company's Internet business division, which consists of NYTimes.com, Boston.com, NYToday.com, WineToday.com, GolfDigest.com and Abuzz. Abuzz develops and deploys technology to enable online communities to share knowledge, interests and experience.
------------------------------------------------------------------------------------------------- Three Months Ended Six Months Ended ----------------------------------------------------------------------- June 25, June 27, June 25, June 27, (Dollars in thousands) 2000 1999 % Change 2000 1999 % Change ------------------------------------------------------------------------------------------------- Revenues $ 13,464 $ 5,009 168.8% $ 25,033 $ 8,832 183.4% ------------------------------------------------------------------------------------------------- EBITDA $(12,594) $(4,318) -191.7% $(20,226) $(9,117) -121.9% ------------------------------------------------------------------------------------------------- Operating loss $(15,472) $(4,619) -235.0% $(25,521) $(9,719) -162.6% -------------------------------------------------------------------------------------------------
NYTD group revenues for the second quarter of 2000 increased 168.8% compared with the second quarter of 1999. For the first half of 2000, revenues increased 183.4% compared with the first half of 1999. These increases were primarily due to increased growth in advertising volume. Advertising revenue accounted for 88% of NYTD group total revenues for the first six months of 2000. Operating losses for the second quarter and for the first six months of 2000 were 235.0% and 162.6% higher than the second quarter and the first six months of 1999. Higher operating losses were mainly due to increased staffing, promotion, advertising and costs associated with the operations of Abuzz Technologies, Inc., which was acquired in July 1999. Operating losses in the second quarter of 2000 were higher than those in the first quarter of the year as NYTD group, late in the second quarter, increased staffing and initiated advertising and promotional campaigns. These campaigns will continue into the third quarter, when advertisers traditionally place fewer advertisements, as well as the fourth quarter, a seasonally strong advertising period. Liquidity and Capital Resources Net cash provided by operating activities was $299.1 million for the first six months of 2000 compared with $228.3 million for the first six months of 1999. The increase of $70.9 million was primarily due to improved earnings. Net cash used in investing activities was $334.1 million for the first six months of 2000 compared with $28.1 million for the first six months of 1999. The increase in cash utilized of $306.0 million was primarily due to the acquisition of the T&G. Net cash provided by financing activities was $8.6 million for the first six months of 2000 compared with $204.3 million used in financing activities for the first six months of 1999. This change was primarily related to increases in commercial paper borrowings mostly used to fund the T&G acquisition partially offset by the repayment of $100.0 million in debt in 2000. In both periods, the repurchase of shares was a use of cash in financing activities. 24 The Company believes that cash generated from its operations and the availability of funds from external sources should be adequate to cover all cash requirements, including working capital needs, stock repurchases, planned capital expenditures and acquisitions, and dividend payments to stockholders. The ratio of current assets to current liabilities was 63.7% at June 25, 2000, and 74.8% at June 27, 1999. This decrease is principally due to an increase in commercial paper outstanding at June 25, 2000, mostly resulting from the funding of the T&G acquisition. The ratio of long-term debt and capital lease obligations as a percentage of total capitalization was 32.2% at June 25, 2000, compared with 29.8% at June 27, 1999. This increase is principally the result of financing repurchases and the acquisition of the T&G under the Company's commercial paper program. Financing: The Company's total debt, including commercial paper and capital leases, was $1.0 billion at June 25, 2000, and $805.9 million at June 27, 1999. The increase in total debt was primarily from an increase in commercial paper outstanding. On April 28, 2000, $100.0 million of the Company's six and one-half year senior notes was repaid; the remainder of the Company's debt and capital leases generally mature between March 2003 and March 2025. In June 2000 total available funds under the revolving credit agreements were increased to $600.0 million from $400.0 million. The Company's one-year agreement was renewed and increased to $300.0 million from $200.0 million and will now mature in June 2001. The Company's multi-year agreement was renewed and increased to $300.0 million from $200.0 million and will now mature in June 2005. The Company's revolving credit agreements require, among other provisions, specified levels of stockholders' equity. Approximately $356.7 million of stockholders' equity was unrestricted under these agreements at June 25, 2000, and $564.0 million was unrestricted at June 27, 1999. The decline in the level of unrestricted stockholders' equity was primarily due to stock repurchases. The Company had $363.5 million in commercial paper outstanding at June 25, 2000, and $206.6 million at June 27, 1999. These obligations are supported by the revolving credit agreements, and no amounts are outstanding under these revolving credit agreements as of June 25, 2000. The amount available under these facilities was $236.5 million as of June 25, 2000, and $93.4 million as of June 27, 1999. In March 2000 the Company issued $40.0 million of 7% subordinated notes due March 21, 2003, to three venture capital firms. After the consummation of a proposed initial public offering of a new class of stock, this debt will be convertible, at the election of the venture capital firms, into shares of a new class of stock intended to represent approximately 6.7% of the pre-offering equity of the NYTD group. If there is no offering, this debt will not be convertible. The Company has agreed to give the venture capital firms piggyback and demand registration rights for the new class of stock issued upon conversion (see Proposed Tracking Stock below). Capital Expenditures: The Company currently estimates that capital expenditures for 2000 will range from $100.0 million to $120.0 million. The Company currently anticipates that depreciation and amortization expense for 2000 will be in the range of $210.0 million to $215.0 million compared with $197.5 million in 1999. 25 Proposed Tracking Stock On January 20, 2000, the Board of Directors of the Company authorized, subject to shareholder approval, the issuance of a new class of stock ("Class C Stock"). On January 28, 2000, the Company filed a registration statement with the SEC on Form S-3 (the "Form S-3") related to a proposed initial public offering of Class C Stock, which is intended to track the performance of the Company's Internet business division, the NYTD group. At the Annual Meeting of Stockholders held on May 23, 2000, stockholders authorized the filing of an amendment to the Company's certificate of incorporation to create this new class of stock. As of the date of this report, the Form S-3 has not become effective and the amendment to the certificate of incorporation has not been filed with the Secretary of State. The Company is currently evaluating market conditions. The Company separates for financial reporting purposes the NYT group and the NYTD group (see Note 11 of the Notes to Condensed Consolidated Financial Statements). The NYT group includes all of the other business segments of the Company: Newspaper, Broadcast and Magazine, except for the businesses of the NYTD group. The NYT group also includes a retained interest in the NYTD group, which is currently 100%. This retained interest will decline upon any issuance of Class C Stock. The NYTD group includes NYTimes.com, NYToday.com, Boston.com, WineToday.com, GolfDigest.com and Abuzz. The NYTD group's operating results as presented in the financial statements included in Note 11 of the Notes to Condensed Consolidated Financial Statements reflect the effect of various inter-group arrangements and policies for license fees, inter-group services and income taxes. Beginning in 2000, and coinciding with the effective date of these various arrangements (January 1, 2000), the Company's management has determined that its reportable segments consist of newspapers, broadcast, magazines and the NYTD group. These segments will be evaluated regularly by key management in assessing performance and allocating resources. Factors That Could Affect Operating Results Except for the historical information contained herein, the matters discussed in this quarterly report are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those predicted by such forward-looking statements. These risks and uncertainties include national and local conditions, as well as competition, that could influence the levels (rate and volume) of retail, national and classified advertising and circulation generated by the Company's various markets and material increases in newsprint and magazine paper prices. They also include other risks detailed from time to time in the Company's publicly-filed documents, including the Company's Annual Report on Form 10-K for the period ended December 26, 1999. Item 3. Quantitative and Qualitative Disclosures about Market Risk The Company's quantitative and qualitative market risk is principally associated with market interest rate fluctuations related to its debt obligations. The Company does not consider such market risk significant. 26 Item 4. Submission of Matters to a Vote of Security-Holders (a) The Company's annual meeting of stockholders was held on May 23, 2000. (b) The following matters were voted on at the annual meeting: 1. The stockholders (with Class A and Class B stockholders voting separately) elected all of management's nominees for election as Class A Directors and Class B Directors. The results of the vote taken were as follows: Class A Directors For Withheld ----------------- --- -------- Raul E. Cesan 144,175,222 1,077,570 Robert A. Lawrence 144,050,167 1,202,625 Charles H. Price II 144,150,813 1,101,979 Henry B. Schacht 144,127,495 1,125,297 Donald M. Stewart 144,167,901 1,084,891 Class B. Directors ------------------ John F. Akers 839,644 0 Brenda C. Barnes 839,644 0 Jacqueline H. Dryfoos 839,644 0 Richard L. Gelb 839,644 0 Michael Golden 839,644 0 Russell T. Lewis 839,644 0 David E. Liddle 839,644 0 Ellen R. Marram 839,644 0 Arthur Ochs Sulzberger 839,644 0 Arthur Sulzberger, Jr. 839,644 0 2. The stockholders (with Class A and Class B stockholders voting together) ratified the amendments to the Company's 1991 Executive Cash Bonus Plan and 1991 Executive Stock Incentive Plan described in Proposal 2 in the Company's 2000 Proxy Statement. The result of the vote taken was as follows: For: 107,971,171 Against: 23,364,683 Abstain: 960,835 Broker Non-Vote: 13,795,747 Total Against, Abstain and Broker Non-Vote*: 38,121,265 3. The stockholders (with Class A and Class B stockholders voting together) ratified the amendment to the Company's 1991 Executive Stock Incentive Plan described in Proposal 3 in the Company's 2000 Proxy Statement. The result of the vote taken was as follows: For: 94,648,784 Against: 36,875,379 Abstain: 772,526 Broker Non-Vote: 13,795,747 Total Against, Abstain and Broker Non-Vote*: 51,443,652 - -------- * An abstention had the same effect as a vote against this matter. 27 4. The stockholders (with Class A and Class B stockholders voting together) reapproved the material terms of the performance goals for annual and long-term performance awards contained in the Company's 1991 Executive Cash Bonus Plan and 1991 Executive Stock Incentive Plan and described in Proposal 4 of the Company's 2000 Proxy Statement. The result of the vote taken was as follows: For: 141,465,421 Against: 3,604,274 Abstain: 1,022,741 Total Against and Abstain*: 4,627,015 5. The stockholders (with Class A and Class B stockholders voting together) ratified the amendment of the Company's Non-Employee Directors' Stock Option Plan described in Proposal 5 in the Company's 2000 Proxy Statement. The result of the vote taken was as follows: For: 109,731,479 Against: 21,715,335 Abstain: 849,875 Broker Non-Vote: 13,795,747 Total Against, Abstain and Broker Non-Vote*: 36,360,957 6. The stockholders (with Class A and Class B stockholders voting together) ratified the selection, by the Audit Committee of the Board of Directors, of Deloitte & Touche LLP, independent certified public accountants, as auditors of the Company for the year ending December 31, 2000. The result of the vote taken was as follows: For: 142,660,852 Against: 2,977,845 Abstain: 453,739 Total Against and Abstain*: 3,431,584 - -------- * An abstention had the same effect as a vote against this matter. 28 7. The stockholders (with Class A and Class B stockholders voting separately) ratified the Company's Amended and Restated Certificate of Incorporation substantially in the form annexed to the Company's 2000 Proxy Statement. The result of the vote taken was as follows: Class A Stockholders -------------------- For: 103,318,744 Against: 27,308,321 Abstain: 842,868 Broker Non-Vote: 13,782,859 Total Against, Abstain and Broker Non-Vote*: 41,934,048 Class B Stockholders -------------------- For: 826,756 Against: 0 Abstain: 0 Broker Non-Vote: 12,888 Total Against, Abstain and Broker Non-Vote*: 12,888 8. The stockholders (with Class A and Class B stockholders voting together) ratified the New York Times Digital Stock Incentive Plan, substantially in the form annexed to the Company's 2000 Proxy Statement. The result of the vote taken was as follows: For: 97,691,812 Against: 33,918,213 Abstain: 686,664 Broker Non-Vote: 13,795,747 Total Against, Abstain and Broker Non-Vote*: 48,400,624 - -------- * An abstention had the same effect as a vote against this matter. 29 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 10.18 The New York Times Company Deferred Executive Compensation Plan, as amended on March 2, 2000 12 Ratio of Earnings to Fixed Charges 27 Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K have been filed during the period for which this report is filed. 30 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE NEW YORK TIMES COMPANY -------------------------- (Registrant) Date: August 9, 2000 /s/ John M. O'Brien ------------------- ---------------------------------- John M. O'Brien Senior Vice President and Chief Financial Officer (Principal Financial Officer) 31 Exhibit Index to Quarterly Report Form 10-Q Quarter Ended June 25, 2000 Exhibit No. (a) Exhibit 10.18 The New York Times Company Deferred Executive Compensation Plan, as amended on March 2, 2000 12 Ratio of Earnings to Fixed Charges 27 Financial Data Schedule EX-10.18 2 0002.txt DEFERRED EXECUTIVE COMPENSATION PLAN THE NEW YORK TIMES COMPANY DEFERRED EXECUTIVE COMPENSATION PLAN Effective July 1, 1994 Amended January 1, 1999 Amended December 8, 1999 Amended March 2, 2000 ARTICLE I Introduction 1.1 Purpose Of Plan The Employer has adopted the Plan set forth herein to provide a means by which certain employees may elect to defer receipt of designated percentages or amounts of their Compensation. 1.2 Status Of Plan The Plan is intended to be "a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees" within the meaning of Sections 201(2) and 301(a)(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), and shall be interpreted and administered to the extent possible in a manner consistent with that intent. 1.2 History Of Plan The Plan was first effective on July 1, 1994. Thereafter, the Plan was amended effective January 1, 1999, to change the deferral periods under the Plan and the method of distribution thereunder. Effective December 8, 1999, the Plan was amended to change the eligibility for participation in the Plan and the definition of Compensation thereunder for year following 1999. Effective December 8, 1999, The New York Times Designated Employees Deferred Earnings Plan was merged into the Plan, as amended. Effective March 2, 2000, the Plan was amended to limit the deferral of annual bonus to 85% thereof for deferrals of Compensation for years following 2000. -1- ARTICLE II Definitions Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context: 2.1 Account means, for each Participant, the account established for his or her benefit under Section 5.1. Such Account shall include both salary and bonus deferrals. 2.2 Change Of Control means: (a) any individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof (a "Person") (or two or more Persons acting in concert), other than any descendent (or any spouse thereof) of Iphigene Ochs Sulzberger (a "Family Member") or a beneficiary or trustee (as the same may change from time to time) of a trust over 50% of the individual beneficiaries of which are Family Members, acquiring the power to elect a majority of the directors of The New York Times Company (the "Company") in a transaction or series of transactions not approved in advance by a vote of at least three quarters of the Continuing Directors (as defined below); or (b) individuals who, as of the date hereof, constitute the Board of Directors of the Company (as of the date hereof the "Continuing Directors") ceasing for any reason to constitute at least a majority of the Board of Directors, provided that any person becoming a director subsequent to the date hereof whose election, or a nomination for election by the Company's shareholders, was approved in advance by a vote of at least three quarters of the Continuing Directors (other than a nomination of an individual whose initial assumption of office is in connection with an actual or threatened solicitation with respect to the election or removal of the directors of the Company, as such terms are used in Rule 14a-11 of the Regulation 14A promulgated under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a Continuing Director; or (c) approval by the stockholders of the Company of a reorganization, merger, consolidation, liquidation or dissolution of the Company or of the sale (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company other than a reorganization, merger, consolidation, liquidation, dissolution or sale approved in advance by three quarters of the Continuing Directors. 2.3 Code means the Internal Revenue Code of 1986, as amended from time to time. Reference to any section or subsection of the Code includes reference to any comparable or succeeding provisions of any legislation which amends, supplements or replaces such section or subsection. -2- 2.4 Compensation means the annual bonus, amounts paid under The Advertising and Circulation Sales Incentive Plan, the Long-Term Performance Awards under The New York Times Company 1991 Executive Cash Bonus Plan and the base salary of a Participant, as well as any discretionary cash bonus awarded to the Participant for a particular year. The ERISA Management Committee, in its sole discretion, shall designate from time to time the maximum percentage of each component of Compensation that can be deferred under the Plan. Such designation shall be listed in Appendix A. For purposes of the Plan, Compensation shall be determined before giving effect to Elective Deferrals and other salary reduction amounts which are not included in the Participant's gross income under Code Sections 125, 401(k), 402(h) or 403(b). 2.5 Effective Date means July 1, 1994. 2.6 Election Form means the participation election form as approved and prescribed by the Plan Administrator. 2.7 Elective Deferral means the portion of Compensation which is deferred by a Participant under Article IV. 2.8 Eligible Employee means, for the Plan Year 2000 and Plan Years thereafter, each employee of the Employer whose annual base salary on October 1 of the year prior to the year for which such employee defers any Compensation under the Plan is at least $110,000, who is not covered under a collective bargaining agreement, who is not eligible to participate in any other non-qualified deferred compensation plan sponsored by the Employer and/or its subsidiaries and affiliates while deferring Compensation under this Plan, and who consents to the purchase of Corporate Owned Life Insurance by the Employer. The $110,000 limit on annual base salary shall be adjusted by the ERISA Management Committee from time to time at its sole discretion and without the need for an amendment to the Plan. An employee who participated in this Plan or The New York Times Designated Employees Deferred Earnings Plan prior to 2000, and who no longer meets the definition of an Eligible Employee shall continue to be an Eligible Employee hereunder. 2.9 Employer means The New York Times Company, any successor to all or a major portion of the Employer's assets or business which assumes the obligations of the Employer, and each other entity that is affiliated with the Employer whose employees, with the consent of the Company, are eligible, as provided under Section 2.8, to participate in the Plan. 2.10 ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time. Reference to any section or subsection of ERISA includes reference to any comparable or succeeding provisions of any legislation which amends, supplements or replaces such section or subsection. -3- 2.11 ERISA Board Committee means a committee of the Board of Directors of The New York Times Company. 2.12 ERISA Management Committee means a committee appointed by the ERISA Board Committee. 2.13 Insolvency means either (i) the Company is unable to pay its debts as they become due, or (ii) the Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. 2.14 Participant means any Eligible Employee who participates in the Plan in accordance with Article III. 2.15 Plan means The New York Times Company Deferred Executive Compensation Plan and all amendments thereto. 2.16 Plan Administrator means the person, persons or entity designated by the Employer under Article VIII to oversee the administration of the Plan. If no such person or entity is so serving at any time, the Employer shall be the Plan Administrator. 2.17 Plan Year means the 12-month period beginning on January 1 and ending on December 31 of each year, except for the first plan year which begins on July 1, 1994, and ends on December 31, 1994. 2.18 Recordkeeper means the person(s) or entity appointed or hired by the ERISA Management Committee under Section 8.1. 2.19 Total And Permanent Disability means the inability of a Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months, and the permanence and degree of which shall be supported by medical evidence satisfactory to the Plan Administrator. 2.20 Trust means the trust established by the Employer that identifies the Plan as a plan with respect to which assets are to be held by the Trustee. Plan assets in the trust are subject to the general creditors of The New York Times Company in the event of bankruptcy or Insolvency. 2.21 Trustee means the trustee or trustees under the Trust. 2.22 Valuation Option means the performance of the investment funds listed in Appendix B of the Plan. -4- ARTICLE III Participation 3.1 Commencement Of Participation Any Eligible Employee who elects to defer part of his or her Compensation in accordance with Article IV shall become a Participant in the Plan as of the date such deferrals commence in accordance with such Article. 3.2 Continued Participation A Participant in the Plan shall continue to be a Participant so long as any amount remains credited to his or her Account. However, future deferrals under the Plan may be made only if such Participant continues to be an Eligible Employee under the Plan. -5- ARTICLE IV Elective Deferrals 4.1 Elective Deferrals Except as provided in Appendix A, an individual who is an Eligible Employee on the Effective Date may, by completing an Election Form and filing it with the Plan Administrator by the end of the first month following the Effective Date, elect to defer the receipt of a portion of one or more payments of Compensation for a period of at least three Plan Years and on such terms as the ERISA Management Committee may permit. Thereafter, any Eligible Employee may elect to defer the receipt of a percentage or dollar amount of one or more payments of Compensation for a period of a least three Plan Years and on such terms as the ERISA Management Committee may permit, commencing with Compensation paid in the next succeeding Plan Year, by completing an Election Form during the annual enrollment period for the Plan as determined by the Plan Administrator. Except as Provided in Appendix A, effective January 1, 1999, with respect to Elective Deferrals made for the Plan Year 1999 and thereafter, deferrals will mature at the end of a three-year cycle. An individual who is an Eligible Employee may elect to defer the receipt of a portion of one or more payments of Compensation during the first year of the deferral cycle for a period of three Plan Years and on such terms as the ERISA Management Committee may permit; an individual who is an Eligible Employee may elect to defer the receipt of a portion of one or more payments of Compensation during the second year of the deferral cycle for a period of two Plan Years and on such terms as the ERISA Management Committee may permit; and an individual who is an Eligible Employee may elect to defer the receipt of a portion of one or more payments of Compensation during the last year of a deferral cycle for a period of one Plan Year and on such terms as the ERISA Management Committee may permit. All deferrals made during a three-year cycle will mature at the end of the third Plan Year in that cycle. A new three-year cycle will commence after the expiration of each three-year cycle. No Participant may defer more than the portion of his or her Compensation designated by the ERISA Management Committee in Appendix A. A Participant's Compensation shall be reduced in accordance with the Participant's election hereunder and amounts deferred hereunder shall be paid by the Employer to the Trust as soon as administratively feasible and credited to the Participant's Account as of the date the amounts are received by the Trustee. 4.2 Investment Election An individual who is an Eligible Employee and elects to defer Compensation under this Plan shall elect to have his or her Account valued based on the Valuation Option represented by the performance of one or more of the investment funds listed in Appendix B of the Plan. Such Appendix B may be amended at any time by an action of the ERISA -6- Management Committee. If a Participant does not elect a Valuation Option for his or her Account, the Account shall be valued based on the Valuation Option represented by the performance of Fund A. A participant may change his or her selection of Valuation Options on any date. -7- ARTICLE V Accounts 5.1 Accounts The Plan Administrator and/or the Recordkeeper shall establish an Account for each Participant reflecting his or her Elective Deferrals made for the Participant's benefit together with any adjustments for income, gain or loss and any payments from the Account. The Plan Administrator and/or the Recordkeeper shall establish sub-accounts for each Participant that has more than one election in effect under Section 7.1 and such other sub-accounts as are necessary for the proper administration of the Plan. As of the last business day of each calendar quarter, the Plan Administrator shall provide, or cause to be provided, the Participant with a statement of his or her Account reflecting the income, gains and losses (realized and unrealized), amounts of deferrals, fund transfers and distributions of such Account since the prior statement. 5.2 Investments The assets of the Trust shall be invested in such investments as the Trustee shall determine. The Trustee may (but is not required to) consider the Employer's or a Participant's investment preferences when investing the assets attributable to a Participant's Account. -8- ARTICLE VI Vesting 6.1 Vesting A Participant shall be immediately vested in, i.e., shall have a nonforfeitable right to, all Elective Deferrals, and all income and gain attributable thereto, credited to his or her Account. -9- ARTICLE VII Payments 7.1 Election As To Form Of Payment Payments to Participants shall be made in annual installments over a period of 10 years commencing between January 2 and March 15 immediately following the end of each deferral period. The amount of each installment payment will equal the balance of a Participant's Account immediately prior to the installment payment divided by the number of installment payments remaining to be made. The above notwithstanding, a Participant may elect in writing to receive the value of his or her Account in one lump sum, in annual installments over a period of five years, or in annual installments over a period of fifteen years, so long as such election is made at least 13 months prior to the end of the deferral period. Additionally, effective January 1, 1999, a Participant may elect in writing to receive the value of his or her account in a partial lump sum where the Participant may choose the percent of an expiring deferral to be paid in a lump sum with the balance in annual installments over the remainder of the 5, 10 or 15 year-installment period; provided, however, that such election is made at least 13 months prior to the end of the deferral period. Effective January 1, 1999, for (i) Elective Deferrals made for Plan Year 1999 and thereafter, and (ii) for Elective Deferrals made prior to January 1, 1999 which are subject to a Participant's election after January 1, 1999 to renew the deferral, a Participant's election as to the form of payment as set forth in this Section 7.1 shall apply to the Participant's entire Account. If the Participant begins to receive distributions of his or her Account pursuant to this Section 7.l, a subsequent election to defer additional Compensation shall be subject to a new election under this Section 7.1 and shall not affect the payment stream established by the prior distribution election. 7.2 Extension Of Deferral Periods A Participant may make an election in writing to extend any deferral period for three to ten additional Plan Years so long as such Participant makes an election therefor at least 13 months prior to the expiration of the deferral period. Effective January 1, 1999, elections to extend a deferral period must be made for a three-year cycle. A new three-year cycle will commence at the end of every third Plan Year. An election to extend a deferral period must be made by the Participant in writing at least 13 months prior to the end of a deferral period. If a deferral period will expire during the course of a three-year cycle, the Participant's election is limited to an election to extend the deferral period until the end of such three-year cycle. A Participant may elect to renew deferral periods for additional three year cycles an unlimited number of times. -10- Effective January 1, 1999, terminated Participants will not be permitted to renew their deferral elections. Payments to terminated Participants will begin at the expiration of their current deferral period in accordance with the method selected under Section 7.1 (unless the Participant retired under a Company pension plan, or had attained age 55 and completed at least ten years of service as of his or her date of termination, or is Totally and Permanently Disabled, in which case additional elections to defer are permitted). 7.3 Change Of Control As soon as possible following a Change Of Control of the Employer, each Participant shall be paid his or her entire Account balance in a single lump sum. 7.4 Termination Of Employment Upon termination of a Participant's employment for any reason other than death, the Participant's Account shall be paid to the Participant in the form of payment in effect at the time the termination of employment occurs and after the expiration of the deferral period. The above notwithstanding, the Plan Administrator, in its sole discretion, may: (a) pay out a Participant's Account balance in one lump sum at any time prior to the expiration of each deferral period; (b) accelerate the beginning of payments of deferrals to any time prior to the expiration of a deferral period; and (c) revoke the deferral elections of a Participant for the year of the termination of his/her employment. 7.5 Death If a Participant dies prior to the complete distribution of his or her Account, the balance of the Account shall be paid as soon as practicable to the Participant's designated beneficiary or beneficiaries, in the form elected by the Participant at the time of his or her death, provided, however, that the ERISA Management Committee and/or the Plan Administrator may, in their sole discretion, pay out the balance of such Participant's Account in one lump sum. Any designation of beneficiary shall be made by the Participant on a Beneficiary Designation Form filed with the Plan Administrator and may be changed by the Participant at any time by filing another Beneficiary Designation Form containing the revised instructions. If no beneficiary is designated or no designated beneficiary survives the Participant, payment shall be made to the Participant's surviving spouse or, if none, to his/her issue per stirpes, in a single payment. If no spouse or issue survives the Participant, payment shall be made in a single lump sum to the Participant's estate. The most recent Beneficiary Designation Form executed by the Participant prior to his/her death shall apply to all Election Deferrals credited to the Participant's Account at the date of his/her death. 7.6 Taxes -11- All federal, state or local taxes that the Plan Administrator determines are required to be withheld from any payments made pursuant to this Article VII shall be withheld. -12- ARTICLE VIII Plan Administration 8.1 Plan Administration And Interpretation. The ERISA Management Committee (the "Committee") shall oversee the administration of the Plan, shall serve as the agent of the Company with respect to the trust, and shall appoint a Plan Administrator and/or Recordkeeper for the day-to-day operations of the Plan. Such Plan Administrator and/or Recordkeeper shall be listed in Appendix C to this Plan. The Committee shall have complete control and authority to determine the rights and benefits under all claims, demands and actions arising out of the provisions of the Plan of any Participant, beneficiary, deceased Participant, or other person having or claiming to have any interest under the Plan. The Committee shall have complete discretion to interpret the Plan and to decide all matters under the Plan. Such interpretation and decision shall be final, conclusive and binding on all Participants and any person claiming under or through any Participant. Any individual(s) serving on the Committee who is a Participant will not vote or act on any matter relating solely to himself or herself. 8.2 Committee Powers, Duties, Procedures, Etc. The Committee shall have such powers and duties, may adopt such rules and regulations, may act in accordance with such procedures, may appoint such agents, may delegate such powers and duties, may receive such reimbursements and compensation, and shall follow such claims and appeal procedures with respect to the Plan as it may establish. 8.3 Plan Administrator's Duties The Plan Administrator shall be responsible for the day-to-day operations of the Plan. His or her duties shall include, but not be limited to, the following: (a) Keeping track of employees eligible to participate in the Plan and the date each employee becomes eligible to participate. (b) Maintaining, or causing to be maintained by the Recordkeeper, Participants' Accounts, including all sub-accounts required for different contribution types and payment elections made by Participants under the Plan and any other relevant information. (c) Transmitting, or causing to be transmitted by the Recordkeeper, various communications to Participants and obtaining information from Participants such as changes in investment selections. (d) Filing reports required by various governmental agencies. When making a determination or calculation, the Plan Administrator and the Recordkeeper shall be -13- entitled to rely on information furnished by a Participant, a beneficiary, the Employer or the Trustee. The Plan Administrator shall have the responsibility for complying with any reporting and disclosure requirements of ERISA. 8.4 Information To enable the Plan Administrator and/or Recordkeeper to perform their functions, the Employer shall supply full and timely information to the Plan Administrator and/or Recordkeeper on all matters relating to the compensation of Participants, their employment, retirement, death, termination of employment, and such other pertinent facts as the Plan Administrator and/or Recordkeeper may require. 8.5 Indemnification Of Committee And Plan Administrator The Employer agrees to indemnify and to defend to the fullest extent permitted by law any officer(s) or employee(s) who serve on the Committee or as Plan Administrator (including any such individual who formerly served on the Committee or as Plan Administrator) against all liabilities, damages, costs and expenses (including attorneys' fees and amounts paid in settlement of any claims approved by the Employer) occasioned by any act or omission to act in connection with the Plan, if such act or omission is in good faith. -14- ARTICLE IX Amendment And Termination 9.1 Amendments The Employer shall have the right to amend the Plan from time to time, subject to Section 9.3, by an action of the ERISA Management Committee. 9.2 Termination Of Plan This Plan is strictly a voluntary undertaking on the part of the Employer and shall not be deemed to constitute a contract between the Employer and any Eligible Employee (or any other employee) or a consideration for, or an inducement or condition of employment for, the performance of the services by any Eligible Employee (or other employee). The Employer reserves the right to terminate the Plan at any time, subject to Section 9.3, by an action of the ERISA Management Committee. Upon termination, the Employer may (a) elect to continue to maintain the Trust to pay benefits hereunder as they become due as if the Plan had not terminated or (b) direct the Trustee to pay promptly to Participants (or their beneficiaries) the vested balance of their Accounts. 9.3 Existing Rights No amendment or termination of the Plan shall adversely affect the rights of any Participant with respect to amounts that have been credited to his or her Account prior to the date of such amendment or termination. -15- ARTICLE X Miscellaneous 10.1 No Funding The Plan constitutes a mere promise by the Employer to make payments in accordance with the terms of the Plan and Participants and beneficiaries shall have the status of general unsecured creditors of the Employer. Nothing in the Plan will be construed to give any employee or any other person rights to any specific assets of the Employer or of any other person. In all events, it is the intent of the Employer that the Plan be treated as unfunded for tax purposes and for purposes of Title I of ERISA. 10.2 Non-Assignability None of the benefits, payments, proceeds or claims of any Participant or beneficiary shall be subject to any claim of any creditor of any Participant or beneficiary and, in particular, the same shall not be subject to attachment or garnishment or other legal process by any creditor of such Participant or beneficiary, nor shall any Participant or beneficiary have any right to alienate, anticipate, commute, pledge, encumber or assign any of the benefits or payments or proceeds which he or she may expect to receive, contingently or otherwise, under the Plan. 10.3 Limitation Of Participants' Rights Nothing contained in the Plan shall confer upon any person a right to be employed or to continue in the employ of the Employer, or interfere in any way with the right of the Employer to terminate the employment of a Participant in the Plan at any time, with or without cause. 10.4 Participants Bound Any action with respect to the Plan taken by the Plan Administrator or the Employer or the Trustee or any action authorized by or taken at the direction of the Plan Administrator, the Employer or the Trustee shall be conclusive upon all Participants and beneficiaries entitled to benefits under the Plan. 10.5 Receipt And Release Any payment to any Participant or beneficiary in accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction of all claims against the Employer, the Plan Administrator and the Trustee under the Plan, and the Plan Administrator may require such Participant or beneficiary, as a condition precedent to such payment, to execute a receipt and release to such effect. If any Participant or beneficiary is determined by the Plan Administrator to be incompetent by reason of physical or mental disability -16- (including minority) to give a valid receipt and release, the Plan Administrator may cause the payment or payments becoming due to such person to be made to another person for his or her benefit without responsibility on the part of the Plan Administrator, the Employer or the Trustee to follow the application of such funds. 10.6 Governing Law The Plan shall be construed, administered, and governed in all respects under and by the laws of the State of New York. If any provision shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions hereof shall continue to be fully effective. 10.7 Headings And Subheadings Heading and subheadings in this Plan are inserted for convenience only and are not to be considered in the construction of the provisions hereof. -17- APPENDIX A Limit on Elective Deferrals For the 1994 and 1995 Plan Years, a Participant may defer up to 100% of his/her annual bonus and no portion of his/her salary. For the 1996 Plan Year and until changed by the Committee, a Participant may defer up to 100% of his/her annual bonus and up to 33% of his/her base salary. For the 2000 Plan Year and until changed by the Committee, a Participant may defer up to 100% of his/her annual bonus, up to 100% of amounts paid under The Advertising and Circulation Sales Incentive Plan, up to 100% of his/her Long-Term Performance Awards under The New York Times Company 1991 Executive Cash Bonus Plan and up to 33% of his/her base salary. In addition, a Participant who is a "covered employee" within the meaning of Code Section 162(m) (a "Covered Employee") may defer his/her entire discretionary bonus, if any, payable in a Plan Year. Deferral of such discretionary bonus shall continue without further action by the Participant until such time as the ERISA Management Committee determines that the Participant is no longer a Covered Employee. The Participant shall be permitted to extend the deferral period beyond the time he/she ceases to be a Covered Employee for a three-year cycle (and for subsequent three-year cycles) in the manner provided in Section 7.2 of the Plan. For the 2001 Plan Year and until changed by the Committee, a Participant may defer up to 85% of his/her annual bonus, up to 85% of amounts paid under The Advertising and Circulation Sales Incentive Plan, up to 85% of his/her Long-Term Performance Awards under The New York Times Company 1991 Executive Cash Bonus Plan and up to 33% of his/her base salary. In addition, a Participant who is a Covered Employee may defer his/her entire discretionary bonus, if any, payable in a Plan Year. Deferral of such discretionary bonus shall continue without further action by the Participant until such time as the ERISA Management Committee determines that the Participant is no longer a Covered Employee. The Participant shall be permitted to extend the deferral period beyond the time he/she ceases to be a Covered Employee for a three-year cycle (and for subsequent three-year cycles) in the manner provided in Section 7.2 of the Plan. -18- APPENDIX B Valuation Options For 1994 and until changed by the ERISA Management Committee, each Participant may elect to value his or her account based on the performance of one or more of the following funds: 1. Fund A: AIM Limited Maturity Treasury 2. Fund B: AIM Aggressive Growth 3. Fund C: AIM Value 4. Fund D: Merrill Lynch Federal Securities 5. Fund E: Merrill Lynch Capital 6. Fund F: Templeton Foreign 7. Fund G: Merrill Lynch Global Allocation For 1999 and until changed by the ERISA Management Committee, each Participant may elect to value his or her account based on the performance of one or more of the following funds: 1. Fund A: Vanguard Short Term Federal Fund 2. Fund B: Vanguard Total Bond Market Index Fund 3. Fund C: Vanguard Asset Allocation Fund 4. Fund D: Vanguard Growth and Income Fund 5. Fund E: Frank Russell Equity I Fund 6. Fund F: Frank Russell Equity II Fund 7. Fund G: AIM Aggressive Growth Fund 8. Fund H: Putnam International Growth Fund 9. Fund I: Putnam Asset Allocation Fund - Balanced Portfolio -19- APPENDIX C Plan Administrator And Record Keeper 1.1 Plan Administrator For the Plan Year 1995, and until removed, the Plan Administrator shall be Phil Ryan. For the Plan Year 1997, and until removed, the Plan Administrator shall be Diane Zubalsky. 1.2 Recordkeeper For the Plan Year 1994, and until removed, the Recordkeeper shall be Actuarial Information Management Systems. From June 1, 1996, and thereafter until removed, the Recordkeeper shall be Merrill Lynch. Effective December 28, 1998, and until removed by the ERISA Management Committee, the Recordkeeper shall be The Vanguard Group. Effective July 17, 1999, and until removed by the ERISA Management Committee, in addition to The Vanguard Group, TBG Financial shall be a Recordkeeper for the Plan. -20- EX-12 3 0003.txt RATIO OF EARNINGS TO FIXED CHARGES Exhibit 12 THE NEW YORK TIMES COMPANY Ratio of Earnings to Fixed Charges (Dollars in thousands, except ratio) (Unaudited)
For the Three Months Ended For the Six Months Ended ------------------------------ ----------------------------- June 25, 2000 June 27, 1999 June 25, 2000 June 27, 1999 ------------- ------------- ------------- ------------- Earnings from continuing operations before fixed charges Income before income taxes and income from joint ventures $170,688 $142,020 $310,279 $245,365 Distributed earnings from less than fifty percent owned affiliates 4,642 2,000 7,345 3,475 -------- -------- -------- -------- Adjusted pre-tax earnings from continuing operations 175,330 144,020 317,624 248,840 Fixed charges 21,715 16,011 40,127 30,851 -------- -------- -------- -------- Earnings from continuing operations before fixed charges $197,045 $160,031 $357,751 $279,691 ======== ======== ======== ======== Fixed charges Interest expense $ 18,331 $ 13,387 $ 34,189 $ 25,723 Portion of rentals representative of interest factor 3,384 2,624 5,938 5,128 -------- -------- -------- -------- Total fixed charges $ 21,715 $ 16,011 $ 40,127 $ 30,851 ======== ======== ======== ======== Ratio of earnings to fixed charges 9.07 10.00 8.92 9.07 ======== ======== ======== ========
EX-27 4 0004.txt FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Consolidated Condensed Financial Statement as of and for the quarter ended June 25, 2000 and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS DEC-31-2000 DEC-27-1999 JUN-25-2000 37,549 0 415,640 45,027 32,295 597,467 2,254,500 1,038,025 3,707,677 938,721 0 0 0 17,987 1,324,421 3,707,677 0 1,728,520 0 725,732 0 0 30,532 317,528 132,727 184,801 0 0 0 184,801 1.08 1.06
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