FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For Quarter Ended June 30, 1996
------------------
Commission file number 1-5837
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THE NEW YORK TIMES COMPANY
--------------------------
(Exact name of registrant as specified in its charter)
NEW YORK 13-1102020
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(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
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(Zip Code)
Registrant's telephone number, including area code 212-556-1234
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes X No .
--- ---
Number of shares of each class of the registrant's common stock outstanding as
of August 4, 1996 (exclusive of treasury shares):
Class A Common Stock 96,767,170 shares
Class B Common Stock 428,316 shares
<PAGE>
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)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------- ---------------------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
------------------------------- ---------------------------------
(13 Weeks) (26 Weeks)
Revenues
<S> <C> <C> <C> <C>
Advertising........................................... $ 447,261 $ 427,672 $ 876,905 $ 828,823
Circulation........................................... 154,580 138,603 301,727 268,344
Other................................................. 43,403 43,705 89,097 83,856
--------------- --------------- -------------- ---------------
Total.............................................. 645,244 609,980 1,267,729 1,181,023
--------------- --------------- -------------- ---------------
Production Costs
Raw Materials......................................... 96,619 85,675 202,498 165,666
Wages and Benefits.................................... 135,546 133,588 272,380 264,967
Other................................................. 101,633 97,592 201,348 193,780
--------------- --------------- -------------- ---------------
Total.............................................. 333,798 316,855 676,226 624,413
Selling, General and Administrative Expenses.............. 221,175 210,544 440,609 416,466
--------------- --------------- -------------- ---------------
Total.............................................. 554,973 527,399 1,116,835 1,040,879
--------------- --------------- -------------- ---------------
Operating Profit.......................................... 90,271 82,581 150,894 140,144
Income from Joint Ventures................................ 2,210 2,458 6,892 4,534
Interest Expense, Net of Interest Income.................. 5,962 6,732 12,400 14,076
--------------- --------------- -------------- ---------------
Income Before Income Taxes................................ 86,519 78,307 145,386 130,602
Income Taxes.............................................. 39,707 35,051 65,860 59,987
--------------- --------------- -------------- ---------------
Net Income................................................ $ 46,812 $ 43,256 $ 79,526 $ 70,615
=============== =============== ============== ===============
Average Number of Common Shares Outstanding............... 97,754 96,781 97,703 97,304
Per Share of Common Stock
Net Income.............................................. $.48 $.45 $.81 $.73
Cash Dividends.......................................... .14 .14 .28 .28
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
THE NEW YORK TIMES COMPANY
--------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(Dollars in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------- --------------
ASSETS (Unaudited)
- ------
<S> <C> <C>
Current Assets
- --------------
Cash and short-term investments................... $ 113,638 $ 91,442
Accounts receivable-net........................... 279,675 277,974
Inventories
Newsprint and magazine paper.................... 33,236 36,965
Work-in-process, etc............................ 5,473 5,879
------------- --------------
Total inventories............................ 38,709 42,844
Other current assets.............................. 54,517 47,394
------------- --------------
Total current assets......................... 486,539 459,654
------------- --------------
Other Assets
- ------------
Investment in joint ventures...................... 136,301 129,206
Property, plant and equipment (less accumulated
depreciation of $772,712 in 1996 and
$740,864 in 1995)............................... 1,302,532 1,276,066
Intangible assets acquired (less accumulated
amortization of $228,342 in 1996
and $207,489 in 1995)........................... 1,407,639 1,394,844
Miscellaneous assets.............................. 107,719 116,960
------------- --------------
TOTAL ASSETS................................. $3,440,730 $ 3,376,730
============= ==============
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
THE NEW YORK TIMES COMPANY
--------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(Dollars in thousands)
June 30, December 31,
1996 1995
--------------- ---------------
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited)
- ------------------------------------
Current Liabilities
- -------------------
Accounts and notes payable.............. $ 146,976 $ 156,722
Accrued payroll and other related
liabilities............................ 73,239 74,560
Accrued expenses........................ 216,075 200,576
Unexpired subscriptions................. 87,454 81,919
Current portion of long-term debt....... 3,365 3,139
--------------- ---------------
Total current liabilities............. 527,109 516,916
--------------- ---------------
Other Liabilities
- -----------------
Long-term debt.......................... 589,438 589,193
Capital lease obligations............... 48,158 48,680
Deferred income taxes................... 155,533 168,715
Other................................... 458,626 441,124
--------------- ---------------
Total other liabilities............... 1,251,755 1,247,712
--------------- ---------------
Stockholders' Equity
- --------------------
Capital shares.......................... 12,762 12,705
Additional capital...................... 631,586 618,570
Earnings reinvested in the business..... 1,314,138 1,262,022
Common stock held in treasury, at cost.. (296,620) (281,195)
--------------- ---------------
Total stockholders' equity............ 1,661,866 1,612,102
--------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY................................... $ 3,440,730 $ 3,376,730
=============== ===============
See notes to condensed consolidated financial statements.
4
<PAGE>
THE NEW YORK TIMES COMPANY
--------------------------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
----------------------------------------------
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Six Months Ended
--------------------------------------
June 30, June 30,
1996 1995
--------------------------------------
(26 Weeks)
<S> <C> <C>
OPERATING ACTIVITIES:
- --------------------
Net cash provided by operating activities.......................................... $ 154,325 $ 170,996
--------------- ---------------
INVESTING ACTIVITIES:
- --------------------
Acquisitions, net of cash acquired................................................. (16,695) (71,913)
Purchases of marketable securities................................................. - (39,370)
Proceeds from sale of marketable securities........................................ - 19,693
Additions to property, plant and equipment......................................... (98,113) (90,715)
Other-net.......................................................................... 15,154 796
--------------- ---------------
Net cash used in investing activities.............................................. (99,654) (181,509)
--------------- ---------------
FINANCING ACTIVITIES:
- --------------------
Long-term obligations
Increase .................................................................... - 400,000
Reduction .................................................................... (1,665) (224,154)
Capital Shares
Issuance .................................................................... 271 723
Repurchase.................................................................... (3,671) (44,960)
Dividends paid to stockholders..................................................... (27,410) (27,268)
Other-net ........................................................................ - (11,063)
--------------- ---------------
Net cash (used in) provided by financing activities................................ (32,475) 93,278
--------------- ---------------
Increase in cash and short-term investments........................................ 22,196 82,765
Cash and short-term investments at the beginning of the year....................... 91,442 41,419
--------------- ---------------
Cash and short-term investments at the end of the quarter.......................... $ 113,638 $ 124,184
=============== ===============
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
THE NEW YORK TIMES COMPANY
--------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(Unaudited)
1. GENERAL
a. The accompanying Notes to Condensed Consolidated Financial Statements
should be read in conjunction with the Notes to Consolidated Financial
Statements included in the annual report on Form 10-K for the year
ended December 31, 1995 for The New York Times Company (the "Company")
filed with the Securities and Exchange Commission. In the opinion of
management, all adjustments necessary for a fair presentation of the
results of operations for the interim period have been included.
Because of the seasonal nature of the business, results for the
interim periods are not necessarily indicative of a full year's
operations.
b. Earnings per share is computed after preference dividends and is based
on the weighted average number of Class A and Class B common shares
outstanding during the period. The dilutive effect of the Company's
common stock equivalents (shares under option) was insignificant or
anti-dilutive, thus, fully-diluted earnings per share is not
presented.
c. Certain reclassifications have been made to the 1995 Condensed
Consolidated Financial Statements to conform with classifications used
at June 30, 1996.
2. INCOME TAXES
The reasons for the variances between the effective tax rate on income
before income taxes and the federal statutory rate are as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
--------------------------------------------------------------------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
------------------------------------------------------------------------------------------------------------------
% of % of % of % of
(Dollars in thousands) Amount Pre-tax Amount Pre-tax Amount Pre-tax Amount Pre-tax
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Pre-tax income.................. $86,519 100.0% $78,307 100.0% $145,386 100.0% $130,602 100.0%
================================================================================
Tax at federal statutory rate... $30,282 35.0% $27,408 35.0% $50,885 35.0% $45,711 35.0%
State and local taxes,
net of federal benefits....... 5,401 6.3% 5,534 7.1% 9,083 6.3% 9,187 7.0%
Amortization of nondeductible
intangible assets acquired.... 3,223 3.7% 3,555 4.5% 5,333 3.7% 6,525 5.0%
Foreign income ................. (141) (0.2%) (914) (1.1%) (1,101) (0.8%) (1,220) (0.9%)
Other net ...................... 942 1.1% (532) (0.7%) 1,660 1.1% (216) (0.2%)
--------------------------------------------------------------------------------
Income taxes at effective tax
rate.......................... $39,707 45.9% $35,051 44.8% $65,860 45.3% $59,987 45.9%
================================================================================
</TABLE>
6
<PAGE>
3. STAFF REDUCTIONS
In the six months ended June 1996, the Company recorded approximately
$5,600,000, or $.03 per share, of pre-tax charges relating to additional staff
reductions primarily at The New York Times ("The Times"). In the year ended
1995, the Company recorded pre-tax charges of approximately $10,100,000, or $.06
per share, for workforce reductions at The Times, The Boston Globe and corporate
headquarters. In 1993, the Company recorded pre-tax charges of $35,400,000, or
$.23 per share, for severance and related costs for staff reductions at The
Times.
At June 30, 1996 and December 31, 1995, approximately $13,400,000 and
$17,472,000, respectively, were included in accrued expenses on the accompanying
Condensed Consolidated Balance Sheets, which represent the unpaid balance of
these pre-tax charges. The Company has committed the remaining funds. The
remaining cash outflows associated with these charges are expected to occur over
the next three years due to the timing of certain union pension and welfare fund
contributions.
4. ACQUISITIONS/DISPOSITIONS
In June 1996, the Company acquired a newspaper distribution business that
distributes The Times and other newspapers and periodicals throughout Long
Island, Westchester and Fairfield counties in the New York City metropolitan
area. The acquisition was accounted for as a purchase, accordingly, the
operating results have been included in the consolidated financial statements
from the acquisition date. The aggregate cost of the acquisition was
$30,673,000, of which $16,695,000 was paid in cash, $9,915,000 in notes and
accounts receivable which were forgiven and the remainder representing
short-term notes and assumed liabilities. The purchase resulted in increases of
other intangible assets of approximately $27,644,000 (consisting primarily of a
customer list) and accounts receivable and equipment of $3,029,000.
In June 1995, the Company acquired WTKR-TV in Norfolk, Virginia. The
acquisition was accounted for as a purchase. The aggregate net cost of the
acquisition was $71,301,000 which was paid in cash. The purchase resulted in
increases in other intangible assets of approximately $61,343,000 (which consist
of a network affiliation agreement, FCC licenses and other intangible assets);
property, plant and equipment of $11,189,000, and other assets of $445,000.
Net liabilities assumed as a result of the transaction totaled approximately
$1,676,000.
In the third quarter of 1995, the Company completed the sales of six small
regional newspapers. The sales resulted in a net pre-tax gain of approximately
$11,300,000 ($5,000,000 after taxes, or $.05 per share). In addition, the
Company sold a small regional newspaper in the second quarter of 1995. The sale
did not have a material effect on the Company's consolidated financial
statements.
Had the acquisitions and dispositions occurred at the beginning of each
period presented, the pro forma impact on the results of operations for each
period presented would not have been material. These acquisitions and
dispositions will not have a material impact on the future operations of the
Company. The second quarter and six months of 1996 include the results of
WTKR-TV, but do not include any operations from the small regional newspapers
sold in 1995.
7
<PAGE>
Subsequent Event
- ----------------
In July 1996, the Company completed the acquisition of KFOR-TV and WHO-TV,
NBC-affiliated stations which serve the Oklahoma City, Oklahoma and Des Moines,
Iowa markets respectively. The cost of the acquisition was approximately
$226,000,000, subject to certain closing adjustments, of which approximately
$143,000,000 was financed by the issuance of commercial paper with the balance
paid in cash. The operations of these stations were not included in the
second-quarter and six-month results.
5. DEBT
In July 1996, the Company entered into $100,000,000 and $200,000,000
revolving credit and term loan agreements with a group of banks ("New
Agreements"). The New Agreements replace existing revolving credit and term loan
agreements aggregating $170,000,000. The New Agreements expire in July 1997 and
July 2001, respectively, at which time any outstanding borrowings would be
payable. At the Company's discretion, these facilities may be converted into
term loans at any time. The $100,000,000 agreement provides for an annual
facility fee of 0.0475%. The $200,000,000 agreement provides for an annual
facility fee of 0.0675% based on the Company's current credit rating.
The agreements permit borrowings which bear interest, at the Company's
option, (i) for domestic borrowings: based on the certificates of deposit rate,
the Federal Funds rate, a prime rate or a quoted rate; or (ii) for Eurodollar
borrowings: based on the LIBOR rate, plus various margins based on the Company's
credit rating. The New Agreements include provisions which require, among other
matters, specified levels of stockholders' equity. On a pro forma basis as of
June 30, 1996, if the New Agreements had been in effect, approximately
$862,000,000 of stockholders' equity would have been unrestricted.
In July 1996, the Company increased its commercial paper facility to
$300,000,000 from $200,000,000. In July 1996, the Company had approximately
$143,000,000 in outstanding commercial paper with maturities ranging up to 60
days at a weighted average interest rate of approximately 5.4%. The outstanding
commercial paper is supported by the Company's New Agreements.
The New Agreements and commercial paper facility will be used for
acquisitions and general corporate purposes.
6. STOCK REPURCHASE PROGRAM
During the first six months of 1996, the Company spent approximately
$3,700,000 to repurchase approximately 119,000 shares of Class A Common Stock at
an average price of $30.80 under the February 1995 authorization of $50,000,000.
In May 1996, the Board of Directors authorized additional repurchases of up to
$32,000,000. Subsequent to June 30, 1996, the Company spent approximately
$15,300,000 to repurchase approximately 514,000 shares of Class A Common Stock
at an average price of $29.78. To date, approximately $31,000,000 remain from
the May 1996 authorization.
8
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
Advertising and circulation revenues accounted for approximately 69% and
24%, respectively, of the Company's revenues in both the second quarter and six
months of 1996. 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. Advertising volume tends to be less in
these quarters because economic activity is lower in the post-holiday season and
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.
The cost of raw materials for the Company and the entire publishing
industry was adversely affected by the significant increases in newsprint and
magazine paper prices throughout 1995. The unfavorable impact of these increases
is expected to continue during most of 1996. However, paper prices have declined
and prices paid in the latter part of 1996 are expected to be lower than
those paid in 1995.
Beginning with the 1996 first quarter, equity ownership interests in
investments of between 20 percent and 50 percent held by the Company are
reported on a pre-tax basis and are included in the line "Income from Joint
Ventures" in the Condensed Consolidated Statements of Income. These equity
ownership interests include investments in two paper mills, the International
Herald Tribune S.A.S. ("IHT") and a new venture. The 1995 amounts have been
reclassified to conform with this presentation.
The 1996 second-quarter and six-month results were affected by the
following special factors:
- $5.6 million pre-tax charge ($.02 per share for the quarter and $.03
per share for the six months) for severance and related costs
resulting from work force reductions ("buyouts").
- $7.8 million pre-tax gain ($.04 per share for the quarter and six
months) on the sale of the 110 Fifth Avenue building.
It is likely that the Company will continue to have severance and related
costs due to workforce reductions in 1996 and subsequent years, as the Company
responds to competitive conditions and changes in technology by reducing its
cost structure and streamlining its operations.
RESULTS OF OPERATIONS
- ---------------------
The 1996 second-quarter net income was $46.8 million, or $.48 per share,
compared with net income of $43.3 million, or $.45 per share, in 1995. For the
first six months of 1996, net income rose 12.6% to $79.5 million, or $.81 per
share, from $70.6 million, or $.73 per share, in 1995. Exclusive of special
factors as described above, 1996 second-quarter earnings and six-month earnings
would have been $.46 and $.80 per share respectively. The higher 1996 net income
was principally due to improved operations in the Newspaper and Broadcast Groups
and higher earnings from the Company's investments in paper mills.
9
<PAGE>
Revenues for the second quarter of 1996 were $645.2 million compared with
$610.0 million in the 1995 quarter, an increase of 5.8%. Revenues for the first
six months of 1996 were $1.27 billion, an increase of 7.3% over the first
six-month revenues of $1.18 billion in 1995. On a comparable basis, adjusted for
acquisitions and dispositions of certain properties, 1996 second-quarter
revenues increased by approximately 5.9% over 1995 and six-month revenues
increased by approximately 7.5% over 1995.
Costs and expenses for the Company increased to $555.0 million in the
second quarter of 1996 from $527.4 million in 1995 and increased to $1.12
billion in the first six months of 1996 from $1.04 billion in 1995 due primarily
to higher paper costs and higher wages and benefits costs.
Operating profit rose to $90.3 million for the second quarter of 1996 from
the operating profit of $82.6 million in 1995. Operating profit rose to $150.9
million for the first six months of 1996 from the operating profit of $140.1
million in 1995. The improvement in operating profit in the Newspaper and
Broadcast Groups was partially offset by incremental corporate expenses
associated with the Company's reengineering program and a decrease in operating
profit at the Magazine Group.
Income from Joint Ventures decreased to $2.2 million for the second
quarter of 1996 from $2.5 million in 1995 and increased to $6.9 million in the
first six months of 1996 from $4.5 million in 1995. The second-quarter decrease
was due to losses from a new venture. The six-month increase was primarily a
result of higher selling prices for paper at the mills in which the Company has
investments offset by losses incurred from a new venture.
The 1996 second-quarter earnings before interest, income taxes,
depreciation and amortization ("EBITDA") rose to $128.8 million from $118.5
million in the 1995 quarter; EBITDA for the first six months of 1996 rose to
$229.7 million from $212.0 million in the comparable 1995 period. Depreciation
and amortization expense was $36.3 million in the second quarter of 1996
compared with $33.4 million in 1995 and $71.9 million for the first half of 1996
compared with $67.3 million in 1995.
Interest expense, net of interest income, declined to $6.0 million and
$12.4 million for the 1996 second quarter and six months, respectively, from
$6.7 million and $14.1 million in the comparable 1995 periods. The decline was
due principally to a higher level of capitalized interest in connection with
facilities under construction.
The Company utilized an effective tax rate of 45.3% for the first six
months of 1996 compared with an effective tax rate of 45.9% in 1995. For the
1996 second quarter, the effective tax rate was 45.9% as compared to 44.8% in
the 1995 quarter. The variations in the rates were due, in part, to varying
levels of state and local taxes and foreign-source income.
10
<PAGE>
Segment Information
- -------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
----------------------------------------------------------------------
June 30, June 30, June 30, June 30,
(Dollars in thousands) 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Newspapers $577,195 $546,263 $1,137,515 $1,059,235
Magazines 41,706 42,929 82,419 83,831
Broadcasting 26,343 20,788 47,795 37,957
- -------------------------------------------------------------------------------------------------------------------------------
Total $645,244 $609,980 $1,267,729 $1,181,023
===============================================================================================================================
OPERATING PROFIT (LOSS)
Newspapers $ 82,372 $ 71,517 $ 143,518 $ 122,373
Magazines 6,464 10,924 13,534 21,123
Broadcasting 7,988 6,228 11,372 8,972
Unallocated Corporate Expenses (6,553) (6,088) (17,530) (12,324)
- -------------------------------------------------------------------------------------------------------------------------------
Total $ 90,271 $ 82,581 $ 150,894 $ 140,144
===============================================================================================================================
DEPRECIATION AND AMORTIZATION
Newspapers $ 34,397 $ 32,850 $ 68,121 $ 66,202
Magazines (1,718) (1,945) (3,589) (3,860)
Broadcasting 3,289 2,183 6,574 4,356
Corporate 256 239 601 436
Joint Ventures 95 95 192 190
- -------------------------------------------------------------------------------------------------------------------------------
Total $ 36,319 $ 33,422 $ 71,899 $ 67,324
===============================================================================================================================
</TABLE>
A discussion of the operating results of the Company's segments follows:
NEWSPAPER GROUP: The Newspaper Group consists of The New York Times ("The
Times"), The Boston Globe ("The Globe"), 21 Regional Newspapers, newspaper
wholesalers, and Information Services (which includes a news service, a features
syndicate and TimesFax and licensing operations of The New York Times databases
and microfilm). The New Ventures category consists of new projects developed in
electronic media by The Times and The Globe as well as various new media
investments such as Video News International.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
----------------------------------------------------------------------
June 30, June 30, June 30, June 30,
(Dollars in thousands) 1996 1995 1996 1995
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Newspapers $575,283 $546,172 $1,133,716 $1,059,144
New Ventures 1,912 91 3,799 91
-------------------------------------------------------------------------------------------------------------
Total Revenues $577,195 $546,263 $1,137,515 $1,059,235
-------------------------------------------------------------------------------------------------------------
EBITDA
Newspapers $118,472 $105,147 $ 215,463 $ 189,458
New Ventures (1,703) (780) (3,824) (883)
-------------------------------------------------------------------------------------------------------------
Total EBITDA $116,769 $104,367 $ 211,639 $ 188,575
-------------------------------------------------------------------------------------------------------------
OPERATING PROFIT (LOSS)
Newspapers $ 84,382 $ 72,343 $ 147,921 $ 123,302
New Ventures (2,010) (826) (4,403) (929)
-------------------------------------------------------------------------------------------------------------
Total Operating Profit $ 82,372 $ 71,517 $ 143,518 $ 122,373
-------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
The Group's second-quarter 1996 operating profit, excluding buyouts, rose
to $86.6 million from $71.5 million in the 1995 second quarter on revenues of
$577.2 million and $546.3 million respectively. Operating profit for the first
six months of 1996, excluding buyouts, rose to $148.8 million from $122.4
million in 1995 on revenues of $1.14 billion and $1.06 billion respectively. The
increase in the Group's revenues for both the quarter and six months was due
primarily to higher advertising and circulation rates offset by softness in
advertising and circulation volume. Operating profit improved despite a 25% and
33% increase in the average cost of newsprint for the quarter and first six
months respectively.
Average circulation for the three and six months ended June 30, 1996 on a
comparable basis were as follows:
----------------------------------------------------------------
Three Months Ended June 30, 1996
-----------------------------------------
(Copies in thousands) Weekday % Change Sunday % Change
----------------------------------------------------------------
AVERAGE CIRCULATION
The New York Times 1,092.8 -1.0 1,675.6 -0.8
The Boston Globe 470.0 -6.2 758.2 -4.0
Regional Newspapers 719.2 -3.4 771.9 -2.2
----------------------------------------------------------------
----------------------------------------------------------------
Six Months Ended June 30, 1996
-----------------------------------------
(Copies in thousands) Weekday % Change Sunday % Change
----------------------------------------------------------------
AVERAGE CIRCULATION
The New York Times 1,121.1 -0.9 1,715.4 -0.8
The Boston Globe 473.0 -5.4 765.3 -2.8
Regional Newspapers 746.2 -4.1 804.0 -2.5
----------------------------------------------------------------
The average circulation decline is partly attributable to the increase in
newsstand and home delivery prices and a decrease in distribution to selected
outlying areas.
Advertising volume on a comparable basis for the quarter and six months
was as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Three Months Six Months
Ended Ended
June 30, June 30,
--------------------------------------------
(Inches in thousands) 1996 % Change 1996 % Change
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ADVERTISING VOLUME (EXCLUDING
PREPRINTS)
The New York Times 956.0 +1.3 1,857.1 -2.0
The Boston Globe 748.6 +0.9 1,433.3 -0.7
Regional Newspapers 3,980.6 +0.4 7,671.4 -0.6
--------------------------------------------------------------------------------
</TABLE>
Advertising volume at The Times for the second quarter of 1996 increased
1.3% from the 1995 second quarter. The classified, zoned, and national
categories showed increases of 4.2%, 3.6% and 1.7%, respectively, while retail
showed a decrease of 7.1%. For the 1996 six months, advertising volume decreased
2.0%. All categories, except national, experienced declines with retail being
the most significant with an 8.8% decrease from the 1995 six months.
12
<PAGE>
At The Globe, advertising volume for the 1996 second quarter increased
0.9% over the 1995 second quarter. Classified advertising increased 7.9% over
1995, while all other categories showed decreases. For the 1996 six months,
advertising volume decreased 0.7% as a result of decreases in the retail and
national categories of 6.4% and 5.9%, respectively, offset by increased
advertising in the classified and zoned categories. Preprint distribution was
down 3.8% for the quarter and 8.4% for the six months over 1995.
Advertising volume at the Regional Newspaper Group for the second quarter
of 1996 increased 0.4% from the 1995 second quarter. The increase was a result
of higher volume in all advertising categories except retail. For the 1996 six
months, advertising volume decreased 0.6% over 1995. Advertising was lower in
the national and retail categories, while the legal and classified categories
were up over 1995. Preprint distribution increased 2.3% and 0.6% for the
second-quarter and six-month periods over 1995.
MAGAZINE GROUP: The Magazine Group is comprised of a number of publications, New
Ventures such as computerized systems for golf tee-time reservations and on-line
magazine services, and related activities in the sports/leisure fields.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Three Months Ended Six Months Ended
----------------------------------------------------
June 30, June 30, June 30, June 30,
(Dollars in thousands) 1996 1995 1996 1995
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Sports/Leisure Magazines $38,947 $40,429 $76,990 $78,831
Non-Compete 2,500 2,500 5,000 5,000
New Ventures 259 - 429 -
-----------------------------------------------------------------------------
Total Revenues $41,706 $42,929 $82,419 $83,831
-----------------------------------------------------------------------------
EBITDA
Sports/Leisure Magazines $ 6,088 $ 8,979 $12,456 $17,263
New Ventures (1,342) - (2,511) -
-----------------------------------------------------------------------------
Total EBITDA $ 4,746 $ 8,979 $ 9,945 $17,263
-----------------------------------------------------------------------------
OPERATING PROFIT (LOSS)
Sports/Leisure Magazines $ 5,508 $ 8,424 $11,396 $16,123
Non-Compete 2,500 2,500 5,000 5,000
New Ventures (1,544) - (2,862) -
-----------------------------------------------------------------------------
Total Operating Profit $ 6,464 $10,924 $13,534 $21,123
-----------------------------------------------------------------------------
</TABLE>
The Magazine Group's second-quarter operating profit was $6.5 million in
1996 compared with $10.9 million in 1995 on revenues of $41.7 million and $42.9
million respectively. Operating profit for the first six months was $13.5
million in 1996 compared with $21.1 million in 1995 on revenues of $82.4 million
and $83.8 million respectively. The decreases were primarily due to lower
advertising revenues and an increase in paper costs.
13
<PAGE>
BROADCASTING GROUP: At June 30, 1996, the Broadcasting Group consisted of six
network-affiliated television stations and two radio stations.
---------------------------------------------------------------------
Three Months Six Months
Ended Ended
---------------------------------------------
June 30, June 30, June 30, June 30,
(Dollars in thousands) 1996 1995 1996 1995
---------------------------------------------------------------------
Revenues $26,343 $20,788 $47,795 $37,957
---------------------------------------------------------------------
EBITDA $11,277 $ 8,411 $17,946 $13,328
---------------------------------------------------------------------
Operating Profit $ 7,988 $ 6,228 $11,372 $ 8,972
---------------------------------------------------------------------
The Broadcasting Group's second-quarter operating profit, excluding
buyouts, was $8.2 million in the 1996 compared with $6.2 million in 1995
on revenues of $26.3 million and $20.8 million respectively. Operating
profit, excluding buyouts, was $11.6 million for the first six months of
1996 compared with $9.0 million in 1995 on revenues of $47.8
million and $38.0 million respectively. The revenue and operating profit
increases were principally attributable to the operations of WTKR-TV, Norfolk,
Virginia, which was acquired in June 1995. In July 1996, the Company acquired
KFOR-TV, Oklahoma City, Oklahoma and WHO-TV, Des Moines, Iowa. (See Note 4 of
the Notes to Condensed Consolidated Financial Statements.)
Liquidity and Capital Resources
- -------------------------------
Net cash provided by operating activities was $154.3 million in the 1996
second quarter compared with $171.0 million in 1995. Such cash was primarily
used to modernize facilities and equipment, pay dividends to stockholders and
for acquisitions. The ratio of current assets to current liabilities was .92 at
June 30, 1996, and .89 at December 31, 1995, and long-term debt and capital
lease obligations as a percentage of total capitalization was 28 percent at June
30, 1996, and at December 31, 1995. The Company believes that cash generated
from its operations and the availability of funds from external sources, as
discussed below, should be adequate to cover working capital needs, planned
capital expenditures, dividend payments to stockholders and other cash
requirements.
FINANCING: In July 1996, the Company entered into $100.0 million and
$200.0 million revolving credit and term loan agreements with a group of banks
("New Agreements"). The New Agreements replace existing revolving credit and
term loan agreements aggregating $170.0 million. The New Agreements expire in
July 1997 and July 2001, respectively, at which time any outstanding borrowings
would be payable. At the Company's discretion, these facilities may be converted
into term loans at any time. Interest is payable on a quarterly basis for both
agreements.
In July 1996, the Company increased the commercial paper facility to
$300.0 million from $200.0 million. In July 1996, the Company had approximately
$143.0 million in outstanding commercial paper with maturities ranging up to 60
days at a weighted average interest rate of approximately 5.4%. The outstanding
commercial paper is supported by the Company's New Agreements.
The New Agreements and commercial paper facility will be used for
acquisitions and general corporate purposes.
14
<PAGE>
STOCK REPURCHASE PROGRAM: At January 1, 1996, approximately $18.0 million
remained under a $50.0 million authorization pursuant to a stock repurchase plan
announced in February 1995. In May 1996, the Board of Directors authorized
additional expenditures of up to $32.0 million. During the first six months of
1996, the Company spent approximately $3.7 million under these authorizations.
Under the programs, purchases may be made from time to time either in the open
market or through private transactions. The number of shares that may be
purchased in market transactions may be limited as a result of The Globe
acquisition. Purchases may be suspended from time to time or discontinued.
Subsequent to June 30, 1996, the Company spent approximately $15.3 million under
the two authorizations noted above. To date, approximately $31.0 million remain
from the May 1996 authorization.
CAPITAL EXPENDITURES: The Company is constructing a new production and
distribution facility in College Point, New York for the production of The
Times. The Company estimates that the cost of the new facility will be
approximately $315.0 million, exclusive of capitalized interest currently
projected to be $35.0 million. Construction began in August 1994 and completion
is expected in the middle of 1997.
The Company currently estimates that, inclusive of the College Point
facility, capital expenditures for 1996 will range from $270.0 million to $290.0
million. The Company currently anticipates that depreciation and amortization
will be approximately $150.0 million to $160.0 million for 1996 compared with
$138.9 million in 1995.
ACQUISITIONS: In June 1996, the Company acquired a newspaper distribution
business that distributes The Times and other newspapers and periodicals
throughout Long Island, Westchester and Fairfield counties in the New York City
metropolitan area. The acquisition was accounted for as a purchase, accordingly,
the operating results have been included in the consolidated financial
statements from the acquisition date. The aggregate cost of the acquisition was
$30,673,000, of which $16,695,000 was paid in cash, $9,915,000 in notes and
accounts receivable which were forgiven and the remainder representing
short-term notes and assumed liabilities.
In July 1996, the Company completed the acquisition of KFOR-TV and WHO-TV,
NBC-affiliated stations which serve the Oklahoma City, Oklahoma and Des Moines,
Iowa markets respectively. The cost of the acquisition was approximately $226.0
million, subject to certain closing adjustments, of which approximately $143.0
million was financed by the issuance of commercial paper with the balance paid
in cash.
OTHER: At June 30, 1996, approximately $13.4 million of payments remain
from charges associated with staff reductions. The cash outflows associated with
these charges are expected to occur over the next three years as a result of the
timing of certain union pension and welfare fund contributions. The Company does
not anticipate that its ongoing business operations will be affected by this
reduction of staff and expects to fund the amounts through internally-generated
funds.
15
<PAGE>
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, including the price of raw materials, the impact of
competing products and pricing, and other risks detailed from time to time in
the Company's publicly-filed documents, including its Quarterly Report on Form
10-Q for the period ended March 31, 1996.
16
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
--------
11. Statements re: Computation of earnings per share
27. Financial Data Schedule
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K have been filed during the period for which
this report is filed.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE NEW YORK TIMES COMPANY
--------------------------
(Registrant)
Date: August 14, 1996 /S/ Diane P. Baker
---------------- -----------------------------
Diane P. Baker
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
18
<PAGE>
Exhibit Index to Quarterly Report Form 10-Q
-------------------------------------------
Quarter Ended June 30, 1996
---------------------------
Exhibit No. Exhibit
- ----------- -------
11 Statements of Computation of Primary and
Fully-Diluted Net Income Per Share
27 Financial Data Schedule
19
<TABLE>
EXHIBIT 11
THE NEW YORK TIMES COMPANY
STATEMENTS OF COMPUTATION OF PRIMARY
AND FULLY-DILUTED NET INCOME PER SHARE
(Dollars and shares in thousands, except per share data)
<CAPTION>
--------------------------- --------------------------
QUARTER ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- --------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
PRIMARY*
Average shares outstanding 97,754 96,781 97,703 97,304
======== ======== ======== ========
Net Income $ 46,812 $ 43,256 $ 79,562 $ 70,615
Less cumulative preference stock dividends (24) (24) (48) (48)
-------- -------- -------- --------
Total $ 46,788 $ 43,232 $ 79,514 $ 70,567
======== ======== ======== ========
Primary earnings per share $ 0.48 $ 0.45 $ 0.81 $ 0.73
======== ======== ======== ========
FULLY DILUTED
Average shares outstanding 97,754 96,781 97,703 97,304
Net effect of dilutive stock
options, retirement units
and put options (based on
the treasury stock method
using the quarter-end market
price which is higher
than the average market price) 2,270 648 1,899 623
-------- -------- -------- --------
Total fully-diluted average shares outstanding 100,024 97,429 99,602 97,927
======== ======== ======== ========
Net Income $ 46,812 $ 43,256 $ 79,562 $ 70,615
Less cumulative preference stock dividends (24) (24) (48) (48)
-------- -------- -------- --------
Total $ 46,788 $ 43,232 $ 79,514 $ 70,567
======== ======== ======== ========
Fully-diluted earnings per share $ 0.47 $ 0.44 $ 0.80 $ 0.72
======== ======== ======== ========
</TABLE>
- -------------------
* Common stock equivalents are excluded from primary earnings per share because
their impact on earnings is less than three percent in the aggregate.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-END> JUN-30-1996
<CASH> 113,668
<SECURITIES> 0
<RECEIVABLES> 311,447
<ALLOWANCES> 31,772
<INVENTORY> 38,709
<CURRENT-ASSETS> 486,539
<PP&E> 2,075,244
<DEPRECIATION> 772,712
<TOTAL-ASSETS> 3,440,730
<CURRENT-LIABILITIES> 527,109
<BONDS> 0
0
1,753
<COMMON> 11,009
<OTHER-SE> 1,649,104
<TOTAL-LIABILITY-AND-EQUITY> 3,440,730
<SALES> 0
<TOTAL-REVENUES> 1,267,729
<CGS> 0
<TOTAL-COSTS> 676,226
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,400
<INCOME-PRETAX> 145,386
<INCOME-TAX> 65,860
<INCOME-CONTINUING> 79,526
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 79,526
<EPS-PRIMARY> .81
<EPS-DILUTED> .81
</TABLE>
