-----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, Ak33fjWvhxx1Q/ti9aTagCSl09pNoqO/2x4JNCC31kf6PdbhoRtG3ek0IcN/JYFr 2QnDsVAUMpzKkhORJld6Yw== 0001005477-01-501755.txt : 20020410 0001005477-01-501755.hdr.sgml : 20020410 ACCESSION NUMBER: 0001005477-01-501755 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW YORK TIMES CO CENTRAL INDEX KEY: 0000071691 STANDARD INDUSTRIAL CLASSIFICATION: NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING [2711] IRS NUMBER: 131102020 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05837 FILM NUMBER: 1778188 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 d01-34750.txt QUARTERLY REPORT FORM 10-Q UNITED STATES SECURITIES EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For Quarter Ended September 30, 2001 ------------------ 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 November 2, 2001 (exclusive of treasury shares): Class A Common Stock 150,749,091 shares Class B Common Stock 847,020 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 Nine Months Ended ----------------------------- ----------------------------- September 30, September 24, September 30, September 24, 2001 2000 2001 2000 ----------------------------- ----------------------------- (13 Weeks) (39 Weeks) Revenues Advertising .......................................... $452,691 $539,043 $1,517,200 $1,760,708 Circulation .......................................... 188,244 178,120 561,203 541,946 Other ................................................ 55,958 50,488 156,925 144,282 -------- -------- ---------- ---------- Total ............................................. 696,893 767,651 2,235,328 2,446,936 -------- -------- ---------- ---------- Production costs Raw materials ........................................ 71,625 81,049 240,611 247,561 Wages and benefits ................................... 145,398 146,251 446,958 458,365 Other ................................................ 110,849 112,180 331,506 332,613 -------- -------- ---------- ---------- Total ............................................. 327,872 339,480 1,019,075 1,038,539 Selling, general and administrative expenses ............. 287,760 315,510 972,297 969,021 -------- -------- ---------- ---------- Total ............................................. 615,632 654,990 1,991,372 2,007,560 -------- -------- ---------- ---------- Operating profit ......................................... 81,261 112,661 243,956 439,376 Income from joint ventures ............................... 2,415 3,929 4,072 11,178 Interest expense - net ................................... 11,249 17,516 36,439 48,048 Gain on disposition of assets and other-net .............. 1,250 22,172 3,750 22,172 -------- -------- ---------- ---------- Income from continuing operations before income taxes .... 73,677 121,246 215,339 424,678 Income taxes ............................................. 29,839 48,369 87,203 175,203 -------- -------- ---------- ---------- Income from continuing operations ........................ 43,838 72,877 128,136 249,475 -------- -------- ---------- ---------- Income from operations of discontinued Magazine Group -- 2,088 1,192 10,292 Gain on disposal of Magazine Group .................. -- -- 241,258 -- -------- -------- ---------- ---------- Discontinued operations, net of income taxes ............. -- 2,088 242,450 10,292 -------- -------- ---------- ---------- Net Income ............................................... $ 43,838 $ 74,965 $ 370,586 $ 259,767 ======== ======== ========== ========== Average Number of Common Shares Basic ............................................... 155,853 166,564 158,833 169,670 Diluted ............................................. 158,881 169,903 161,901 173,367 Basic Earnings Per Share Income from continuing operations ................... $ 0.28 $ 0.44 $ 0.81 $ 1.47 Discontinued operations, net of income taxes ........ -- 0.01 1.52 0.06 -------- -------- ---------- ---------- Net Income .......................................... $ 0.28 $ 0.45 $ 2.33 $ 1.53 ======== ======== ========== ========== Diluted Earnings Per Share Income from continuing operations .................... $ 0.28 $ 0.43 $ 0.79 $ 1.44 Discontinued operations, net of income taxes ......... -- 0.01 1.50 0.06 -------- -------- ---------- ---------- Net Income ........................................... $ 0.28 $ 0.44 $ 2.29 $ 1.50 ======== ======== ========== ========== Dividends per share ...................................... $ 0.125 $ 0.115 $ 0.365 $ 0.335 ======== ======== ========== ==========
See Notes to Condensed Consolidated Financial Statements. 2 THE NEW YORK TIMES COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
September 30, December 31, 2001 2000 ------------- ------------ ASSETS (Unaudited) CURRENT ASSETS Cash and cash equivalents ........................ $ 54,576 $ 69,043 Accounts receivable-net .......................... 288,085 341,863 Inventories Newsprint and magazine paper .................. 25,820 30,639 Work-in-process and other ..................... 3,544 4,425 ---------- ---------- Total inventories ......................... 29,364 35,064 Deferred income taxes ............................ 62,939 62,939 Other current assets ............................. 50,318 101,079 ---------- ---------- Total current assets ...................... 485,282 609,988 OTHER ASSETS Investments in joint ventures .................... 96,074 107,320 Property, plant and equipment (less accumulated depreciation of $1,146,545 in 2001 and $1,081,114 in 2000) ....................... 1,159,408 1,207,160 Intangible assets acquired Cost in excess of net assets acquired (less accumulated amortization of $323,715 in 2001 and $302,571 in 2000) ................. 1,024,842 1,060,796 Other intangible assets acquired (less accumulated amortization of $130,552 in 2001 and $110,172 in 2000) ................. 398,768 419,302 Miscellaneous assets ............................. 211,126 202,113 ---------- ---------- TOTAL ASSETS ......................................... $3,375,500 $3,606,679 ========== ==========
See Notes to Condensed Consolidated Financial Statements. 3 THE NEW YORK TIMES COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
September 30, December 31, 2001 2000 ------------- ------------ LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited) CURRENT LIABILITIES Commercial paper outstanding ........................................... $ 125,650 $ 291,251 Accounts payable ....................................................... 155,734 174,552 Accrued payroll and other related liabilities .......................... 82,643 126,983 Accrued expenses ....................................................... 210,570 190,748 Accrued income taxes ................................................... 136,968 9,852 Unexpired subscriptions ................................................ 62,159 81,385 Current portion of long-term debt and capital lease obligations ........................................... 2,880 2,599 ----------- ----------- Total current liabilities ........................................... 776,604 877,370 ----------- ----------- OTHER LIABILITIES Long-term debt ......................................................... 514,038 553,415 Capital lease obligations .............................................. 82,010 83,451 Deferred income taxes .................................................. 104,423 106,247 Other .................................................................. 735,959 705,033 ----------- ----------- Total other liabilities ............................................. 1,436,430 1,448,146 ----------- ----------- Total liabilities ................................................... 2,213,034 2,325,516 ----------- ----------- STOCKHOLDERS' EQUITY Capital stock of $.10 par value Class A - authorized 300,000,000 shares; issued: 2001 - 169,163,427; 2000 - 166,526,108 (including treasury shares: 2001 - 17,196,428; 2000 - 5,000,000) ............................ 16,916 16,653 Class B - convertible - authorized 847,020 shares; issued: 2001 - 847,020; 2000 - 847,158 .................................. 85 85 Additional paid-in capital ............................................. 78,590 -- Deferred compensation on issuance of restricted Class A common stock ................................................ (880) (1,127) Accumulated other comprehensive loss ................................... (5,282) (2,693) Retained earnings ...................................................... 1,779,737 1,467,103 Common stock held in treasury, at cost ................................. (706,700) (198,858) ----------- ----------- Total stockholders' equity .......................................... 1,162,466 1,281,163 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................................. $ 3,375,500 $ 3,606,679 =========== ===========
See Notes to Condensed Consolidated Financial Statements. 4 THE NEW YORK TIMES COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) (Dollars in thousands)
Nine Months Ended ---------------------------- September 30, September 24, 2001 2000 ---------------------------- (39 Weeks) OPERATING ACTIVITIES Net cash provided by operating activities ............ $ 351,600 $ 381,007 --------- --------- INVESTING ACTIVITIES Additions to property, plant and equipment ........... (57,102) (43,461) Business acquired .................................... (2,636) (296,278) Net proceeds from dispositions ....................... 436,672 55,980 Other-net ............................................ (214) (6,713) --------- --------- Net cash provided by/(used in) investing activities .. 376,720 (290,472) --------- --------- FINANCING ACTIVITIES Commercial paper (payments)/borrowings ............... (165,601) 403,490 Redemption of subsidiary stock ....................... (25,000) -- Long-term debt Proceeds ......................................... -- 40,000 Payments ......................................... (41,213) (101,839) Capital shares Issuances ........................................ 55,779 29,499 Repurchases ...................................... (508,509) (425,932) Dividends paid to stockholders ....................... (58,243) (56,750) --------- --------- Net cash used in financing activities ................ (742,787) (111,532) --------- --------- Decrease in cash and cash equivalents ................ (14,467) (20,997) Cash and cash equivalents at the beginning of the year 69,043 63,861 --------- --------- Cash and cash equivalents at the end of the quarter .. $ 54,576 $ 42,864 ========= =========
SUPPLEMENTAL CASH FLOW INFORMATION BUSINESS ACQUIRED In August 2001, the Company acquired certain assets and assumed certain liabilities of a weekly newspaper, the Petaluma Argus-Courier, for approximately $2.6 million in cash. The net assets acquired had a nominal value. In January 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. OTHER Amounts in these statements of cash flow 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 31, 2000, 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 periods 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 39 weeks for the nine-month periods. Certain reclassifications have been made to the 2000 Condensed Consolidated Financial Statements to conform with classifications used as of and for the periods ended September 30, 2001. 2. RECENT ACCOUNTING PRONOUNCEMENTS In August 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS No. 144"). This statement supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of ("SFAS No. 121"). This statement also supersedes the accounting and reporting provisions of Accounting Principles Board ("APB") Opinion 30, Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, relating to the disposal of a segment of a business ("APB Opinion 30"). SFAS No. 121 did not address the accounting for a segment of a business accounted for as a discontinued operation under APB 30 and therefore two accounting models existed for long-lived assets to be disposed of. SFAS No. 144 established one accounting model for long-lived assets (including those accounted for as a discontinued operation) to be disposed of by sale and resolved certain implementation issues related to SFAS No. 121. SFAS No. 144 will be effective for fiscal years beginning after December 15, 2001. The Company is required to adopt SFAS No. 144 in the first quarter of 2002 and is currently assessing the impact on its results of operations and financial position. In July 2001, the FASB issued SFAS No. 141, Business Combinations ("SFAS No. 141") and SFAS No. 142, Goodwill and Other Intangible Assets ("SFAS No. 142"). SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001, and prohibits the use of the pooling-of-interest method. The Company adopted SFAS No. 141 in the third quarter of 2001. The adoption of SFAS No. 141 had no material impact on the Company's results of operations or financial position. SFAS No. 142, upon adoption, ceases the amortization of goodwill and requires, among other things, a certain impairment approach on the carrying value of goodwill. An initial goodwill impairment test must be completed in the year of adoption with at least an annual impairment test thereafter. SFAS No. 142 will be effective for fiscal years beginning after December 15, 2001. The Company is required to adopt SFAS No. 142 in the first quarter of 2002 and is currently assessing the impact on its results of operations and financial position. 6 Effective January 1, 2001, the Company adopted SFAS No. 133, as amended, Accounting for Derivative Instruments and Hedging Activities ("SFAS No. 133"). SFAS No. 133 establishes accounting and reporting standards for derivative instruments and for hedging activities. All derivatives, whether designated as hedging activities or not, are required to be recorded on the balance sheet at fair value. If the derivative is designated as a fair-value hedge, the changes in the fair value of the derivative and the hedged item will be recognized in earnings. If the derivative is designated as a cash-flow hedge, changes in the fair value of the derivative will be recorded in other comprehensive income and will be recognized in the statement of income when the hedged item affects earnings. For derivatives that do not qualify as a hedge, changes in the fair value will be recognized in earnings. SFAS No. 133 defines new requirements for the designation of hedging relationships as well as ongoing effectiveness assessments in order to use hedge accounting. The Company has various derivative instruments, which are further detailed in Notes 6 and 9 to the Condensed Consolidated Financial Statements in this Form 10-Q. 3. ACQUISITIONS/DISPOSITIONS Petaluma Acquisition: On August 31, 2001, the Company acquired certain assets and assumed certain liabilities of a weekly newspaper, the Petaluma Argus-Courier, in Petaluma, Calif., for approximately $2.6 million. The majority of the purchase price was allocated to goodwill. The transaction was accounted for as a purchase in accordance with SFAS No. 141. This acquisition does not have a material impact on the Company's results of operations or financial position. Magazine Sale - Discontinued Operations: On April 2, 2001, the Company sold its golf properties, which included Golf Digest, Golf Digest Woman, Golf World, Golf World Business ("Magazine Group") and GolfDigest.com, to Advance Publications, Inc., for approximately $435.0 million. The Company recorded a gain from the sale of approximately $412.0 million ($241.3 million after-tax), or $1.49 per share for the first nine months of 2001. The income taxes related to this gain make up the principal portion of "Accrued income taxes" in the Company's Condensed Consolidated Balance Sheet as of September 30, 2001. The Internal Revenue Service has granted all companies in the five boroughs of New York City an extension, in connection with the September 11 terrorist attacks, on income taxes payable until the first quarter of 2002. The Company will pay the income taxes related to the gain within the extended time period. The results of operations of the Magazine Group are reported as discontinued operations for all periods presented. Revenues and operating profit for the Magazine Group were as follows:
- ------------------------------------------------------------------------------------------------- Three Months Ended Nine Months Ended ------------------------------------------------------------- (IN MILLIONS) September 30, September 24, September 30, September 24, 2001 2000 2001 2000 - ------------------------------------------------------------------------------------------------- Revenues $ -- $ 26.5 $ 26.5 $ 91.0 - ------------------------------------------------------------------------------------------------- Operating Profit $ -- $ 3.5 $ 2.0 $ 17.6 - -------------------------------------------------------------------------------------------------
Other Dispositions: In the second half of 2000, the Company sold seven newspapers and nine telephone directory operations ("divested Regionals"). In connection with the sale of one of these papers, the Santa Barbara News-Press, the Company entered into a five-year, $25.0 million non-compete agreement. This amount will be recognized as income on a straight-line basis over 7 the life of the agreement, and is included in the "Gain on disposition of assets and other-net" line on the Company's Condensed Consolidated Statements of Income. In the first quarter of 2001, the Company sold substantially all of its investment in TheStreet.com. The proceeds of the sale approximated carrying value. 4. REDEMPTION OF SUBSIDIARY STOCK Since the Company did not issue a new class of stock to the public by December 31, 2000, the former stockholders of Abuzz Technologies, Inc. (acquired in July 1999) and certain optionees of a subsidiary of the Company have since required such subsidiary to redeem their shares for cash in the amount of $25.0 million. This redemption occurred in the first quarter of 2001. 5. INCOME TAXES Reconciliations between the effective rate on income before income taxes and the federal statutory rate are as follows:
- ------------------------------------------------------------------------------------------------------------------------------------ Three Months Ended Nine Months Ended ------------------------------------------------------------------------------------- September 30, 2001 September 24, 2000 September 30, 2001 September 24, 2000 ------------------------------------------------------------------------------------- % 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 ......... $25,349 35.0% $ 34,676 35.0% $ 74,056 35.0% $ 140,877 35.0% State and local income taxes-net of federal benefit ................................... 1,700 2.3 4,557 4.6 7,406 3.5 20,125 5.0 Amortization of nondeductible intangible assets acquired ........................... 2,223 3.1 1,387 1.4 4,867 2.3 6,843 1.7 Other-net ................................. 61 0.1 (211) (0.2) (645) (0.3) (602) (0.1) ------------------------------------------------------------------------------------- Subtotal .................................. 29,333 40.5% 40,409 40.8% 85,684 40.5% 167,243 41.6% ------------------------------------------------------------------------------------- Gain on disposition of assets and other-net 506 -- 7,960 -- 1,519 -- 7,960 -- ------------------------------------------------------------------------------------- Income tax expense ........................ $29,839 -- $ 48,369 -- $ 87,203 -- $ 175,203 -- ====================================================================================
6. DEBT OBLIGATIONS In June 2001, the Company decreased the amount available to borrow under its revolving credit agreements from $600.0 million to $540.0 million based on expected liquidity needs. The Company's one-year credit agreement was renewed and decreased to $270.0 million from $300.0 million and will now mature in June 2002. The Company's multi-year credit agreement was renewed and decreased to $270.0 million from $300.0 million and will now mature in June 2006. These revolving credit agreements require, among other provisions, specified levels (amended in the second quarter of 2001) of stockholders' equity. Approximately $362.5 million of stockholders' equity was unrestricted under these agreements as of September 30, 2001, and $262.7 million was unrestricted at December 31, 2000. The increase in the level of unrestricted stockholders' equity was primarily due to an amendment to the level of restricted stockholders' equity, partially offset by stock repurchases. The Company had $125.7 million in commercial paper outstanding at September 30, 2001, and $291.3 million at December 31, 2000. Commercial paper was paid down with funds available to the Company from the sale of the Magazine Group and GolfDigest.com. These obligations are supported by the revolving credit agreements, which had no amounts 8 outstanding as of September 30, 2001, and December 31, 2000. The amount available under the commercial paper facility was $414.4 million as of September 30, 2001. On September 28, 2001, the Company repaid $40.0 million in 7% subordinated convertible notes that were issued in March 2000 to three venture capital firms. These notes, which were to mature in March 2003, allowed the venture capital firms to call the notes beginning January 1, 2002, if the Company did not issue a new class of stock ("Class C Stock") by this date. With the agreement of the venture capitalists, the Company repaid the notes prior to the call and maturity dates, so as to take advantage of lower interest rates on commercial paper borrowings. In the second quarter of 2001, the Company entered into interest rate swap agreements, designated as fair-value hedges as defined under SFAS No. 133, based on notional amounts totaling $100.0 million with variable interest rates which are reset quarterly based on three-month LIBOR. These agreements were entered into to manage a portion of the Company's exposure to changes in the fair value of its 10-year $250.0 million 7.625% notes that mature on March 15, 2005. The fair value of the swap agreements as of September 30, 2001, was not material. The difference between fixed and variable interest rates to be paid or received is accrued as interest rates change, and recognized over the life of the agreements as an adjustment to interest expense. The Company's total debt, including commercial paper and capital leases, was $724.6 million at September 30, 2001, and $930.7 million at December 31, 2000. The decrease in total debt was primarily from a decrease in commercial paper outstanding, which was paid down with the proceeds received from the sale of the Magazine Group and GolfDigest.com as well as the repayment of the Company's $40.0 million in 7% subordinated convertible notes. 7. COMMON STOCK During the first nine months of 2001, the Company repurchased 12.2 million shares of Class A Common Stock at a cost of $508.5 million. The average price of these repurchases was $41.64 per share. On April 17, 2001, the Board of Directors authorized an additional $300.0 million of repurchase expenditures under the Company's stock repurchase program. As of November 2, 2001, the remaining amount of the aggregate repurchase authorization from the Company's Board of Directors was $196.7 million. Since the end of the quarter, the Company has repurchased approximately 1.3 million shares at a cost of $50.3 million. On April 17, 2001, the Board of Directors authorized a $.01 per share increase in the quarterly dividend on the Company's Class A and Class B Common Stock from $.115 per share to $.125 per share, effective with the June 2001 dividend. 8. STAFF REDUCTIONS The Company recorded work force reduction expenses of $5.4 million and $84.5 million in the third quarter and first nine months of 2001. Total work force reduction expenses of $3.8 million were recorded in the third quarter and first nine months of 2000. These charges are included in "Selling, general and administrative expenses" in the Company's Condensed Consolidated Statements of Income. Accruals for these work force reduction expenses are primarily included in "Accrued expenses" on the Company's Condensed Consolidated Balance Sheets and amounted to $29.4 million at September 30, 2001, and $13.6 million at December 31, 2000. Most of the accruals outstanding at September 30, 2001, will be paid within one year. 9 9. 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. As of September 30, 2001, the Company has a derivative instrument that is designated as a cash-flow hedge as defined under SFAS No. 133. This derivative instrument, which will nominally reduce the Company's exposure to fluctuations in newsprint prices, was entered into in 1998 and is effective beginning in 2002 through 2008. The adoption of SFAS No. 133 in 2001 resulted in a pre-tax increase to comprehensive income of $5.3 million related to this derivative instrument. Comprehensive income for 2001 and 2000 was as follows:
- -------------------------------------------------------------------------------------------------------------- Three Months Ended Nine Months Ended ----------------------------------------------------------- September 30, September 24, September 30, September 24, (DOLLARS IN THOUSANDS) 2001 2000 2001 2000 - --------------------------------------------------------------------------------------------------------------- Net Income $ 43,838 $ 74,965 $ 370,586 $ 259,767 Foreign currency translation losses (747) (1,428) (1,008) (540) Change in unrealized losses on marketable securities (43) (2,523) (211) (18,291) Cumulative effect of change in accounting principle (SFAS 133) on other comprehensive income -- -- 5,272 -- Unrealized derivative losses on cash-flow hedge (5,786) -- (8,464) -- Income tax benefit 2,704 1,330 1,823 8,598 - --------------------------------------------------------------------------------------------------------------- Comprehensive income $ 39,966 $ 72,344 $ 367,998 $ 249,534 ==============================================================================================================
The "Accumulated other comprehensive loss" on the Company's Condensed Consolidated Balance Sheets was net of a deferred income tax asset of $4.1 million as of September 30, 2001, and $2.3 million as of December 31, 2000. 10 10. SEGMENT STATEMENTS OF INCOME Beginning in 2001, the Company's reportable segments consist of Newspapers, Broadcast and New York Times Digital. These segments are evaluated regularly by key management in assessing performance and allocating resources. Included in Newspapers are The Boston Globe and the Worcester Telegram & Gazette, which are combined and presented as the New England Newspaper Group. Prior to 2001, the Magazine Group was reported as a separate segment, but it has since been sold and its results of operations are classified as discontinued operations for all periods presented.
- --------------------------------------------------------------------------------------------------------------------- Three Months Ended Nine Months Ended ------------------------------------------------------------ September 30, September 24, September 30, September 24, (DOLLARS IN THOUSANDS) 2001 2000 2001 2000 - --------------------------------------------------------------------------------------------------------------------- REVENUES Newspapers ........................................ $ 653,626 $ 718,625 $ 2,097,017 $ 2,294,226 Broadcast ......................................... 31,713 37,484 102,852 113,161 New York Times Digital ............................ 14,363 16,076 43,754 49,156 Intersegment eliminations (A) ..................... (2,809) (4,534) (8,295) (9,607) ------------------------------------------------------------ Total ....................................... $ 696,893 $ 767,651 $ 2,235,328 $ 2,446,936 ============================================================ OPERATING PROFIT (LOSS) Newspapers ........................................ $ 81,894 $ 126,223 $ 255,535 $ 469,366 Broadcast ......................................... 6,149 10,231 24,359 31,248 New York Times Digital ............................ 786 (17,002) (8,693) (34,924) Unallocated corporate expenses .................... (7,568) (6,791) (27,245) (26,314) ------------------------------------------------------------ Total ....................................... 81,261 112,661 243,956 439,376 Income from joint ventures .............................. 2,415 3,929 4,072 11,178 Interest expense-net .................................... 11,249 17,516 36,439 48,048 Gain on disposition of assets and other-net ............. 1,250 22,172 3,750 22,172 ------------------------------------------------------------ Income from continuing operations before Income taxes ...................................... 73,677 121,246 215,339 424,678 Income taxes ............................................ 29,839 48,369 87,203 175,203 ------------------------------------------------------------ Income from continuing operations ....................... 43,838 72,877 128,136 249,475 ------------------------------------------------------------ Income from operations of discontinued Magazine Group .............................. -- 2,088 1,192 10,292 Gain on disposal of Magazine Group ................ -- -- 241,258 -- ------------------------------------------------------------ Discontinued operations, net of income taxes............. -- 2,088 242,450 10,292 ------------------------------------------------------------ Net Income .............................................. $ 43,838 $ 74,965 $ 370,586 $ 259,767 ============================================================
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 segments. (A) Intersegment eliminations primarily include revenues between New York Times Digital and other segments. 11 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Advertising revenues accounted for approximately 65% and circulation revenues accounted for 27% of the Company's total revenues in the third quarter and for the first nine months of 2001. For the first nine months of 2001, the Company experienced a decline in its advertising revenue compared with the first nine months of 2000. Given the decline in the Company's advertising revenue to date, as well as the slowing U.S. economy and its uncertain impact on the advertising environment for the remainder of the year, the Company anticipates Newspaper Group advertising revenues for 2001 to be below the level of last year. To help offset these advertising revenue declines, the Company will continue to implement additional cost containment initiatives as well as attain continuing benefits from a staff reduction program initiated earlier this year. Furthermore, the Company increased circulation prices to mitigate the advertising revenue decline. Newsprint is the major component of the Company's cost of raw materials. Newsprint market prices were higher in the third quarter of 2001 than 2000 levels but are expected to be below the 2000 levels for the remainder of the year. Additionally, based on current market trends newsprint prices are expected to be lower in 2002 than 2001. The September 11 terrorist attacks affected all business groups throughout the Company, with the biggest impact on the Company coming from the Newspaper Group. At the Newspaper Group, a decrease in advertising revenue was partly offset by an increase in circulation revenue resulting from all of the Company's newspapers experiencing increased demand after September 11. Furthermore, the Company incurred additional expenses in producing and distributing additional newspaper copies and in providing its readers, users and viewers with coverage and analysis of the war against terrorism. Because of the lack of visibility on advertising revenues due to the uncertain economic outlook and its effect on consumer confidence, the Company is not providing earnings guidance for 2001 at this time. SEASONALITY 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 as well as the occurrence of certain international, national and local events. This trend has been masked thus far in the current year, as advertising revenue has continued to decrease in the first three quarters due to a significant cyclical decline. ACQUIRED/SOLD PROPERTIES On August 31, 2001, the Company acquired certain assets and assumed certain liabilities of a weekly newspaper, the Petaluma Argus-Courier, in Petaluma, Calif., for approximately $2.6 million. The majority of the purchase price was allocated to goodwill. This transaction was accounted for as a purchase in accordance with SFAS No. 141. This acquisition does not have a material impact on the Company's results of operations or financial position. 12 On April 2, 2001, the Company sold its golf properties, which included Golf Digest, Golf Digest Woman, Golf World, Golf World Business ("Magazine Group") and GolfDigest.com, to Advance Publications, Inc., for approximately $435.0 million. The Company recorded a gain from the sale of approximately $412.0 million ($241.3 million after-tax), or $1.49 per share for the first nine months of 2001. The income taxes related to this gain make up the principal portion of "Accrued income taxes" in the Company's Condensed Consolidated Balance Sheet as of September 30, 2001. The Internal Revenue Service has granted all companies in the five boroughs of New York City an extension, in connection with the September 11 terrorist attacks, on income taxes payable until the first quarter of 2002. The Company will pay the income taxes related to the gain within this extended time period. The results of operations of the Magazine Group are reported as discontinued operations for all periods presented. Revenues, operating profit and EBITDA (earnings before interest, taxes, depreciation and amortization) for the Magazine Group were as follows:
- ----------------------------------------------------------------------------------------------- Three Months Ended Nine Months Ended ------------------------------------------------------------------- September 30, September 24, September 30, September 24, (IN MILLIONS) 2001 2000 2001 2000 - ----------------------------------------------------------------------------------------------- Revenues $ -- $26.5 $26.5 $91.0 - ----------------------------------------------------------------------------------------------- Operating Profit $ -- $ 3.5 $ 2.0 $17.6 - ----------------------------------------------------------------------------------------------- EBITDA $ -- $ 3.8 $ 2.3 $18.6 - -----------------------------------------------------------------------------------------------
Diluted earnings per share from continuing operations and discontinued operations for 2000 were as follows:
- ---------------------------------------------------------------------------------------------------------------------- For the Quarters Ended For the Year Ended ---------------------------------------------------------------------- March 26, June 25, September 24, December 31, December 31, DILUTED EARNINGS PER SHARE: 2000 2000 2000 2000 2000 - ---------------------------------------------------------------------------------------------------------------------- Income from continuing operations $0.46 $0.56 $0.43 $0.82 $2.26 - ---------------------------------------------------------------------------------------------------------------------- Discontinued operations, net of income taxes $0.01 $0.03 $0.01 $0.01 $0.06 - ---------------------------------------------------------------------------------------------------------------------- Net Income $0.47 $0.59 $0.44 $0.83 $2.32 - ----------------------------------------------------------------------------------------------------------------------
In the second half of 2000, the Company sold seven newspapers and nine telephone directory operations ("divested Regionals"). In connection with the sale of one of these papers, the Santa Barbara News-Press, the Company entered into a five-year, $25.0 million non-compete agreement (the "non-compete agreement"). This amount will be recognized as income on a straight-line basis over the life of the agreement, and is included in the "Gain on disposition of assets and other-net" line on the Company's Condensed Consolidated Statements of Income. SPECIAL ITEMS Total special items after-tax amounted to $2.5 million ($.02 per share) in the third quarter and $193.2 million ($1.19 per share) for the first nine months of 2001. Special items in the third quarter of 2001 included the following: o A $5.4 million pre-tax charge ($.02 per share) for work force reduction expenses. o $1.3 million in income on a pre-tax basis related to the non-compete agreement. Special items for the first nine months of 2001 included the following: o An $84.5 million pre-tax charge ($.31 per share) for work force reduction expenses. o $3.8 million in income on a pre-tax basis ($.01 per share) related to the non-compete agreement. o A $412.0 million pre-tax gain ($1.49 per share) resulting from the sale of the Magazine Group. 13 Total special items after-tax amounted to $12.0 million ($.07 per share) in the third quarter and for the first nine months of 2000. Special items for both the third quarter and first nine months of 2000 included the following: o A $22.2 million pre-tax gain ($.08 per share) principally resulting from the sale of four newspapers and nine telephone directory operations, partially offset by the loss on the disposition of the Company's interest in an online venture. o A $3.8 million pre-tax charge ($.01 per share) for work force reduction expenses. OPERATING RESULTS The Company's consolidated financial results for the quarter and nine months ended September 30, 2001, compared with the quarter and nine months ended September 24, 2000, were as follows:
- ------------------------------------------------------------------------------------------------------------------------------- Three Months Ended Nine Months Ended --------------------------------------------------------------------------------- September 30, September 24, September 30, September 24, (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 2001 2000 % Change 2001 2000 % Change - ------------------------------------------------------------------------------------------------------------------------------- Revenues $ 696,893 $767,651 (9.2) $2,235,328 $2,446,936 (8.6) - ------------------------------------------------------------------------------------------------------------------------------- Operating profit $ 81,261 $112,661 (27.9) $ 243,956 $ 439,376 (44.5) - ------------------------------------------------------------------------------------------------------------------------------- Net Income before special items $ 46,323 $ 62,987 (26.5) $ 177,391 $ 247,789 (28.4) Special items (2,485) 11,978 * 193,195 11,978 * - ------------------------------------------------------------------------------------------------------------------------------- Net Income $ 43,838 $ 74,965 (41.5) $ 370,586 $ 259,767 42.7 - ------------------------------------------------------------------------------------------------------------------------------- Diluted earnings per share: Net Income before special items $ 0.30 $ 0.37 (18.9) $ 1.10 $ 1.43 (23.1) Special items (0.02) 0.07 * 1.19 0.07 * - ------------------------------------------------------------------------------------------------------------------------------- Diluted earnings per share $ 0.28 $ 0.44 (36.4) $ 2.29 $ 1.50 52.7 - -------------------------------------------------------------------------------------------------------------------------------
* Represents percentages greater than or equal to 100% (see table above and tables on pages 16 and 21). Excluding the divested Regionals, in the third quarter of 2001 total revenues for the Company decreased 7.7% to $696.9 million from $754.9 million in the third quarter of 2000 and advertising revenue decreased 14.5% to $452.7 million in the third quarter of 2001 from $529.5 million in the third quarter of 2000. On the same basis, for the first nine months of 2001 total revenues for the Company decreased 7.1% to $2.2 billion from $2.4 billion for the first nine months of 2000 and advertising revenue decreased 12.3% to $1.5 billion for the first nine months of 2001 from $1.7 billion for the first nine months of 2000. Operating profit in the third quarter of 2001 decreased 25.0% to $86.7 million from $115.6 million in the third quarter of 2000, excluding special items. On the same basis, operating profit for the first nine months of 2001 decreased 25.7% to $328.5 million from $442.3 million in the corresponding period of 2000. The 2001 third-quarter net income decreased 26.5% to $46.3 million from $63.0 million in the third quarter of 2000, excluding special items. On the same basis, net income for the first nine months of 2001 decreased 28.4% to $177.4 million from $247.8 million for the first nine months of 2000. The decreases in operating results, excluding special items, were primarily due to a slowing U.S. economy, which resulted in lower advertising revenue as compared with last year, particularly in the help-wanted category, as well as a fall-off in dot-com and technology advertising. The decrease in advertising revenue was partly offset by an increase in circulation revenue for the first nine months of 2001 due to certain price increases at The Times and The Globe. In addition, the terrorist attacks on September 11, 2001, affected all business groups throughout the Company, with the biggest impact 14 on the Company coming from the Newspaper Group. At the Newspaper Group, a decrease in advertising revenue was partly offset by an increase in circulation revenue resulting from all of the Company's newspapers experiencing increased demand after September 11. Furthermore, the Company incurred additional expenses in producing and distributing additional newspaper copies and in providing its readers, users and viewers with coverage and analysis of the war against terrorism. EBITDA EBITDA for the third quarter and first nine months of 2001 and 2000 were as follows:
- ------------------------------------------------------------------------------------------------------------------------ Three Months Ended Nine Months Ended --------------------------------------------------------------------------------------- September 30, September 24, September 30, September 24, (IN MILLIONS) 2001 2000 % Change 2001 2000 % Change - ------------------------------------------------------------------------------------------------------------------------ EBITDA (excluding special items) $137.4 $170.5 (19.4) $477.7 $607.9 (21.4) - ------------------------------------------------------------------------------------------------------------------------ EBITDA (including special items) $132.0 $167.6 (21.2) $393.2 $605.0 (35.0) - ------------------------------------------------------------------------------------------------------------------------
Special items that impact 2001 EBITDA include a $5.4 million charge and an $84.5 million charge in the third quarter and for the first nine months of the year related to work force reduction expenses. EBITDA for 2000 included special items of a $2.9 million charge for work force reduction expenses in the third quarter and first nine months of the year. 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 accounting principles generally accepted in the United States of America ("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 COSTS AND EXPENSES Consolidated operating expenses for the third quarter and first nine months of 2001 and 2000 were as follows:
- --------------------------------------------------------------------------------------------------------------- Three Months Ended Nine Months Ended -------------------------------------------------------------------------------------- September 30, September 24, September 30, September 24, (DOLLARS IN THOUSANDS) 2001 2000 % Change 2001 2000 % Change - --------------------------------------------------------------------------------------------------------------- Production costs Raw materials $ 71,625 $ 81,049 (11.6) $ 240,611 $ 247,561 (2.8) Wages and benefits 145,398 146,251 (0.6) 446,958 458,365 (2.5) Other 110,849 112,180 (1.2) 331,506 332,613 (0.3) - --------------------------------------------------------------------------------------------------------------- Total production costs 327,872 339,480 (3.4) 1,019,075 1,038,539 (1.9) Selling, general and administrative expenses 287,760 315,510 (8.8) 972,297 969,021 0.3 - --------------------------------------------------------------------------------------------------------------- Total expenses $615,632 $654,990 (6.0) $1,991,372 $2,007,560 (0.8) - ---------------------------------------------------------------------------------------------------------------
Excluding the divested Regionals, total production costs decreased 2.0% in the third quarter and remained flat for the first nine months of 2001. In the third quarter of 2001, the Company's newsprint expense decreased 7.7% compared with the 2000 third quarter, excluding the divested Regionals. This resulted from an increase in the average cost per ton of newsprint of 1.6%, which was more than offset by a decrease in consumption of 9.3%. On the same basis, for the first nine months of 2001, the Company's newsprint expense remained flat compared with the same period last year, as an increase in the average cost per ton of newsprint of 10.9% was offset by a decrease in consumption of 10.8%. The decrease in consumption in the third quarter and first nine months of 2001 was due to lower advertising volume and web-width reductions at The Boston Globe and seven of the Company's other newspapers. Excluding the divested Regionals and work force reduction expenses, selling, general and administrative expenses decreased 7.7% and 6.1% in 15 the third quarter and for the first nine months of 2001 compared with the corresponding periods in 2000, principally due to lower compensation and promotion costs. The Company currently expects total expenses for the year, excluding work force reduction charges and divestitures, to decrease 2% to 4% compared with the prior year and are likely to decrease closer to 4%. OTHER Interest expense-net decreased to $11.2 million in the 2001 third quarter and $36.4 million for the first nine months of 2001 compared with $17.5 million and $48.0 million in the year earlier periods. The decrease was due to lower amounts of debt outstanding. The effective income tax rate for the third quarter of 2001 was 40.5% compared with 40.8% in the 2000 third quarter. For the first nine months of 2001, the effective income tax rate was 40.5% compared with 41.6% in the first nine months of 2000. The decreases for both the quarter and for the first nine months of 2001 were primarily due to lower state and local income taxes. Consolidated revenues, EBITDA, depreciation and amortization and operating profit by business segment were as follows:
- ---------------------------------------------------------------------------------------------------------------------- Three Months Ended Nine Months Ended --------------------------------------------------------------------------------------- September 30, September 24, September 30, September 24, (DOLLARS IN THOUSANDS) 2001 2000 % Change 2001 2000 % Change - ---------------------------------------------------------------------------------------------------------------------- REVENUES Newspapers ................... $ 653,626 $ 718,625 (9.0) $ 2,097,017 $ 2,294,226 (8.6) Broadcast .................... 31,713 37,484 (15.4) 102,852 113,161 (9.1) New York Times Digital ....... 14,363 16,076 (10.7) 43,754 49,156 (11.0) Intersegment eliminations (A) (2,809) (4,534) 38.0 (8,295) (9,607) 13.7 -------------------------------------------------------------------------------- Total ..................... $ 696,893 $ 767,651 (9.2) $ 2,235,328 $ 2,446,936 (8.6) ================================================================================ EBITDA Newspapers ................... $ 122,174 $ 167,494 (27.1) $ 376,623 $ 594,582 (36.7) Broadcast .................... 10,093 14,251 (29.2) 36,453 43,869 (16.9) New York Times Digital ....... 2,679 (14,365) * (3,256) (26,994) 87.9 Unallocated corporate expenses (5,433) (3,789) (43.4) (20,937) (17,881) (17.1) Joint ventures ............... 2,503 4,016 (37.7) 4,336 11,440 (62.1) -------------------------------------------------------------------------------- Total ..................... $ 132,016 $ 167,607 (21.2) $ 393,219 $ 605,016 (35.0) ================================================================================ DEPRECIATION AND AMORTIZATION Newspapers ................... $ 40,280 $ 41,271 (2.4) $ 121,088 $ 125,216 (3.3) Broadcast .................... 3,944 4,020 (1.9) 12,094 12,621 (4.2) New York Times Digital ....... 1,893 2,637 (28.2) 5,437 7,930 (31.4) Corporate .................... 2,135 3,002 (28.9) 6,308 8,433 (25.2) Joint ventures ............... 88 88 -- 264 264 -- -------------------------------------------------------------------------------- Total ..................... $ 48,340 $ 51,018 (5.2) $ 145,191 $ 154,464 (6.0) ================================================================================ OPERATING PROFIT (LOSS) Newspapers ................... $ 81,894 $ 126,223 (35.1) $ 255,535 $ 469,366 (45.6) Broadcast .................... 6,149 10,231 (39.9) 24,359 31,248 (22.0) New York Times Digital ....... 786 (17,002) * (8,693) (34,924) 75.1 Unallocated corporate expenses (7,568) (6,791) (11.4) (27,245) (26,314) (3.5) -------------------------------------------------------------------------------- Total ..................... $ 81,261 $ 112,661 (27.9) $ 243,956 $ 439,376 (44.5) ================================================================================
(A) Intersegment eliminations primarily include revenues between New York Times Digital and other segments. 16 NEWSPAPER GROUP: The Newspaper Group consists of The New York Times ("The Times"), the New England Newspaper Group, which includes The Boston Globe ("The Globe") and the Worcester Telegram & Gazette (the "T&G"), 15 other newspapers, newspaper distributors, a news service, a features syndicate, TimesDigest, and licensing of the trademarks and copyrights of The Times and The Globe.
- -------------------------------------------------------------------------------------------------------------- Three Months Ended Nine Months Ended -------------------------------------------------------------------------------------- September 30, September 24, September 30, September 24, (DOLLARS IN THOUSANDS) 2001 2000 % Change 2001 2000 % Change - -------------------------------------------------------------------------------------------------------------- Revenues $653,626 $718,625 (9.0) $2,097,017 $2,294,226 (8.6) - -------------------------------------------------------------------------------------------------------------- EBITDA $122,174 $167,494 (27.1) $ 376,623 $ 594,582 (36.7) - -------------------------------------------------------------------------------------------------------------- Operating profit $ 81,894 $126,223 (35.1) $ 255,535 $ 469,366 (45.6) - --------------------------------------------------------------------------------------------------------------
Excluding the divested Regionals, total Newspaper Group revenues for the third quarter of 2001 decreased 7.4% to $653.6 million from $705.9 million in the 2000 third quarter. On the same basis, for the first nine months of 2001, total Newspaper Group revenues decreased 7.0% to $2.1 billion from $2.3 billion for the first nine months of 2000. Operating profit for the Newspaper Group decreased 31.8% to $87.3 million in the third quarter of 2001 from $128.0 million in the 2000 third quarter, excluding special items. For the first nine months of 2001, operating profit decreased 28.6% to $336.2 million from $471.1 million for the first nine months of 2000, excluding special items. Excluding special items and the divested Regionals, total Newspaper Group operating profit decreased 31.0% and 27.9% for the third quarter and for the first nine months of 2001. The decrease in results was principally attributable to a slowing U.S. economy, which resulted in lower advertising revenue as compared with last year, particularly in the help-wanted category, as well as a fall-off in dot-com and technology advertising. Advertising revenue declined across the entire Newspaper Group. Circulation revenue rose at The Times and The Globe primarily due to price increases at both newspapers, partially offset by reductions in volume. Additionally, the terrorist attacks on September 11, 2001, resulted in decreased advertising revenue, which was partially offset by an increase in circulation revenue resulting from all of the Company's newspapers experiencing increased demand after September 11. The Newspaper Group also incurred additional expenses in producing and distributing additional newspaper copies and in providing its readers coverage and analysis of the war against terrorism. The Company currently expects advertising revenue in the Newspaper Group for 2001 to be below the level of last year. 17 Advertising, circulation and other revenue, by major product of the Newspaper Group, were as follows:
- ----------------------------------------------------------------------------------------------------------------- Three Months Ended Nine Months Ended ----------------------------------------------------------------------------------- September 30, September 24, September 30, September 24, (DOLLARS IN THOUSANDS) 2001 2000 % Change 2001 2000 % Change - ----------------------------------------------------------------------------------------------------------------- THE NEW YORK TIMES Advertising $ 235,982 $ 275,836 (14.4) $ 818,044 $ 941,414 (13.1) Circulation 126,189 114,925 9.8 373,821 349,176 7.1 Other 40,625 37,206 9.2 110,897 101,809 8.9 - ---------------------------------------------------------------------------------------------------------------- Total $ 402,796 $ 427,967 (5.9) $1,302,762 $1,392,399 (6.4) - ---------------------------------------------------------------------------------------------------------------- NEW ENGLAND NEWSPAPER GROUP Advertising $ 102,270 $ 129,827 (21.2) $ 337,445 $ 406,369 (17.0) Circulation 40,676 39,106 4.0 120,347 116,128 3.6 Other 6,417 5,669 13.2 19,863 17,059 16.4 - ---------------------------------------------------------------------------------------------------------------- Total $ 149,363 $ 174,602 (14.5) $ 477,655 $ 539,556 (11.5) - ---------------------------------------------------------------------------------------------------------------- REGIONAL NEWSPAPERS Advertising $ 76,822 $ 87,959 (12.7) $ 239,237 $ 273,860 (12.6) Circulation 21,378 24,089 (11.3) 67,034 76,642 (12.5) Other 3,267 4,008 (18.5) 10,329 11,769 (12.2) - ---------------------------------------------------------------------------------------------------------------- Total $ 101,467 $ 116,056 (12.6) $ 316,600 $ 362,271 (12.6) - ---------------------------------------------------------------------------------------------------------------- TOTAL NEWSPAPER GROUP Advertising $ 415,074 $ 493,622 (15.9) $1,394,726 $1,621,643 (14.0) Circulation 188,243 178,120 5.7 561,202 541,946 3.6 Other 50,309 46,883 7.3 141,089 130,637 8.0 - ---------------------------------------------------------------------------------------------------------------- Total $ 653,626 $ 718,625 (9.0) $2,097,017 $2,294,226 (8.6) ================================================================================================================
The percentage change excluding the divested Regionals was as follows: - ------------------------------------------------------------ Three Months Ended Nine Months Ended -------------------------------------- September 30, September 30, 2001 2001 - ------------------------------------------------------------- REGIONAL NEWSPAPERS Advertising (2.1) (2.0) Circulation (0.3) (1.7) Other (4.0) 3.3 - ------------------------------------------------------------ Total (1.8) (1.7) - ------------------------------------------------------------ TOTAL NEWSPAPER GROUP Advertising (14.3) (12.4) Circulation 7.3 5.2 Other 8.7 9.5 - ------------------------------------------------------------ Total (7.4) (7.0) ============================================================ 18 Advertising volume was as follows:
- -------------------------------------------------------------------------------------------------------------------- Three Months Ended Nine Months Ended ----------------------------------------------------------------------------------- (INCHES IN THOUSANDS, PREPRINTS September 30, September 24, September 30, September 24, IN THOUSANDS OF COPIES) 2001 2000 % Change 2001 2000 % Change - -------------------------------------------------------------------------------------------------------------------- THE NEW YORK TIMES Retail 88.2 111.4 (20.8) 326.0 379.5 (14.1) National 298.4 348.6 (14.4) 1,001.0 1,185.9 (15.6) Classified 182.1 232.0 (21.5) 603.5 738.9 (18.3) Zoned 187.8 219.6 (14.5) 706.0 742.8 (5.0) - -------------------------------------------------------------------------------------------------------------------- Total 756.5 911.6 (17.0) 2,636.5 3,047.1 (13.5) - -------------------------------------------------------------------------------------------------------------------- Preprints 101,661 98,940 2.8 325,445 301,955 7.8 - -------------------------------------------------------------------------------------------------------------------- NEW ENGLAND NEWSPAPER GROUP Retail 179.7 204.0 (11.9) 590.5 635.9 (7.1) National 174.7 203.1 (14.0) 564.4 640.1 (11.8) Classified 414.4 475.5 (12.8) 1,262.2 1,449.6 (12.9) Zoned 209.4 174.5 20.0 638.7 545.7 17.1 - -------------------------------------------------------------------------------------------------------------------- Total 978.2 1,057.1 (7.5) 3,055.8 3,271.3 (6.6) - -------------------------------------------------------------------------------------------------------------------- Preprints 215,975 234,929 (8.1) 674,471 711,855 (5.3) - -------------------------------------------------------------------------------------------------------------------- REGIONAL NEWSPAPERS Retail 1,342.4 1,657.2 (19.0) 4,144.4 5,311.0 (22.0) National 54.8 70.0 (21.8) 169.3 219.0 (22.7) Classified 1,753.2 2,061.0 (14.9) 5,225.4 6,163.4 (15.2) Legal 72.3 94.9 (23.8) 288.1 429.2 (32.9) - -------------------------------------------------------------------------------------------------------------------- Total 3,222.7 3,883.1 (17.0) 9,827.2 12,122.6 (18.9) - -------------------------------------------------------------------------------------------------------------------- Preprints 233,126 258,612 (9.9) 747,561 811,589 (7.9) - --------------------------------------------------------------------------------------------------------------------
The percentage change excluding the divested Regionals was as follows: - --------------------------------------------------------- Three Months Ended Nine Months Ended --------------------------------------- September 30, September 30, 2001 2001 - --------------------------------------------------------- REGIONAL NEWSPAPERS Retail (0.1) (2.3) National 3.9 0.5 Classified (2.0) (1.6) Legal (4.8) (10.3) - --------------------------------------------------------- Total (1.2) (2.2) - --------------------------------------------------------- Preprints (1.9) 0.1 - --------------------------------------------------------- 19 Average net paid circulation for The Times, the New England Newspaper Group, and the Regional Newspapers for the third quarter and nine months ended September 30, 2001, compared with the third quarter and nine months ended September 24, 2000, was as follows:
- -------------------------------------------------------------------------------------- Three Months Ended September 30, 2001 - -------------------------------------------------------------------------------------- (COPIES IN THOUSANDS) Weekday/Daily % Change Sunday % Change - -------------------------------------------------------------------------------------- AVERAGE NET PAID CIRCULATION The New York Times 1,098.0 (0.2) 1,653.0 (1.3) New England Newspaper Group 576.8 0.5 830.6 (3.1) Regional Newspapers Including divested Regionals 597.7 (12.7) 657.9 (10.3) Excluding divested Regionals 597.7 (2.0) 657.9 (2.3) - --------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------- Nine Months Ended September 30, 2001 - -------------------------------------------------------------------------------------- (COPIES IN THOUSANDS) Weekday/Daily % Change Sunday % Change - -------------------------------------------------------------------------------------- AVERAGE NET PAID CIRCULATION The New York Times 1,117.4 0.1 1,678.7 (1.1) New England Newspaper Group 572.3 0.1 833.3 (2.0) Regional Newspapers Including divested Regionals 627.1 (9.0) 687.7 (9.0) Excluding divested Regionals 627.1 (2.7) 687.7 (2.8) - --------------------------------------------------------------------------------------
The Times continues to improve retail availability in major markets across the nation and to improve the quality and levels of its home delivery circulation base. Additionally, all of the Company's newspapers are continuing to make improvements in product delivery and customer service to attract new readers and retain existing ones. BROADCAST GROUP: The Broadcast Group comprises eight network-affiliated television stations and two radio stations.
- -------------------------------------------------------------------------------------------------------------- Three Months Ended Nine Months Ended -------------------------------------------------------------------------------------- September 30, September 24, September 30, September 24, (DOLLARS IN THOUSANDS) 2001 2000 % Change 2001 2000 % Change - -------------------------------------------------------------------------------------------------------------- Revenues $31,713 $37,484 (15.4) $102,852 $113,161 (9.1) - -------------------------------------------------------------------------------------------------------------- EBITDA $10,093 $14,251 (29.2) $ 36,453 $ 43,869 (16.9) - -------------------------------------------------------------------------------------------------------------- Operating profit $ 6,149 $10,231 (39.9) $ 24,359 $ 31,248 (22.0) - --------------------------------------------------------------------------------------------------------------
The decrease in revenues resulted from lower levels of advertising revenue in most categories, particularly automotive and packaged goods, due to a slowing U.S. economy. Additionally, the terrorist attacks on September 11, 2001, resulted in decreased advertising revenue as the Broadcast Group's television stations implemented commercial-free broadcasting during the week following September 11 to provide continuous news coverage of the terrorist attacks. In the prior year's third quarter, the Group benefited from political advertising associated with the presidential elections. Excluding special items, operating profit in the third quarter of 2001 decreased 44.9% to $6.1 million from $11.2 million in the third quarter of 2000. On the same basis, operating profit for the first nine months of 2001 decreased 23.8% to $24.5 million from $32.2 million in the corresponding period of 2000. This decrease resulted mainly from lower revenues. 20 NEW YORK TIMES DIGITAL: NYTD is the Company's Internet business division. In the third quarter of 2001, NYTD consisted of NYTimes.com, Boston.com and Digital Archive Distribution ("DAD"). In April 2001, the Company sold GolfDigest.com, which was included in the sale of the Company's golf properties.
- ------------------------------------------------------------------------------------------------------------ Three Months Ended Nine Months Ended ----------------------------------------------------------------------------------- September 30, September 24, September 30, September 24, (DOLLARS IN THOUSANDS) 2001 2000 % Change 2001 2000 % Change - ------------------------------------------------------------------------------------------------------------ Revenues $14,363 $ 16,076 (10.7) $ 43,754 $ 49,156 (11.0) - ------------------------------------------------------------------------------------------------------------ EBITDA $ 2,679 $(14,365) * $ (3,256) $(26,994) 87.9 - ------------------------------------------------------------------------------------------------------------ Operating profit (loss) $ 786 $(17,002) * $ (8,693) $(34,924) 75.1 - ------------------------------------------------------------------------------------------------------------
Advertising revenue accounted for approximately 61% and other revenue, which is primarily DAD, accounted for the remainder of NYTD's total revenues for the first nine months of 2001. Revenues declined mainly due to lower online display advertising, particularly in the dot-com, telecommunication and technology sectors. For the first nine months of 2001, these revenue decreases were partially offset by an increase in classified advertising revenue. NYTD had operating income of $0.8 million in the third quarter of 2001 compared with a $17.0 million operating loss in the same quarter last year. Operating losses for the first nine months of 2001 decreased 75.1% to $8.7 million from $34.9 million for the first nine months of 2000. The decrease in operating losses was principally due to cost reduction efforts including decreased staffing and promotion costs. For the full year of 2001, NYTD expects EBITDA losses of $2 to $4 million, down from a loss of $36.7 million in 2000. NYTD's goal is to achieve positive EBITDA for the year in 2002. LIQUIDITY AND CAPITAL RESOURCES The Company's cash flow activity for the first nine months of 2001 and 2000 was as follows: - -------------------------------------------------------------------------------- For the Nine Months Ended ----------------------------- September 30, September 24, (IN MILLIONS) 2001 2000 - -------------------------------------------------------------------------------- Net cash provided by operating activities $ 351.6 $ 381.0 - -------------------------------------------------------------------------------- Net cash provided by/(used in) investing activities $ 376.7 $(290.5) - -------------------------------------------------------------------------------- Net cash used in financing activities $(742.8) $(111.5) - -------------------------------------------------------------------------------- The decrease in net cash provided by operating activities of $29.4 million is principally due to a decline in earnings, partially offset by a decrease in working capital in 2001 compared with 2000. Net cash provided by investing activities of $376.7 million in 2001 was due to the sale of the Magazine Group and GolfDigest.com. Net cash used in investing activities of $290.5 million in the prior year was due to the acquisition of the T&G, partially offset by the proceeds from the sale of four Regional newspapers and the Company's interest in an online venture. The increase in net cash used in financing activities of $631.3 million was principally related to the repayment of commercial paper borrowings and subordinated convertible notes, stock repurchases and the redemption of subsidiary stock in 2001 as well as the net issuance of debt in the prior year. The Company believes that cash generated from its operations and the availability of funds from external sources should be adequate to cover its cash requirements, including working capital, stock repurchases, planned capital expenditures and acquisitions, and dividend payments to stockholders for both the next twelve months and the foreseeable future. The ratio of current assets to current liabilities was 62.5% at September 30, 2001, and 69.5% at December 31, 21 2000. The change was due to a decrease in current assets, partially offset by a decrease in current liabilities primarily resulting from lower commercial paper outstanding in 2001 compared with 2000. The ratio of long-term debt and capital lease obligations as a percentage of total capitalization was 33.9% at September 30, 2001, compared with 33.2% at December 31, 2000. FINANCING: In June 2001, the Company decreased the amount available to borrow under its revolving credit agreements from $600.0 million to $540.0 million based on expected liquidity needs. The Company's one-year credit agreement was renewed and decreased to $270.0 million from $300.0 million and will now mature in June 2002. The Company's multi-year credit agreement was renewed and decreased to $270.0 million from $300.0 million and will now mature in June 2006. These revolving credit agreements require, among other provisions, specified levels (amended in the second quarter of 2001) of stockholders' equity. Approximately $362.5 million of stockholders' equity was unrestricted under these agreements as of September 30, 2001, and $262.7 million was unrestricted at December 31, 2000. The increase in the level of unrestricted stockholders' equity was primarily due to an amendment to the level of restricted stockholders' equity, partially offset by stock repurchases. The Company had $125.7 million in commercial paper outstanding at September 30, 2001, and $291.3 million at December 31, 2000. Commercial paper was paid down with funds available to the Company from the sale of the Magazine Group and GolfDigest.com. These obligations are supported by the revolving credit agreements, which had no amounts outstanding as of September 30, 2001, and December 31, 2000. The amount available under the commercial paper facility was $414.4 million as of September 30, 2001. On September 28, 2001, the Company repaid $40.0 million in 7% subordinated convertible notes that were issued in March 2000 to three venture capital firms. These notes, which were to mature in March 2003, allowed the venture capital firms to call the notes beginning January 1, 2002, if the Company did not issue a new class of stock ("Class C Stock") by this date. With the agreement of the venture capitalists, the Company repaid the notes prior to the call and maturity dates, so as to take advantage of lower interest rates on commercial paper borrowings. In the second quarter of 2001, the Company entered into interest rate swap agreements, designated as fair-value hedges as defined under SFAS No. 133, based on notional amounts totaling $100.0 million with variable interest rates, which are reset quarterly based on three-month LIBOR. These agreements were entered into to manage a portion of the Company's exposure to changes in the fair value of its 10-year $250.0 million 7.625% notes that mature on March 15, 2005. The fair value of the swap agreements as of September 30, 2001, was not material. The difference between fixed and variable interest rates to be paid or received is accrued as interest rates change, and recognized over the life of the agreements as an adjustment to interest expense. The Company's total debt, including commercial paper and capital leases, was $724.6 million at September 30, 2001, and $930.7 million at December 31, 2000. The decrease in total debt was due to a decrease in commercial paper outstanding, which was paid down with the proceeds received from the sale of the Magazine Group and GolfDigest.com as well as the repayment of the Company's $40.0 million in 7% subordinated convertible notes. Since the Company did not issue Class C Stock to the public by December 31, 2000, the former stockholders of Abuzz Technologies, Inc. (acquired in July 1999) and certain optionees of a subsidiary of the Company have since required 22 such subsidiary to redeem their shares for cash in the amount of $25.0 million. This redemption occurred in the first quarter of 2001. CAPITAL EXPENDITURES: The Company currently estimates that capital expenditures for 2001 will range from $90.0 million to $100.0 million compared with $85.3 million in 2000. The Company currently anticipates that depreciation and amortization expense for 2001 will be in the range of $195.0 million to $205.0 million compared with $205.3 million (excludes the write-down of intangible assets related to an acquisition at NYTD) in 2000. RECENT ACCOUNTING PRONOUNCEMENTS: In August 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS No. 144"). This statement supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of ("SFAS No. 121"). This statement also supersedes the accounting and reporting provisions of Accounting Principles Board ("APB") Opinion 30, Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, relating to the disposal of a segment of a business ("APB Opinion 30"). SFAS No. 121 did not address the accounting for a segment of a business accounted for as a discontinued operation under APB 30 and therefore two accounting models existed for long-lived assets to be disposed of. SFAS No. 144 established one accounting model for long-lived assets (including those accounted for as a discontinued operation) to be disposed of by sale and resolved certain implementation issues related to SFAS No. 121. SFAS No. 144 will be effective for fiscal years beginning after December 15, 2001. The Company is required to adopt SFAS No. 144 in the first quarter of 2002 and is currently assessing the impact on the Company's results of operations and financial position. In July 2001, the FASB issued SFAS No. 141, Business Combinations ("SFAS No. 141") and SFAS No. 142, Goodwill and Other Intangible Assets ("SFAS No. 142"). SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001, and prohibits the use of the pooling-of-interest method. The Company adopted SFAS No. 141 in the third quarter of 2001. The adoption of SFAS No. 141 had no material impact on the Company's results of operations or financial position. SFAS No. 142, upon adoption, ceases the amortization of goodwill and requires, among other things, a certain impairment approach on the carrying value of goodwill. An initial goodwill impairment test must be completed in the year of adoption with at least an annual impairment test thereafter. SFAS No. 142 will be effective for fiscal years beginning after December 15, 2001. The Company is required to adopt SFAS No. 142 in the first quarter of 2002 and is currently assessing the impact on its results of operations and financial position. Effective January 1, 2001, the Company adopted SFAS No. 133, as amended, Accounting for Derivative Instruments and Hedging Activities ("SFAS No. 133"). SFAS No. 133 establishes accounting and reporting standards for derivative instruments and for hedging activities. All derivatives, whether designated as hedging activities or not, are required to be recorded on the balance sheet at fair value. If the derivative is designated as a fair-value hedge, the changes in the fair value of the derivative and the hedged item will be recognized in earnings. If the derivative is designated as a cash-flow hedge, changes in the fair value of the derivative will be recorded in other comprehensive income and will be recognized in the statement of income when the hedged item affects earnings. For derivatives that do not qualify as a hedge, changes in the fair value will be recognized in earnings. SFAS No. 133 defines new requirements for the designation of hedging relationships as well as ongoing effectiveness assessments in order to use hedge accounting. 23 The Company has various derivative instruments, which are further detailed in Notes 6 and 9 of the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q. 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 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 31, 2000. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's market risk associated with interest rate fluctuations is related to its debt obligations. The Company does not consider such market risk significant. In the second quarter of 2001, the Company entered into interest rate swap agreements based on notional amounts totaling $100.0 million with variable interest rates, which are reset quarterly based on three-month LIBOR. These agreements were entered into to manage a portion of the Company's exposure to changes in the fair value of its 10-year $250.0 million 7.625% notes that mature on March 15, 2005. The Company's cost of newsprint, which is significant to its operations, is subject to market price fluctuations. The Company entered into a derivative instrument in 1998 that will nominally reduce its exposure to fluctuations in newsprint prices beginning in 2002 through 2008. 24 PART. II. OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS 10.1 The Company's 1991 Executive Stock Incentive Plan, as amended through September 20, 2001 12 Ratio of Earnings to Fixed Charges (b) REPORTS ON FORM 8-K No reports on Form 8-K have been filed during the period for which this report is filed. 25 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: NOVEMBER 8, 2001 /s/ John M. O'Brien --------------------------- John M. O'Brien Senior Vice President and Chief Financial Officer (Principal Financial Officer) 26 EXHIBIT INDEX TO QUARTERLY REPORT FORM 10-Q QUARTER ENDED SEPTEMBER 30, 2001 EXHIBIT NO. (a) EXHIBIT 10.1 The Company's 1991 Executive Stock Incentive Plan, as amended through September 20, 2001 12 Ratio of Earnings to Fixed Charges 27 EX-10.1 3 ex10-1.txt THE COMPANY'S 1991 EXECUTIVE STOCK INCENTIVE PLAN EXHIBIT 10.1 THE NEW YORK TIMES COMPANY 1991 EXECUTIVE STOCK INCENTIVE PLAN AS AMENDED THROUGH SEPTEMBER 20, 2001 1. NAME AND GENERAL PURPOSE The name of this plan is The New York Times Company 1991 Executive Stock Incentive Plan (hereinafter called the "Plan"). The purpose of the Plan is to enable the Company (as hereinafter defined) to retain and attract executives who enhance its tradition and contribute to its success by their ability, ingenuity and industry, and to enable them to participate in the long-term success and growth of the Company. 2. DEFINITIONS (a) "Awards" has the meaning specified in Section 12 hereof. (b) "Board" means the Board of Directors of the Company. (c) "Cash Plan" means the Company's 1991 Executive Cash Bonus Plan. (d) "Code" means the Internal Revenue Code of 1986, as amended. (e) "Committee" means the Committee referred to in Section 3 of the Plan. If at any time no Committee shall be in office then the functions of the Committee specified in the Plan shall be exercised by those members of the Board who are Non-Employee Directors. (f) "Common Stock" means shares of the Class A Common Stock of the Company. (g) "Company" means The New York Times Company, a corporation organized under the laws of the State of New York (or any successor corporation), and, unless the context otherwise requires, its subsidiaries (as hereinafter defined) and other non-corporate entities in which it owns directly or indirectly 20% or more of the equity interests. A "subsidiary" means any corporation in which the Company possesses directly or indirectly 50% or more of the combined voting power of all classes of stock. (h) "Consolidated Statement of Income" means the consolidated statement of income (or any comparable statement, however designated) of the Company, audited by the independent certified public accountants of the Company and contained in the Company's annual report to stockholders or proxy statement. (i) "Disability" means total disability as defined under the Company's long-term disability plan, whether or not the Participant is covered by such plan, as determined by the Committee. (j) "Fair Market Value" means the arithmetic mean of the highest and lowest sales prices of the Common Stock as reported by The New York Stock Exchange (the "NYSE") (or such other national securities exchange on which the Common Stock may be listed at the time of determination, and if the Common Stock is listed on more than one exchange, then on the one located in New York or if the Common Stock is listed only on the National Association of Securities Dealers Automated Quotations System ("NASDAQ"), then on such system) on the date of the grant or other date on which the Common Stock is to be valued hereunder. If no sale shall have been made on the NYSE, such other exchange or the NASDAQ on such date or if the Common Stock is not then listed on any exchange or on the NASDAQ, Fair Market Value shall be determined by the Committee in accordance with Treasury Regulations applicable to incentive stock options. (k) "Income Before Income Taxes" means the amount designated as Income Before Income Taxes for the applicable year and shown separately on the Consolidated Statement of Income for such year. (l) "Non-Employee Director" means any Director of the Company who at the time of acting is a "Non-Employee Director" under Rule 16b-3 or any successor rule ("Rule 16b-3") under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (m) "Participant" means a key employee of the Company who is selected by the Committee to participate in any one or more parts of the Plan from among persons who in the judgment of the Committee are key employees of the Company. In general, key employees are those employees who have principal responsibility for, or who contribute substantially to, the management efficiency, editorial achievement or financial success of the Company. Only employees of The New York Times Company, its subsidiaries and other non-corporate entities in which it owns directly or indirectly 40% or more of the equity interests are eligible to participate in the Plan. (n) "Retirement" means retirement as defined by the terms of "The New York Times Companies Pension Plan" which became effective December 31, 1988, or any successor retirement plan, whether or not the Participant is a member of such retirement plan, and, in the case of employees of Affiliated Publications, Inc., or any subsidiary thereof, who retire under the terms of the Globe Newspaper Company Retirement Plan, which became effective January 1, 1994 (the "Globe Pension Plan") or any successor retirement plan, "Retirement" shall also mean retirement as defined by the terms of the Globe Pension Plan or any successor plan. 3. ADMINISTRATION OF THE PLAN The Plan shall be administered by the Board or the Committee appointed by it and composed of two or more directors all of whom shall be Non-Employee Directors. The membership of the Committee shall be constituted so as to comply at all times with the applicable requirements of Rule 16b-3, and with the administration requirements of Section 162(m)(4)(C) of the Code. The Committee shall serve at the pleasure of the Board and shall have such powers as the Board may from time to time confer upon it. 4. OPTIONS AND AWARDS UNDER THE PLAN Options, which include "Non-Qualified Options" and "Incentive Stock Options" or combinations thereof, are rights to purchase Common Stock. Non-Qualified Options and Incentive Stock Options are subject to the terms, conditions and restrictions provided in Part I of the Plan. Awards under the Plan may include one or more of the following types, either alone or in any combination thereof: (i) "Stock Awards," (ii) "Restricted Stock Awards," (iii) "Retirement Unit Awards," (iv) "Annual Performance Awards," (v) "Performance Awards" or "Other Awards" and (vi) "Long-Term Performance Awards." 2 Stock Awards are granted under Part IIA of the Plan. Restricted Stock Awards are granted under Part IIB of the Plan. Retirement Unit Awards are granted under Part IIC of the Plan. Annual Performance Awards are granted under Part IID of the Plan. Performance Awards or Other Awards are granted under Part IIE of the Plan. Awards are subject to the terms, conditions and restrictions provided in the respective subparts of Part II of the Plan. Annual Performance Awards will be based exclusively on the criteria set forth in Section 27A. Long-Term Performance Awards are granted under Part IIF of the Plan. Long-Term Performance Awards will be based exclusively on the criteria set forth in Section 28A. PART I STOCK OPTIONS 5. PURPOSE The purpose of the Stock Option portion of the Plan is to provide an added incentive for effective service and high levels of performance to Participants by affording them an opportunity, under the terms of the Plan, to acquire Common Stock and thereby to increase their proprietary interest in the continued progress and success of the Company. 6. DETERMINATION OF OPTIONEES; SHARES SUBJECT TO OPTIONS (a) The Committee may grant options to purchase Common Stock ("Options") to Participants in such amounts as the Committee may determine, subject to the conditions and limitations set forth in the Plan. Options may be granted in combination with Awards made under the Plan, and Options may be granted to any Participant whether or not he or she was eligible for, or received, an Award. (b) The number of shares of Common Stock with respect to which Options may be granted to any key employee during any calendar year shall not exceed 400,000 (subject to adjustment as provided in Sections 28 and 29 hereof). (c) There may be issued under the Plan pursuant to the exercise of Options, an aggregate of not more than 60,000,000 shares of Common Stock, subject to adjustment as provided in Sections 28 and 29 hereof. Shares of Common Stock issued pursuant to Options may be either authorized but unissued shares, treasury shares, reacquired shares, or any combination thereof. Any shares subject to an Option which expires without being exercised shall be available for issuance under new Options. 7. OPTION PRICE The exercise price of Common Stock subject to Options granted pursuant to the Plan shall be the Fair Market Value thereof at the time the Option is granted. If a Participant owns or is deemed to be the owner of, by reason of the attribution rules under Section 425(d) of the Code, more than 10% of the combined voting power of all classes of the stock of the Company or any subsidiary of the Company and an Option granted to such Participant is intended to qualify as an Incentive Stock Option within the meaning of Section 422 of the Code, the option price shall be no less than 110% of the Fair Market Value of the Common Stock on the date the Option is granted. 8. PAYMENT OF OPTION PRICE The purchase price is to be paid in full when the Option is exercised and Common Stock will be 3 delivered only against such payment. Payment of the option price may be made (i) in cash, (ii) by delivering a properly executed exercise notice to the Company together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds to pay the purchase price (or by otherwise arranging, in a manner satisfactory to the Company, for a broker to promptly pay the purchase price to the Company), (iii) by delivering to the Company shares of Common Stock previously owned, or (iv) any combination of the foregoing forms, all subject to the approval of the Committee and to such rules as the Committee may adopt. In determining the number of shares of Common Stock necessary to be delivered to the Company, such Common Stock shall be valued at Fair Market Value. 9. TYPES OF STOCK OPTIONS (a) Options granted under the Plan may be two types, an incentive stock option ("Incentive Stock Option") and a non-qualified stock option ("Non-Qualified Option"). It is intended that Incentive Stock Options granted hereunder shall constitute incentive stock options within the meaning of Section 422 of the Code. Anything in the Plan to the contrary notwithstanding, (i) no provision of this Plan relating to Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be so exercised, so as to disqualify either the Plan or any Incentive Stock Option granted under such provisions of the Code, and (ii) no Option designated by the Committee as a Non-Qualified Option shall constitute an Incentive Stock Option. In furtherance of the foregoing and not by way of limitation, no Incentive Stock Option shall be granted to a Participant who is not an employee of The New York Times Company or one of its subsidiaries. (b) If the aggregate Fair Market Value of the Common Stock (determined as of the date of grant) for which any optionee may for the first time exercise Incentive Stock Options in any calendar year under the Plan and any other stock option plan of the Company, considered in the aggregate, exceeds $100,000, such excess Incentive Stock Options will be treated as Non-Qualified Options. 10. TERMS OF STOCK OPTIONS (a) Each Option will be for a term of not more than ten years from the date of grant, except that if a Participant owns or is deemed to be the owner of, by reason of the attribution rules of Section 425(d) of the Code, more than 10% of the combined voting power of all classes of stock of the Company or any subsidiary of the Company and an Incentive Stock Option is granted to such Participant, the term of such Option shall be no more than five years from the date of grant. (b) An Option may not be exercised within one year after the date of grant except in the case of the death of the optionee or upon termination of active employment with the Company by reason of the Disability or Retirement of the optionee during such period; provided, however, that the Committee shall have the discretion to provide for the immediate exercisability of the Options in such additional circumstances as the Committee in its discretion shall determine. Thereafter, an Option shall be exercisable in such installments, if any, as the Committee may specify, and shall be exercisable during the optionee's lifetime only by the optionee (or, if the optionee is disabled, by any guardian or other legal representative appointed to represent him or her) and, except as provided in subsections (c) and (d) below, shall not be exercisable by the optionee unless at the time of exercise such optionee is an employee of the Company. 4 (c) Upon termination of active employment with the Company by reason of Disability or Retirement, an optionee (or, if the optionee is disabled, any guardian or legal representative appointed to represent him or her) may exercise all Options otherwise exercisable by him or her at the time of such termination of employment (subject to the provisions of subsection (e) below) until the expiration thereof. In the event an optionee dies while employed by the Company or after termination of employment by reason of Disability or Retirement, the person who acquired the right to exercise his or her Options by reason of the death of the optionee, as provided in Section 30 hereof, may exercise such Options otherwise exercisable at the time of death (subject to the provisions of subsection (e) below) at any time until the expiration thereof. (d) Upon termination of employment with the Company for any reason other than death, Retirement or Disability, the optionee may exercise all Options otherwise exercisable by him or her at the time of such termination of employment for an additional one year after such termination of employment. Upon termination of employment with the Company as a result of the sale or other disposition of a subsidiary or division of the Company, management shall have the discretion to extend the period the optionee may exercise all Options, otherwise exercisable by him or her for an additional one year after such termination of employment as described above, up to an additional two years (for a maximum period of three-years) after such termination of employment. In the event of a termination as described in the preceding sentence, the one-year period referred to in the following sentences in this Section 10(d) shall be extended accordingly. In the event such optionee dies within such one-year period, the person who acquired the right to exercise his or her Options by reason of the death of the optionee, as provided in Section 30 hereof, may exercise such Options at any time within the period of the greater of (i) the remainder of the one-year period described in the foregoing sentence, or (ii) three months from the date of the optionee's death. For purposes of this Section 10(d), in the event that any optionee is rehired by the Company within one year of such optionee's termination of employment with the Company, such optionee shall be deemed not to have terminated employment for purposes of determining the expiration date of all unexpired non-qualified stock options held by such individual on the date of rehire, with the effect that such options shall continue to be exercisable at any time until the expiration thereof (subject to the terms thereof and the provisions of this Section 10). (e) Notwithstanding any of the foregoing, no Option shall be exercisable in whole or in part after the expiration date provided in the Option. In the event of the death of the optionee while employed by the Company, or the Disability or Retirement of the optionee, the Committee shall have the discretion to provide for the acceleration of the exercisability of Options exercisable over a period of time, or alternatively, to provide for all or any part of such Options to continue to become exercisable in such installments as originally specified by the Committee, or such revised installments as specified by the Committee at the time of termination of employment (but in no event beyond the original expiration date), in either case subject to such conditions as determined by the Committee in its discretion. (f) No Option shall be transferable otherwise than by will or by the laws of descent and distribution. Notwithstanding the foregoing sentence, the Committee may determine that Options granted to a Participant or a specified group of Participants may be transferred by the Participant to one or more members of the Participant's immediate family, to a partnership or limited liability company whose only partners or members are members of the Participant's immediate family, or to a trust established by the Participant for the 5 benefit of one or more members of the Participant's immediate family; provided, however, that no Incentive Stock Options may become transferable if inconsistent with Section 422 of the Code, unless the Participant consents. For this purpose, "immediate family" means the Participant's spouse, parents, children (including adopted and step-children), grandchildren and the spouses of such parents, children (including adopted and step-children) and grandchildren. A transferee described in this subsection may not further transfer an Option. An Option transferred pursuant to this subsection shall remain subject to the provisions of the Plan and shall be subject to such other rules as the Committee shall determine. 11. OPTION AGREEMENTS In consideration of any Options granted to a Participant under the Plan, if requested by the Committee, such Participant shall enter into an Option Agreement with the Company providing such other terms as the Committee may deem advisable. PART II AWARDS 12. FORM OF AWARDS The Award portion of the Plan is designed to provide incentives for Participants by the making of awards of supplemental compensation ("Awards"). The Committee, subject to the terms and conditions hereof, may make Awards to a Participant in any one, or in any combination, of the following forms: (a) Common Stock as provided in Part IIA of the Plan ("Stock Awards"); (b) Restricted Stock as provided in Part IIB of the Plan ("Restricted Stock Awards"); (c) Retirement Units as provided in Part IIC of the Plan ("Retirement Unit Awards"); (d) Annual Performance Awards as provided in Part IID of the Plan ("Annual Performance Awards"); (e) Performance Awards ("Performance Awards") or other forms of Awards ("Other Awards"), as provided in Part IIE of the Plan; and (f) Long-Term Performance Awards as provided in Part IIF of the Plan ("Long-Term Performance Awards"). Awards may be made to a Participant whether or not he or she is receiving an Option grant under Part I of the Plan for the year and whether or not he or she receives an award under the Cash Plan. Awards will be based on a Participant's performance in those areas for which the Participant is directly responsible. Performance for this purpose may be measured by the achievement of specific management goals such as, but not limited to, an increase in earnings or the operating cash flow of the Company, outstanding initiative or achievement in any department of the Company, or any other standards specified by the Committee. Annual Performance Awards will be based exclusively on the criteria set forth in Section 27A. Long-Term Performance Awards will be based exclusively on the criteria set forth in Section 28A. 6 13. MAXIMUM AMOUNT AVAILABLE FOR THE ACCRUAL OF AWARDS UNDER PART II OF THE PLAN FOR ANY YEAR (a) No accrual for Awards shall be made hereunder (or under the Cash Plan) for any year unless cash dividends of not less than five cents ($.05) per share (subject to adjustment as provided in Sections 28 and 29 hereof) have been declared on the outstanding Class A and Class B Common Stock of the Company during such year. (b) In the event that the above condition is met for any year during the continuance of this Plan, the maximum aggregate amount that may be accrued for Awards under the Plan and the Cash Plan for such year shall be 4% of Income Before Income Taxes. The Committee, in its sole discretion, may make adjustments in Income Before Income Taxes to take account of extraordinary, unusual or infrequently occurring events and transactions, changes in accounting principles that substantially affect the foregoing, or such other circumstances as the Committee may determine warrant such adjustment. (c) As soon as feasible after the close of each year, the independent certified public accountants of the Company shall report the maximum amount that may be accrued for Awards for such year under the formula described in Section 13(b), subject to the second sentence of such Section. (d) If amounts are accrued in any year under the formula described in this Section 13 and are not awarded in full in such year under the Plan and the Cash Plan, such unawarded amounts may, in the discretion of the Committee, be carried forward and be available for Awards under the Plan and under the Cash Plan in any future year without regard to the provisions of Sections 13(a) or (b) of the Plan applicable to Awards made in such year. (e) Awards under the Plan for any year may not exceed the sum of (i) the amount accrued for such year under Section 13(b) above plus (ii) unawarded accrued amounts carried forward from previous years under Section 13(d) above plus (iii) amounts that may become available for Awards pursuant to the last sentence of Sections 15(c) and 27A hereof, minus (x) the amount of interest or dividend equivalents set aside during such year pursuant to Sections 15(c) and 27A hereof and the amount of dividend equivalents allocated to Retirement Unit Accounts during such year pursuant to Section 24 hereof, and minus (y) the amount of awards made for such year under the Cash Plan (and any interest equivalents allocated during such year pursuant to Section 10(b), 11(f) and 12(b) thereof). For this purpose, the amount of Awards of Common Stock under the Plan shall be based on the Fair Market Value of the Common Stock subject to Awards as of the date of grant of such Awards. (f) Subject to Sections 28 and 29 hereof, the aggregate number of shares of Common Stock for which Stock, Restricted Stock, Retirement Units, Annual Performance Awards, and Performance and Other Awards may be made under the Plan shall not exceed 2,000,000 shares, which shall be treasury shares reserved for issuance of Awards under the Plan. Shares of Common Stock subject to, but not issued under, any deferred Award which has been discontinued by the Committee pursuant to the provisions hereof or any Restricted Stock which is forfeited by any Participant shall again be available for Awards under the Plan. 7 14. DETERMINATION OF AWARDS AND PARTICIPANTS (a) As promptly as practicable after the end of each year, the Committee may make Awards (other than Annual Performance Awards and Long-Term Performance Awards, which are to be made exclusively as set forth in Sections 27A and 28A, respectively) for such year and determine the amounts to be carried forward for Awards in future years. The Committee may also, in its discretion, make Awards (other than Annual Performance Awards and Long-Term Performance Awards, which are to be made exclusively as set forth in Sections 27A and 28A, respectively) prior to the end of the year based on the amounts available under clauses (ii) and (iii) of Section 13(e) and reasonable estimates of the accrual for the year in question. (b) The Committee shall have absolute discretion to determine the key employees who are to receive Awards (other than Annual Performance Awards, which are to be made exclusively as set forth in Sections 27A and 28A, respectively) under the Plan for any year and to determine the amount of such Awards based on such criteria and factors as the Committee in its sole discretion may determine, such as the Company's operating cash flow and overall financial performance. Recommendations as to the key employees who are to receive Awards (including Annual Performance Awards and Long-Term Performance Awards) under the Plan for any year and as to the amount and form of such Awards shall, however, be made to the Committee by the chief executive officer of the Company. The fact that an employee is selected as eligible for an Award shall not mean, however, that such employee will necessarily receive an Award. (c) A person whose employment terminates during the year or who is granted a leave of absence during the year may, in the discretion of the Committee and under such rules as the Committee may from time to time prescribe, be given an Award with respect to the period of such person's service during such year. 15. METHOD AND TIME OF PAYMENT OF AWARDS (a) Awards shall be paid in full as soon as practicable after the Award is made; provided, however, that the payment of Annual Performance Awards and Long-Term Performance Awards shall be subject to the provisions of Sections 27A and 28A, respectively, and provided further, that the payment of any or all Awards may be deferred, divided into annual installments, or made subject to such other conditions as the Committee in its sole discretion may authorize under such rules and regulations as may be adopted from time to time by the Committee. (b) The Committee's rules and regulations may include procedures by which a Participant expresses a preference to the Committee as to the form of Award or method of payment of an Award but the final determination as to the form and the terms and conditions of any Award shall rest solely with the Committee. (c) Awards deferred under the Plan shall become payable to the Participant or, in the event of the Participant's death, as specified in Section 30 hereof, in such manner, at such time or times (which may be either before or after Retirement or other termination of service), and subject to such conditions as the Committee in its sole discretion shall determine. In any year the Committee shall have the discretion to set aside, for payment in such year or any future year, interest on any deferred Award payable partly in cash, and amounts equivalent to dividends on any deferred Award payable wholly or partly in stock; 8 provided, however, that the total amount of such interest and dividend equivalents shall be deducted from the maximum amount available for Awards under Section 13(e) of the Plan. Any forfeited deferred Awards (including any forfeited stock at its Award value) shall be carried forward and be available for Awards in any future year without regard to the provisions of Sections 13(a) or (b) of the Plan. 16. INDIVIDUAL AGREEMENTS (a) The Committee may in its discretion require that each Participant receiving an Award enter into an agreement with the Company which shall contain such terms and conditions as the Committee in its discretion may require. (b) The Committee may cancel any unexpired, unpaid or deferred Award at any time if the Participant is not in compliance with all applicable provisions of the agreement referred to above, if any, and the Plan. 17. STATUS OF PARTICIPANTS No Participant in this Plan shall be deemed to be a stockholder of the Company, or to have any interest in any stock or any specific assets of the Company by reason of the fact that deferred Stock Awards, Retirement Unit Awards, Annual Performance Awards, Long-Term Performance Awards, Performance Awards, Other Awards or dollar credits are to be recorded as being held for such Participant's account to be paid in installments in the future. The interest of all Participants shall derive from and be determined solely by the terms and provisions of the Plan set forth herein. 18. [INTENTIONALLY LEFT BLANK] PART IIA STOCK AWARDS 19. DETERMINATION OF STOCK AWARDS (a) Each year the Committee shall designate those Participants who shall receive Stock Awards under this part of the Plan. Stock Awards may be granted under this part of the Plan only in lieu of cash salary or bonuses. Stock Awards are made in the form of grants of Common Stock, which may be delivered immediately, in installments or on a deferred date, as the Committee, in its discretion, may provide. (b) If the Committee determines that some portion of a Stock Award to a Participant shall be treated as a deferred Stock Award and payable in annual or other periodic installments, then the Participant will be notified in writing when such deferred Stock Awards shall be paid and over what period of time. As soon as feasible after the granting of such a Stock Award, there shall be reserved out of the treasury shares of the Company, a number (which may include a fraction) of shares of Common Stock equal to the number of shares of Common Stock so awarded. In each year at the discretion of the Committee there may also be allocated or credited to each Participant a dollar amount equal to the cash dividends declared and paid by the Company on its Common Stock which the Participant would have received had such Participant been the owner of the number of shares of any Common Stock deferred for future payment. Any amounts provided for pursuant to the preceding sentence shall become payable in such manner, at such time or times, and subject to such conditions (which may include provision for an amount equivalent to 9 interest on such dividend equivalents at rates fixed by the Committee) as the Committee in its sole discretion shall determine; provided, however, that the total value of such dividend equivalents (and any interest thereon) shall be deducted from the amount available for Awards under the provisions of Section 13(e) of the Plan. The Committee in its discretion may make appropriate equitable adjustments to such deferred Stock Award to account for any dividends of property (other than cash) declared and paid by the Company on its Common Stock, or to account for any other event described in Sections 28 and 29 hereof. PART IIB RESTRICTED STOCK AWARDS 20. DETERMINATION OF RESTRICTED STOCK AWARDS Each year the Committee shall designate the Participants who shall receive Restricted Stock Awards. Shares awarded under this part of the Plan, while subject to the restrictions hereinafter set forth, are referred to as "Restricted Stock." 21. TERMS OF RESTRICTED STOCK AWARDS Any Award of Restricted Stock shall be subject to the following terms and conditions and to any other terms and conditions not inconsistent with the Plan as shall be prescribed by the Committee in its sole discretion and which may be contained in the agreement, if any, referred to in Section 16 above (or in any amendment thereto): (a) DELIVERY OF RESTRICTED STOCK. Unless otherwise determined by the Committee, the Company shall transfer treasury shares to each Participant to whom an Award of Restricted Stock has been made equal to the number of shares of Restricted Stock specified in the Award, and may either (i) hold the certificates representing such shares of Restricted Stock for the Participant or (ii) take other steps to restrict the Participant's ability to transfer such shares, in either case, for the period of time during which such shares shall remain subject to the restrictions set forth in the Award (the "Restricted Period"). Shares of Restricted Stock may not be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered by a Participant during the Restricted Period, except as hereinafter provided. Except for the restrictions set forth herein and unless otherwise determined by the Committee, a Participant shall have all the rights of a stockholder with respect to the shares of Restricted Stock comprising his or her Award, including, but not limited to, the right to vote and the right to receive dividends (which if in shares of Common Stock shall be Restricted Stock under the same terms and conditions). (b) RESTRICTED PERIOD. The Restricted Period shall commence upon the date of the Award (which unless otherwise specified by the Committee shall be the date the Restricted Stock is transferred to the Participant) and, unless sooner terminated as otherwise provided herein, shall continue for such period of time as specified by the Committee in the Award. The Restricted Period for Restricted Stock shall be at least (i) one year in the case of Restricted Stock having restrictions based on performance-based criteria and (ii) three years in the case of Restricted Stock having restrictions based solely on the passage of time. The terms of any Award of Restricted Stock, or the Committee at any time, may provide for the earlier termination of the Restricted Stock Period in the case of, and only in the case of, the death, Disability or Retirement of the Participant. 10 (c) LEGEND. If certificates are issued in respect of shares of Restricted Stock transferred or issued to a Participant under an Award registered in the name of the Participant, such certificate shall bear the following (or a similar) legend: "THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN THE NEW YORK TIMES COMPANY 1991 EXECUTIVE STOCK INCENTIVE PLAN (THE "PLAN") APPLICABLE TO RESTRICTED STOCK AND TO THE RESTRICTED STOCK AGREEMENT DATED (THE "AGREEMENT"), AND MAY NOT BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED, HYPOTHECATED, OR OTHERWISE DISPOSED OF OR ENCUMBERED IN ANY MANNER DURING THE RESTRICTED PERIOD SPECIFIED IN SUCH AGREEMENT. COPIES OF SUCH PLAN AND AGREEMENT ARE ON FILE WITH THE SECRETARY OF THE COMPANY." (d) DEATH OR DISABILITY. Unless the Committee shall otherwise determine in the Award, if a Participant ceases to be employed by the Company by reason of death or Disability, the Restricted Period covering all shares of Restricted Stock transferred or issued to such Participant under the Plan shall immediately lapse. (e) RETIREMENT. Unless the Committee shall otherwise determine in the Award, the Restricted Period covering all shares of Restricted Stock transferred to a Participant under the Plan shall immediately lapse upon such Participant's Retirement, whether early or not. (f) TERMINATION OF EMPLOYMENT. Unless the Committee shall otherwise determine in the Award or otherwise determine at or after the date of grant, if a Participant ceases to be employed by the Company other than due to a condition described in Sections 21(d) or (e) above, all shares of Restricted Stock owned by such Participant for which the Restricted Period has not lapsed shall revert back to the Company upon such termination. Authorized leave of absence or absence in military service shall constitute employment for the purposes of this Section 21(f). Whether absence in government service may constitute employment for the purposes of the Plan shall be conclusively determined by the Committee. (g) WAIVER OF FORFEITURE PROVISIONS. The Committee, in its sole and absolute discretion, may waive the forfeiture provisions in respect of all or some of the Restricted Stock awarded to a Participant. (h) LAPSE OF RESTRICTED PERIOD. Upon the lapse of the Restricted Period with respect to any shares of Restricted Stock, such shares shall no longer be subject to the restrictions imposed in the Award and shall no longer be considered Restricted Stock for the purposes of the Award and the Plan, and the Company shall take all appropriate steps to effect the foregoing. PART IIC RETIREMENT UNIT AWARDS 22. DETERMINATION OF RETIREMENT UNIT AWARDS Each year the Committee shall designate those Participants who shall receive Retirement Unit 11 Awards under the Plan. The Company shall create and maintain appropriate records of account for each Participant which shall be designated as the Participant's Retirement Unit Account. 23. CREDITS TO RETIREMENT UNIT ACCOUNTS The Committee shall allocate to each Participant selected to receive a Retirement Unit Award for that year such dollar amount as the Committee shall determine, taking into account the value of the Participant's services to the Company. Such dollar amount shall thereupon be converted into Retirement Units or fractions of Units and credited to each such Participant's Retirement Unit Account in a number equal to the quotient obtained by dividing such allocated dollar amount by the Fair Market Value of one share of Common Stock as of the date the allocation is made. 24. DIVIDEND CREDITS At the discretion of the Committee there may also be allocated in each year to each Participant a dollar amount equal to the cash dividends declared and paid by the Company on the Common Stock which the Participant would have received had such Participant been the owner of the number of shares of Common Stock equal to the number of the whole Retirement Units (but not fractional Units) credited to the Participant's Retirement Unit Account; provided, however, that the total value of such dividend equivalents shall be deducted from the amount available for Awards under Section 13 of the Plan. The dollar amounts allocated shall be converted into and credited to the Participant's Retirement Unit Account as Retirement Units or fractions thereof as set forth in Section 23 above as of the date on which such dividends were paid by the Company. No interest shall be paid on the dollar amount so allocated to the Retirement Unit Account of any Participant. The Committee in its discretion may make appropriate equitable adjustments to such Retirement Unit Accounts to account for any dividends of property (other than cash) declared and paid by the Company on its Common Stock, or to account for any other event described in Sections 28 and 29 hereof. 25. RESERVATION OF STOCK AND ACCOUNTING RECORDS The Company shall keep records of the Participant's Retirement Unit Account. At the time of any allocation to a Participant's account under Sections 23 or 24 hereof, there shall be reserved out of treasury shares of the Company a number (which may include a fraction) of shares of Common Stock equal to the number of Units or fraction thereof so allocated. 26. MATURITY AND PAYMENT AFTER MATURITY (a) The Retirement Unit Account of each Participant shall mature upon such Participant's death, Retirement or other termination of employment. (b) After maturity, the Company shall deliver to the Participant (or in the event of the death of the Participant, as specified in Section 30 hereof) in ten approximately equal annual installments, shares of Common Stock equal in the aggregate to the number of Retirement Units credited to the Participant's Retirement Unit Account. Any fraction of a Unit credited to the Participant's account at maturity shall be paid in cash with the first installment, the fractional Unit being converted into cash at the Fair Market Value of the Common Stock on such first payment date. The first such installment shall be paid within 90 days after maturity. However, the Committee in its discretion at or any time after maturity may, with the consent of the Participant (or the beneficiary of a deceased Participant as specified in Section 30 hereof), (i) defer the commencement of such distribution or defer any installment, (ii) deliver full payment of the shares of Common 12 Stock equal to the aggregate number of Retirement Units credited to the Participant's Retirement Unit Account and the dollar amount credited thereto, or (iii) reduce or increase the number of annual installments in which the payments are to be made. (c) So long as Retirement Units remain credited to the Retirement Unit Account of a Participant subsequent to maturity, such account shall be credited with the dollar amount allocated to the account as dividends as provided for in Section 24 hereof. Any dollar amount so credited may be paid in cash with the next succeeding annual installment made under Section 26(b) above, or in such manner, at such time or times, and subject to such conditions as the Committee in its sole discretion shall determine; provided, however, that in the case of any dollar amount credited to an account after maturity in respect of a dividend declared prior to maturity, such dollar amounts shall be converted to Retirement Units as of the date of payment and the remaining installments of Common Stock shall be increased accordingly. PART IID ANNUAL PERFORMANCE AWARDS 27A. DETERMINATION OF ANNUAL PERFORMANCE AWARDS (a) GENERAL. Each year the Committee may make Annual Performance Awards under this part of the Plan; provided that no Participant may be eligible to receive an Annual Performance Award hereunder and under the Cash Plan in the same year. (b) CERTAIN DEFINITIONS. For the purposes of this Section 27A, the following terms shall have the meanings specified: "AFFECTED OFFICERS" shall mean those executive officers of the Company whose compensation is required to be disclosed in the Company's annual proxy statement relating to the election of directors. "CODE SECTION 162(m)" shall mean Section 162(m) of the Code (or any successor provision), and "Regulations" shall mean the regulations promulgated thereunder, as from time to time in effect. "ELIGIBLE PARTICIPANTS" shall have the meaning set forth in subsection (c) below. "PERFORMANCE ADJUSTMENT" means, for any year, a factor ranging from 0% to 200%, based upon the achievement of Performance Goal Targets established by the Committee, that, when multiplied by an Eligible Participant's Target Award, determines the amount of such Eligible Participant's Annual Performance Award for such year. "PERFORMANCE GOAL" means, for any year, the business criteria selected by the Committee to measure the performance during such year of the Company (or of a division, subsidiary or group thereof) from one or more of the following: (i) earnings per share of the Company for the year; (ii) net income of the Company for the year; (iii) return on assets of the Company for the year (net income of the Company for the year divided by average total assets during such year); 13 (iv) return on stockholder's equity of the Company for the year (net income of the Company for the year divided by average stockholder's equity during such year); (v) operating profit or operating margins of the Company or of a division, subsidiary or group thereof for the year; (vi) cash flow of the Company or of a division, subsidiary or group thereof for the year; (vii) increase in shareholder value as determined at the end of each year; (viii) revenue growth of the Company or of a division, subsidiary or group thereof for the year; and (ix) improved use of capital and/or assets of the Company or of a division, subsidiary or group thereof for the year. "PERFORMANCE GOAL TARGET" means, for any Performance Goal, the levels of performance during a year under such Performance Goal established by the Committee to determine the Performance Adjustment to an Eligible Participant's Target Award for such year. "TARGET AWARD" means, for any year, with respect to an Eligible Participant, the dollar amount set by the Committee that, when multiplied by the applicable Performance Adjustment, determines the dollar amount of such Eligible Participant's Annual Performance Award. (c) ELIGIBILITY. Annual Performance Awards are available each year only to Plan Participants who are designated by the Committee, prior to March 31 of such year (or prior to such later date as permitted by Code Section 162(m) and the Regulations), as likely to be Affected Officers for such year, whose annual salary and bonus for such year are expected to exceed $1,000,000 and who are not designated by the Committee as eligible for an annual performance award under the Cash Plan for such year ("Eligible Participants"). (d) DETERMINATION OF ANNUAL PERFORMANCE AWARDS. Prior to March 31 of each year (or prior to such later date as permitted by Code Section 162(m) and the Regulations), the Committee will determine the Eligible Participants for such year, will designate those Eligible Participants who will be entitled to earn an Annual Performance Award for such year under this Plan, and will establish for each such Eligible Participant for such year: (i) a Target Award, (ii) one or more Performance Goals, and (iii) for each such Performance Goal, a Performance Goal Target, the method by which achievement thereof will be measured and a schedule of Performance Adjustment factors corresponding to varying levels of Performance Goal Target achievement. In the event more than one Performance Goal is established for any Eligible Participant, the Committee shall at the same time establish the weighting of each such Performance Goal in determining such Eligible Participant's Annual Performance Award. Notwithstanding anything in this Section 27A to the contrary, the Annual Performance Award payable to any Eligible Participant in any year may not exceed $3.0 million. (e) PAYMENT OF ANNUAL PERFORMANCE AWARDS. Subject to subsection (f) below, Annual Performance Awards will be paid as soon as practicable after the end of the year to which it relates and after the Committee certifies the extent to which the Performance Goal Target or Targets under the Performance Goal or Goals have been met 14 or exceeded. In the discretion of the Committee, an Annual Performance Award may be paid in cash, shares of Common Stock, shares of Restricted Stock (subject to the provisions of Section 21 hereof), Retirement Units (subject to the provisions of Sections 23-26 hereof) or any combination thereof. For this purpose, shares of Common Stock shall be valued at Fair Market Value, and Restricted Stock and Retirement Units shall be deemed to have a value equal to the Fair Market Value of the underlying Common Stock, in each case as of the date of the Committee's determination to pay such Annual Performance Award in such form or forms. If permitted by the Regulations and Code Section 162(m), the Committee may determine to pay a portion of an Annual Performance Award in December of the year to which it relates. The Committee may not increase the amount of an Annual Performance Award that would otherwise be payable upon achievement of the Performance Target or Targets, but it may reduce any Eligible Participant's Annual Performance Award in its discretion. Subject to Section 14(c) above, no Annual Performance Award will be payable to any Eligible Participant who is not an employee of the Company on the last day of the year to which such Annual Performance Award relates. (f) DEFERRAL OF ANNUAL PERFORMANCE AWARDS. If the Committee determines that some portion of an Annual Performance Award to an Eligible Participant shall be treated as a deferred Annual Performance Award and be payable in annual or other periodic installments, the Eligible Participant will be notified in writing when such deferred Annual Performance Award shall be paid and over what period of time. A deferred Award in the form of shares of Common Stock shall be subject to the provisions of Section 19(b) hereof. In the case of a deferred Award in the form of cash, in each year the Committee shall have the discretion to provide for the payment of an amount equivalent to interest, at such rate or rates fixed by the Committee, on such deferred cash Annual Performance Award. Any amounts provided for pursuant to the preceding sentence shall become payable in such a manner, at such time or times, and subject to such conditions as the Committee shall in its sole discretion determine; provided, however, that the total amount of such interest shall be deducted from the maximum amount available for Awards under the formula described in Section 13 of the Plan. (g) CODE SECTION 162(m). It is the intent of the Company that Annual Performance Awards satisfy, and this Section 27A be interpreted in a manner that satisfies, the applicable requirements of Code Section 162(m) and the Regulations so that the Company's tax deduction for Annual Performance Awards to Affected Officers is not disallowed in whole or in part by operation of Code Section 162(m). If any provision of this Plan or of any Annual Performance Award would otherwise frustrate or conflict with such intent, that provision shall be interpreted and deemed amended so as to avoid such conflict. To the extent of any irreconcilable conflict with such intent, such provision shall be deemed void as applicable to Eligible Participants. PART IIE PERFORMANCE OR OTHER AWARDS 27. DETERMINATION OF PERFORMANCE AND OTHER AWARDS (a) Each year the Committee in its sole discretion may authorize other forms of Awards such as, but not limited to, Performance Awards, if the Committee deems it appropriate to do so in order to further the purposes of the Plan. 15 (b) A "Performance Award" shall mean an Award which entitles the Participant to receive Common Stock, Restricted Stock, Retirement Units, Options under Part I of the Plan or other compensation (which may include cash), or any combination thereof, in an amount which depends upon the financial performance of the Company during a stated period of more than one year. Performance for this purpose may be measured by the growth in book value of the Common Stock, an increase in per share earnings of the Company, an increase in operating cash flow, or any other indicators specified by the Committee. The Committee shall also fix the period during which such performance is to be measured, the value of a Performance Award for purposes of providing for the accrual pursuant to Section 13 of the Plan and the form of payment to be made in respect of the Performance Award. PART IIF LONG-TERM PERFORMANCE AWARDS 28A. DETERMINATION OF LONG-TERM PERFORMANCE AWARDS (a) GENERAL. Each year the Committee shall designate those Participants who shall be eligible to receive Long-Term Performance Awards under this part of the Plan. (b) CERTAIN DEFINITIONS. For purposes of this Section 28A, the following terms shall have the meanings specified: "CODE SECTION 162(m)" shall mean Section 162(m) of the Internal Revenue Code of 1986, as amended (or any successor provision), and "Regulations" shall mean the regulations promulgated thereunder, as from time to time in effect. "ELIGIBLE PARTICIPANTS" shall mean certain key business leaders and senior management of the Company as determined in the discretion of the Committee. "LONG-TERM PERFORMANCE GOAL" means, for any Performance Period, the business criteria selected by the Committee to measure the performance during such Performance Period of the Company (or of a division, subsidiary or group thereof) from one or more of the following: (i) earnings per share of the Company for the Performance Period; (ii) net income of the Company for the Performance Period; (iii) return on assets of the Company for the Performance Period (net income of the Company for the Performance Period divided by average total assets for such Performance Period); (iv) return on stockholder's equity of the Company for the Performance Period (net income of the Company for the Performance Period divided by average stockholder's equity for such Performance Period); (v) operating profit or operating margins of the Company or of a division, subsidiary or group thereof for the Performance Period; (vi) cash flow of the Company or of a division, subsidiary or group thereof for the Performance Period; 16 (vii) increase in shareholder value as determined at the end of the Performance Period; (viii) revenue growth of the Company or of a division, subsidiary or group thereof for the Performance Period; and (ix) improved use of capital and/or assets of the Company or of a division, subsidiary or group thereof for the Performance Period. "LONG-TERM PERFORMANCE GOAL TARGET" means, for any Long-Term Performance Goal, the levels of performance during a Performance Period under such Long-Term Performance Goal established by the Committee to determine an Eligible Participant's maximum Long-Term Performance Award. "PERFORMANCE PERIOD" means the period in excess of one year commencing on January 1 of the year in which the Committee makes the Long-Term Performance Award to an Eligible Participant. (c) ELIGIBILITY. Long-Term Performance Awards are available each year to Eligible Participants who are designated by the Committee, prior to March 31 of such year (or prior to such later date as permitted by Code Section 162(m) and the Regulations). (d) DETERMINATION OF LONG-TERM PERFORMANCE AWARDS. Prior to March 31 of each year (or prior to such later date as permitted by Code Section 162(m) and the Regulations), the Committee will designate the Eligible Participants who will be entitled to earn a Long-Term Performance Award for such Performance Period under this Plan, and will establish for each such Eligible Participant for such Performance Period (i) one or more Long-Term Performance Goals, and (ii) for each such Long-Term Performance Goal, a Long-Term Performance Goal Target and the method by which achievement thereof will be measured. In the event that more than one Long-Term Performance Goal is established for any Eligible Participant, the Committee shall at the same time establish the weighting of each such Long-Term Performance Goal in determining such Eligible Participant's Long-Term Performance Award. Notwithstanding anything in this Section 28A to the contrary, the Long-Term Performance Award payable to any Eligible Participant in any Performance Period may not exceed $3.0 million. (e) PAYMENT OF LONG TERM PERFORMANCE AWARDS. Subject to subsection (g) below, Long-Term Performance Awards will be paid in cash as soon as practicable after the end of the Performance Period to which it relates and after the Committee certifies the extent to which the Long-Term Performance Goal Target or Targets under the Long-Term Performance Goal or Goals have been met or exceeded. If permitted by the Regulations and Code Section 162(m), the Committee may determine to pay a portion of a Long-Term Performance Award in December of the last year of the Performance Period to which it relates. The Committee may not increase the amount of a Long-Term Performance Award that would otherwise be payable upon the achievement of the Long-Term Performance Goal Target or Targets, but it may reduce any Eligible Participant's Long-Term Performance Award in its discretion. Subject to Sections 14(c) and 28A(g), no Long-Term Performance Award will be payable to any Eligible Participant who is not an employee of the Company on the last day of the Performance Period to which such Long-Term Performance Award relates. (f) TERMINATION OF EMPLOYMENT BECAUSE OF DEATH, DISABILITY OR RETIREMENT. In the event that an Eligible Participant terminates employment 17 because of death, Disability or Retirement, such Eligible Participant, or in the event of death such person as determined in accordance with Section 30, shall be paid a pro rata portion of such Eligible Participant's Long-Term Performance Award that would otherwise be payable upon the achievement of the Long-Term Performance Goal Target or Targets had the Participant continued employment until the end of the Performance Period. Such pro rata Long-Term Performance Award shall not be paid until the end of the Performance Period to which such Long-Term Award relates. (g) DEFERRAL AND ALTERNATIVE FORM OF PAYMENT OF LONG-TERM PERFORMANCE AWARDS. If the Committee determines that some portion of a Long-Term Performance Award to an Eligible Participant shall be treated as a deferred Long-Term Performance Award and payable in annual or other periodic installments, the Eligible Participant will be notified in writing when such deferred Long-Term Performance Award shall be paid and over what period of time. In each year the Committee shall have the discretion to provide for the payment of an amount equivalent to interest, at such rate or rates fixed by the Committee, on any deferred Long-Term Performance Award. Any amounts provided for pursuant to the preceding sentence shall become payable in such manner, at such time or times, and subject to such conditions as the Committee shall in its sole discretion determine; provided, however, that the total amount of such interest shall be deducted from the maximum amount available for Awards under the formula described in Section 5 of the Plan. Furthermore, the Committee may, in its sole discretion, determine that such Long-Term Performance Award shall be paid in shares of Common Stock or in the form of Retirement Units (subject to the provisions of Sections 23-26 hereof). For this purpose, shares of Common Stock shall be valued at Fair Market Value, and Retirement Units shall be deemed to have a value equal to the Fair Market Value of the underlying Common Stock, in each case as of the date of the Committee's determination to pay such Long-Term Performance Award in such form. (h) CODE SECTION 162(m). It is the intent of the Company that Long-Term Performance Awards satisfy, and this Section 28A be interpreted in a manner that satisfies, the applicable requirement of Code Section 162(m) and the Regulations so that the Company's tax deduction for Long-Term Performance Awards to Eligible Participants is not disallowed in whole or in part by operation of Code Section 162(m). If any provision of this Plan or of any Long-Term Performance Award would otherwise frustrate or conflict with such intent, that provision shall be interpreted and deemed amended so as to avoid such conflict. To the extent of any irreconcilable conflict with such intent, such provision shall be deemed void as applicable to any Participant whose compensation is subject to Code Section 162(m). PART III GENERAL PROVISIONS 28. STOCK DIVIDEND OR STOCK SPLIT If at any time the Company shall take any action whether by stock dividend, stock split, combination of shares, or otherwise, which results in a proportionate increase or decrease in the number of shares of Common Stock theretofore issued and outstanding, (i) the number of shares of Common Stock then subject to deferred Awards, credited to Retirement Unit Accounts (matured or unmatured) or set aside for Performance or Other Awards, (ii) the number of outstanding Options, the number of shares of Common Stock for which such Options are exercisable and the exercise price thereof, (iii) the number 18 of shares of Common Stock reserved for Awards, (iv) the number of shares of Common Stock reserved for Options, and (v) the maximum number of shares with respect to which Options may be granted to any key employee in any calendar year under Section 6(b), shall be increased or decreased in the same proportion. The Committee shall make an appropriate equitable adjustment to the provisions of Section 13(a) to take account of such increase or decrease in issued and outstanding shares. The Committee in its discretion may make appropriate equitable adjustments respecting deferred Stock Awards, Retirement Units, Annual Performance Awards, Long-Term Performance Awards, Performance or Other Awards and outstanding Options to take account of a dividend by the Company of property other than cash. All such adjustments shall be made by the Committee whose determination shall be conclusive and binding upon all Participants and any person claiming under or through any Participant. 29. RECLASSIFICATION OR MERGER If at any time the Company reclassifies or otherwise changes its issued and outstanding Common Stock (other than in par value) or the Company and one or more corporations merge and the Company is the surviving corporation of such merger, then each Stock Award, Retirement Unit (matured or unmatured), Annual Performance Award, Performance or Other Award which at the time of such reclassification or merger is credited as a Stock Award, Retirement Unit, Annual Performance Award, Long-Term Performance Award, Performance or Other Award shall thereafter be deemed to be the equivalent of (and all Units thereafter credited to a Retirement Unit Account shall be computed with reference to), and outstanding Options shall be exercisable for, the shares of stock or other securities of the Company which pursuant to the terms of such reclassification or merger are issued with respect to each share of Common Stock. The Committee shall also make an appropriate equitable adjustment to the provisions of Sections 6(b) and 13(a) to take account of such event. All such adjustments shall be made by the Committee whose determination shall be conclusive and binding upon all Participants and any person claiming under or through any Participant. 30. NON-ALIENATION OF BENEFITS Except as herein specifically provided, no right or unpaid benefit under this Plan shall be subject to alienation, assignment, pledge or charge and any attempt to alienate, assign, pledge or charge the same shall be void. If any Participant or person entitled to the benefits hereunder should attempt to alienate, assign, pledge or charge any benefit hereunder, then such benefit shall, in the discretion of the Committee, cease. Notwithstanding the foregoing, rights and benefits hereunder shall pass by will or the laws of descent and distribution in the following order: (i) to beneficiaries so designated by the Participant; if none, then (ii) to a legal representative of the Participant; if none, then (iii) to the persons entitled thereto as determined by a court of competent jurisdiction. Awards so passing shall be made at such times and in such manner as if the Participant were living. 31. WITHHOLDING OR DEDUCTION FOR TAXES If at any time specified herein for the making of any payment or delivery of any Common Stock to any Participant or beneficiary, any law or regulation of any governmental authority having jurisdiction in the premises shall require the Company to withhold, or to make any deduction for, any taxes or take any other action in connection with the payment or delivery then to be made, such payment or delivery shall be deferred until such withholding or deduction shall have been provided for by the Participant or beneficiary, or other appropriate action shall have been taken. The amount of any such tax shall be computed by the Company in a manner consistent with applicable law. The Participant or beneficiary may satisfy the obligation for such withholding or deduction in whole or in part by electing to deliver shares of Common Stock already owned and having a value (as determined by Committee rule consistent with applicable law) equal to the amount to be withheld or deducted. 19 32. ADMINISTRATION EXPENSES The entire expense of administering this Plan shall be borne by the Company. 33. GENERAL CONDITIONS (a) The Board in its discretion may from time to time amend, suspend or terminate any or all of the provisions of this Plan, provided that no change may be made which would prevent Incentive Stock Options granted under the Plan from being Incentive Stock Options as described therein without the consent of the optionees concerned, and further provided that the Board may not make any amendment which (1) changes the class of persons eligible for Incentive Stock Options, or (2) increases the total number of shares for which Options may be granted under Section 6(c), or (3) materially affects the provisions of Sections 13(a) or (b) of the Plan, or (4) materially increases the benefits accruing to Participants under the Plan (provided that changes in the vesting and exercise periods for Options for Participants who leave the Company may be effected by the Board or the Committee without stockholder approval), or (5) increases the total number of shares authorized under Section 13(f) for which Awards may be granted, without the consent and approval of the holders of a majority of the outstanding shares of Class A and Class B Common Stock of the Company entitled to vote thereon, voting together as one class. The foregoing provisions shall not be construed to prevent the Committee from exercising its discretion, or to limit such discretion, to increase the total number of shares for which Options may be granted under Section 6(b) or the total number of shares authorized under Section 13(f) for which Awards may be granted, as expressly permitted by Sections 28 and 29 hereof, or to adjust the provisions of Sections 13(a) and (b) hereof as expressly permitted by Sections 13(b), 28 and 29 hereof, or otherwise to exercise any discretion to the extent expressly authorized hereunder. (b) Nothing contained in the Plan shall prohibit the Company from establishing incentive compensation arrangements in addition to this Plan and the Cash Plan. Payments made under any such separate arrangements shall not be included in or considered a part of the maximum dollar amount available for Awards under the Plan and Cash Plan, or number of shares available for Awards or Options under the Plan, and shall not be charged against the dollar or share amounts available for Awards under the Plan and Cash Plan or Options under the Plan. In the discretion of the Committee, employees shall be eligible to participate in such other arrangements, as well as the Plan and Cash Plan, in the same year. (c) Nothing in this Plan shall be deemed to limit in any way the right of the Company to terminate a Participant's employment with the Company at any time. (d) The Committee may promulgate rules and regulations relating to the administration and interpretation of, and procedures under, the Plan. Any decision or action taken by the Company, the Board or the Committee arising out of or in connection with the construction, administration, interpretation and effect of the Plan shall be conclusive and binding upon all Participants and any person claiming under or through any Participant. (e) No member of the Board or of the Committee shall be liable for any act or action, whether of commission or omission, taken by any other member or by any officer, agent or employee, nor for anything done or omitted to be done by such Director except in circumstances involving actual bad faith. 20 (f) Notwithstanding any other provision of this Plan, the Company shall not be obligated to make any Award, issue any shares of Common Stock, or grant any Option with respect thereto, unless it is advised by counsel of its selection that it may do so without violation of the applicable Federal and State laws pertaining to the issuance of securities, and may require any stock so issued to bear a legend, may give its transfer agent instructions, and may take such other steps, as in its judgment are reasonably required to prevent any such violation. (g) It is the intent of the Company that transactions involving Options or Awards granted under the Plan be entitled to the exemption from Section 16 of the Exchange Act provided by Rule 16b-3, that any ambiguities or inconsistencies in construction of the Plan be interpreted to give effect to such intention and that if any provision of the Plan is found not to be in compliance with Rule 16b-3, such provision shall be deemed null and void to the extent required to permit any such transaction to comply with Rule 16b-3. The Committee may adopt rules and regulations under, and amend, the Plan in furtherance of the intent of the foregoing. 34. TRANSITION Upon the effectiveness of this Plan, as provided below, and the Cash Plan, such plans replaced the Company's Executive Incentive Compensation Plan ("EICP"), except that the EICP shall continue to govern options and awards of restricted stock outstanding under the EICP. No further awards will be made under the EICP, and all amounts accrued for awards under the EICP and unawarded were carried forward and made available for Awards under the Plan and awards under the Cash Plan. All unmatured and matured but undistributed retirement units and all performance awards respecting current performance cycles awarded under the EICP became Retirement Units and Performance Awards hereunder and any payments or distributions in respect thereof shall be made hereunder; provided, however, that the number of shares of Common Stock available for Awards pursuant to Section 13(f) hereof shall not be reduced by the number of such retirement units previously awarded under the EICP and paid subsequently under the Plan. 35. EFFECTIVE DATE; EXPIRATION The Plan became effective for periods beginning after January 1, 1991 upon approval by the holders of a majority of the outstanding shares of Class A and Class B Common Stock of the Company entitled to vote thereon at the 1991 Annual Meeting of Stockholders, in person or by proxy, voting together as a single class. No Options may be granted or Awards made under the Plan after December 31, 2010, or such earlier expiration date as may be designated by resolution of the Board. 21 EX-12 4 ex12.txt EXHIBIT 12 RATIO OF EARNINGS TO FIXED CHARGES Exhibit 12 THE NEW YORK TIMES COMPANY RATIO OF EARNINGS TO FIXED CHARGES (DOLLARS IN THOUSANDS, EXCEPT RATIOS) (Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED ----------------------------- ----------------------------- SEPTEMBER 30, SEPTEMBER 24, SEPTEMBER 30, SEPTEMBER 24, 2001 2001 2001 2001 ------------- ------------- ------------- ------------- EARNINGS FROM CONTINUING OPERATIONS BEFORE FIXED CHARGES Income before income taxes, discontinued operations and income from joint ventures (1) $ 71,262 $ 117,317 $ 211,267 $ 413,500 Distributed earnings from less than fifty percent owned affiliates 3,511 5,585 11,730 12,930 ------------- ------------- ------------- ------------- Adjusted pre-tax earnings from continuing operations 74,773 122,902 222,997 426,430 Fixed charges less capitalized interest 15,306 21,305 49,429 61,006 ------------- ------------- ------------- ------------- EARNINGS FROM CONTINUING OPERATIONS BEFORE FIXED CHARGES $ 90,079 $ 144,207 $ 272,426 $ 487,436 ============= ============= ============= ============= FIXED CHARGES Interest expense, net of capitalized interest $ 12,249 $ 18,110 $ 39,986 $ 51,970 Capitalized interest 91 -- 149 -- Portion of rentals representative of interest factor 3,057 3,195 9,443 9,036 ------------- ------------- ------------- ------------- TOTAL FIXED CHARGES $ 15,397 $ 21,305 $ 49,578 $ 61,006 ============= ============= ============= ============= RATIO OF EARNINGS TO FIXED CHARGES 5.85 6.77 5.49 7.99 ============= ============= ============= =============
(1) The three-month and nine-month periods ended September 30, 2001, include work force reduction expenses of $5.4 million and $84.5 million and the three-month and nine-month periods ended September 24, 2000, include work force reduction expenses of $2.9 million. Excluding work force reduction expenses, the ratio of earnings to fixed charges is 6.20 and 7.20 for the three-month and nine-month periods ended September 30, 2001, compared with 6.90 and 8.04 for the comparable prior year periods. -----END PRIVACY-ENHANCED MESSAGE-----