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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
-----------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 28, 1997 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 43d Street, New York, N.Y. 10036
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 556-1234
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ------------------------
Class A Common Stock of $.10 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Not Applicable
(Title of class)
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 [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
The aggregate market value of Class A Common Stock held by non-affiliates
as of February 25, 1998, was approximately $5.10 billion. As of such date,
non-affiliates held 47,598 shares of Class B Common Stock. There is no active
market for such stock.
The number of outstanding shares of each class of the registrant's common
stock as of February 25, 1998, was as follows: 95,834,039 shares of Class A
Common Stock and 424,801 shares of Class B Common Stock.
Document incorporated by reference Part
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Proxy Statement for the 1998 Annual Meeting of Stockholders............... III
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INDEX TO THE NEW YORK TIMES COMPANY
1997 FORM 10-K
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PART I
Item No. Page
- - ------- ----
1. Business............................................................ 1
Introduction...................................................... 1
Newspapers........................................................ 1
The New York Times.............................................. 2
Circulation................................................... 2
Advertising................................................... 3
Production and Distribution................................... 3
Related Businesses............................................ 4
The Boston Globe................................................ 4
Circulation................................................... 4
Advertising................................................... 5
Production and Distribution................................... 5
Regional Newspapers............................................. 6
New Ventures.................................................... 6
Magazines......................................................... 7
New Ventures.................................................... 7
Broadcasting...................................................... 8
Forest Products Investments and Other Joint Ventures.............. 8
Forest Product Investments...................................... 8
Other Joint Ventures............................................ 9
Raw Materials..................................................... 9
Competition....................................................... 9
Employees......................................................... 10
Labor Relations................................................. 10
2. Properties.......................................................... 11
3. Legal Proceedings................................................... 11
4. Submission of Matters to a Vote of Security Holders................. 12
Executive Officers of the Registrant.............................. 12
PART II
5. Market for the Registrant's Common Equity and Related
Stockholder Matters............................................... 14
6. Selected Financial Data............................................. 14
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................... 14
8. Financial Statements and Supplementary Data......................... 14
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.......................................... 14
PART III
10. Directors and Executive Officers of the Registrant.................. 14
11. Executive Compensation.............................................. 14
12. Security Ownership of Certain Beneficial Owners and Management...... 14
13. Certain Relationships and Related Transactions...................... 14
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K..... 15
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PART I
Item 1. Business.
INTRODUCTION
The New York Times Company (the "Company") was incorporated on August 26,
1896, under the laws of the State of New York. The Company is a diversified
media company including newspapers, magazines, television and radio stations,
electronic information and publishing and forest products investments.
The Company currently classifies its businesses into the following
segments:
Newspapers: The New York Times ("The Times"); The Boston Globe, a
daily newspaper, and the Boston Sunday Globe (both editions, "The Globe");
18 other daily and three non-daily newspapers in Alabama, California,
Florida, Louisiana, North Carolina and South Carolina ("Regional
Newspapers"); newspaper distributors in the New York City and Boston
metropolitan areas; various newspaper on-line products; news, photo and
graphics services and news and features syndication; TimesFax; The New
York Times Index; and licensing of electronic data bases and microform,
CD-ROM products and the trademarks and copyrights of The Times and The
Globe.
Magazines: Golf Digest, Golf World and Golf Shop Operations. In
November 1997, the Company sold the assets of its tennis, sailing and ski
magazines and related businesses. The six magazines included in the sale
were Tennis, Tennis Buyer's Guide, Cruising World, Sailing World, Snow
Country and Snow Country Business.
Broadcasting: television stations WTKR-TV in Norfolk, Virginia;
WREG-TV in Memphis, Tennessee; KFOR-TV in Oklahoma City, Oklahoma; WNEP-TV
in Wilkes-Barre/Scranton, Pennsylvania; WHO-TV in Des Moines, Iowa;
WHNT-TV in Huntsville, Alabama; WQAD-TV in Moline, Illinois; and KFSM-TV
in Fort Smith, Arkansas; and radio stations WQXR (FM) and WQEW (AM) in New
York City.
Forest Products Investments and Other Joint Ventures: Minority
equity interests in a Canadian newsprint company and a supercalendered
paper manufacturing partnership in Maine, and a one-half interest in the
International Herald Tribune.
In 1997, the Company's consolidated revenues increased to
$2,866,418,000 from $2,628,271,000 in 1996. The increase in revenues was
principally due to higher advertising revenues at the Newspaper Group as a
result of higher rates and volume and the additional revenues associated with
the Company's new television stations, acquired in July 1996. The Company's
net income in 1997 was $262,301,000, or $2.72 basic earnings per share ($2.66
diluted earnings per share), compared with $84,534,000, or $.87 basic
earnings per share ($.86 diluted earnings per share), in 1996. Net income in
fiscal 1996 was reduced by a non-cash accounting charge of $94,500,000 or
$.97 basic earnings per share ($.96 diluted earnings per share). Exclusive of
special items set forth on page F-4 of this Form 10-K, annual earnings from
ongoing operations would have been $2.58 basic earnings per share ($2.53
diluted earnings per share) in 1997, compared with $1.91 basic earnings per
share ($1.89 diluted earnings per share) in 1996. For fiscal 1997, the
increase in net income was primarily a result of higher advertising revenues,
lower cost of newsprint for the majority of the year in the Newspaper Group,
and the continuing strong performance of the two new television stations,
acquired in July 1996, in the Broadcast Group. A summary of segment
information for the three years ended December 28, 1997, is set forth on
pages F-2 and F-3 of this Form 10-K. Also see "Management's Discussion and
Analysis" on pages F-4 through F-11 of this Form 10-K.
The Company changed its fiscal year-end to the last Sunday in December,
beginning with the fiscal year ended December 29, 1996.
NEWSPAPERS
The Newspaper Group had revenues of $2,557,080,000 in 1997, compared with
$2,348,592,000 in 1996, and an operating profit of $434,057,000 in 1997,
compared with $179,611,000 in 1996. (These amounts include
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certain special items for 1997 and 1996 which are discussed in more detail in
"Management's Discussion and Analysis" on page F-4 of this Form 10-K.) Operating
profit for the year, excluding special items, increased due principally to
higher advertising revenues resulting from higher rates and volume, and the
lower cost of newsprint.
The Newspaper Group segment consists of two categories: Newspapers
(consisting of The Times, The Globe, 21 Regional Newspapers, newspaper
distributors, and certain related businesses) and New Ventures (consisting of
projects developed in electronic media by The Times, The Globe and the Regional
Newspapers, as well as various new media investments). The Newspapers category
had revenues of $2,541,262,000 in 1997 and an operating profit of $441,396,000
in 1997, while the New Ventures category had revenues of $15,818,000 and an
operating loss of $7,339,000.
THE NEW YORK TIMES
Circulation
The Times is a standard-size weekday and Sunday newspaper which commenced
publication in 1851. In 1997, The Times introduced a daily color New York
edition with separate daily culture and sports sections, as well as other new
features. Weekday color printing, later deadlines for news and sports results,
and new and expanded sections were made possible by the Company's new production
and distribution facility at College Point, Queens, described below under "The
New York Times--Production and Distribution." The Times is circulated in each
of the 50 states, the District of Columbia and worldwide. Approximately 62% of
the weekday (Monday through Friday) circulation is sold in the 31 counties that
make up the greater New York City area, which includes New York City,
Westchester and parts of upstate New York, Connecticut and New Jersey; 38% is
sold elsewhere. On Sundays, approximately 59% of the circulation is sold in the
greater New York City area and 41% elsewhere. According to reports of the Audit
Bureau of Circulations ("ABC"), an independent agency that audits the
circulation of most U.S. newspapers and magazines, for the six-month period
ended September 30, 1997, of all seven-day United States newspapers, The Times's
weekday and Sunday circulations were the largest.
The Times's average weekday and Sunday circulations for the three 12-month
periods ended September 30, 1997, as audited by ABC (except as indicated), are
shown in the table below:
Weekday Sunday
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(Thousands of copies)
1997 (unaudited).......................... 1,090.3 1,651.4
1996...................................... 1,111.8 1,701.8
1995...................................... 1,124.3 1,720.3
During the year ended December 28, 1997, the average weekday circulation
of The Times decreased by approximately 13,300 copies to 1,089,600 copies and
the average Sunday circulation of The Times decreased by approximately 29,200
copies to 1,651,300 copies. Approximately 58% of the weekday circulation and 51%
of the larger Sunday circulation were sold through home and office delivery in
1997, compared with approximately 56% of the weekly circulation and 49% of the
larger Sunday circulation sold through home and office delivery in 1996; the
remainder were sold primarily on newsstands in 1997 and 1996. The Times's
increasing percentage of home and office delivery is part of its continuing
strategy to improve the stability of its circulation base and provide added
value to its advertisers. The Times embarked on a national marketing campaign in
1997, focusing on home delivery and retail distribution.
The weekly rate charged to subscribers for home-delivered copies of The
Times in the New York City metropolitan area is $7.20. The suggested newsstand
price of The Times within the New York City metropolitan area is $.60 on
weekdays and $2.50 on Sundays. The suggested newsstand price for the New England
and Washington editions is $1.00 on weekdays and $3.00 on Sundays. The suggested
newsstand price of the National Edition, distributed throughout the rest of the
country, is $1.00 on weekdays and $4.00 on Sundays.
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Advertising
Total volume in The Times for the two years ended December 28, 1997, as
measured by The Times, is shown in the table below. The "National" heading in
the table below includes such categories as entertainment, financial, magazine
and general advertising.
Full Run
------------------------------ Preprint
Retail National Classified Zoned Total(1) Copies
Inches Inches Inches Inches Inches Distributed
------ -------- ---------- ------ -------- -----------
(Inches and Preprints in Thousands)
1997 606.8 1,330.8 971.1 1,034.6 3,943.3 318,490
1996 620.2 1,229.6 918.2 1,000.4 3,768.4 296,839
- - ----------
(1) All totals exclude preprint inches.
The table includes volume for The New York Times Magazine, which published 3,116
pages of advertising in 1997, compared with 3,009 pages in 1996.
Advertising rates for The Times increased an average of 6.5% in January
1997, and 6% in January 1998.
Production and Distribution
News text, headlines, graphics, photos and advertisements are configured
into newspaper pages on electronic editing terminals and sent electronically to
high-resolution image setters. The completed pages are then transmitted
electronically to The Times's own printing plants in the New York metropolitan
area and to remote printing sites around the country.
Generally, The Times is printed at its production and distribution
facility in Edison, New Jersey, and its new production and distribution facility
in College Point, Queens. The College Point facility began to come on line in
January 1997, and became fully operational in the second quarter of 1997. The
Times's Manhattan facility was phased out during the second quarter of 1997.
The Edison and College Point facilities print all of the advance sections
of the Sunday newspaper (except The New York Times Magazine and the Television
section) and all of the weekday New York edition. The Edison facility houses six
10-unit Goss Colorliner presses; College Point has five of the same presses.
Both facilities have the capacity to print in color and have modern, automated
packaging and distribution equipment.
The Times has agreements with two commercial printing companies to print
its Television section and The New York Times Magazine.
The New England and Washington editions of The Times are printed under
contract at two sites: near Boston (at The Globe) and in Springfield, Virginia.
The National Edition of The Times is printed under contract at eight
sites: in the Midwest at printing sites in Chicago, Illinois, and Canton, Ohio;
in the West at printing sites in Torrance and Walnut Creek, California, and
Tacoma, Washington; in the Southwest at a printing site in Austin, Texas; and in
the Southeast at printing sites in Atlanta, Georgia, and Ft. Lauderdale,
Florida. It is anticipated that a ninth site will be added in the spring of 1998
in Lakeland, Florida, at the Company's regional newspaper, The Ledger. Satellite
transmission of page images to the National Edition printing sites permits
early-morning delivery to homes and newsstands in many major markets.
The Times entered into an agreement, effective January 1, 1997, with a
national magazine distribution company to become the exclusive single copy sales
and marketing representative for the National Edition. The Times currently has
agreements with approximately 63 newspapers and other delivery agents located in
the United
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States and Canada to deliver The Times in their respective markets and, in some
cases, to expand current markets. The agreements include various arrangements
for delivery on Sundays and weekdays to homes and newsstands.
A subsidiary of the Company, City & Suburban Delivery Systems, Inc. ("City
& Suburban"), operates a wholesale newspaper distribution business that
distributes The Times and other newspapers and periodicals in New York City,
Long Island (New York), the counties of Westchester (New York) and Fairfield
(Connecticut) and central and northern New Jersey. Approximately 85% of The
Times's single-copy daily circulation and 87% of its single-copy Sunday
circulation in the New York City metropolitan area are delivered to retail
outlets by City & Suburban. Approximately 87% of The Times's daily
home-delivered circulation and 89% of its Sunday home-delivered circulation are
delivered to depots by City & Suburban.
Related Businesses
The New York Times Electronic Media Company ("Electronic Media") was
founded to develop new products and distribution channels for The Times and
includes NYT Business Information Services, consumer on-line products, and NYT
Television.
NYT Business Information Services produces on-line computer databases and
The New York Times Index, a print publication. The Company licenses LEXIS/NEXIS,
Dow Jones Business Information Services, UMI, The Dialog Corp. and Online
Computer Library Center, Incorporated to store, market and distribute its
on-line computer databases. The Company also licenses UMI to produce and sell
The New York Times Index and The Times on microform and CD-ROM.
The New York Times on America Online is one of America Online's most
frequently accessed services. The New York Times's Web site, The New York Times
on the Web, is located at nytimes.com and has attracted over 3,000,000
registered users. In 1998, the Company anticipates launching a new Web site, New
York Today, at nytoday.com, which seeks to be the definitive on-line guide to
New York for New Yorkers and visitors.
In January 1997, the Company established a division, NYT Television, to
pursue certain programming ventures utilizing The Times and other content.
The New York Times News Services includes, among other things, The New
York Times Syndication Sales Corporation ("Syndication Sales"), The New York
Times News Service and TimesFax.
Syndication Sales operates The New York Times News Service, The New York
Times Syndicate and the licensing and reprint permission operations of The
Times. The News Service transmits articles, graphics and photographs from The
Times, The Globe and other publications to approximately 650 newspapers and
magazines in the United States and in more than 50 countries worldwide. The New
York Times Syndicate markets other supplemental news services and feature
material, graphics and photographs from The Times and other leading news sources
to newspapers and magazines around the world.
In 1997, the Company continued to expand its distribution of TimesFax, a
six to eight page synopsis of The Times delivered to customers' facsimile
machines or personal computers in markets where The Times is not easily
available.
In 1997, the Company sold its NYT Custom Publishing division.
THE BOSTON GLOBE
The Globe is owned and published by the Company's subsidiary, Globe
Newspaper Company (as used herein, "The Globe" may also be used to refer to
Globe Newspaper Company).
Circulation
The Globe is a standard-size weekday and Sunday newspaper which commenced
publication in 1872, and was acquired by the Company in 1993. The Globe is
distributed throughout New England, although its circulation is concentrated in
the Boston metropolitan area. According to ABC reports, as of September 28,
1997, the weekday
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circulation of The Globe was the 14th largest of any weekday newspaper;
circulation of the Sunday edition was the ninth largest of any Sunday newspaper
published in the United States; and its weekday and Sunday circulation was the
largest of all newspapers published in either Boston or New England.
The Globe's average weekday and Sunday paid circulation for the two
12-month periods ended March 30, 1997, and March 31, 1996, as audited by ABC,
are shown in the table below:
Weekday Sunday
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(Thousands of copies)
1997.............................................. 468.8 757.4
1996.............................................. 492.9 785.4
During the year ended December 28, 1997, the average weekday circulation
of The Globe increased approximately 2,600 copies over 1996 to approximately
474,800 copies and the average Sunday circulation decreased by approximately
7,500 copies below 1996 to approximately 755,200 copies.
Approximately 71% of The Globe's total weekday circulation and 60% of The
Globe's total Sunday circulation are sold through home or office delivery; the
remainder are sold primarily on newsstands.
The weekly rate charged to subscribers for home-delivered copies of The
Globe is $5.00 within the 30-mile radius of Boston and $5.50 outside of the
30-mile radius. The suggested newsstand price of The Globe throughout its
circulation area is $.50 on weekdays and $2.00 on Sundays.
Advertising
The Globe's total advertising volume by category of advertising for the
two years ended December 28, 1997, for all editions, as measured by The Globe,
is set forth below:
Full Run
------------------------------ Preprint
Retail National Classified Zoned Total(1) Copies
Inches Inches Inches Inches Inches Distributed
------ -------- ---------- ------ -------- -----------
(Inches and Preprints in Thousands)
1997 729.6 601.2 1,374.6 304.5 3,009.9 729,228
1996(2) 764.5 554.6 1,295.3 304.4 2,918.8 686,628
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(1) All totals exclude preprint inches.
(2) For comparability, 1996 has been restated to conform with the 1997
presentation.
Advertising rates in each category of advertising were adjusted in 1997.
The latest increase in certain retail advertising rates occurred on September 1,
1997. Increases in classified and national advertising rates were effective as
of April 1, 1997, and July 1, 1997, respectively. These rate increases ranged
from 3% to 5%.
Production and Distribution
The Globe's project (commenced in 1989) to electronically design and
construct the news text, headlines, graphics and photos on the newspaper page
(rather than having them pasted up manually) continued according to plan:
full-page output increased in 1997 to a weekly average of 1,200 pages per week,
or almost 95% of The Globe's pages produced weekly. The Globe plans to complete
the project during 1998.
All editions of The Globe are printed and prepared for delivery at its
main Boston plant or its Billerica, Massachusetts, satellite plant. Both of the
plants use Goss Metroliner offset presses. The Globe also owns a Sunday
pre-print storage, inserting and packaging plant in Westwood, Massachusetts.
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Virtually all of The Globe's home-delivered circulation is delivered
through The Globe's distribution subsidiary, Community Newsdealers, Inc. During
1997, The Globe and its subsidiary, Retail Sales, Inc., increased their direct
control of single copy distribution to further improve the stability of its
circulation base. In December 1997, such distribution accounted for
approximately 66% of average daily single copy distribution (up from 60% a year
earlier) and 57% of its average Sunday single copy distribution (up from 53% a
year earlier).
REGIONAL NEWSPAPERS
The Company currently owns 18 daily and three non-daily smaller-city
newspapers.
Daily Newspapers Non-Daily Newspapers
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Sarasota Herald-Tribune Times Daily The News-Sun (Sebring/
(Fla.) (Florence, Ala.) Avon Park, Fla.)
The Press Democrat (Santa The Tuscaloosa News (Ala.) Marco Island Eagle
Rosa, Cal.) The Gadsden Times (Ala.) (Fla.)
The Ledger (Lakeland, Fla.) The Courier (Houma, La.) News-Leader
The Gainesville Sun (Fla.) Times-News (Fernandina
Santa Barbara (Hendersonville, N.C.) Beach, Fla.)
News-Press (Cal.) Daily World (Opelousas, La.)
Spartanburg The Dispatch (Lexington, N.C.)
Herald-Journal (S.C.) Daily Comet (Thibodaux, La.)
Wilmington Morning Star Palatka Daily News (Fla.)
(N.C.) Lake City Reporter (Fla.)
Star-Banner (Ocala, Fla.)
The regional daily newspapers' circulation for the years ended December
28, 1997, and December 29, 1996, is shown in the table below:
Daily Weekday Non-Daily Sunday
------------- --------- ------
(Thousands of Copies)
1997 733.4 33.0 788.7
1996 730.1 34.0 789.7
Advertising volume, stated on the basis of six columns per page, was
15,659,800 inches in 1997, compared with 15,602,800 inches in 1996. Preprints
distributed in 1997 were 1,015,240,000, compared with 928,765,000 in 1996.
All of the Regional Newspapers are produced by photocomposition and offset
printing.
NEW VENTURES
The following businesses relating to Newspapers were classified by the
Company as "New Ventures" during 1997: The New York Times on America Online, The
New York Times on the Web, boston.com, Careerpath.com, various Regional
Newspaper on-line services, NYT Television, and the Company's investments in
OVATION and Zip2 Corporation.
The New York Times on America Online, The New York Times on the Web and
NYT Television are described above under "The New York Times--Related
Businesses." Boston Globe Electronic Publishing, Inc. operates The Globe's
Internet site boston.com, an Internet gateway to Boston and New England. The
Times and The Globe have participated in the development of Careerpath.com, the
leading employment database on the Internet. Several Regional Newspapers have
created on-line services tailored to their local market interests and needs. The
Sarasota Herald-Tribune operates a 24-hour local news cable television channel
which reaches approximately 123,000 subscribers.
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The Company has an investment in OVATION, a visual and performing arts
cable television network, which launched in April 1996. In the fall of 1997,
OVATION launched on Time Warner Cable in New York City. OVATION is available
through approximately 51 U.S. cable systems as well as in St. Lucia, West
Indies, and Bermuda. OVATION currently reaches approximately 880,000
subscribers.
During 1997, the Company invested in Zip2 Corporation, a leading provider
of software and on-line business systems designed to facilitate newspapers'
efforts to capture on-line advertising revenue.
The financial results of such New Ventures are set forth in Management's
Discussion and Analysis on pages F-4 through F-11 of this Form 10-K.
MAGAZINES
The Company's Magazine Group had revenues of $164,832,000 in 1997,
compared with $161,071,000 in 1996, and an operating profit of $28,332,000 in
1997, compared with $24,778,000 in 1996. In November 1997, the Company sold the
assets of its tennis, sailing and ski magazines and related businesses. The six
magazines included in the sale were Tennis, Tennis Buyer's Guide, Cruising
World, Sailing World, Snow Country and Snow Country Business (the "Sold
Magazines"). Excluding the Sold Magazines, the Magazine Group had revenues of
$125,104,000 and operating profit of $26,155,000 in 1997.
The Magazine Group segment consists of two categories: Magazines
(including those publications set forth in the table below and related
activities in the golf field) and New Ventures (which included in 1997 a driving
range, on-line magazine services and computerized systems for golf tee time
reservations). The Magazines category had revenues of $162,676,000 and an
operating profit of $36,354,000 in 1997, while the New Ventures category had
revenues of $2,156,000 and an operating loss of $8,022,000 in 1997. The Magazine
Group's 1997 results include 11 months of results of the Sold Magazines. The
Magazine Group's revenues for 1997 include $10,000,000 relating to the
non-competition agreement entered into in connection with the sale in 1994 of
the Women's Magazines Division. The terms of the sale included a four-year
$40,000,000 non-competition agreement, which expires in 1998.
As of December 28, 1997, the Company published the magazines listed in the
chart below:
<TABLE>
<CAPTION>
Percentage Percentage
Increase Increase
(Decrease) in (Decrease) in
Average Advertising
Publication Subject/ Average Circulation Advertising Pages
Magazine Cycle Audience Rate Base Circulation(1) Over 1996 Pages(2) Over 1996
-------- ----------- -------- --------- -------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Golf Digest............ Monthly Golf 1,500,000 1,519,900 1.1 1,369 9.3
Golf World............. 46 issues per year Golf 145,000 148,500 1.2 1,457 (1.2)
Golf Shop Operations... 10 issues per year Golf trade 23,600(3) 18,200 3.4 1,056 (15.9)
</TABLE>
- - ----------
(1) As reported by the publisher to ABC or the Business Publications
Association.
(2) As reported by the publisher to Publisher's Information Bureau ("PIB");
or, in the case of Golf Shop Operations, as calculated by the publisher
using the same methodology as for PIB.
(3) For this trade publication, the average print order is disclosed as the
applicable measure for advertisers.
NEW VENTURES
The Magazine Group offers various golf and travel information and excerpts
from its publications on the World Wide Web. During 1997, the Magazine Group
opened a driving range adjacent to The Times's printing facility in Edison, New
Jersey. The range features heated stalls and a teaching center. In October 1995,
the Company acquired the business of PAR Business Systems, Inc., which provided
computerized systems for golf tee time reservations and automated pro shop
business systems for the golf industry. The tee time system was known as
T-LINKS(TM) and was operated by Golf Digest Information Systems, Inc., an
indirect subsidiary of the Company. In the fourth quarter of 1997, the Company
decided to exit the T-LINKS(TM) business.
The financial results of such New Ventures are set forth in Management's
Discussion and Analysis on pages F-4 through F-11 of this Form 10-K.
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BROADCASTING
The Broadcast Group had revenues of $144,506,000 in 1997, up from
$118,608,000 in 1996, and an operating profit of $39,368,000 in 1997, compared
with $30,596,000 in 1996. Higher advertising revenue at most of the Company's
television stations, including the full year's revenue at KFOR-TV and WHO-TV
(acquired July 1996), accounted for the improved results.
The Company's television and radio stations are operated under licenses
from the Federal Communications Commission ("FCC") and are subject to FCC
regulations. Radio and television license renewals are now normally granted for
terms of eight years. The license renewal application of WTKR-TV (Norfolk,
Virginia) was approved in 1996 and will expire in 2004. The license renewal
applications for WREG-TV (Memphis, Tennessee), WHNT-TV (Huntsville, Alabama),
WQAD-TV (Moline, Illinois) and KFSM-TV (Fort Smith, Arkansas) were all approved
during 1997 for terms expiring in 2005. Applications for renewal of station
licenses are due to be filed four months prior to their expiration dates.
Pursuant to that schedule, the license renewal application for WHO-TV (Des
Moines, Iowa) was filed on September 30, 1997; the license renewal applications
for KFOR-TV (Oklahoma City, Oklahoma) and WQXR (FM) and WQEW (AM) (New York, New
York) were filed during the first quarter of 1998; and the license renewal
application for WNEP-TV (Scranton, Pennsylvania) will be filed in 1999. The
Company anticipates that its present and future applications for renewal of its
station licenses will result in such licenses being renewed for eight-year
periods.
All of the television stations have three principal sources of revenue:
local advertising sold to advertisers in the immediate geographic areas of the
stations, national spot advertising and compensation paid by the networks for
carrying commercial network programs. WTKR-TV, WREG-TV, WHNT-TV and KFSM-TV are
affiliated with the CBS Television Network; WNEP-TV and WQAD-TV are affiliated
with the ABC Television Network; and KFOR-TV and WHO-TV are affiliated with the
NBC Television Network.
WTKR-TV, WREG-TV, KFOR-TV, WHO-TV, WQAD-TV and KFSM-TV are in the VHF
band; WNEP-TV and WHNT-TV are in the UHF band, as are all other stations in
their markets. According to A. C. Nielsen Company, a research company which
measures audiences for television stations, Norfolk is the 39th largest
television market in the United States, Memphis is the 42nd largest, Oklahoma
City is the 44th largest market, Wilkes-Barre/Scranton is the 47th largest, Des
Moines is the 69th largest market, Huntsville is the 82nd largest, Moline is
part of the Quad Cities market, the 89th largest, and Fort Smith is the 116th
largest market.
The Company's two radio stations serve the New York City metropolitan
area. WQXR (FM) is currently the only commercial classical music station serving
this market. WQEW (AM) is the only station covering the total New York City
region that offers a format of American popular standards.
FOREST PRODUCTS INVESTMENTS AND OTHER JOINT VENTURES
The Company has ownership interests in one newsprint mill and one
supercalendered paper mill (the "Forest Products Investments") and the
International Herald Tribune. Income from these joint ventures decreased in 1997
to $13,990,000 from $18,223,000 in 1996. The decrease in results for 1997 was
due principally to lower selling prices for paper at the Forest Products
Investments.
Forest Products Investments
The Company has a 49% equity interest in a Canadian newsprint company,
Donohue Malbaie Inc. ("Malbaie"). The other 51% is owned by Donohue, Inc.
("Donohue"), a publicly-traded Canadian company whose voting shares are
controlled by Quebecor, a Canadian publishing company. Malbaie purchases pulp
from Donohue and manufactures newsprint from this raw material on the paper
machine it owns within the Donohue paper mill at Clermont, Quebec. Malbaie is
wholly dependent upon Donohue for its pulp. In 1997, Malbaie produced 205,000
metric tons of newsprint, 68,000 tons of which were sold to the Company, with
the balance sold to Donohue for resale.
The Company has an equity interest in a partnership operating a
supercalendered paper mill in Maine, Madison Paper Industries ("Madison").
Madison is a partnership between Northern SC Paper Corporation
8
<PAGE>
("Northern") and a subsidiary of Myllykoski Oy, a Finnish papermaking company.
Through Northern, the Company's interest in Madison is 40%. Madison produces
supercalendered paper at its facility in Madison, Maine. Madison purchases all
of its wood from local suppliers, mostly under long-term contracts. In 1997,
Madison produced 188,000 metric tons, 11,000 tons of which were sold to the
Company.
The debt of Malbaie and Madison is not guaranteed by the Company.
Malbaie and Madison are subject to comprehensive environmental protection
laws, regulations and orders of provincial, federal, state and local authorities
of Canada or the United States (the "Environmental Laws"). The Environmental
Laws impose effluent and emission limitations and require Malbaie and Madison to
obtain, and operate in compliance with the conditions of, permits and other
governmental authorizations ("Governmental Authorizations"). Malbaie and Madison
follow policies and operate monitoring programs to ensure compliance with
applicable Environmental Laws and Governmental Authorizations and to minimize
exposure to environmental liabilities. Various regulatory authorities
periodically review the status of the operations of Malbaie and Madison. Based
on the foregoing, the Company believes that Malbaie and Madison are in
substantial compliance with such Environmental Laws and Governmental
Authorizations.
Other Joint Ventures
Each of the Company and The Washington Post Company owns a one-half
interest in the International Herald Tribune S.A.S., which publishes the
International Herald Tribune. In 1996, the Company began a five-year term as
managing partner of the newspaper's operations. The newspaper is edited in Paris
and printed simultaneously in Frankfurt, Hong Kong, Kuala Lumpur, London,
Marseille, New York, Paris, Rome, Singapore, Tel Aviv, The Hague, Tokyo,
Toulouse and Zurich. The International Herald Tribune opened new print sites in
Kuala Lumpur, Malaysia, and Tel Aviv, Israel, in 1997; and it launched an
edition of the newspaper in Israel, with an English-language local news section
inserted in the global edition, in September 1997. It expects to publish more of
these global/local editions in the next few years.
RAW MATERIALS
The primary raw materials used by the Company are newsprint and
supercalendered and coated paper. Neither the Company nor any of its businesses
is dependent on any one supplier of paper.
In 1997, The Times used approximately 295,000 metric tons of newsprint,
compared to 276,000 in 1996. The New York Times Magazine used approximately
22,000 metric tons of coated paper and supercalendered paper, grades of magazine
quality paper, in both 1997 and 1996. In 1997, The Globe used approximately
141,000 metric tons of newsprint, compared to 136,000 in 1996. The Globe used
approximately 5,000 metric tons of a grade of paper higher than newsprint for
its Sunday magazine both in 1997 and 1996. The Regional Newspapers used
approximately 94,000 metric tons of newsprint in 1997, compared to 90,500 in
1996. In 1997, the magazines published by the Magazine Group used approximately
14,500 metric tons of coated paper, compared to 14,400 in 1996. The 1997 amount
includes coated paper used by the Sold Magazines through November 1997.
The paper used by The Times, The New York Times Magazine, The Globe, the
Regional Newspapers and the magazines published by the Magazine Group was
purchased under long-term contracts with unrelated suppliers and related
suppliers in which the Company holds equity interests (see "Forest Products
Investments").
COMPETITION
The Times competes with newspapers of general circulation in New York City
and its suburbs. The Times also competes in varying degrees with national
publications such as The Wall Street Journal and USA Today and with magazines,
television, radio and other media. Based on recent data provided by Competitive
Media Reporting, Inc., an independent agency that measures advertising sales
volume and estimates advertising revenue, and The Times's internal analysis, The
Times believes that it ranks first by a substantial margin in advertising
revenue in the general weekday and Sunday newspaper field in the New York City
metropolitan area. The Regional Newspapers and the International Herald Tribune
compete with a variety of other advertising media in their respective markets.
9
<PAGE>
The Globe competes with other daily, weekly and national newspapers
distributed in Boston, its neighboring suburbs and the greater New England
region, including, among others, The Boston Herald (daily and Sunday). The Globe
also competes with other communications media, such as direct mail, magazines,
radio and television (including cable television). Based on information supplied
by major daily newspapers published in New England and assembled by the New
England Newspaper Association, Inc., for the 12-month period ending December 28,
1997, The Globe ranked first in advertising inches among all newspapers
published in Boston and New England.
The magazines published by the Company compete directly with other golfing
publications as well as with general interest magazines and other media,
primarily broadcast and cable television.
All of the Company's television stations compete directly with other
television stations in their respective markets and with other video services,
such as cable network programming carried on local cable systems. WQXR (FM)
competes for listeners with WNYC (FM) (a non-commercial station) for the
classical music audience, and it and WQEW (AM) compete for listeners and
revenues with many adult-audience commercial radio stations and other media in
New York City and surrounding suburbs.
Syndication Sales's operations compete with several other syndicated
features and supplemental news services.
Malbaie and Madison are in a highly competitive industry.
EMPLOYEES
As of December 28, 1997, the Company had approximately 13,100 full-time
equivalent employees.
The Times 5,000
The Globe 3,200
Regional Newspapers 3,400
Broadcast Group 900
Magazine Group 300
Corporate 300
------
Total Company 13,100
======
LABOR RELATIONS
Approximately 3,800 full-time equivalent employees of The Times and City &
Suburban are represented by 16 unions.
The Times has collective bargaining agreements effective through March
30, 2000, with all of its production unions, except for the New York
Newspaper Printing Pressmen's Union (which contract expires on March 30,
2005, and covers approximately 450 employees), and with all of its
non-production unions, except for the Newspaper Guild of New York (which
contract expires on March 30, 2003, and covers approximately 1,500
employees), the International Brotherhood of Electricians (which contract
expires on March 30, 1999, and covers approximately five employees) and the
International Union of Operating Engineers. (One of this non-production
union's contracts with The Times, covering approximately 20 employees,
expired in mid-1996; the parties are continuing to negotiate a successor
contract).
City & Suburban has collective bargaining agreements effective through
March 30, 2000, with its sole production union and with two of its three
non-production unions. City & Suburban's contract with the United Auto Workers
(covering approximately 10 employees in this non-production union) expired in
May 1995; the parties are continuing to negotiate a successor contract.
The Times has agreements with four of its unions (covering
approximately 2,400 employees) on a wage package for the period beginning
March 31, 1996, and ending March 30, 2000, except for the Newspaper Guild of
New York agreement, which ends on March 30, 2003. City & Suburban reached
agreements with two of
10
<PAGE>
its unions (covering approximately 25 employees) on a wage package for the
period beginning March 31, 1996, and ending March 30, 2000. Wage packages
covering the same period with the other unions representing production and
non-production employees at The Times and City & Suburban (approximately 950
employees) are being negotiated. If such negotiations are not successful, the
wage packages will be submitted to binding arbitration for resolution.
Approximately 2,100 full-time equivalent employees of The Globe and its
subsidiaries are represented by 12 unions. On December 28, 1997, The Globe's
labor agreement with The Boston Globe Employees Association, an affiliate of The
Newspaper Guild representing non-production employees, expired. Negotiations
have commenced and The Globe expects them to be completed in 1998. Negotiations
continue with one production union whose contract expired in December 31, 1995.
The Globe expects to conclude these negotiations in 1998 as well. In late
December 1997, The Globe concluded its negotiations with Boston Typographical
Union No. 13 (representing composing room employees) for a new 10-year
agreement, effective January 1, 1997, through December 31, 2006. Nine other
production unions have contracts that continue to be in effect with expiration
dates ranging from December 31, 1998, to December 31, 2001.
The Company cannot predict the timing or the outcome of the various
negotiations described above.
Three other entities owned by the Company (The Press Democrat, WQXR and
WQEW) also have collective bargaining agreements covering certain of their
employees.
Item 2. Properties.
The Times: The Company owns its headquarters at 229 West 43d Street, New
York, New York. The building has 15 stories and approximately 714,000 square
feet of floor space and serves as a publishing facility for The Times. A
renovation of The Times's newsroom, commenced in 1995, is expected to be
complete by 1999. The renovation was designed to give The Times necessary
additional space and an enhanced electrical infrastructure.
The Company has two modern printing facilities: one in Edison, New Jersey,
and the other in College Point, Queens. The Edison facility, a 1,300,000 square
foot production and distribution facility, is occupied pursuant to a long-term
lease with renewal and purchase options. The Edison plant began producing
newspapers in 1992. The College Point facility is a 515,000 square foot printing
and distribution plant which commenced operations in the middle of 1997. The
Company is leasing the 31-acre site in College Point and has the option to
purchase the property at any time prior to the end of the lease in 2019. These
two facilities provide a number of benefits, including later deadlines,
increased color in the daily paper, increased flexibility in paging and
sectioning the paper and daily advertising inserts.
In 1997, the Company completed the sale of a former production facility in
Carlstadt, New Jersey.
The Globe owns its printing plants in Boston (652,000 square feet) and
Billerica (290,000 square feet), Massachusetts, as well as its Sunday pre-print
storage, inserting and packaging plant in Westwood, Massachusetts (115,000
square feet). The Globe and its subsidiaries own or lease office and other
facilities that are suitable and adequate for their current activities.
The Regional Newspapers own their printing facilities (in the aggregate,
670,000 square feet). The Company's Regional Newspapers, magazines, broadcast
stations and information businesses own or lease office facilities that are
suitable and adequate for their current activities. A new color printing
facility was completed in 1997 at The Ledger in Lakeland, Florida.
Item 3. Legal Proceedings.
There are various legal actions that have arisen in the ordinary course of
business and are now pending against the Company. Such actions are usually for
amounts greatly in excess of the payments, if any, that may be required to be
made. It is the opinion of management after reviewing such actions with legal
counsel to the Company that the ultimate liability which might result from such
actions will not have a material adverse effect on the consolidated financial
position or results of operations of the Company.
11
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Executive Officers of the Registrant
Employed By Position(s) As Of
Name Age Registrant Since February 27, 1998
- - -------------------------- --- ---------------- -----------------------------
Corporate Officers
Arthur O. Sulzberger, Jr... 46 1978 Chairman (since 1997) and
Publisher of The Times
(since 1992)
Russell T. Lewis........... 50 1966(1) President (since 1996) and
Chief Executive Officer
(since 1997); Chief
Operating Officer (1996 to
1997); President and
General Manager of The
Times (1993 to 1996);
Deputy General Manager of
The Times (1991 to 1993)
Michael Golden............. 48 1984 Vice Chairman and Senior Vice
President (since 1997);
Vice President, Operations
Development (1996 to 1997);
Executive Vice President,
Sports/Leisure Magazines
and Publisher of Tennis
(1994 to 1995); Executive
Vice President and General
Manager of Women's
Magazines (1991 to 1994)
Cynthia H. Augustine....... 40 1986(2) Senior Vice President (since
1998), Human Resources;
Partner of Sabin, Bermant
and Gould LLP (1994 to
1998); Of Counsel, Sabin,
Bermant and Gould LLP (1993
to 1994); Attorney at the
Company (1986 to 1993)
Diane P. Baker............. 43 1995 Senior Vice President and
Chief Financial Officer
(since 1995); Treasurer
(1996 to 1997); Group
Senior Vice
President--Chief Financial
Officer of R.H. Macy & Co.,
Inc. ("Macy's") (1993 to
1995); Senior Vice
President--Finance and
Chief Financial Officer of
Macy's (1990 to 1993)
Katharine P. Darrow........ 54 1970(3) Senior Vice President (since
1993), Broadcasting (since
1993), Real Estate (since
1993), Corporate
Communications (1996 to
1997), Corporate
Development and Human
Resources (1993 to 1996);
Vice Chairman, The
International Herald
Tribune S.A.S. (since
1996); Vice President (1988
to 1993), Broadcasting/
Information Services and
Corporate Development
Leonard P. Forman.......... 52 1974(4) Senior Vice President (since
1996), Corporate
Development, New Ventures
and Electronic Businesses;
President and Chief
Executive Officer of
Nynex/Newsday electronic
service joint venture
(1995); Chief Operating
Officer of the Newspaper
Association of America
(1992 to 1994)
John M. O'Brien............ 55 1960 Senior Vice President (since
1996), Operations;
Executive Vice President
(1992 to 1996) and Deputy
General Manager (1991 to
1996) of The Times
Solomon B. Watson IV....... 53 1974 Senior Vice President (since
1996); Vice President (1990
to 1996); General Counsel
(since 1989)
- - ----------
(1) Mr. Lewis left the Company in 1973 and returned in 1977.
(2) Ms. Augustine left the Company in 1993 and returned in 1998.
(3) Mrs. Darrow left the Company in 1971 and returned in 1973.
(4) Mr. Forman left the Company in 1986 and returned in 1996.
12
<PAGE>
Employed By Position(s) As Of
Name Age Registrant Since February 27, 1998
- - -------------------------- --- ---------------- -----------------------------
Laura J. Corwin............ 52 1980 Vice President (since 1997);
Secretary (since 1989) and
Corporate Counsel (1993 to
1997)
Stuart Stoller............. 42 1996 Vice President and Corporate
Controller (since 1996);
Controller of Coopers and
Lybrand L.L.P. (1995);
Senior Vice
President--Control and
Accounting of Macy's (1993
to 1995); Group Vice
President--Control and
Accounting of Macy's (1991
to 1993)
Ellen Taus................. 39 1996 Treasurer (since 1997);
Assistant Treasurer (1996
to 1997); Independent
Financial and Transition
Consultant (1994 to 1996);
Vice President--Corporate
Finance of Macy's (1992 to
1994)
Operating Unit Executives
James W. FitzGerald........ 59 1968 President, The New York Times
Company Magazine Group,
Inc. (since 1985)
Stephen Golden............. 50 1967(1) Vice President, Forest
Products, Health, Safety
and Environmental Affairs
(since 1992); President of
the Company's Forest
Products Group (since 1994)
C. Frank Roberts........... 54 1970 Vice President, Broadcasting
(since 1986); President,
The New York Times Company
Broadcast Group (since
1985)
William O. Taylor.......... 65 1993 Chairman and Chief Executive
Officer of Globe Newspaper
Company (since 1982);
Director (since 1993);
Publisher of The Boston
Globe (1978 to 1997)
James C. Weeks............. 55 1971 President, The New York Times
Company Regional Newspaper
Group (since 1993);
Executive Vice President,
Operations, Regional
Newspaper Group (1988 to
1993)
- - ----------
(1) Mr. Golden left the Company in 1969 and returned in 1974.
13
<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters.
The information required by this item appears at page F-31 of this Form
10-K.
Item 6. Selected Financial Data.
The information required by this item appears at page F-1 of this Form
10-K.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The information required by this item appears at pages F-4 to F-11 of this
Form 10-K.
Item 8. Financial Statements and Supplementary Data.
The information required by this item appears at pages F-2, F-3, pages
F-12 to F-30 and page F-32 of this Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
In addition to the information set forth under the caption "Executive
Officers of the Registrant" in Part I of this Form 10-K, the information
required by this item is incorporated by reference to the section entitled
"Section 16(a) Beneficial Ownership Reporting Compliance" on page 7 and pages 9
to 13 of the Company's Proxy Statement for the 1998 Annual Meeting of
Stockholders.
Item 11. Executive Compensation.
The information required by this item is incorporated by reference to
pages 15 to 19, but only up to and not including the section entitled
"Performance Presentation," of the Company's Proxy Statement for the 1998 Annual
Meeting of Stockholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information required by this item is incorporated by reference to
pages 1 to 8 of the Company's Proxy Statement for the 1998 Annual Meeting of
Stockholders.
Item 13. Certain Relationships and Related Transactions.
The information required by this item is incorporated by reference to page
13 and pages 16 to 19, but only up to and not including the section entitled
"Performance Presentation," of the Company's Proxy Statement for the 1998 Annual
Meeting of Stockholders.
14
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) Documents filed as part of this report
(1) Financial Statements and Supplemental Schedules
(a) The consolidated financial statements of the Company are filed
as part of this Form 10-K and are set forth on pages F-2, F-3 and F-12 to
F-30. The report of Deloitte & Touche LLP, Independent Public Accountants,
dated January 30, 1998, is set forth on page F-31 of this Form 10-K.
(b) The following additional consolidated financial information is
filed as part of this Form 10-K and should be read in conjunction with the
consolidated financial statements set forth on pages F-2, F-3 and F-12 to
F-30. Schedules not included with this additional consolidated financial
information have been omitted either because they are not applicable or
because the required information is shown in the consolidated financial
statements at the aforementioned pages.
Page
----
Independent Auditors' Consent................................ Exhibit 23
Consolidated Schedules for the Three Years Ended
December 28, 1997: II--Valuation and Qualifying Accounts.. S-1
Separate financial statements and supplemental schedules of
associated companies accounted for by the equity method are omitted in
accordance with the provisions of Rule 3-09 of Regulation S-X.
(2) Exhibits
(2.1) Agreement and Plan of Merger dated as of June 11, 1993, as
amended by the First Amendment dated as of August 12, 1993, by and among
the Company, Sphere, Inc. and Affiliated Publications, Inc. ("API") (filed
as Exhibit 2 to the Form S-4 Registration Statement, Registration No.
33-50043, on August 23, 1993, and included as Annex I to the Joint Proxy
Statement/Prospectus included in such Registration Statement (schedules
omitted--the Company agrees to furnish a copy of any schedule to the
Securities and Exchange Commission upon request), and incorporated by
reference herein).
(3.1) Certificate of Incorporation as amended by the Class A and
Class B stockholders and as restated on September 29, 1993 (filed as an
Exhibit to the Company's Form 10-K dated March 21, 1994, and incorporated
by reference herein).
(3.2) By-laws as amended through February 19, 1998.
(4) The Company agrees to furnish to the Commission upon request a
copy of any instrument with respect to long-term debt of the Company and
any subsidiary for which consolidated or unconsolidated financial
statements are required to be filed, and for which the amount of
securities authorized thereunder does not exceed 10% of the total assets
of the Company and its subsidiaries on a consolidated basis.
(9.1) Globe Voting Trust Agreement, dated as of October 1, 1993, as
amended effective October 1, 1995 (filed as an Exhibit to the Company's
Form 10-K dated March 11, 1996, and incorporated by reference herein).
(10.1) The Company's Executive Incentive Compensation Plan as
amended through December 20, 1990 (filed as an Exhibit to the Company's
Form 10-K dated March 1, 1991, and incorporated by reference herein).
(10.2) The Company's 1991 Executive Stock Incentive Plan, as amended
through February 19, 1998.
15
<PAGE>
(10.3) The Company's 1991 Executive Cash Bonus Plan, as amended
through September 19, 1996 (filed as an Exhibit to the Company's 10-Q
dated November 12, 1996, and incorporated by reference herein).
(10.4) The Company's Non-Employee Directors' Stock Option Plan, as
amended through February 19, 1998.
(10.5) The Company's Supplemental Executive Retirement Plan, as
amended and restated through January 1, 1993 (filed as an Exhibit to the
Company's Form 10-K dated March 11, 1996, and incorporated by reference
herein).
(10.6) Amendment No. 1, dated May 1, 1997, to the Company's
Supplemental Executive Retirement Plan (filed as an Exhibit to the
Company's Form 10-Q dated March 30, 1997, and incorporated by reference
herein).
(10.7) Lease (short form) between the Company and Z Edison Limited
Partnership dated April 8, 1987 (filed as an Exhibit to the Company's Form
10-K dated March 27, 1988, and incorporated by reference herein).
(10.8) Agreement of Lease, dated as of December 15, 1993, between
The City of New York, Landlord, and the Company, Tenant (as successor to
New York City Economic Development Corporation (the "EDC"), pursuant to an
Assignment and Assumption of Lease With Consent, made as of December 15,
1993, between the EDC, as Assignor, to the Company, as Assignee) (filed as
an Exhibit to the Company's Form 10-K dated March 21, 1994, and
incorporated by reference herein).
(10.9) Funding Agreement #1, dated as of December 15, 1993, between
the EDC and the Company (filed as an Exhibit to the Company's Form 10-K
dated March 21, 1994, and incorporated by reference herein).
(10.10) Funding Agreement #2, dated as of December 15, 1993, between
the EDC and the Company (filed as an Exhibit to the Company's Form 10-K
dated March 21, 1994, and incorporated by reference herein).
(10.11) Funding Agreement #3, dated as of December 15, 1993, between
the EDC and the Company (filed as an Exhibit to the Company's Form 10-K
dated March 21, 1994, and incorporated by reference herein).
(10.12) Funding Agreement #4, dated as of December 15, 1993, between
the EDC and the Company (filed as an Exhibit to the Company's Form 10-K
dated March 21, 1994, and incorporated by reference herein).
(10.13) New York City Public Utility Service Power Service
Agreement, made as of May 3, 1993, between The City of New York, acting by
and through its Public Utility Service, and The New York Times Newspaper
Division of the Company (filed as an Exhibit to the Company's Form 10-K
dated March 21, 1994, and incorporated by reference herein).
(10.14) Employment Agreement, dated May 19, 1993, between API, Globe
Newspaper Company and William O. Taylor (filed as an Exhibit to the
Company's Form 10-K dated March 21, 1994, and incorporated by reference
herein).
(10.15) API's 1989 Stock Option Plan (filed as Annex F-1 to API's
Proxy Statement-Joint Prospectus, dated as of April 28, 1989, contained in
API's Registration Statement on Form S-4 (Registration Statement No.
33-28373) declared effective April 28, 1989, and incorporated by reference
herein).
(10.16) API's Supplemental Executive Retirement Plan, as amended
effective December 17, 1996.
16
<PAGE>
(10.17) API's 1990 Stock Option Plan (Restated 1991) (filed as
Exhibit 1 to API's Quarterly Report on Form 10-Q for the Quarter ended
June 30, 1991 (Commission File No. 1-10251), and incorporated by reference
herein).
(10.18) Form of Substituted Stock Option Agreement/Incentive 88
among API, its predecessor company and certain employees (filed as Exhibit
10.31 to Post-Effective Amendment No. 1 filed August 11, 1989, to API's
Registration Statement on Form S-4 (Registration Statement No. 33-28373)
declared effective April 28, 1989, and incorporated by reference herein).
(10.19) The Company's Deferred Executive Compensation Plan.
(10.20) The New York Times Designated Employees Deferred Earnings
Plan.
(10.21) The Company's Non-Employee Directors Deferral Plan (filed as
an Exhibit to the Company's Form 10-Q dated November 12, 1997, and
incorporated by reference herein).
(21) Subsidiaries of the Company.
(23) Consent of Deloitte & Touche LLP.
(27) Financial Data Schedules.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the fiscal year
ended December 28, 1997.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: March 2, 1998
(Registrant)
THE NEW YORK TIMES COMPANY
By: /S/ LAURA J. CORWIN
---------------------------------------------
Laura J. Corwin, Vice President and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
ARTHUR OCHS SULZBERGER Chairman Emeritus, Director March 2, 1998
ARTHUR O. SULZBERGER, JR. Chairman, Director (Principal March 2, 1998
Executive Officer)
RUSSELL T. LEWIS Chief Executive Officer, March 2, 1998
President and Director
MICHAEL GOLDEN Vice Chairman, Senior Vice March 2, 1998
President and Director
JOHN F. AKERS Director March 2, 1998
DIANE P. BAKER Senior Vice President and March 2, 1998
Chief Financial Officer
(Principal Financial Officer)
RICHARD L. GELB Director March 2, 1998
A. LEON HIGGINBOTHAM, JR. Director March 2, 1998
RUTH S. HOLMBERG Director March 2, 1998
ROBERT A. LAWRENCE Director March 2, 1998
GEORGE B. MUNROE Director March 2, 1998
CHARLES H. PRICE II Director March 2, 1998
GEORGE L. SHINN Director March 2, 1998
DONALD M. STEWART Director March 2, 1998
STUART STOLLER Vice President, Corporate March 2, 1998
Controller (Principal
Accounting Officer)
JUDITH P. SULZBERGER Director March 2, 1998
WILLIAM O. TAYLOR Director March 2, 1998
18
<PAGE>
Appendix
1997 Financial Report
<PAGE>
THE NEW YORK TIMES COMPANY
1997 Consolidated Financial Statements
- - --------------------------------------------------------------------------------
Contents Page
- - --------------------------------------------------------------------------------
Financial Highlights F-1
Segment Information F-2
Management's Discussion and Analysis F-4
Consolidated Statements of Income F-12
Consolidated Balance Sheets F-13
Consolidated Statements of Cash Flows F-15
Consolidated Statements of Stockholders' Equity F-17
Notes to Consolidated Financial Statements F-18
Independent Auditors' Report F-31
Management's Responsibilities Report F-31
Market Information F-31
Quarterly Information F-32
Ten-Year Supplemental Financial Data F-33
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
- - --------------------------------------------------------------------------------------------------------------------------
Dollars in thousands, except per share data Years Ended
-------------------------------------------------------------------------
December 28, December 29, December 31,
------------ ------------ -----------------------------------
<S> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993
- - --------------------------------------------------------------------------------------------------------------------------
REVENUES AND INCOME
Revenues $2,866,418 $2,628,271 $2,428,124 $2,396,517 $2,057,370
Operating profit 455,102 173,280 232,749 210,899 126,028
Income before income taxes 437,365 197,909 233,839 388,736 48,108
Net income 262,301 84,534 135,860 213,349 6,123
- - --------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION
Property, plant and equipment - net 1,366,931 1,358,029 1,266,609 1,158,751 1,112,024
Total assets 3,639,018 3,539,871 3,389,704 3,137,631 3,215,204
Long-term debt and capital lease obligations 535,428 636,632 637,873 523,196 460,063
Common stockholders' equity 1,728,062 1,623,379 1,610,349 1,543,539 1,598,883
- - --------------------------------------------------------------------------------------------------------------------------
PER SHARE OF COMMON STOCK
Basic earnings 2.72 .87 1.40 2.05 .07
Diluted earnings 2.66 .86 1.39 2.04 .07
Dividends .64 .57 .56 .56 .56
Common stockholders' equity (end of year) 17.90 16.69 16.50 15.71 14.96
- - --------------------------------------------------------------------------------------------------------------------------
KEY RATIOS (See notes below)
Operating profit to revenues 16% 11% 10% 9% 6%
Return on average stockholders' equity 15% 10% 8% 7% -
Return on average total assets 7% 5% 4% 3% -
Long-term debt and capital lease obligations
to total capitalization 24% 28% 28% 25% 22%
Current assets to current liabilities .88 .74 .92 .92 .89
- - --------------------------------------------------------------------------------------------------------------------------
EMPLOYEES 13,100 12,800 12,300 12,800 13,000
- - --------------------------------------------------------------------------------------------------------------------------
</TABLE>
All earnings per share amounts for special items below are the same for basic
and diluted earnings per share unless otherwise noted.
The following transactions are NOT reflected in the respective year income
amounts used in the applicable key ratio calculations presented above:
In 1997, the Company recorded an $18.0 million favorable tax adjustment ($.19
basic earnings per share, $.18 diluted earnings per share) resulting from the
completion of the Company's federal income tax audits for periods through 1992.
In addition, the Company recorded aggregate pre-tax gains totaling $10.4 million
($5.7 million after taxes or $.06 per share) from the sale of the assets of its
tennis, sailing and ski businesses and certain small properties, net of the exit
costs associated with the shutdown of a golf-related business (see Note 2 of
Notes to the consolidated financial statements). The Company also recorded a
$10.1 million pre-tax noncash charge ($5.7 million after taxes or $.06 per
share) relating to the adoption of Emerging Issues Task Force Issue No. 97-13,
Accounting for Costs Incurred in Connection with a Consulting Contract or an
Internal Project That Combines Business Process Reengineering and Information
Technology Transformation ("EITF 97-13") (see Note 3 of Notes to the
consolidated financial statements).
In 1996, the Company recorded a $126.8 million pre-tax noncash charge ($94.5
million after taxes or $.97 basic earnings per share, $.96 diluted earnings per
share) relating to Statement of Financial Accounting Standards No. 121,
Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets To Be
Disposed Of ("SFAS 121 charge") (see Note 4 of Notes to the consolidated
financial statements). The Company also recorded pre-tax gains totaling $32.8
million ($17.5 million after taxes or $.18 per share) from the sale of a
building and the realization of a gain contingency from the disposition of a
paper mill in a prior year (see Note 2 of Notes to the consolidated financial
statements).
In 1995, the Company sold small regional newspapers (see Note 2 of Notes to the
consolidated financial statements). The sales resulted in a pre-tax gain of
approximately $11.3 million ($5.0 million after taxes or $.05 per share).
In 1994, the Company sold its Women's Magazines Division and U.K. golf
publications, and divested a minority interest in a Canadian paper mill, which
resulted in a net pre-tax gain of approximately $200.9 million ($103.3 million
after taxes or $.99 per share).
For 1993, return on average stockholders' equity and return on average total
assets are less than 1% due to several factors (see F-33) which lowered net
income for the year. Amounts for 1997 through 1993 include The Boston Globe
since its acquisition on October 1, 1993.
F-1
<PAGE>
SEGMENT INFORMATION
The Company has classified its business Magazine Group: Three golf-related
into the following segments and equity publications and related activities in
interests: the golf field, and New Ventures, such
as on-line magazine services.
Newspaper Group: The New York Times Broadcast Group: Eight
("The Times"), The Boston Globe ("The network-affiliated television
Globe"), 21 regional newspapers, stations and two radio stations.
newspaper distributors, a news service,
a features syndicate, TimesFax, Joint Ventures: Equity ownership
licensing operations of The New York interests in a newsprint mill, a
Times databases/microfilm and New supercalendered paper mill, a one-half
Ventures. New Ventures include, among interest in the International Herald
other things, projects developed in Tribune S.A.S., and a new venture. The
electronic media. new venture ceased operations in
December 1996.
- - -------------------------------------------------------------------------------
Dollars in thousands Years Ended
----------------------------------------
December 28, December 29, December 31,
1997 1996 1995
- - -------------------------------------------------------------------------------
REVENUES
Newspapers $ 2,557,080 $ 2,348,592 $ 2,180,077
Magazines 164,832 161,071 162,941
Broadcast 144,506 118,608 85,106
- - -------------------------------------------------------------------------------
Total $ 2,866,418 $ 2,628,271 $ 2,428,124
- - -------------------------------------------------------------------------------
OPERATING PROFIT (LOSS)
Newspapers $ 434,057 $ 179,611 $ 212,634
Magazines 28,332 24,778 28,741
Broadcast 39,368 30,596 18,943
Unallocated corporate expenses (46,655) (61,705) (27,569)
- - -------------------------------------------------------------------------------
Total 455,102 173,280 232,749
Income from Joint Ventures 13,990 18,223 15,029
Interest expense, net 42,115 26,430 25,230
Net gain on dispositions of assets 10,388 32,836 11,291
- - -------------------------------------------------------------------------------
Income before income taxes 437,365 197,909 233,839
Income taxes 175,064 113,375 97,979
- - -------------------------------------------------------------------------------
NET INCOME $ 262,301 $ 84,534 $ 135,860
- - -------------------------------------------------------------------------------
See Notes to the consolidated financial statements.
Newspaper Group operating profit for 1997, 1996 and 1995 includes charges of
$7.5 million, $31.9 million and $8.5 million, respectively, for costs related to
work force reductions ("buyouts"). The 1996 Broadcast Group operating profit
includes a charge of $0.3 million for buyouts.
The 1996 Newspaper Group and Magazine Group operating profits include $125.7
million and $1.1 million, respectively, of the noncash SFAS 121 charge (see Note
4 of Notes to the consolidated financial statements).
Magazine Group amounts include the amortization of the income relating to a
$40.0 million non-compete agreement, associated with the disposition of the
Women's Magazines Division, which is being recognized straight-line over four
years. Amortization of this income was $10.0 million in each of 1997, 1996 and
1995.
Broadcast Group amounts for 1996 and 1995 were affected by the acquisitions of
new television stations (see Note 2 of Notes to the consolidated financial
statements).
Unallocated corporate expenses for 1997, 1996 and 1995 include charges of $1.0
million, $11.9 million, and $1.6 million, respectively, for buyouts. Unallocated
corporate expenses for 1997 also include a $10.1 million noncash charge related
to the adoption of EITF 97-13 (see Note 3 of Notes to the consolidated financial
statements).
F-2
<PAGE>
SEGMENT INFORMATION
- - -------------------------------------------------------------------------------
Dollars in thousands Years Ended
----------------------------------------
December 28, December 29, December 31,
1997 1996 1995
- - -------------------------------------------------------------------------------
DEPRECIATION AND AMORTIZATION
Newspapers $ 160,192 $ 138,630 $ 132,884
Magazines (7,330) (7,320) (7,000)
Broadcast 17,919 14,161 8,527
Corporate 2,761 2,022 1,151
Investment in Joint Ventures 355 384 380
- - -------------------------------------------------------------------------------
Total $ 173,897 $ 147,877 $ 135,942
- - -------------------------------------------------------------------------------
CAPITAL EXPENDITURES
Newspapers $ 117,346 $ 179,762 $ 196,096
Magazines 3,205 2,554 736
Broadcast 7,225 4,438 4,093
Corporate 32,392 20,080 11,130
- - -------------------------------------------------------------------------------
Total $ 160,168 $ 206,834 $ 212,055
- - -------------------------------------------------------------------------------
IDENTIFIABLE ASSETS
Newspapers $ 2,711,180 $ 2,733,243 $ 2,805,061
Magazines 56,236 92,632 89,731
Broadcast 409,742 406,053 174,363
Corporate 327,510 170,688 191,343
Investment in Joint Ventures 134,350 137,255 129,206
- - -------------------------------------------------------------------------------
Total $ 3,639,018 $ 3,539,871 $ 3,389,704
- - -------------------------------------------------------------------------------
See Notes to the consolidated financial statements.
F-3
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
- - -------------------------------------------------------------------------------
OVERVIEW
Advertising and circulation revenues accounted for approximately 70% and 23%,
respectively, of the Company's revenues in 1997. Other revenues primarily
included newspaper wholesaler distribution operations and database royalties.
Newsprint is the major component of the Company's cost of raw materials.
Newsprint prices fell dramatically throughout 1996 from the historic highs of
1995. Although newsprint prices increased in 1997 and the Company's cost of
newsprint was higher in the fourth quarter of 1997 than in the comparable 1996
quarter, the annual cost of newsprint for 1997 was significantly lower than
1996. Newsprint prices are expected to drift upward in 1998, but they are not
expected to be as volatile as in the last few years.
In the fourth quarter of 1997, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 128, Earnings Per Share ("SFAS 128"), which is
effective for fiscal periods ending after December 15, 1997. SFAS 128 replaced
primary earnings per share ("EPS") with basic EPS and fully diluted EPS with
diluted EPS. SFAS 128 also required previously reported earnings per share to be
restated. Earnings per share amounts presented in the following Management's
Discussion and Analysis are in accordance with the new accounting pronouncement.
All earnings per share amounts are also the same for basic and diluted earnings
per share unless otherwise noted.
RESULTS OF OPERATIONS: 1997 COMPARED WITH 1996
In 1997, the Company reported net income of $262.3 million or $2.72 basic
earnings per share ($2.66 diluted earnings per share), compared with $84.5
million or $.87 basic earnings per share ($.86 diluted earnings per share), in
1996. Net income in fiscal 1996 was reduced by a noncash accounting charge of
$94.5 million or $.97 basic earnings per share ($.96 diluted earnings per share)
(see special items described below).
Exclusive of the special items described below, net income for 1997
increased 34% to $249.0 million, or $2.58 basic earnings per share ($2.53
diluted earnings per share), from net income for 1996 of $185.9 million, or
$1.91 basic earnings per share ($1.89 diluted earnings per share).
The increase in 1997 net income was primarily a result of higher
advertising revenues, lower cost of newsprint for the majority of the year in
the Newspaper Group, and the continuing strong performance of KFOR-TV, Oklahoma
City, Okla., and WHO-TV, Des Moines, Iowa, both acquired in July 1996, in the
Broadcast Group.
Earnings for 1997 were affected by the following special items:
- $18.0 million favorable tax adjustment ($.19 basic earnings per
share, $.18 diluted earnings per share) resulting from the
completion of the Company's federal income tax audits for periods
through 1992 ("favorable tax adjustment").
- $10.4 million aggregate pre-tax gain ($.06 per share) resulting from
the sale of the assets of the tennis, sailing and ski businesses and
certain small properties, net of the exit costs associated with the
shutdown of a golf-related business.
- $10.1 million pre-tax charge ($.06 per share) resulting from a
noncash charge relating to the adoption of Emerging Issues Task
Force Issue No. 97-13, Accounting for Costs Incurred in Connection
with a Consulting Contract or an Internal Project That Combines
Business Process Reengineering and Information Technology
Transformation ("EITF 97-13 charge").
- $8.5 million pre-tax charge ($.05 per share) for severance and
related costs resulting from work force reductions ("buyouts").
Earnings for 1996 were affected by the following special items:
- $126.8 million pre-tax charge ($.97 basic earnings per share, $.96
diluted earnings per share) resulting from a noncash charge relating
to SFAS No. 121, Accounting for Impairment of Long-Lived Assets and
for Long-Lived Assets To Be Disposed Of ("SFAS 121 charge").
- $44.1 million pre-tax charge ($.25 per share) for buyouts.
- $25.1 million pre-tax gain ($.14 per share) resulting from the
realization of a gain contingency from the disposition of a paper
mill in a prior year ("paper mill gain realization").
- $7.8 million pre-tax gain ($.04 per share) from the sale of the
Company's 110 Fifth Avenue building ("sale of a building").
Consolidated revenues for 1997 were $2.87 billion, an increase of 9.1%
over revenues of $2.63 billion in 1996. On a comparable basis, adjusted for the
acquisitions/dispositions of certain properties, 1997 revenues increased by
approximately 7% over 1996. The increase in revenues on a comparable basis was
primarily due to higher advertising revenues at the Newspaper Group as a result
of higher rates and volume.
Production costs for 1997 increased 3.8% to $1.41 billion from $1.36
billion in 1996. The increase was primarily due to higher salary and
payroll-related costs and depreciation expenses associated with new production
facilities, partially offset by a lower cost of newsprint during the majority of
the year.
Selling, general and administrative expenses ("SGA expenses") for 1997
increased 3.3% to $999.1 million from $967.1 million in 1996. SGA expenses for
1997, exclusive of buyouts and the EITF 97-13 charge (see Note 3 of Notes to the
consolidated financial statements), increased 6.2% to $980.5 from $923.0 million
in 1996, exclusive of buyouts.
F-4
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
- - --------------------------------------------------------------------------------
The impairment loss in 1996 is related to the SFAS 121 charge of $126.8
million (see Note 4 of Notes to the consolidated financial statements).
Operating profit for 1997 rose to $455.1 million from $173.3 million in
1996. Operating profit for 1997, exclusive of buyouts and the EITF 97-13 charge,
rose to $473.7 million from $344.2 million in 1996, exclusive of the SFAS 121
charge and buyouts. The improvement in operating profit was principally
attributable to higher advertising revenues and a lower cost of newsprint for
the majority of the year in the Newspaper Group, and to the continuing strong
performance of KFOR-TV and WHO-TV.
The Company's earnings for the year before interest, income taxes,
depreciation and amortization ("EBITDA") for 1997 rose to $653.4 million from
$372.2 million in 1996. EBITDA for 1997, excluding gains on dispositions, exit
costs associated with the shutdown of a golf-related business and the EITF 97-13
charge, was $653.1 million compared with $466.1 million in 1996, excluding the
SFAS 121 charge and gains on dispositions.
EBITDA is presented because it is a widely accepted indicator of funds
available to service debt, although it is not a measure of liquidity or of
financial performance under generally accepted accounting principles ("GAAP").
The 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.
In 1997, Interest expense, net increased to $42.1 million from $26.4
million in 1996. The increase was primarily a result of lower capitalization of
interest expense associated with construction. Interest income and capitalized
interest included in the amounts presented were $8.3 million in 1997 compared
with $23.9 million in 1996.
Net gains on dispositions were $10.4 million in 1997 compared with $32.8
million in 1996. The 1997 results include the sale of the assets of the tennis,
sailing and ski businesses and certain small properties, net of the exit costs
associated with the shutdown of a golf-related business (see special items
described above). The 1996 results include the paper mill gain realization and
the sale of a building (see special items described above).
The Company's annual effective tax rate was 44.1% in 1997 compared with
44.7% in 1996. The 1997 and 1996 effective tax rates exclude the favorable tax
adjustment, taxes associated with disposition of assets and the SFAS 121 charge
where appropriate. The effective tax rate change was primarily attributable to
non-taxable items.
The following discussion provides additional information with respect to
the Company's traditional operations and new ventures:
NEWSPAPER GROUP: The Times, The Globe, 21 regional newspapers, newspaper
distributors, a news service, a features syndicate, TimesFax, licensing
operations of The New York Times databases/microfilm and New Ventures. New
Ventures include, among other things, projects developed in electronic media.
- - -----------------------------------------------------------------------------
(Dollars in thousands) 1997 1996
- - -----------------------------------------------------------------------------
REVENUES
Newspapers $2,541,262 $2,340,029
New Ventures 15,818 8,563
- - -----------------------------------------------------------------------------
Total Revenues $2,557,080 $2,348,592
- - -----------------------------------------------------------------------------
EBITDA
Newspapers $ 600,581 $ 454,944
New Ventures (6,332) (11,011)
- - ----------------------------------------------------------------------------
Total EBITDA $ 594,249 $ 443,933
- - ----------------------------------------------------------------------------
OPERATING PROFIT (LOSS)
Newspapers $ 441,396 $ 195,176
New Ventures (7,339) (15,565)
- - ----------------------------------------------------------------------------
Total Operating Profit $ 434,057 $ 179,611
- - -----------------------------------------------------------------------------
The Newspaper Group's operating profit for 1997, excluding buyouts, rose
to $441.6 million from $337.2 million in 1996, excluding the SFAS 121 charge and
buyouts, on revenues of $2.6 billion and $2.3 billion, respectively. The 8.9%
increase in revenues for the year was primarily due to higher advertising as a
result of higher rates and volume. Other revenue increased 25.5% in 1997 due to
the expanded wholesale newspaper delivery operations of The Times. Operating
profit for the year included a favorable 15% decrease in the cost of newsprint
compared to 1996, exclusive of LIFO adjustments.
Advertising volume on a comparable basis for the year was as follows:
- - -----------------------------------------------------------------------------
(Inches in thousands) 1997 % Change
- - -----------------------------------------------------------------------------
ADVERTISING VOLUME
(excluding preprints)
The New York Times 3,943.3 4.6%
The Boston Globe 3,009.9 3.1%
Regional Newspapers 15,659.8 0.4%
- - ------------------------------------------- ---------------------------------
Advertising volume at The Times increased 4.6% in 1997 over 1996. The
national, classified and zoned categories increased 8.2%, 5.8% and 3.4%,
respectively, while the retail category decreased 2.2%. Preprint distribution in
1997 improved 7.3% over 1996.
Advertising volume at The Globe increased 3.1% in 1997 over 1996. The
national and classified categories increased 8.4% and 6.1%, respectively, the
zoned category remained flat and the retail category decreased 4.6%. Preprint
distribution in 1997 improved 6.2% over 1996.
Advertising volume at the Regional Newspapers increased 0.4% in 1997 over
1996. The national and classified categories increased 14.4% and 2.0%,
respectively, while the retail and legal categories decreased 1.1% and 5.1%,
respectively. Preprint distribution in 1997 improved 9.3% over 1996.
F-5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
- - -------------------------------------------------------------------------------
Average circulation of daily newspapers on a comparable basis for the year
was as follows:
- - -------------------------------------------------------------------------
Weekday Sunday
- - -------------------------------------------------------------------------
(Copies in thousands) 1997 % Change 1997 % Change
- - -------------------------------------------------------------------------
AVERAGE CIRCULATION
The New York Times 1,089.6 (1.2%) 1,651.3 (1.7%)
The Boston Globe 474.8 0.6% 755.2 (1.0%)
Regional Newspapers 733.4 0.5% 788.7 (0.1%)
- - -------------------------------------------------------------------------
The average circulation decline for the year at The Times and on Sunday at
The Globe and the Regional Newspapers is partly attributable to increases in
newsstand and home delivery prices and a decrease in distribution to selected
outlying areas. To increase circulation, The Times is investing in a national
image campaign, adding new products and sections and has also entered into
approximately 63 home delivery distribution arrangements to expand national
circulation. In addition, the Company has added new products and sections, and
made improvements in delivery service at The Globe and the Regional Newspapers.
The benefit of these programs began to be realized in the latter part of 1997.
Magazine Group: The Magazine Group is comprised of three golf-related
publications and related activities in the golf field, and New Ventures, such as
on-line magazine services.
The revenues for the Group include a $40.0 million non-compete agreement
associated with the divestiture of the Women's Magazine Division, which is being
recognized on a straight-line basis over four years ending in July 1998.
- - ---------------------------------------------------------------------------
(Dollars in thousands) 1997 1996
- - ---------------------------------------------------------------------------
REVENUES
Magazines $152,676 $150,033
Non-Compete 10,000 10,000
New Ventures 2,156 1,038
- - ---------------------------------------------------------------------------
Total Revenues $164,832 $161,071
- - ---------------------------------------------------------------------------
EBITDA
Magazines $ 28,131 $ 25,555
New Ventures (7,129) (7,026)
- - ---------------------------------------------------------------------------
Total EBITDA $ 21,002 $ 18,529
- - ---------------------------------------------------------------------------
OPERATING PROFIT (LOSS)
Magazines $ 26,354 $ 22,537
Non-Compete 10,000 10,000
New Ventures (8,022) (7,759)
- - ---------------------------------------------------------------------------
Total Operating Profit $ 28,332 $ 24,778
- - ---------------------------------------------------------------------------
The Magazine Group's operating profit for 1997 was $28.3 million compared
with $25.8 million in 1996, excluding the SFAS 121 charge, on revenues of $164.8
million and $161.1 million, respectively. The improvement in operating profit
was primarily related to higher advertising revenues as a result of increased
advertising pages at the golf-related publications. Advertising pages for Golf
Digest, as reported to Publisher's Information Bureau, increased 9.3% to 1,369
pages in 1997.
New Venture losses were primarily attributable to the operations of a tee
time reservation system. The Company decided to exit this business in the fourth
quarter of 1997. In November 1997, the Company completed the sale of the assets
of its tennis, sailing and ski magazine businesses (see Note 2 of Notes to the
consolidated financial statements). The Magazine Group's 1997 results include
eleven months of results of the sold magazine businesses.
BROADCAST GROUP: The Broadcast Group is comprised of eight network-affiliated
television stations and two radio stations.
- - ---------------------------------------------------------------------------
(Dollars in thousands) 1997 1996
- - ---------------------------------------------------------------------------
REVENUES $144,506 $118,608
- - ---------------------------------------------------------------------------
EBITDA $ 57,287 $ 44,757
- - ---------------------------------------------------------------------------
OPERATING PROFIT $ 39,368 $ 30,596
- - ---------------------------------------------------------------------------
The Broadcast Group's operating profit was $39.4 million in 1997 compared
with $30.9 million in 1996, excluding buyouts, on revenues of $144.5 million and
$118.6 million, respectively.
The revenue and operating profit increases were principally attributable
to the strong performance of KFOR-TV and WHO-TV. These new stations, which were
acquired in July 1996, contributed $12.7 million and $6.1 million of operating
profit in 1997 and 1996, respectively.
JOINT VENTURES: Income from Joint Ventures decreased to $14.0 million in 1997
from $18.2 million in 1996. The decrease was primarily attributable to lower
selling prices for paper from the mills in which the Company has investments,
partially offset by the absence of a loss from a new venture, which ceased
operations in December 1996.
RESULTS OF OPERATIONS: 1996 COMPARED WITH 1995
In 1996, the Company reported net income of $84.5 million or $.87 basic earnings
per share ($.86 diluted earnings per share), compared with $135.9 million or
$1.40 basic earnings per share ($1.39 diluted earnings per share), in 1995. Net
income in fiscal 1996 was reduced by a noncash accounting charge of $94.5
million or $.97 basic earnings per share ($.96 diluted earnings per share) (see
special items described below).
Exclusive of the special items described below, net income for 1996
increased 36% to $185.9 million or $1.91 basic earnings per share ($1.89 diluted
earnings per share), from net income for 1995 of $136.7 million, or $1.41 basic
per share ($1.40 diluted earnings per share).
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.
Earnings for 1996 were affected by the following special items:
- $126.8 million pre-tax charge ($.97 basic earnings per share,
$.96 diluted earnings per share) resulting from the SFAS 121
charge.
F-6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
- - -------------------------------------------------------------------------------
- $44.1 million pre-tax charge ($.25 per share) for buyouts.
- $25.1 million pre-tax gain ($.14 per share) resulting from the
paper mill gain realization.
- $7.8 million pre-tax gain ($.04 per share) from sale of a
building.
Earnings for 1995 were affected by the following special items:
- $10.1 million pre-tax charge ($.06 per share) for buyouts.
- $11.3 million pre-tax gain ($.05 per share) resulting from the
sale of six small regional newspapers ("sale of small
newspapers").
Consolidated revenues for 1996 were $2.63 billion, an increase of 8.2%
over revenues of $2.43 billion in 1995. On a comparable basis, adjusted for
acquisitions/dispositions of certain properties, 1996 revenues increased by
approximately 8% in 1996 over 1995. The increase in revenues on a comparable
basis was primarily due to higher advertising and circulation rates at the
Newspaper Group.
Production costs for 1996 increased 2.1% to $1.36 billion from $1.33
billion in 1995. The increase was due to higher salaries and benefits and
increased depreciation expense associated with new equipment offset, in part, by
lower newsprint and magazine paper expenses.
SGA expenses for 1996 increased 12.2% to $967.1 million from $861.9
million in 1995. SGA expenses in 1996, exclusive of buyouts, increased 8.4% to
$923.0 million from $851.8 million in 1995. The increase was primarily due to
higher salaries and benefits, and increased amortization expense associated with
new acquisitions.
The impairment loss in 1996 is related to the SFAS 121 charge of $126.8
million (see Note 4 of Notes to the consolidated financial statements).
Operating profit for 1996 decreased to $173.3 million from $232.7
million in 1995. Operating profit for 1996, excluding buyouts and the SFAS
121 charge,rose to $344.2 million from $242.8 million in 1995, excluding
buyouts. The improvement in operating profit from the Newspaper and Broadcast
Groups was partially offset by incremental corporate expenses associated with
the Company's reengineering initiatives and higher net development losses in
new ventures.
The Company's EBITDA for 1996 decreased to $372.2 million from $395.0
million in 1995. EBITDA for 1996, excluding the SFAS 121 charge and gains on
dispositions, rose to $466.1 million from $383.7 million in 1995, excluding a
gain from a disposition.
EBITDA is presented because 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 GAAP. 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.
In 1996, Interest expense, net increased to $26.4 million from $25.2
million in 1995. The increase net was a result of higher debt levels incurred
for acquisitions partially offset by higher capitalization of interest expense
associated with construction. Interest income and capitalized interest included
in the amounts presented was $23.9 million in 1996 compared with $23.5 million
in 1995.
Net gains on dispositions were $32.8 million in 1996 and $11.3 million in
1995. The 1996 results include the paper mill gain realization and the sale of a
building (see special items described above). The 1995 results include the sale
of small newspapers (see special items described above).
The Company's annual effective tax rate was 44.7% in 1996, exclusive of
taxes associated with the gains and the SFAS 121 charge, as compared to 41.2% in
1995. The variation in the rate was primarily due to a favorable state tax
ruling in 1995.
The following discussion provides additional information with respect to
the Company's traditional operations and new ventures:
NEWSPAPER GROUP:
- - ---------------------------------------------------------------------------
(Dollars in thousands) 1996 1995
- - ---------------------------------------------------------------------------
REVENUES
Newspapers $2,340,029 $2,179,120
New Ventures 8,563 957
- - ---------------------------------------------------------------------------
Total Revenues $2,348,592 $2,180,077
- - ---------------------------------------------------------------------------
EBITDA
Newspapers $ 454,944 $ 354,154
New Ventures (11,011) (8,636)
- - ---------------------------------------------------------------------------
Total EBITDA $ 443,933 $ 345,518
- - ---------------------------------------------------------------------------
OPERATING PROFIT (LOSS)
Newspapers $ 195,176 $ 221,685
New Ventures (15,565) (9,051)
- - ---------------------------------------------------------------------------
Total Operating Profit $ 179,611 $ 212,634
- - ---------------------------------------------------------------------------
The Newspaper Group's operating profit for 1996, excluding buyouts and the
SFAS 121 charge, rose to $337.2 million from $221.1 million in 1995, excluding
buyouts, on revenues of $2.3 billion and $2.2 billion, respectively. The 7.7%
increase in revenues for the year was primarily due to higher advertising and
circulation revenues as a result of higher rates. Due to the higher rates,
certain properties experienced softness in advertising and circulation volume.
Other revenue increased 28.1% for the year as the Newspaper Group expanded its
wholesale newspaper delivery operations. Operating profit for the year improved
despite a 6.3% increase in the Group's average cost of newsprint, exclusive of a
LIFO credit, over 1995.
Advertising volume on a comparable basis for the year was as follows:
- - -------------------------------------------------------------------------
(Inches in thousands) 1996 % Change
- - -------------------------------------------------------------------------
ADVERTISING VOLUME
(excluding preprints)
The New York Times 3,768.4 (1.1%)
The Boston Globe 2,918.8 0.7%
Regional Newspapers 15,560.6 0.2%
- - -------------------------------------------------------------------------
F-7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
- - -------------------------------------------------------------------------------
Advertising volume at The Times decreased 1.1% in 1996 over 1995. The
zoned, retail and classified categories decreased 5.1%, 6.4%, and 0.2%,
respectively, while national experienced an increase of 4.8%.
Advertising volume at The Globe increased 0.7% in 1996 over 1995.
Classified and zoned categories increased 6.9% and 0.1%, respectively, while the
retail and national categories decreased 5.5% and 3.7%, respectively. Preprint
distribution in 1996 decreased 4.8% over 1995.
Advertising volume at the Regional Newspapers increased 0.2% in 1996 over
1995. Legal and classified categories increased 11.9% and 4.0%, respectively,
while the retail and national categories decreased 3.5% and 1.2%, respectively.
Preprint distribution in 1996 improved 1.5% over 1995.
Average circulation of daily newspapers on a comparable basis for the year
was as follows:
- - ---------------------------------------------------------------------------
Weekday Sunday
- - ---------------------------------------------------------------------------
(Copies in thousands) 1996 % Change 1996 % Change
- - ---------------------------------------------------------------------------
AVERAGE CIRCULATION
The New York Times 1,102.9 (1.6%) 1,680.5 (1.9%)
The Boston Globe 472.2 (5.1%) 762.7 (3.4%)
Regional Newspapers 730.1 (3.1%) 789.7 (1.8%)
- - ---------------------------------------------------------------------------
MAGAZINE GROUP: The Magazine Group is comprised of a number of sports-related
publications and related activities in the sports/leisure fields, and New
Ventures such as computerized systems for golf tee time reservations and on-line
magazine services.
The revenues for the Group include a $40.0 million non-compete agreement
associated with the divestiture of the Women's Magazine Division, which is being
recognized on a straight-line basis over four years ending in July 1998.
- - -----------------------------------------------------------------------------
(Dollars in thousands) 1996 1995
- - -----------------------------------------------------------------------------
REVENUES
Magazines $150,033 $152,819
Non-Compete 10,000 10,000
New Ventures 1,038 122
- - -----------------------------------------------------------------------------
Total Revenues $161,071 $162,941
- - -----------------------------------------------------------------------------
EBITDA
Magazines $ 25,555 $ 22,876
New Ventures (7,026) (1,135)
- - -----------------------------------------------------------------------------
Total EBITDA $ 18,529 $ 21,741
- - -----------------------------------------------------------------------------
OPERATING PROFIT (LOSS)
Magazines $ 22,537 $ 19,971
Non-Compete 10,000 10,000
New Ventures (7,759) (1,230)
- - -----------------------------------------------------------------------------
Total Operating Profit $ 24,778 $ 28,741
- - -----------------------------------------------------------------------------
The Magazine Group's operating profit for 1996, excluding the SFAS 121
charge, was $25.8 million in 1996 compared with $28.7 million in 1995, on
revenues of $161.1 million and $162.9 million, respectively. The decreases for
the year were primarily related to the higher net development losses from its
new ventures.
Advertising pages for Golf Digest, as reported to Publisher's Information
Bureau, decreased 4.0% to 1,252 pages and for Tennis increased 3.6% to 743 pages
in 1996.
BROADCAST GROUP:
- - ---------------------------------------------------------------------------
(Dollars in thousands) 1996 1995
- - ---------------------------------------------------------------------------
REVENUES $118,608 $ 85,106
- - ---------------------------------------------------------------------------
EBITDA $ 44,757 $ 27,470
- - ---------------------------------------------------------------------------
OPERATING PROFIT $ 30,596 $ 18,943
- - ---------------------------------------------------------------------------
The Broadcast Group's operating profit for 1996, excluding buyouts, was
$30.9 million compared with $18.9 million in 1995, on revenues of $118.6 million
and $85.1 million, respectively. The revenue and operating profit increases were
principally attributable to the performance of WTKR-TV, which was acquired in
June 1995, and to KFOR-TV and WHO-TV, which were acquired in July 1996. These
three stations contributed $11.3 million of operating profit in 1996.
JOINT VENTURES: Income from Joint Ventures increased to $18.2 million in
1996 from $15.0 million in 1995. The increase was primarily the result of higher
average selling prices for paper at the mills in which the Company has
investments, offset by losses incurred from a new venture. The new venture
ceased operations in December 1996.
F-8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
- - -------------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $452.2 million in 1997 compared
with $425.1 million in 1996. The increase of $27.1 million, or 6.4%, was
primarily attributable to higher earnings. The increase in operating cash flows
was primarily used for the construction of production and distribution
facilities, stock repurchases and the payment of dividends to stockholders.
Net cash used in investing activities was $119.1 million in 1997 compared
with $420.8 million in 1996. The decrease of $301.7 million was primarily
attributable to the acquisition of certain properties in 1996 (See Note 2 of
Notes to the consolidated financial statements).
Net cash used in financing activities was $265.3 million in 1997 compared
with $56.6 million in 1996. The increase of $208.7 million was primarily related
to an increase in share repurchases and a reduction in commercial paper
borrowings in 1997 (see Financing below).
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, stock repurchases, planned capital
expenditures, dividend payments to stockholders and other cash requirements. The
ratio of current assets to current liabilities was .88 at December 28, 1997, and
.74 at December 29, 1996. The increase in the ratio of current assets to current
liabilities is primarily related to an increase in short-term investments
offset, in part, by an increase in the current portion of debt. Long-term debt
and capital lease obligations, as a percentage of total capitalization, was 24%
at December 28, 1997, and 28% at December 29, 1996.
FINANCING: The Company currently maintains $300.0 million in revolving credit
agreements (the "Revolvers"), $100.0 million of which was renewed in July 1997
and has been extended through July 1998, and $200.0 million of which had an
original maturity of July 2001 and has been extended through July 2002. The
Revolvers 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 Revolvers include provisions which require, among other matters,
specified levels of stockholders' equity. Approximately $935.9 million of
stockholders' equity was unrestricted under the Revolvers at December 28, 1997.
The Company's long-term debt, including capital leases, was $535.4 million at
December 28, 1997, compared with $636.6 million at December 29, 1996.
In July 1996, the Company increased its ability to issue commercial paper
from $200.0 to $300.0 million, which is supported by the Company's Revolvers. In
July 1996, the Company utilized approximately $143.0 million of its commercial
paper facility to finance the acquisition of KFOR-TV and WHO-TV. At December 28,
1997, the Company had no borrowings outstanding under its commercial paper
facility. At December 29, 1996, the Company had approximately $45.5 million in
outstanding commercial paper with original maturities ranging up to 82 days, at
a weighted average interest rate of approximately 5.5%.
ACQUISITIONS/DISPOSITIONS: In November 1997, the Company sold the assets of its
tennis, sailing, and ski businesses ("magazine sale") and certain small
properties, and exited a golf-related business. These transactions resulted in a
$10.4 million net pre-tax gain ($5.7 million after taxes, or $.06 per share).
This gain does not include a portion of the proceeds of the magazine sale, which
is in escrow pending the completion of a post-closing requirement.
In 1997, the Company sold its NYT Custom Publishing division and a closed
printing facility. These sales did not have a material effect on the Company's
consolidated financial statements.
In July 1996, the Company acquired KFOR-TV and WHO-TV. The aggregate cost
of the acquisition was approximately $234.1 million, of which approximately
$232.9 million was paid in cash ($143.0 million was financed using the Company's
commercial paper facility) and the balance represented accrued liabilities.
In 1996, the Company acquired newspaper distribution businesses that
distribute The Times, other newspapers and periodicals throughout the New York
City metropolitan area. The aggregate cost of these acquisitions was $32.5
million, of which approximately $13.9 million was paid in cash, $9.8 million in
notes and accounts receivable which were forgiven, and the balance represented
assumed and accrued liabilities.
CAPITAL EXPENDITURES: In 1997, the Company completed construction of a new
production and distribution facility in New York City for The Times and a new
printing facility in Lakeland, Florida, for a Regional Newspaper. The cost of
the new facilities was approximately $356.3 million, exclusive of estimated
capitalized interest of $38.6 million.
The Company currently estimates that capital expenditures for 1998 will
range from $90.0 million to $110.0 million compared with $160.2 million in 1997
and $206.8 million in 1996.
STOCK REPURCHASE PROGRAM: The Company repurchased approximately 3.0 million
shares of Class A Common stock at a cost of $145.6 million in 1997 compared with
approximately 1.4 million shares at a cost of $43.8 million in 1996 pursuant to
a stock repurchase plan which began in February 1995. In December 1997, the
Company's Board of Directors authorized additional expenditures of up to $215.0
million for share repurchases. Under the authorizations, purchases may be made
from time to time either in the open market or through private transactions.
Purchases may be suspended from time to time or discontinued. As of February 1,
1998, the remaining amount of repurchase authorizations is approximately $188.5
million. Stock repurchases under this program exclude shares reacquired in
connection with certain exercises under the Company's stock option plans at a
cost of approximately $22.2 million in 1997.
F-9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
- - -------------------------------------------------------------------------------
In 1997, the Company redeemed all of its outstanding 5 1/2 percent cumulative
prior preference stock at par value at a cost of approximately $1.8 million.
NONCASH ACCOUNTING CHARGES: The $10.1 million EITF 97-13 charge recorded in the
fourth quarter of 1997 was related to certain corporate expenses associated with
the Company's business process/technology reengineering program. This charge had
no impact on the Company's 1997 cash flow.
The $126.8 million SFAS 121 charge recorded in the third quarter of 1996
was related to an impairment of certain long-lived assets. This charge had no
impact on the Company's 1996 cash flow and will not impact its ability to
generate cash flow in the future. As a result of the SFAS 121 charge,
depreciation and amortization expense related to certain assets will decrease in
future periods. In conjunction with the review for impairment, the estimated
useful lives of certain of the Company's long-lived assets were reviewed. This
review resulted in the acceleration of amortization expense for certain
intangible assets. In the aggregate, the changes to depreciation and
amortization expense are not expected to have a material effect on net income in
the future.
OTHER: At December 28, 1997, approximately $25.0 million of payments had not yet
been made from prior charges for buyouts. This balance will principally be paid
within one year.
The Company has evaluated the potential impact of the situation commonly
referred to as the "Year 2000 problem." The Year 2000 problem, which is common
to most corporations, concerns the inability of information systems, primarily
computer software programs, to properly recognize and process date sensitive
information related to the year 2000. Preliminary assessment indicates that
solutions will involve a mix of purchasing new systems, modifying existing
systems, retiring obsolete systems and confirming vendor compliance. The Company
currently anticipates that incremental capital expenditures associated with the
Year 2000 problem will be modest. Additional expenses to remediate existing
systems are currently expected to range between $10.0 million and $15.0 million.
These expenses are expected to be incurred through 1999.
NEW ACCOUNTING PRONOUNCEMENTS: In June 1997, the Financial Accounting Standards
Board issued SFAS No. 131, Disclosures about Segments of an Enterprise and
Related Information ("SFAS 131"), and SFAS No. 130, Reporting Comprehensive
Income ("SFAS 130"). SFAS 131 establishes standards for reporting financial and
descriptive information for reportable segments on the same basis that is used
internally for evaluating segment performance and the allocation of resources to
segments. The Company is evaluating the effect, if any, of SFAS 131 on its
operating segment reporting disclosure. SFAS 130 establishes standards for
presenting nonshareholder related items that are excluded from net income and
reported as components of stockholders' equity, such as foreign currency
translation. These statements are effective for fiscal years beginning after
December 15, 1997. The adoption of these statements will not have a material
effect on the Company's results of operations or financial position.
FACTORS THAT MAY AFFECT FUTURE RESULTS AND FINANCIAL CONDITION
This Annual Report on Form 10-K contains forward-looking statements. Additional
written and oral forward-looking statements may be made by the Company from time
to time in Securities and Exchange Commission ("SEC") filings and otherwise. The
Company cautions readers that results predicted by forward-looking statements,
including, without limitation, those relating to the Company's future business
prospects, revenues, working capital, liquidity, capital needs, interest costs,
and income are subject to certain risks and uncertainties that could cause
actual results to differ materially from those indicated in the forward-looking
statements, due to the following factors, among other risks and factors
identified from time to time in the Company's filings with the SEC:
ADVERTISING REVENUES: Advertising revenue is the Company's most significant
source of revenue. Competition from other forms of media available in the
Company's respective markets, including direct marketing, affects the Company's
ability to attract and retain advertisers and to increase advertising rates.
In addition, advertising and thus the Company's quarterly consolidated
results are seasonal in nature. Traditionally, second-quarter and fourth-quarter
advertising volume is higher than in the first and third quarters. National and
local economic conditions, most particularly in the New York City and Boston
metropolitan regions, influence the levels of the Company's retail, national
and, most particularly, classified advertising revenue. Structural changes in
the retail environment may also depress the level of display advertising
revenue.
CIRCULATION REVENUES: Circulation revenue is a significant source of revenue for
the Company. Circulation revenue and the Company's ability to achieve price
increases for its products are affected by competition from other publications
and other forms of media available in the Company's respective markets.
Circulation could also be negatively affected by an economic downturn in the
Company's markets, including, but not limited to, the New York City or Boston
metropolitan regions, decreased consumer spending on discretionary items like
newspapers and magazines and the decreasing number of newspaper readers among
young people.
PAPER PRICES: Newsprint and magazine paper are the Company's most important raw
materials and represent a significant component of the Company's cost of goods
sold. To the extent that such historically volatile raw material prices increase
materially, the Company's operating results could be adversely affected.
F-10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONCLUDED)
- - -------------------------------------------------------------------------------
LABOR RELATIONS: Advances in technology and other factors have allowed the
Company to realize cost savings by reducing the size of its overall workforce.
There is no assurance that the Company will continue to be able to realize cost
savings in such manner. A significant portion of the Company's employees are
unionized, and the Company's results could be adversely affected if labor
negotiations were to restrict its ability to maximize the efficiency of its
operations. In addition, if the Company experienced labor unrest, its ability to
produce and deliver its largest products could be impaired.
NEW PRODUCTS IN NEW MARKETS: There are substantial uncertainties associated with
the Company's efforts to develop new products and services for evolving markets.
The success of these ventures will be determined not only by the Company's
efforts, but in some cases by those of its partners, fellow investors and
licensees. Initial timetables for the introduction and development of new
products or services may not be achieved, and price/profitability targets may
not prove feasible. External factors, such as the development of competitive
alternatives and market response, may cause new markets to move in unanticipated
directions.
Because of the potential threat to the Company's traditional sources of
revenue (particularly classified advertising and circulation) posed by on-line
competition, the Company may seek to develop its own on-line products, which may
incur losses. The Company may also consider the acquisition of specific
properties or business which fall outside its preferred parameters if such
properties are deemed sufficiently attractive to the Company.
PRODUCT PORTFOLIO; ACQUISITIONS: From time to time, the Company evaluates the
various components of its portfolio of products and may, as a result, buy or
sell different properties. Such acquisitions or divestitures may affect the
Company's costs, revenues and profitability.
Acquisitions involve risks, including difficulties in integrating acquired
operations, diversions of management resources, debt incurred in financing such
acquisitions and unanticipated problems and liabilities.
TELEVISION BROADCASTING: The Company's television stations are subject to
continuing technological and regulatory developments that may affect their
future profitability. The advent of digital broadcasting is one such
development. The Federal Communications Commission ("FCC") adopted rules in 1997
under which all television stations are required to change to a new system of
digital broadcasting. The direct hardware costs of this change will be
substantial and the new digital stations are unlikely to produce significant
additional revenue until consumers have purchased a substantial number of
digital television receivers. Additionally, the new digital transmission systems
to be used by television stations, cable systems and direct broadcast satellites
could greatly increase the number of electronic video services with which the
Company's stations compete.
The foregoing list of factors should not be construed as exhaustive or as
any admission regarding the adequacy of disclosures made by the Company prior to
the date hereof.
The Company disclaims any intention or obligation to update or revise
forward-looking statements, whether as a result of new information, future
events or otherwise.
F-11
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dollars and shares in thousands, except per share data
Years Ended
-----------------------------------------
December 28, December 29, December 31,
1997 1996 1995
- - ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Advertising $1,999,844 $1,811,411 $1,682,707
Circulation 672,662 659,818 613,527
Other 193,912 157,042 131,890
- - ---------------------------------------------------------------------------------------
Total 2,866,418 2,628,271 2,428,124
- - ---------------------------------------------------------------------------------------
COSTS AND EXPENSES
Production costs
Raw materials 317,811 363,503 363,808
Wages and benefits 604,924 557,543 548,812
Other 489,531 440,038 420,863
- - ---------------------------------------------------------------------------------------
Total 1,412,266 1,361,084 1,333,483
Selling, general and administrative expenses 999,050 967,144 861,892
Impairment loss -- 126,763 --
- - ---------------------------------------------------------------------------------------
Total 2,411,316 2,454,991 2,195,375
- - ---------------------------------------------------------------------------------------
OPERATING PROFIT 455,102 173,280 232,749
Income from Joint Ventures 13,990 18,223 15,029
Interest expense, net 42,115 26,430 25,230
Net gain on dispositions of assets 10,388 32,836 11,291
- - ---------------------------------------------------------------------------------------
Income before income taxes 437,365 197,909 233,839
Income taxes 175,064 113,375 97,979
- - ---------------------------------------------------------------------------------------
NET INCOME $ 262,301 $ 84,534 $ 135,860
- - ---------------------------------------------------------------------------------------
Average number of common shares outstanding
Basic 96,520 97,293 96,854
Diluted 98,575 98,442 97,376
- - ---------------------------------------------------------------------------------------
Per share of common stock
Basic Earnings $ 2.72 $ .87 $ 1.40
Diluted Earnings 2.66 .86 1.39
Dividends .64 .57 .56
- - ---------------------------------------------------------------------------------------
</TABLE>
See Notes to the consolidated financial statements.
F-12
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------
Dollars in thousands
December 28, December 29,
1997 1996
- - ----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and short-term investments (at cost which approximates
market: 1997, $72,516; 1996, $157) $ 106,820 $ 39,103
Accounts receivable (net of allowances:
1997, $25,887; 1996, $31,312) 331,287 309,164
Inventories 32,134 33,808
Deferred income taxes 60,039 36,162
Other current assets 85,555 60,535
- - ----------------------------------------------------------------------------------------------
Total current assets 615,835 478,772
- - ----------------------------------------------------------------------------------------------
INVESTMENT IN JOINT VENTURES 133,054 137,255
- - ----------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT
Land 71,515 64,384
Buildings, building equipment and improvements 793,311 646,029
Equipment 1,317,446 1,057,555
Construction and equipment installations in progress 52,933 397,181
- - ----------------------------------------------------------------------------------------------
Total - at cost 2,235,205 2,165,149
Less accumulated depreciation 868,274 807,120
- - ----------------------------------------------------------------------------------------------
Property, plant and equipment - net 1,366,931 1,358,029
- - ----------------------------------------------------------------------------------------------
INTANGIBLE ASSETS ACQUIRED
Costs in excess of net assets acquired 1,204,021 1,225,868
Other intangible assets acquired 428,474 419,426
- - ----------------------------------------------------------------------------------------------
Total 1,632,495 1,645,294
Less accumulated amortization 254,790 207,580
- - ----------------------------------------------------------------------------------------------
Intangible assets acquired - net 1,377,705 1,437,714
- - ----------------------------------------------------------------------------------------------
MISCELLANEOUS ASSETS 145,493 128,101
- - ----------------------------------------------------------------------------------------------
Total $3,639,018 $3,539,871
- - ----------------------------------------------------------------------------------------------
</TABLE>
See Notes to the consolidated financial statements.
F-13
<PAGE>
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------
Dollars in thousands
December 28, December 29,
1997 1996
- - -----------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- - -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES
Commercial paper outstanding $ -- $ 45,500
Accounts payable 189,580 171,853
Accrued payroll and other related liabilities 103,511 84,458
Accrued expenses 217,742 247,657
Unexpired subscriptions 82,621 90,059
Current portion of long-term debt and capital lease obligations 104,033 3,359
- - -----------------------------------------------------------------------------------------------------------------------
Total current liabilities 697,487 642,886
- - -----------------------------------------------------------------------------------------------------------------------
OTHER LIABILITIES
Long-term debt 490,237 589,693
Capital lease obligations 45,191 46,939
Deferred income taxes 186,705 188,560
Other 491,336 446,661
- - -----------------------------------------------------------------------------------------------------------------------
Total other liabilities 1,213,469 1,271,853
- - -----------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
5 1/2 percent cumulative prior preference stock of $100 par value - authorized
110,000 shares; outstanding: 1997 - none; 1996, 17,530 shares -- 1,753
Serial preferred stock of $1 par value - authorized 200,000 shares - none issued -- --
Common stock of $.10 par value:
Class A - authorized 200,000,000 shares; issued: 1997, 113,283,790 shares;
1996, 110,622,041 shares (including treasury shares: 1997, 17,079,743; 1996, 13,349,205) 11,328 11,062
Class B, convertible - authorized 600,000 shares; issued: 1997, 564,744 shares;
1996, 568,259 shares (including treasury shares: 1997 and 1996, 139,943) 57 57
Additional paid-in capital 773,367 663,007
Earnings reinvested in the business 1,488,910 1,290,899
Common stock held in treasury, at cost (545,600) (341,646)
- - -----------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,728,062 1,625,132
- - -----------------------------------------------------------------------------------------------------------------------
Total $ 3,639,018 $ 3,539,871
- - -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to the consolidated financial statements.
F-14
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------------------
Dollars in thousands Years Ended
-----------------------------------------
December 28, December 29, December 31,
1997 1996 1995
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 262,301 $ 84,534 $ 135,860
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 128,427 108,787 102,271
Amortization - net 45,470 39,090 33,671
Impairment loss -- 126,763 --
Business process/technology reengineering charge 10,100 -- --
Equity in operations of Joint Ventures - net (16,006) (21,713) (20,064)
Cash distributions and dividends from Joint Ventures 14,982 16,957 7,980
Net gain on dispositions (10,388) (32,836) (11,291)
Deferred income taxes (26,559) (6,005) (9,225)
Changes in operating assets and liabilities, net of acquisitions/dispositions:
Increase in accounts receivable - net (29,216) (24,192) (32,762)
Decrease (Increase) in inventories 1,152 9,036 (12,723)
(Increase) Decrease in other current assets (4,927) (25,821) 51,939
Increase in accounts payable 31,279 14,919 28,200
(Decrease) Increase in accrued payroll and accrued expenses (8,559) 81,118 43,837
Increase in unexpired subscriptions 4,359 8,093 4,832
Other - net 49,741 46,351 (26,227)
- - ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 452,156 425,081 296,298
- - ---------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net proceeds from dispositions 39,727 16,878 27,536
Businesses acquired, net of cash acquired -- (246,805) (71,299)
Additions to property, plant and equipment (152,671) (211,320) (200,688)
Purchases of marketable securities -- -- (39,370)
Proceeds from sales of marketable securities -- -- 39,370
Other investing proceeds 593 24,815 4,960
Other investing payments (6,782) (4,357) (17,788)
- - ---------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (119,133) (420,789) (257,279)
- - ---------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Commercial paper (repayments) borrowings (45,500) 45,500 --
Long-term obligations
Increase -- -- 400,000
Reduction (3,847) (3,377) (275,727)
Capital shares
Issuance 9,930 5,358 1,908
Repurchase (162,615) (48,631) (49,987)
Dividends paid to stockholders (61,865) (55,532) (54,291)
Preferred stock redemption (1,753) -- --
Other financing proceeds (payments) 344 51 (10,899)
- - ---------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities (265,306) (56,631) 11,004
- - ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in Cash and short-term investments 67,717 (52,339) 50,023
Cash and short-term investments at the beginning of the year 39,103 91,442 41,419
- - ---------------------------------------------------------------------------------------------------------------------------
Cash and short-term investments at the end of the year $ 106,820 $ 39,103 $ 91,442
- - ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to the consolidated financial statements and supplemental disclosures
to consolidated statements of cash flows.
F-15
<PAGE>
SUPPLEMENTAL DISCLOSURES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------
Dollars in thousands Years Ended
------------------------------------------
December 28, December 29, December 31,
1997 1996 1995
- - ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
NONCASH INVESTING AND FINANCING TRANSACTIONS
Businesses acquired
Fair value of assets acquired $ 268,319 $ 72,977
Assets forgiven (9,833) --
Liabilities assumed and incurred (11,681) (1,678)
--------- ---------
Net cash paid $ 246,805 $ 71,299
========= =========
Issuance of common shares - net $ 30,561 $ 23,155 $ 22,477
========= ========= =========
CASH FLOW INFORMATION
Cash payments during the year for
Interest (net of amount capitalized) $ 39,122 $ 24,367 $ 29,277
========= ========= =========
Income taxes $ 169,115 $ 133,871 $ 86,851
========= ========= =========
- - ---------------------------------------------------------------------------------------
</TABLE>
Amounts in these statements of cash flows are presented on a cash basis and may
differ from those shown in other sections of the financial statements.
During 1996, federal tax authorities issued a favorable ruling on matters
affecting The Globe which had originated prior to its acquisition in 1993. As a
result, accrued federal taxes were reduced by $25,000,000. In accordance with
SFAS 109, this tax benefit was excluded from income and was applied as a
reduction of goodwill (see Note 9 of Notes to the consolidated financial
statements).
F-16
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dollars in thousands, except
per share data Capital Stock Common
--------------------------------------- Earnings Stock
Additional Reinvested Held in
5 1/2 % Class A Class B Paid-in in the Treasury,
Preference Common Common Capital Business at cost Total
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995 $ 1,753 $ 10,805 $ 57 $ 597,860 $ 1,179,715 $ (244,898) $ 1,545,292
- - ----------------------------------------------------------------------------------------------------------------------------------
Net income 135,860 135,860
- - ----------------------------------------------------------------------------------------------------------------------------------
Dividends, preference -
$5.50 per share (96)
Dividends, common - (96)
$.56 per share (54,195) (54,195)
- - ----------------------------------------------------------------------------------------------------------------------------------
Issuance of shares:
Retirement units, etc. - 21,421
Class A shares from treasury (308) 533 225
Employee stock purchase plan -
1,100,348 Class A shares 1 (4,852) 26,023 21,172
Stock options - 297,569
Class A shares 89 22,925 (16,317) 6,697
Stock conversions - 1,202 shares -- --
- - ----------------------------------------------------------------------------------------------------------------------------------
Purchase of company stock:
2,054,904 Class A shares (46,536) (46,536)
Proceeds from the sale of
put options 285 285
Fulfilled equity put option
obligations 2,660 2,660
- - ----------------------------------------------------------------------------------------------------------------------------------
Foreign currency translation 738 738
- - ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1995 1,753 10,895 57 618,570 1,262,022 (281,195) 1,612,102
- - ----------------------------------------------------------------------------------------------------------------------------------
Net income 84,534 84,534
- - ----------------------------------------------------------------------------------------------------------------------------------
Dividends, preference - $5.50
per share (96) (96)
Dividends, common - $.57
per share (55,436) (55,436)
- - ----------------------------------------------------------------------------------------------------------------------------------
Issuance of shares:
Retirement units, etc. - 16,127
Class A shares from treasury (271) 383 112
Employee stock purchase plan -
967,125 Class A shares 729 22,707 23,436
Stock options - 508,222
Class A shares 167 43,928 (39,702) 4,393
Stock conversions - 660 shares -- --
- - ----------------------------------------------------------------------------------------------------------------------------------
Purchase of company stock:
1,394,900 Class A shares (43,839) (43,839)
Proceeds from the sale of
put options 51 51
- - ----------------------------------------------------------------------------------------------------------------------------------
Foreign currency translation (125) (125)
- - ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 29, 1996 1,753 11,062 57 663,007 1,290,899 (341,646) 1,625,132
- - ----------------------------------------------------------------------------------------------------------------------------------
Net income 262,301 262,301
- - ----------------------------------------------------------------------------------------------------------------------------------
Dividends, preference -
$4.125 per share (72) (72)
Dividends, common -
$.64 per share (61,793) (61,793)
- - ----------------------------------------------------------------------------------------------------------------------------------
Issuance of shares:
Retirement units, etc. - 8,595
Class A shares from treasury 202 202 404
Employee stock purchase plan -
799,285 Class A shares 8,335 18,730 27,065
Stock options - 1,080,963
Class A shares 266 101,570 (77,423) 24,413
Stock awards - 3,850
Class A Shares (91) 91 --
Stock conversions -
3,515 shares -- --
- - -----------------------------------------------------------------------------------------------------------------------------------
Purchase of company stock:
2,966,000 Class A shares (145,554) (145,554)
Preferred stock redemption (1,753) (1,753)
Proceeds from the sale of
put options 344 344
- - ----------------------------------------------------------------------------------------------------------------------------------
Foreign currency translation (2,425) (2,425)
- - ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 28, 1997 -- $ 11,328 $ 57 $ 773,367 $ 1,488,910 $ (545,600) $ 1,728,062
- - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to the consolidated financial statements.
F-17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS. The New York Times Company (the "Company") is engaged in
diversified activities in the communications field. The Company's principal
businesses are newspapers, magazines and broadcasting. The Company also has
equity interests in a Canadian newsprint mill and a supercalendered paper mill.
The Company's major source of revenue is advertising from its newspaper
business. The newspapers operate in the Northeast, Southeast and California
markets.
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the
accounts of the Company after elimination of intercompany items.
FISCAL YEAR. The Company changed its fiscal year-end to the last Sunday in
December, beginning with the fiscal year ended December 29, 1996.
INVENTORIES. Inventories are stated at the lower of cost or current market
value. Inventory cost generally is based on the last-in, first-out ("LIFO")
method for newsprint and magazine paper and the first-in, first-out ("FIFO")
method for other inventories.
INVESTMENTS. Investments in which the Company has at least a 20%, but not more
than 50%, interest are accounted for under the equity method.
PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment is stated at cost,
and depreciation is computed by the straight-line method over estimated service
lives. The Company capitalizes interest costs as part of the cost of
constructing major facilities and equipment.
INTANGIBLE ASSETS ACQUIRED. Costs in excess of net assets acquired consist of
excess costs of businesses acquired over values assigned to their net tangible
assets and other intangible assets. The Company evaluates quarterly whether
there has been a permanent impairment in any of its intangible assets, inclusive
of goodwill. An impairment in value will be considered to have occurred when it
is determined that the undiscounted future operating cash flows generated by the
acquired businesses are not sufficient to recover the carrying values of such
intangible assets. If it has been determined that an impairment in value has
occurred, the excess of the purchase price over the net assets acquired and
intangible assets would be written down to an amount which will be equivalent to
the present value of the future operating cash flows to be generated by the
acquired businesses. The excess costs which arose from acquisitions after
October 31, 1970, are being amortized by the straight-line method principally
over 40 years. The remaining portion of such excess, which arose from
acquisitions before November 1, 1970 (approximately $13,000,000), is not being
amortized since in the opinion of management there has been no diminution in
value. Other intangible assets acquired consist principally of advertiser and
subscriber relationships and mastheads, which are being amortized over their
remaining lives, ranging from 5 to 40 years. The general policy relating to
intangible assets is a life of 5 years for various software licenses and a life
of 40 years for mastheads on various acquired properties.
SUBSCRIPTION REVENUES AND COSTS. Proceeds from subscriptions and related costs,
principally agency commissions, are deferred at the time of sale and are
included in the Consolidated Statements of Income on a pro rata basis over the
terms of the subscriptions.
FOREIGN CURRENCY TRANSLATION. The assets and liabilities of foreign companies
are translated at year-end exchange rates. Results of operations are translated
at average rates of exchange in effect during the year. The resultant
translation adjustment is included as a component of stockholders' equity.
EARNINGS PER SHARE. In the fourth quarter of 1997, the Company adopted Statement
of Financial Accounting Standards ("SFAS") No. 128, Earnings Per Share ("SFAS
128"), which is effective for fiscal periods ending after December 15, 1997 (see
Note 6). SFAS 128 replaced primary earnings per share ("EPS") with basic EPS and
fully diluted EPS with diluted EPS. Basic EPS is calculated by dividing net
earnings available to common shares by weighted average common shares
outstanding. Diluted EPS is calculated similarly, except that it includes the
dilutive effect of the assumed exercise of securities, including the effect of
shares issuable under the Company's incentive plans (see Note 13). SFAS 128 also
required previously reported earnings per share to be restated. All per share
amounts included in the footnotes are the same for basic and diluted earnings
per share unless otherwise noted. The adoption of SFAS 128 did not have a
material effect on the calculation of EPS.
CASH AND SHORT-TERM INVESTMENTS. For purposes of the Consolidated Statements of
Cash Flows, the Company considers all highly-liquid debt instruments purchased
with original maturities of three months or less to be cash equivalents. The
Company has overdraft positions at certain banks as a result of outstanding
checks which have been reclassified to accounts payable.
DERIVATIVES. The Company enters into foreign exchange contracts as a hedge
against foreign accounts payable. Market value gains and losses are recognized,
and the resulting credit or debit offsets foreign exchange gains on those
payables. No such contracts were outstanding at December 28, 1997.
INVESTMENT TAX CREDITS. The Company uses the deferred method of accounting for
investment tax credits.
USE OF ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements.
Actual results could differ from these estimates.
NEW ACCOUNTING PRONOUNCEMENTS. In 1997, the Company adopted the provisions of
Emerging Issues Task Force Issue No. 97-13, Accounting for Costs Incurred in
Connection with a Consulting Contract or an Internal Project That Combines
Business Process Reengineering and Information Technology Transformation ("EITF
97-13") (see Note 3).
F-18
<PAGE>
In June 1997, the Financial Accounting Standards Board issued SFAS No.
131, Disclosures about Segments of an Enterprise and Related Information ("SFAS
131"), and SFAS No. 130, Reporting Comprehensive Income ("SFAS 130"). SFAS 131
establishes standards for reporting financial and descriptive information for
reportable segments on the same basis that is used internally for evaluating
segment performance and the allocation of resources to segments. The Company is
evaluating the effect, if any, of SFAS 131 on its operating segment reporting
disclosure. SFAS 130 establishes standards for presenting nonshareholder related
items that are excluded from net income and reported as components of
stockholders' equity, such as foreign currency translation. These statements are
effective for fiscal year beginning after December 15, 1997. The adoption of
these statements will not have a material effect on the Company's results of
operations or financial position.
- - --------------------------------------------------------------------------------
2. ACQUISITIONS/DISPOSITIONS
ACQUISITIONS: In July 1996, the Company acquired KFOR-TV in Oklahoma City, Okla.
and WHO-TV in Des Moines, Iowa. The aggregate cost of the acquisition was
approximately $234,075,000, of which approximately $232,925,000 was paid in cash
and the balance represented accrued liabilities. The purchases resulted in
increases in intangible assets of approximately $197,118,000 (consisting
primarily of network affiliation agreements, Federal Communications Commission
licenses and other intangible assets), property plant and equipment of
$29,058,000, other assets of $9,687,000 and other assumed liabilities of
$1,788,000.
In 1996, the Company acquired newspaper distribution businesses that
distribute The Times, other newspapers and periodicals throughout the New York
City metropolitan area. The aggregate cost of these acquisitions was
approximately $32,456,000, of which approximately $13,880,000 was paid in cash,
$9,833,000 in notes and accounts receivable which were forgiven, and the balance
represented assumed and accrued liabilities. The purchase resulted in increases
in intangible assets of approximately $30,438,000 (consisting primarily of a
customer list), and accounts receivable and equipment of $2,018,000.
In June 1995, the Company acquired WTKR-TV in Norfolk, Virginia. The
aggregate net cost of the acquisition was $71,299,000, 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 $1,678,000.
These acquisitions have been accounted for by the purchase method. The
consolidated financial statements include the operating results of these
acquisitions subsequent to their respective dates of acquisition. The foregoing
acquisitions, if they had occurred on January 1 of the year prior to
acquisition, would not have had a material impact on the results of operations.
DISPOSITIONS: In November 1997, the Company sold the assets of its tennis,
sailing, and ski businesses ("magazine sale") and certain small properties, and
exited a golf-related business. These transactions resulted in a $10,388,000 net
pre-tax gain ($5,663,000 after-taxes, or $.06 per share). This gain does not
include a portion of the proceeds of the magazine sale, which is in escrow
pending the completion of a post-closing requirement.
In 1997, the Company sold its NYT Custom Publishing division and a closed
printing facility. These sales did not have a material effect on the Company's
consolidated financial statements.
In connection with the divestiture of a newsprint mill in 1991, the
Company made a loan commitment of up to $26,500,000 to the new owners of the
mill. At December 31, 1995, the commitment was fully funded. In 1996, the
Company received the funds to satisfy this loan. As a result of the repayment,
the Company realized a $25,085,000 pre-tax gain ($13,292,000 after taxes, or
$.14 per share) resulting from the realization of a gain contingency from the
divestiture of the mill.
In June 1996, the Company sold the 110 Fifth Avenue building in New York
City which the Women's Magazine Division formerly occupied. The sale resulted in
a $7,751,000 pre-tax gain ($4,240,000 after taxes, or $.04 per share).
In the third quarter of 1995, the Company completed the sales of six small
regional newspapers: The Daily Commercial (Leesburg, FL); The Daily Corinthian
(Corinth, MS); The Messenger (Madisonville, KY); The Lenoir News-Topic (Lenoir,
NC), The State Gazette (Dyersburg, TN) and The Banner-Independent (Booneville,
MS). The sales resulted in a net pre-tax gain of approximately $11,300,000
($5,000,000 after taxes, or $.05 per share). In May 1995, the Company sold The
York County Coast Star (Kennebunk, ME). The sale did not have a material effect
on the Company's consolidated financial statements.
- - --------------------------------------------------------------------------------
3. BUSINESS PROCESS/TECHNOLOGY REENGINEERING CHARGE
In the fourth quarter of 1997, the Company recorded a pre-tax noncash accounting
charge of $10,100,000 ($5,686,000 after-tax, or $.06 per share) as a result of
adopting the provisions of EITF 97-13. This charge related to certain expenses
associated with the Company's business process/technology reengineering program.
This charge had no impact on the Company's 1997 cash flow.
F-19
<PAGE>
- - --------------------------------------------------------------------------------
4. IMPAIRMENT LOSS
In September 1996, the Company recorded a noncash accounting charge related
to an impairment of certain long-lived assets as required by SFAS No. 121,
Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets To
Be Disposed Of ("SFAS 121 charge"), which was principally, in concept, the
accounting policy used by the Company in prior years. As a result of the
Company's strategic review process, analyses were prepared to determine if
there was impairment of any long-lived asset and certain assets, primarily in
the Newspaper Group, met the test for impairment. These assets were
associated with three small regional newspapers, certain wholesale
distribution operations and a printing facility. The revised carrying values
of these assets were generally calculated on the basis of discounted
estimated future cash flows and resulted in a pre-tax noncash charge of
$126,763,000 ($94,500,000 after-tax, or $.97 basic earnings per share, $.96
diluted earnings per share).
The SFAS 121 charge had no impact on the Company's 1996 cash flow and will
not impact its ability to generate cash flow in the future. As a result of the
SFAS 121 charge, depreciation and amortization expense related to these assets
will decrease in future periods. However, in conjunction with the review for
impairment, the estimated lives of certain of the Company's long-lived assets
were reviewed, which resulted in the acceleration of amortization expense for
certain intangible assets. In the aggregate, the changes to depreciation and
amortization expense are not expected to have a material effect on net income in
the future.
- - --------------------------------------------------------------------------------
5. INVESTMENT IN JOINT VENTURES
Investment in Joint Ventures consists of equity ownership interests in two paper
mills ("Forest Products Investments"), the International Herald Tribune S.A.S.
("IHT"), and the operations of a new venture. The new venture ceased operations
in December 1996. The results of the IHT and the new venture are not material to
the operations of the Company.
The Forest Products Investments consist of a newsprint company, Donohue
Malbaie Inc. ("Malbaie"), and a partnership operating a supercalendered paper
mill in Maine, Madison Paper Industries ("Madison") (collectively referred to
herein as "Paper mills"). The equity interest in Malbaie represents a 49%
ownership interest.
The Company and Myllykoski Oy, a Finnish paper manufacturing company, are
partners through subsidiary companies in Madison. The partners' interests in the
net assets of Madison at any time will depend on their capital accounts, as
defined, at such time. Through an 80%-owned subsidiary, the Company's share of
Madison's profits and losses is 40%.
The Company received distributions from Madison of $9,680,000, $6,200,000
and $3,650,000 in 1997, 1996 and 1995, respectively. Loans to Madison by the
80%-owned subsidiary of the Company totaled $1,769,000 and $1,882,000, in 1996
and 1995, respectively. Loan repayments in 1997 were $2,470,000. No
contributions were made to Madison in 1997, 1996 or 1995.
The Company received distributions from Malbaie of $5,302,000, $10,757,000
and $4,330,000 in 1997, 1996 and 1995, respectively. No loans or contributions
were made to Malbaie in 1997, 1996 or 1995.
The current portion of debt of the paper mills included in current
liabilities in the adjacent table was $145,000 and $10,500,000 at December 28,
1997, and December 29, 1996, respectively. All long-term debt of the Paper mills
matures in 1999. The debt of the Paper mills is not guaranteed by the Company.
Condensed combined balance sheets of the Paper mills are as follows:
- - --------------------------------------------------------------------------------
Condensed Combined Balance Sheets
of Paper mills
- - --------------------------------------------------------------------------------
Dollars in thousands December 28, December 29,
1997 1996
- - --------------------------------------------------------------------------------
Current assets $ 67,023 $ 73,781
Less current liabilities 31,817 36,477
- - --------------------------------------------------------------------------------
Working capital 35,206 37,304
Fixed assets, net 215,427 226,938
Long-term debt (99) (245)
Deferred income taxes and other (96,168) (109,074)
- - --------------------------------------------------------------------------------
Net assets $154,366 $ 154,923
- - --------------------------------------------------------------------------------
Condensed combined income statements of the Paper mills are as follows:
- - -------------------------------------------------------------------------------
Condensed Combined Income Statements
of Paper mills
- - --------------------------------------------------------------------------------
Dollars in thousands 1997 1996 1995
- - --------------------------------------------------------------------------------
Net sales and
other income $234,290 $268,654 $268,377
Costs and
expenses 196,415 203,120 216,342
- - --------------------------------------------------------------------------------
Income before taxes 37,875 65,534 52,035
Income tax expense 5,577 9,635 7,969
- - --------------------------------------------------------------------------------
Net income $ 32,298 $ 55,899 $ 44,066
- - --------------------------------------------------------------------------------
The condensed combined financial information of the Paper mills excludes
the income tax effects attributable to Madison.
Such tax effects (see Note 9) have been included in the Company's
consolidated financial statements.
Adjustments from translating certain balance sheet accounts, for each of
the three years in the period ended December 28, 1997,
F-20
<PAGE>
are set forth in the Consolidated Statements of Stockholders' Equity. The
cumulative translation adjustment (included in earnings reinvested in the
business) decreased stockholders' equity by $2,745,000, $320,000 and $195,000 at
December 28,1997, December 29, 1996 and December 31, 1995, respectively. During
1997, 1996 and 1995, the Company's Newspaper Group purchased newsprint and
supercalendered paper from the Paper mills at competitive prices. Such purchases
aggregated approximately $74,000,000, $80,000,000, and $59,000,000,
respectively.
- - --------------------------------------------------------------------------------
6. EARNINGS PER SHARE
The Company adopted the provisions of SFAS 128 in the fourth quarter of 1997.
Basic and diluted earnings per share for the years ended December 28, 1997,
December 29, 1996, and December 31, 1995 were computed as follows:
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------
Dollars and shares in thousands, except per share data 1997 1996 1995
- - -------------------------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Basic Earnings Per Share Computation
Numerator:
Net Income $262,301 $ 84,534 $135,860
Less cumulative preference stock dividends 72 96 96
-------- -------- --------
Income available to common stockholders $262,229 $ 84,438 $135,764
Denominator:
Average number of common shares outstanding 96,520 97,293 96,854
- - -------------------------------------------------------------------------------------------------
Basic Earnings Per Share $ 2.72 $ 0.87 $ 1.40
- - -------------------------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------------------------
Diluted Earnings Per Share Computation
Numerator:
Net Income $262,301 $ 84,534 $135,860
Less cumulative preference stock dividends 72 96 96
-------- -------- --------
Income available to common stockholders $262,229 $ 84,438 $135,764
Denominator:
Average number of common shares outstanding 96,520 97,293 96,854
Incremental shares for assumed exercise of securities 2,055 1,149 522
-------- -------- --------
Total shares 98,575 98,442 97,376
- - -------------------------------------------------------------------------------------------------
Diluted Earnings Per Share $ 2.66 $ 0.86 $ 1.39
- - -------------------------------------------------------------------------------------------------
</TABLE>
Outstanding stock options to purchase common stock with an exercise price
greater than the average market price of common stock were not included in the
computation of diluted earnings per share. The balance of such options was
approximately 2,195,000 in 1997, 2,167,000 in 1996, and 5,673,000 in 1995. The
incremental shares for assumed exercise of securities was determined using the
Treasury Stock method.
- - --------------------------------------------------------------------------------
7. INVENTORIES
Inventories as shown in the accompanying Consolidated Balance Sheets are
composed of the following:
- - --------------------------------------------------------------------------------
Dollars in thousands December 28, December 29,
1997 1996
- - --------------------------------------------------------------------------------
Newsprint and magazine paper $27,694 $28,778
Work-in-process, etc. 4,440 5,030
- - --------------------------------------------------------------------------------
Total $32,134 $33,808
- - --------------------------------------------------------------------------------
Inventories are stated at the lower of cost or current market value. Cost was
determined utilizing the LIFO method for 78% of inventory in 1997 and 1996. The
replacement cost of inventory was approximately $36,400,000 and $36,700,000 at
December 28, 1997, and December 29, 1996, respectively.
F-21
<PAGE>
- - --------------------------------------------------------------------------------
8. DEBT
Long-term debt consists of the following:
- - --------------------------------------------------------------------------------
Dollars in thousands December 28, December 29,
1997 1996
- - --------------------------------------------------------------------------------
5.50% to 5.77% Senior Notes due $200,000 $200,000
1998 and 2000 (a)
7.625% Notes due 2005, net of unamortized 245,001 244,501
debt costs of $4,999 in 1997, $5,499
in 1996; effective interest rate 7.996% (b)
8.25% Debentures due 2025 (due 145,236 145,192
2005 at option of Company), net of
unamortized debt costs of $4,764 in
1997, $4,808 in 1996; effective
interest rate 8.553% (b)
- - --------------------------------------------------------------------------------
Total notes and debentures 590,237 589,693
- - --------------------------------------------------------------------------------
Less: current portion 100,000 -
- - --------------------------------------------------------------------------------
Total long-term debt $490,237 $589,693
- - --------------------------------------------------------------------------------
(a) In October 1993, the Company issued senior notes totaling $200,000,000
to an insurance company with interest payable semi-annually. Five-year notes
totaling $100,000,000 were issued at an annual rate of 5.50%, and the remaining
$100,000,000 were issued as six and one-half year notes at an annual rate of
5.77%.
(b) In March 1995, the Company completed a public offering of $400,000,000
of unsecured notes and debentures. The offering consisted of ten-year notes
aggregating $250,000,000 maturing March 15, 2005, at an annual rate of 7.625%
(the "Notes") and 30-year debentures aggregating $150,000,000 maturing March 15,
2025, at an annual rate of 8.25% (the "Debentures") (collectively referred to
herein as the "Offering"). The Debentures are callable after ten years. Interest
is payable semi-annually on March 15 and September 15 on both the Notes and the
Debentures.
The net proceeds from the Offering were used to repay the principal
balance of $162,300,000 of 11.85% Notes due March 31, 1995, $50,000,000 of 9.34%
Notes due July 15, 1995 and indebtedness outstanding under the Company's
commercial paper program. The remaining net proceeds were used for general
corporate purposes.
Based on borrowing rates currently available for debt with similar terms
and average maturities, the fair value of long-term debt, excluding the current
portion, was approximately $632,200,000 and $626,600,000 at December 28, 1997
and December 29, 1996, respectively.
- - --------------------------------------------------------------------------------
In July 1996, the Company entered into a $100,000,000 revolving credit
agreement and a $200,000,000 revolving credit agreement with a group of banks
the (the "Revolvers"). The Revolvers replaced existing revolving credit
agreements aggregating $170,000,000. The Revolvers, $100,000,000 of which was
renewed in July 1997 and has been extended through July 1998, and $200,000,000
of which had an original maturity of July 2001 and has been extended through
July 2002, at which time any outstanding borrowings would be payable. 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.
No borrowings under the Revolvers were outstanding during 1997 or 1996.
In July 1996, the Company increased its ability to issue commercial paper
from $200,000,000 to $300,000,000, which is supported by the Company's
Revolvers. Borrowings are in the form of unsecured notes sold at a discount with
maturities ranging up to 270 days. At December 28, 1997, the Company had no
outstanding commercial paper. At December 29, 1996, the Company had
approximately $45,500,000 in outstanding commercial paper with original
maturities ranging up to 82 days at a weighted average interest rate of
approximately 5.5%.
The Revolvers 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 Revolvers include provisions which require, among other
matters, specified levels of stockholders' equity. At December 28, 1997,
approximately $935,900,000 of stockholders' equity was unrestricted under the
Revolvers.
The aggregate face amount of maturities of long-term debt over the next
five years are as follows: 1998, $100,000,000; 1999, none; 2000, $100,000,000;
2001, none; 2002, none and $400,000,000 thereafter.
Interest expense, net as shown in the accompanying Consolidated Statements
of Income consists of the following:
- - --------------------------------------------------------------------------------
Dollars in thousands 1997 1996 1995
- - --------------------------------------------------------------------------------
Interest expense $50,433 $50,333 $48,751
Capitalized interest (5,394) (19,574) (15,177)
Interest income (2,924) (4,329) (8,344)
- - --------------------------------------------------------------------------------
Interest expense, net $42,115 $26,430 $25,230
- - --------------------------------------------------------------------------------
F-22
<PAGE>
- - --------------------------------------------------------------------------------
9. INCOME TAXES
Income tax expense for each of the years presented is determined in accordance
with SFAS No. 109, Accounting for Income Taxes ("SFAS 109").
The components of income tax expense as shown in the Consolidated
Statements of Income is presented in the adjacent table:
- - --------------------------------------------------------------------------------
Dollars in thousands 1997 1996 1995
- - --------------------------------------------------------------------------------
Current tax expense
Federal $146,550 $ 90,886 $105,999
State, local, foreign 55,073 28,494 1,970
- - --------------------------------------------------------------------------------
201,623 119,380 107,969
- - --------------------------------------------------------------------------------
Deferred tax expense
Federal (24,102) 6,076 (22,483)
State, local, foreign (2,457) (12,081) 12,493
- - --------------------------------------------------------------------------------
(26,559) (6,005) (9,990)
- - --------------------------------------------------------------------------------
Income tax expense $175,064 $113,375 $ 97,979
- - --------------------------------------------------------------------------------
The reasons for the variance between the effective tax rate on income
before income taxes and the federal statutory rate (exclusive of a favorable tax
adjustment of $18,000,000 in fiscal 1997 resulting from the completion of the
Company's federal income tax audits for periods through 1992 ("favorable tax
adjustment"), the impairment loss in fiscal 1996 and gains on dispositions in
each period) are presented on the table below:
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------
Dollars in thousands 1997 1996 1995
- - --------------------------------------------------------------------------------------------------------------
% of % of % of
Amount Pretax Amount Pretax Amount Pretax
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tax at federal statutory rate $ 149,442 35.0% $ 102,143 35.0% $ 77,892 35.0%
Increase (decrease) resulting from
State and local taxes - net 32,837 7.7 14,310 4.9 8,880 4.0
Amortization of nondeductible intangible
assets acquired 9,892 2.3 12,856 4.4 11,061 5.0
Other - net (3,832) (.9) 1,026 .4 (6,188) (2.8)
- - --------------------------------------------------------------------------------------------------------------
Subtotal 188,339 44.1% 130,335 44.7% 91,645 41.2%
- - --------------------------------------------------------------------------------------------------------------
Impairment loss -- (32,264) --
- - --------------------------------------------------------------------------------------------------------------
Favorable tax adjustment (18,000) -- --
- - --------------------------------------------------------------------------------------------------------------
Dispositions 4,725 15,304 6,334
- - --------------------------------------------------------------------------------------------------------------
Income tax expense $ 175,064 $ 113,375 $ 97,979
- - --------------------------------------------------------------------------------------------------------------
</TABLE>
Tax expense in 1996 was reduced by $5,571,000 ($8,517,000 before federal
tax effect) due to a reduction in the valuation allowance attributable to state
net operating loss tax benefits. Other state and local operating loss tax
benefits further reduced 1996 tax expense by $2,507,000.
During 1996, federal tax authorities issued a favorable ruling on matters
affecting The Globe which had originated prior to its acquisition in 1993. As a
result, accrued federal taxes were reduced by $25,000,000 relating to a
pre-acquisition tax contingency predominately related to pre-acquisition net
operating loss carryforwards. The remainder of the reduction is related to other
pre-acquisition tax contingencies. In accordance with SFAS 109, this tax benefit
was excluded from income and was applied as a reduction of goodwill.
Tax expense in 1995 was reduced by $10,986,000 as a result of a favorable
state tax ruling and adjustments to federal, state and local tax liabilities. A
further reduction of $4,339,000 ($6,676,000 before federal tax effect) in 1995
tax expense relates to a reduction in the valuation allowance attributable to
state and local capital and net operating loss tax benefits. The remaining
decrease in the valuation allowance is due principally to the expiration of net
operating loss tax benefits and does not affect income tax expense.
Income tax benefits, which related to the exercise of options and the
employee stock purchase plan, reduced current taxes payable and increased
additional paid-in capital by $38,553,000, $3,645,000, and $837,000 during 1997,
1996 and 1995, respectively.
Foreign taxes included in income tax expense totaled $877,000, $882,000
and $774,000 in 1997, 1996 and 1995, respectively. Foreign taxes are principally
applicable to the Company's equity in the operations of a Canadian newsprint
mill.
F-23
<PAGE>
At December 28, 1997, tax loss carryforwards included only state tax loss
benefits. The benefits are attributable to tax operating losses totaling
$8,105,000 at December 28, 1997. Such loss carryforwards expire in accordance
with provisions of applicable tax laws and have remaining lives ranging from 1
to 15 years. These tax loss carryforwards will, more likely than not, expire
unused, and as such the Company's valuation allowance has increased to
$8,105,000, as of December 28, 1997.
The Company generated approximately $17,000,000 in investment tax credits
in the state of New York, in connection with the construction of its College
Point facility. The unused investment tax credit carryforward at December 28,
1997, was approximately $12,000,000, which the Company has the ability to
utilize for 15 years. For financial statement purposes, the Company has selected
the deferred method of accounting for investment tax credits, and as such, will
amortize the $17,000,000 tax benefit over the average useful life of the assets.
The Internal Revenue Service has completed its examination of federal
income tax returns for all years through 1992. Examinations of the tax returns
for the years 1993 through 1995 are in process. Management is of the opinion
that any assessments resulting from these examinations will not have a material
effect on the consolidated financial statements.
The components of the net deferred tax liabilities recognized on the
respective Consolidated Balance Sheets are as follows:
- - -------------------------------------------------------------------------------
Dollars in thousands December 28, December 29,
1997 1996
- - -------------------------------------------------------------------------------
Deferred Tax Assets
Retirement, postemployment and
deferred compensation plans $174,069 $168,795
Accruals for other employee benefits,
compensation, insurance and other 33,244 20,654
Accounts receivable allowances 26,561 18,231
Other 41,527 23,896
- - -------------------------------------------------------------------------------
Total deferred tax assets 275,401 231,576
Valuation allowance (8,105) (4,671)
- - -------------------------------------------------------------------------------
Net deferred tax assets 267,296 226,905
- - -------------------------------------------------------------------------------
Deferred Tax Liabilities
Property, plant and equipment 230,712 250,636
Intangible assets 98,076 80,057
Investments in Joint Ventures 42,057 39,787
Other 23,117 9,650
- - -------------------------------------------------------------------------------
Total deferred tax liabilities 393,962 380,130
- - -------------------------------------------------------------------------------
Net deferred tax liability 126,666 153,225
- - -------------------------------------------------------------------------------
Amounts included in:
Other current assets 60,039 36,162
Accrued expenses -- (827)
- - -------------------------------------------------------------------------------
Deferred income tax liability $186,705 $188,560
- - -------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
10. VOLUNTARY STAFF REDUCTIONS
The Company recorded pre-tax charges of approximately $8,500,000, or $.05 per
share, $44,100,000, or $.25 per share, and $10,100,000, or $.06 per share in
1997, 1996 and 1995, respectively.
At December 28, 1997 and December 29, 1996, approximately $24,990,000 and
$49,052,000, respectively, of these charges were unpaid. This balance will be
principally paid within one year.
F-24
<PAGE>
- - --------------------------------------------------------------------------------
11. PENSION PLANS
The Company sponsors several pension plans and makes contributions to several
others in connection with collective bargaining agreements, including a joint
Company-union plan and a number of joint industry-union plans. These plans cover
substantially all employees.
The Company-sponsored pension plans provide participating employees with
retirement benefits in accordance with benefit provision formulas which are
based on years of service and final average or career pay and, where applicable,
employee contribu-tions. Funding is based on an evaluation and review of the
assets, liabilities and requirements of each plan. In 1996, the Company merged
the assets of two of the plans. Retirement benefits are also provided under
supplemental unfunded pension plans.
The components of net periodic pension cost for all Company-sponsored
pension plans were as follows:
- - --------------------------------------------------------------------------------
Dollars in thousands 1997 1996 1995
- - --------------------------------------------------------------------------------
Service cost $ 19,645 $ 20,984 $ 16,413
Interest cost 48,734 45,353 41,859
Actual (return) loss on plan
assets (138,597) (59,062) (74,904)
Net amortization and
deferral 100,509 25,683 42,320
- - --------------------------------------------------------------------------------
Net periodic pension cost $ 30,291 $ 32,958 $ 25,688
- - --------------------------------------------------------------------------------
Assumptions used in the actuarial computations were:
- - --------------------------------------------------------------------------------
1997 1996 1995
- - --------------------------------------------------------------------------------
Discount rate 7.25% 7.75% 7.25%
Rate of increase in
compensation levels 5.50% 5.50% 5.50%
Expected long-term rate of
return on assets 8.75% 8.75% 8.75%
- - --------------------------------------------------------------------------------
In connection with collective bargaining agreements, the Company
contributes to several other pension plans including a joint Company-union plan
and a number of joint industry-union plans. Contributions are determined as a
function of hours worked or period earnings. Pension cost for these plans was
$22,430,000 in 1997, $21,111,000 in 1996, and $20,679,000 in 1995.
Plan assets, which were valued as of September 30, 1997 and 1996, consist
of money market investments, investments in marketable fixed income and equity
securities, an investment in a diversified real estate equity fund and
investments in group annuity insurance contracts.
The funded status of the Company's qualified plans, which were valued at
September 30, 1997 and 1996, was as follows:
- - -------------------------------------------------------------------------------
Dollars in thousands Plans Whose Assets Exceed
Accumulated Benefits
----------------------------------------
December 28, December 29,
1997 1996
- - -------------------------------------------------------------------------------
Actuarial present value of
benefit obligation:
Vested benefit obligation $489,526 $367,438
- - -------------------------------------------------------------------------------
Accumulated benefit obligation 502,615 375,492
- - -------------------------------------------------------------------------------
Projected benefit obligation 603,746 454,995
Plan assets at fair value 620,562 439,184
- - -------------------------------------------------------------------------------
Projected benefit obligation (less
than) in excess of plan assets (16,816) 15,811
Unrecognized net gains 90,519 27,493
Unrecognized prior service cost 2,372 2,529
Unrecognized transition asset 420 419
- - -------------------------------------------------------------------------------
Recorded pension liability $ 76,495 $ 46,252
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
Dollars in thousands Plans Whose Assets Exceed
Accumulated Benefits
----------------------------------------
December 28, December 29,
1997 1996
- - -------------------------------------------------------------------------------
Actuarial present value of benefit
obligation:
Vested benefit obligation -- $64,312
- - -------------------------------------------------------------------------------
Accumulated benefit obligation -- 67,789
- - -------------------------------------------------------------------------------
Projected benefit obligation -- 71,167
Plan assets at fair value -- 66,459
- - -------------------------------------------------------------------------------
Projected benefit obligation
in excess of plan assets -- 4,708
Unrecognized net gains -- 8,962
Fourth-quarter contribution, net -- (431)
- - -------------------------------------------------------------------------------
Recorded pension liability -- $13,239
- - -------------------------------------------------------------------------------
The Company's liability for its unfunded non-qualified plans (the "Plans")
was $84,161,000 and $71,204,000 as of December 28, 1997 and December 29, 1996,
respectively. At December 28, 1997, the projected benefit obligation of the
Plans totaled $119,751,000 of which $41,559,000 ($34,174,000 of unrecognized
actuarial losses, $5,319,000 of unrecognized prior service cost and $2,066,000
of unrecognized transition obligation) is subject to amortization. At December
29, 1996, the projected benefit obligation of the Plans totaled $100,665,000 of
which $30,257,000 ($21,645,000 of unrecognized actuarial losses, $5,910,000 of
unrecognized prior service cost and $2,702,000 of unrecognized transition
obligation) is subject to amortization. These amounts are not included in the
funded status of the qualified plans shown in the table above.
Included in the recorded pension liability for 1997 and 1996 is a minimum
liability of $7,234,000 and $796,000, respectively, relating to the unfunded
status of the Plans. Miscellaneous assets in the Consolidated Balance Sheets in
both years included a related intangible asset of an equal amount.
F-25
<PAGE>
- - --------------------------------------------------------------------------------
12. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS AND POSTEMPLOYMENT BENEFITS
The Company provides health and life insurance benefits to retired employees
(and their eligible dependents) who are not covered by any collective bargaining
agreements if the employee meets specified age and service requirements.
In accordance with SFAS No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions, the Company accrues the costs of such benefits
during the employee's active years of service.
The components of net periodic postretirement cost were as follows:
- - --------------------------------------------------------------------------------
Dollars in thousands 1997 1996 1995
- - --------------------------------------------------------------------------------
Service cost for benefits
earned during the period $ 3,680 $ 3,682 $ 2,820
Interest cost on accumulated
postretirement obligation 8,581 8,250 8,142
Net amortization and deferral (3,194) (2,367) (3,120)
- - --------------------------------------------------------------------------------
Net periodic postretirement cost $ 9,067 $ 9,565 $ 7,842
- - --------------------------------------------------------------------------------
The Company's policy is to fund the above-mentioned plans as claims and premiums
are paid.
For 1997, the accumulated postretirement benefit obligation was determined
using a discount rate of 7.25%, an estimated increase in compensation levels of
5.5% and a health care cost trend rate of between 9.25% and 8.0% in the first
year, grading down to 5.0% in the year 2008.
For 1996, the accumulated postretirement benefit obligation was determined
using a discount rate of 7.75%, an estimated increase in compensation levels of
5.5% and a health care cost trend rate of between 10.0% and 8.5% in the first
year, grading down to 5.0% in the year 2008.
For 1995, the accumulated postretirement benefit obligation was determined
using a discount rate of 7.25%, an estimated increase in compensation levels of
5.5% and a health care cost trend rate of between 11.0% and 9.25% in the first
year, grading down to 5.0% in the year 2008.
The following table sets forth the accrued postretirement benefit
liability amounts included in Accrued Expenses and Other Liabilities in the
Consolidated Balance Sheets at December 28, 1997, and December 29, 1996, based
on valuation dates of September 30 in each year:
- - --------------------------------------------------------------------------------
Dollars in thousands December 28, December 29,
1997 1996
- - --------------------------------------------------------------------------------
Accumulated postretirement
benefit obligation
Retirees $ 54,410 $ 51,164
Fully eligible active plan
participants 23,434 19,510
Other active plan participants 49,576 43,451
- - --------------------------------------------------------------------------------
Total 127,420 114,125
Unrecognized net gains 26,677 32,212
Unrecognized prior service cost 10,186 11,929
Fourth-quarter benefit payments (878) (822)
- - --------------------------------------------------------------------------------
Total accrued postretirement
benefit liability 163,405 157,444
Current portion included in
accrued expenses 5,465 4,400
- - --------------------------------------------------------------------------------
Long-term accrued
postretirement benefit liability $157,940 $153,044
- - --------------------------------------------------------------------------------
Increasing the assumed health care cost trend rates by one percentage
point in each year and holding all other assumptions constant would increase the
accumulated postretirement benefit obligation as of December 28, 1997, by
$17,736,000, and increase the net periodic postretirement benefit cost for 1997
by $2,057,000.
In connection with collective bargaining agreements, the Company
contributes to several welfare plans including a joint Company-union plan and a
number of joint industry-union plans. Contributions are determined as a function
of hours worked or period earnings. Portions of these contributions, which
cannot be disaggregated, related to postretirement benefits for plan
participants. Total contributions to these welfare funds were approximately
$26,873,000, $24,745,000 and $26,034,000 in 1997, 1996 and 1995, respectively.
In accordance with SFAS No. 112, Employers' Accounting for Postemployment
Benefits, the Company accrues the cost of certain benefits provided to former or
inactive employees after employment but before retirement, such as workers'
compensation, disability benefits and health care continuation coverage during
the employee's active years of service.
F-26
<PAGE>
- - --------------------------------------------------------------------------------
13. EXECUTIVE AND NON-EMPLOYEE DIRECTORS' INCENTIVE PLANS
Under the Company's 1991 Executive Stock Incentive Plan and 1991 Executive Cash
Bonus Plan (together, the "1991 Executive Plans"), the Board of Directors may
authorize incentive compensation awards and grant stock options to key employees
of the Company. Awards may be granted in cash, restricted and unrestricted
shares of the Company's Class A Common Stock, Retirement Units or such other
forms as the Board of Directors deems appropriate. Under the 1991 Executive
Plans, stock options of up to 20,000,000 shares of Class A Common Stock may be
granted and stock awards of up to 1,000,000 shares of Class A Common Stock may
be made. In adopting the 1991 Executive Plans, shares previously available for
issuance of retirement units and stock options under prior plans are no longer
available for future awards.
Retirement Units are payable in Class A Common Stock generally over a
period of ten years following retirement.
Stock options currently outstanding were granted under the Company's
1984 Stock Option Plan and the 1991 Executive Plans. The Plans provide for
granting of both incentive and non-qualified stock options principally at an
option price per share of 100% of the fair market value of the Class A Common
Stock on the date of grant. These options have a term of ten years, and
become exercisable in annual periods ranging from one year to four years from
the date of grant. Payment upon exercise of an option may be made in cash,
with previously-acquired shares, with shares (valued at fair market value)
which would be otherwise issued on the exercise of the option or any
combination thereof.
Under the Company's Non-Employee Directors' Stock Option Plan (the
"Directors' Plan"), non-qualified options with ten-year terms are granted
annually to each non-employee director of the Company. The 1997 annual grant
increased the number of shares of Class A Common Stock a director may purchase
from the Company from 1,000 to 2,000 shares at the fair market value of such
shares at the date of grant. Options for an aggregate of 250,000 shares of Class
A Common Stock may be granted under the Directors' Plan.
Changes in the Company's stock options for each of the three years in the period
ended December 28, 1997 were as follows:
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------
Shares in thousands 1997 1996 1995
---------------------- ---------------------- ----------------------
Weighted Weighted Weighted
Average Average Average
Shares Exercise Price Shares Exercise Price Shares Exercise Price
- - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding,
beginning of year 10,369 $28 10,007 $25 9,282 $24
Granted 2,218 64 2,169 38 2,047 30
Exercised (2,658) 25 (1,672) 24 (910) 21
Forfeited (137) 17 (135) 28 (412) 27
------ ------ ------
Options outstanding, end
of year 9,792 37 10,369 28 10,007 25
====== ====== ======
Options exercisable,
end of year 4,639 26 5,279 24 5,273 24
====== ====== ======
- - ------------------------------------------------------------------------------------------------
</TABLE>
The following table summarizes information about the Company's stock options
outstanding as of December 28, 1997:
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------
Shares in thousands Options Outstanding Options Exercisable
------------------------------------------------------ -----------------------------
Weighted Average
Exercise Price Outstanding Remaining Contractual Weighted Remaining Exercisable Weighted Average
Ranges Shares Life Exercise Price Shares Exercise Price
- - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$10-19 222 4 years $15 222 $15
$20-29 3,560 6 years 24 3,053 24
$30-39 3,792 9 years 34 1,364 33
$40-64 2,218 10 years 64 -- --
----- -----
9,792 37 4,639 26
===== =====
- - ----------------------------------------------------------------------------------------------------------
</TABLE>
F-27
<PAGE>
The Company applies Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations to accounting for its
stock option and employee stock purchase plans (see Note 14) (collectively
referred to herein as "Employee Stock Based Plans"). Accordingly, no
compensation cost has been recognized for the aforementioned plans. The Company
adopted the disclosure provisions of SFAS No. 123, Accounting for Stock-Based
Compensation, in 1996. The weighted average fair value of $18.53 and $10.94 for
1997 and 1996 stock option grants, respectively, and of $8.81 and $5.81 for 1997
and 1996 employee stock purchase plan ("ESPP") rights, respectively, were
estimated at the date of grant using the Black-Scholes option valuation model
and the following assumptions:
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------
Stock Options ESPP Rights
------------------ ----------------
1997 1996 1997 1996
- - -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Risk-free interest rate 5.72% 6.14% 5.45% 5.47%
Expected life 5 years 5 years 1.1 years 1.2 years
Expected volatility 22.62% 23.84% 22.62% 21.22%
Expected dividend yield 1.05% 1.56% 1.66% 2.0%
- - -------------------------------------------------------------------------------------
</TABLE>
Had compensation cost for the Employee Stock Based Plans been determined over
the vesting period based on the fair value at the grant date for awards under
those plans, the Company's net income and earnings per share would have been
reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------
Dollars in thousands, except per share data 1997 1996
----------------------- ----------------------
As reported Pro forma As reported Pro forma
- - --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Income $262,301 $249,582 $84,534 $76,889
Basic earnings per share $ 2.72 $ 2.59 $ .87 $ .79
Diluted earnings per share $ 2.66 $ 2.53 $ .86 $ .78
- - --------------------------------------------------------------------------------------------
</TABLE>
The pro forma effect for 1997 and 1996 on the amounts presented above is not
representative of the pro forma effect in future years because it does not take
into account pro forma compensation expense related to grants made prior to
1995. The pro forma effect on net income for 1995 is not material because
substantially all grants were made in December 1995.
- - --------------------------------------------------------------------------------
14. CAPITAL STOCK
The 5 1/2 percent cumulative prior preference stock was redeemable at the option
of the Company on 30 days' notice at par plus accrued dividends and was entitled
to an annual dividend of $5.50 payable quarterly. The Company redeemed all
outstanding shares of its 5 1/2 percent cumulative prior preference stock on
October 1, 1997, at par value at a cost of $1,753,000.
The serial preferred stock was subordinate to the 5 1/2 percent cumulative
prior preference stock. The Board of Directors is authorized to set the
distinguishing characteristics of each series prior to issuance, including the
granting of limited or full voting rights; however, the consideration received
must be at least $100 per share. No shares of serial preferred stock have been
issued.
The Class A and Class B Common Stock are entitled to equal participation
in the event of liquidation and in dividend declarations. The Class B Common
Stock is convertible at the holders' option on a share-for-share basis into
Class A shares. As provided for in the Certificate of Incorporation, the Class A
Common Stock has limited voting rights, including the right to elect thirty
percent of the directors of the Board, and the Class A and Class B Common Stock
have the right to vote together on reservations of Company stock for stock
options and other stock- related plans, on the ratification of the selection of
independent certified public accountants and, in certain circumstances, on
acquisitions of the stock or assets of other companies. Otherwise, except as
provided by the laws of the State of New York, all voting power is vested solely
and exclusively in the holders of the Class B Common Stock.
At the April 1996 annual meeting of the Company's Class A and B Common
Shareholders, an amendment to the 1991 Executive Stock Incentive Plan was
approved to reserve an additional 10,000,000 shares of Class A Common Stock for
issuance thereunder pursuant to the exercise of stock options.
In 1996, the Company spent approximately $43,800,000 to repurchase
approximately 1,395,000 shares of Class A Common Stock, at an average price of
$31.43. In 1997, the Company spent approximately $145,554,000 to repurchase
approximately 2,966,000 shares of Class A Common Stock, at an average price of
$49.07. In December 1997, the Company's Board of Directors
F-28
<PAGE>
authorized additional expenditures of up to $215,000,000 for share repurchases.
Under the authorizations, purchases may be made from time to time either in the
open market or through private transactions. Purchases may be suspended from
time to time or discontinued. During the period December 29, 1997 through
February 1, 1998, the Company spent approximately $37,400,000 to repurchase
approximately 577,000 shares of Class A Common Stock at an average price of
$64.89. As of February 1, 1998, the remaining amount of repurchase
authorizations is approximately $188,500,000. Stock repurchases under this
program exclude shares reacquired in connection with certain exercises under the
Company's stock option plans at a cost of approximately $22,242,000 in 1997. Had
the 1997 and 1996 stock repurchases occurred as of January 1 in the respective
years, the impact on earnings per share would have been immaterial.
In addition to the Company's stock repurchase program, the Company sells
equity put options in private placements that entitle the holder, upon exercise,
to sell shares of Class A Common Stock to the Company at a specified price. In
1997 and 1996, put options for 180,000 and 40,000 shares were issued for
$344,000 and $51,000 in premiums, respectively, which have been accounted for as
a part of additional paid-in capital. All put options issued have expired.
Shares of Class A Common Stock reserved for issuance were as follows:
- - --------------------------------------------------------------------------------
Shares in thousands December 28, December 29,
1997 1996
- - --------------------------------------------------------------------------------
Stock Options
Outstanding 9,792 10,369
Available 7,691 9,793
Employee Stock Purchase Plan
Available 2,936 3,735
Stock Awards Available 963 964
Voluntary Conversion of
Class B Common Stock
Available 565 568
Retirement Units Outstanding 159 175
- - --------------------------------------------------------------------------------
Total 22,106 25,604
- - --------------------------------------------------------------------------------
Under the 1998 Offering of the ESPP, eligible employees may purchase Class
A Common Stock through payroll deductions during 1998 plan year at the lower of
$44.84 per share (85% of the average market price on October 1, 1997) or 85% of
the average market price on November 25, 1998. Approximately 35 to 40 percent of
eligible employees have participated in the ESPP in the last three years. Under
the ESPP, the Company issued approximately 799,000 shares, 967,000 shares and
1,100,000 shares in 1997, 1996 and 1995, respectively.
- - --------------------------------------------------------------------------------
15. COMMITMENTS AND CONTINGENT LIABILITIES
OPERATING LEASES: Such lease commitments are primarily for office space and
equipment. Certain office space leases provide for rent adjustments relating to
changes in real estate taxes and other operating expenses.
Rental expense amounted to $30,408,000 in 1997, $29,664,000 in 1996, and
$27,699,000 in 1995. The approximate minimum rental commitments under
noncancelable leases at December 28, 1997, were as follows: 1998, $14,121,000;
1999, $12,598,000; 2000, $9,160,000; 2001, $6,387,000; 2002, $5,627,000 and
$15,943,000 thereafter.
CAPITAL LEASES: In 1994, the Company recorded a $5,000,000 capital lease for 31
acres of City-owned land in College Point, New York City, on which the Company
has completed building a printing and distribution facility. The Company has the
option to purchase the property at any time prior to the end of the lease in
2019. Under the terms of the lease agreement with the City of New York, the
Company receives various tax and energy cost reductions.
The Company also has a long-term lease for a building and site in Edison,
N.J. The lease provides the Company with certain early cancellation rights, as
well as renewal and purchase options.
For financial reporting purposes, the Edison lease has been classified as
a capital lease; accordingly, an asset of approximately $57,000,000 (included in
buildings, building equipment and improvements at December 28, 1997 and December
29, 1996) has been recorded.
The following is a schedule of future minimum lease payments under all
capitalized leases together with the present value of the net minimum lease
payments as of December 28, 1997:
- - --------------------------------------------------------------------------------
Dollars in thousands Amount
- - --------------------------------------------------------------------------------
1998 $ 7,976
1999 8,491
2000 7,958
2001 7,277
2002 7,045
Later years 43,365
- - --------------------------------------------------------------------------------
Total minimum lease payments 82,112
Less: imputed interest (32,888)
- - --------------------------------------------------------------------------------
Present value of net minimum lease payments including
current maturities of $4,033 $49,224
- - --------------------------------------------------------------------------------
OTHER: There are various legal actions that have arisen in the ordinary course
of business and are now pending against the Company. Such actions are usually
for amounts greatly in excess of the payments, if any, that may be required to
be made.
It is the opinion of management after reviewing such actions with legal
counsel to the Company that the ultimate liability which might result from such
actions would not have a material adverse effect on the consolidated financial
statements.
F-29
<PAGE>
16. SEGMENTS
The Company's segment and related information is included on pages F-2 and F-3
of this Appendix. The information for the years 1997, 1996 and 1995 appearing
therein is presented on a basis consistent with, and is an integral part of, the
consolidated financial statements. Revenues from individual customers, revenues
between business segments and revenues, operating profit and identifiable assets
of foreign operations are not significant.
- - --------------------------------------------------------------------------------
17. RECLASSIFICATIONS
For comparability, certain 1996 and 1995 amounts have been reclassified to
conform with the 1997 presentation.
F-30
<PAGE>
INDEPENDENT AUDITORS' REPORT
BOARD OF DIRECTORS
AND STOCKHOLDERS OF
THE NEW YORK TIMES COMPANY:
We have audited the accompanying consolidated balance sheets of The New York
Times Company as of December 28, 1997 and December 29, 1996, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended December 28, 1997. Our audits also
include the financial statement schedule listed in the Index at Item 14a. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of The New York Times Company as
of December 28, 1997 and December 29, 1996, and the results of their operations
and their cash flows for each of the three years in the period ended December
28, 1997 in conformity with generally accepted accounting principles. Also, in
our opinion, such financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.
Deloitte & Touche LLP
New York, New York
January 30, 1998
MANAGEMENT'S RESPONSIBILITIES REPORT
The Company's consolidated financial statements were prepared by management who
is responsible for their integrity and objectivity. The consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles and, as such, include amounts based on management's best estimates
and judgments.
Management is further responsible for maintaining a system of internal
accounting control, designed to provide reasonable assurance that the Company's
assets are adequately safeguarded and that the accounting records reflect
transactions executed in accordance with management's authorization. The system
of internal control is continually reviewed for its effectiveness and is
augmented by written policies and procedures, the careful selection and training
of qualified personnel and a program of internal audit.
The consolidated financial statements were audited by Deloitte & Touche
LLP, independent auditors. Their audit was conducted in accordance with
generally accepted auditing standards and their report is shown on this page.
The Audit Committee of the Board of Directors, which is composed solely of
independent directors, meets regularly with the independent auditors, internal
auditors and management to discuss specific accounting, financial reporting and
internal control matters. Both the independent auditors and the internal
auditors have full and free access to the Audit Committee. Each year the Audit
Committee selects, subject to ratification by stockholders, the firm which is to
perform audit and other related work for the Company.
- - --------------------------------------------------------------------------------
MARKET INFORMATION
- - --------------------------------------------------------------------------------
The Class A Common Stock is listed on the New York Stock Exchange. Prior to
September 25, 1997, the Class A Common Stock was listed on the American Stock
Exchange. The Class B Common Stock is unlisted and is not actively traded.
The approximate number of security holders of record as of January 31, 1998 was
as follows: Class A Common Stock: 12,055; Class B Common Stock: 35.
The market price range of Class A Common Stock in 1997 and 1996 is as follows:
- - --------------------------------------------------------------------------------
Quarter Ended 1997 1996
- - --------------------------------------------------------------------------------
High Low High Low
March 30 $47.88 $36.38 March 31 $30.50 $25.75
June 29 51.75 40.00 June 30 33.87 28.37
September 28 55.31 45.56 September 29 33.87 27.50
December 28 66.50 50.00 December 29 39.87 33.25
Year 66.50 36.38 Year 39.87 25.75
- - --------------------------------------------------------------------------------
F-31
<PAGE>
<TABLE>
<CAPTION>
QUARTERLY INFORMATION (Unaudited)
- - -----------------------------------------------------------------------------------------------------------------------------
Dollars and shares in millions, First Quarter Second Quarter Third Quarter Fourth Quarter Year
except per share data -----------------------------------------------------------------------------------------
1997 (a) 1996 1997 (a) 1996 1997 1996 1997 1996 1997 1996
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $692.4 $627.6 $721.9 $649.5 $683.6 $631.4 $768.4 $719.8 $2,866.4 $2,628.3
- - -----------------------------------------------------------------------------------------------------------------------------
Costs and Expenses
Production costs:
Raw materials 73.5 105.6 76.3 96.4 78.3 85.8 89.7 75.7 317.8 363.5
Wages and benefits 158.4 136.8 149.3 135.6 145.6 140.7 151.6 144.5 604.9 557.5
Other 114.6 105.1 119.7 106.1 126.1 109.9 129.1 118.9 489.5 440.0
- - -----------------------------------------------------------------------------------------------------------------------------
Total 346.5 347.5 345.3 338.1 350.0 336.4 370.4 339.1 1,412.2 1,361.0
Selling, general and
administrative expenses 244.6 219.5 249.3 228.9 242.3 232.1 262.8 286.7 999.1 967.2
Impairment Loss -- -- -- -- -- 126.8 -- -- -- 126.8
- - -----------------------------------------------------------------------------------------------------------------------------
Total 591.1 567.0 594.6 567.0 592.3 695.3 633.2 625.8 2,411.3 2,455.0
- - -----------------------------------------------------------------------------------------------------------------------------
Operating profit (loss) 101.3 60.6 127.3 82.5 91.3 (63.9) 135.2 94.0 455.1 173.3
Income from Joint Ventures 1.3 4.7 3.1 2.2 3.4 6.4 6.3 4.9 14.0 18.2
Interest expense, net 8.3 6.4 11.4 6.0 11.7 8.0 10.8 6.0 42.1 26.4
Net gain on dispositions of assets -- -- -- 7.8 -- 25.1 10.4 -- 10.4 32.9
Income taxes 42.5 26.2 34.1 39.7 36.8 7.3 61.8 40.2 175.1 113.4
- - -----------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 51.8 $ 32.7 $ 84.9 $ 46.8 $ 46.2 $(47.7) $ 79.3 $ 52.7 $ 262.3 $ 84.6
- - -----------------------------------------------------------------------------------------------------------------------------
Average number of common
shares outstanding
Basic 97.8 97.7 96.2 97.8 95.9 97.0 96.2 96.8 96.5 97.3
Diluted 99.6 98.4 98.1 98.9 98.0 98.0 98.5 98.3 98.6 98.4
Per share of common stock
Basic Earnings $ .53 $ .33 $ .88 $ .48 $ .48 $ (.49) $ .82 $ .54 $ 2.72 $ .87
Diluted Earnings .52 .33 .87 .47 .47 (.49) .81 .54 2.66 .86
- - -----------------------------------------------------------------------------------------------------------------------------
Dividends .15 .14 .16 .14 .16 .14 .17 .15 .64 .57
- - -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
All earnings per share amounts for special items below are the same basic
and diluted earnings per share unless otherwise noted.
The 1997 and 1996 quarters do not equal the respective year-end amounts
for earnings per share due to the weighted average number of shares outstanding
used in the computations for the respective periods. Per share amounts for the
respective quarters and years have been computed using the average number of
common shares outstanding as presented in the table above.
The Company's largest source of revenues is advertising, which influences
the pattern of the Company's quarterly consolidated revenues and is 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 primarily because economic activity is
lower in the post holiday season and summer periods. 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.
First-quarter 1997 results included a $2.5 million pre-tax charge ($.01
per share) for severance and related costs for work force reductions
("buyouts").
Second-quarter 1997 results included an $18.0 million favorable adjustment
($.19 basic earning per share, $.18 diluted earnings per share) resulting from
the completion of the Company's federal income tax audits for periods through
1992.
Fourth-quarter 1997 results included a $10.4 million aggregate pre-tax
gain ($.06 per share) resulting from the sale of the assets of the tennis,
sailing and ski businesses and certain small properties, net of the exit costs
associated with the shutdown of a golf-related business. Fourth-quarter 1997
results also included a $10.1 million pre-tax noncash charge ($.06 per share)
relating to EITF Issue No. 97-13 and a $6.0 million pre-tax charge ($.04 basic
earnings per share, $.03 diluted earning per share) for buyouts.
First-quarter 1996 results included a $1.2 million pre-tax charge for
buyouts.
Second-quarter 1996 results included a $4.4 million pre-tax charge ($.03
per share) for buyouts and a $7.8 million pre-tax gain ($.04 per share) on the
sale of the 110 Fifth Avenue building.
Third-quarter 1996 results included a $126.8 million pre-tax noncash
accounting charge ($.97 basic earning per share, $.96 diluted earnings per
share) related to the measurement for impairment of long-lived assets as
required by SFAS No. 121, a $25.1 million pre-tax gain ($.14 per share)
resulting from the realization of a gain contingency from the disposition of a
paper mill in a prior year and a $7.0 million pre-tax charge ($.04 per share)
for buyouts.
Fourth-quarter 1996 results included a $31.5 million pre-tax charge ($.18
per share) for buyouts.
(a) For comparability, certain amounts have been reclassified to conform with
the current presentation.
F-32
<PAGE>
<TABLE>
<CAPTION>
TEN-YEAR SUPPLEMENTAL FINANCIAL DATA
- - --------------------------------------------------------------------------------------------------------------------------------
Dollars and shares in millions, Years Ended December
except per share data --------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES AND INCOME
Revenues $2,866 $2,628 $2,428 $2,397 $ 2,057 $ 1,810 $ 1,737 $1,808 $ 1,797 $1,728
- - --------------------------------------------------------------------------------------------------------------------------------
Operating Profit 455 173 233 211 126 88 93 129 168 251
- - --------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Joint Ventures 14 18 15 5 (53) (9) (9) 8 (11) 35
- - --------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from continuing operations 262 85 136 213 6 (11) 47 65 68 161
Discontinued operations -- -- -- -- -- -- -- -- 199 7
Net cumulative effect of
accounting changes -- -- -- -- -- (34) -- -- -- --
- - --------------------------------------------------------------------------------------------------------------------------------
Net income (loss) 262 85 136 213 6 (45) 47 65 267 168
- - --------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET
Total assets 3,639 3,540 3,390 3,138 3,215 1,995 2,128 2,150 2,188 1,915
Long-term debt
and capital lease obligations 535 637 638 523 460 207 213 319 337 378
Common stockholders' equity 1,728 1,623 1,610 1,544 1,599 1,000 1,073 1,056 1,064 873
- - --------------------------------------------------------------------------------------------------------------------------------
PER SHARE OF COMMON STOCK
Continuing operations 2.72 .87 1.40 2.05 .07 (.14) .61 .85 .87 2.00
Discontinued operations -- -- -- -- -- -- -- -- 2.52 .08
Net cumulative effect of
accounting changes -- -- -- -- -- (.43) -- -- -- --
Basic Earnings 2.72 .87 1.40 2.05 .07 (.57) .61 .85 3.39 2.08
Diluted Earnings 2.66 .86 1.39 2.04 .07 (.57) .60 .84 3.37 2.06
Dividends .64 .57 .56 .56 .56 .56 .56 .54 .50 .46
Common stockholders'
equity (end of year) 17.90 16.69 16.50 15.71 14.96 12.54 13.70 13.68 13.63 11.02
- - --------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding (end of year)
Class A and Class B Common 96.6 97.7 97.6 98.2 106.9 79.7 78.4 77.2 78.1 79.2
- - --------------------------------------------------------------------------------------------------------------------------------
Market Price (end of year) 64.06 38.50 29.62 22.12 26.25 26.37 23.62 20.62 26.37 26.87
- - --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1997 - Results included: a $10.4 million pre-tax gain ($.06 per share) resulting
from the sale of the assets of the tennis, sailing and ski businesses and
certain small properties, net of the exit costs associated with the shutdown of
a golf-related business; a $10.1 million pre-tax noncash accounting charge ($.06
per share) related to EITF 97-13; an $8.5 million pre-tax charge ($.05 per
share) for buyouts; an $18.0 million ($.19 basic earnings per share, $.18
diluted earnings per share) favorable tax adjustment.
1996 -Results included: a $126.8 million pre-tax noncash accounting charge ($.97
basic earnings per share, $.96 diluted earnings per share) related to SFAS 121;
$44.1 million pre-tax charge ($.25 per share) for buyouts; $25.1 million pre-tax
gain ($.14 per share) resulting from the realization of a gain contingency from
the disposition of a paper mill in a prior year; $7.8 million pre-tax gain ($.04
per share) on the sale of an office building.
1995 - Results included: a net pre-tax gain of $11.3 million ($.05 per share)
from the sales of small newspapers; $10.1 million pre-tax charge ($.06 per
share) for buyouts.
1994 - Results included: a net pre-tax gain of $200.9 million ($.99 per share)
from the sales of the Women's Magazines Division and U.K. golf publications, and
the disposition of a minority interest in a newsprint mill.
1993 - Results included: a pre-tax $3.7 million charge ($.02 per share) for rate
adjustments due to a severe snowstorm; $4.4 million ($.05 per share) of
additional tax expense for remeasurement of deferred tax balances due to the
enactment of the 1993 Tax Act; $1.2 million ($.02 per share) of additional tax
expense due to the 1993 Tax Act which increased the federal corporate income tax
rate; a $2.6 million pre-tax gain ($.02 per share) from the sale of assets;
$35.4 million of pre-tax charges ($.23 per share) for buyouts; pre-tax noncash
charge of $47.0 million ($.56 basic earnings per share, $.55 diluted earnings
per share) to write down the Gaspesia investment.
1992 - Results included: $53.8 million pre-tax loss ($.47 per share) on the
closing of The Gwinnett (Ga.) Daily News; a $3.1 million pre-tax gain ($.02 per
share) from the sale of assets; a $28.0 million pre-tax charge ($.20 per share)
for buyouts; $21.4 million pre-tax charge ($.15 per share) for labor
disruptions, training and start-up costs at Edison. Net cumulative effect of
accounting changes ($.43 basic earnings per share, $.42 diluted earnings per
share includes the change in methods of accounting for income taxes,
postretirement benefits other than pensions and postemployment benefits.
1991 - Results included: a $20.0 million pre-tax charge ($.15 per share) for
voluntary union staff reductions at The Times; the reversal of a provision for
income taxes of $10.0 million ($.13 per share) for a favorable tax settlement.
1989 - Results included: an after-tax gain of $193.3 million ($2.46 basic
earnings per share, $2.44 diluted earnings per share) from the sale of the
Company's cable television operations, of which the gain and results of
operations through the 1989 sale date are included as discontinued operations
($2.52 basic earnings per share, $2.50 diluted earnings per share); a $30.0
million pre-tax charge ($.22 per share) for buyouts; a pre-tax charge of $27.2
million ($.35 per share) for a valuation reserve against the Company's
investment in the Forest Products Investments.
F-33
<PAGE>
SCHEDULE II
THE NEW YORK TIMES COMPANY
VALUATION AND QUALIFYING ACCOUNTS
For the Three Years Ended December 28, 1997
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
- - -------------------------------------------------------------------------------------
Additions Deductions for
charged to purposes for
Balance at costs and which Balance at
beginning of expenses or accounts were end of
Description period revenues set up period
- - -------------------------------------------------------------------------------------
Dollars in thousands
<S> <C> <C> <C> <C>
Year Ended December 28, 1997
Deducted from assets to which
they apply
Uncollectible accounts ....... $24,359 $22,423 $25,893 $20,889
Returns and allowances, etc .. 6,953 8,997 10,952 4,998
------- ------- ------- -------
Total ....................... $31,312 $31,420 $36,845 $25,887
======= ======= ======= =======
Year Ended December 29, 1996
Deducted from assets to which
they apply
Uncollectible accounts ....... $18,942 $23,526 $18,109 $24,359
Returns and allowances, etc .. 6,923 10,324 10,294 6,953
------- ------- ------- -------
Total ....................... $25,865 $33,850 $28,403 $31,312
======= ======= ======= =======
Year Ended December 31, 1995
Deducted from assets to which
they apply
Uncollectible accounts ....... $22,268 $20,749 $24,075 $18,942
Returns and allowances, etc .. 5,889 9,892 8,858 6,923
------- ------- ------- -------
Total ....................... $28,157 $30,641 $32,933 $25,865
======= ======= ======= =======
</TABLE>
S-1
<PAGE>
EXHIBIT INDEX
(2.1) Agreement and Plan of Merger dated as of June 11, 1993, as amended
by the First Amendment dated as of August 12, 1993, by and among the Company,
Sphere, Inc. and Affiliated Publications, Inc. ("API") (filed as Exhibit 2 to
the Form S-4 Registration Statement, Registration No. 33-50043, on August 23,
1993, and included as Annex I to the Joint Proxy Statement/Prospectus included
in such Registration Statement (schedules omitted--the Company agrees to furnish
a copy of any schedule to the Commission upon request), and incorporated by
reference herein).
(3.1) Certificate of Incorporation as amended by the Class A and Class B
stockholders and as restated on September 29, 1993 (filed as an Exhibit to the
Company's Form 10-K dated March 21, 1994, and incorporated by reference herein).
(3.2) By-laws as amended through February 19, 1998.
(4) The Company agrees to furnish to the Commission upon request a copy of
any instrument with respect to long-term debt of the Company and any subsidiary
for which consolidated or unconsolidated financial statements are required to be
filed, and for which the amount of securities authorized thereunder does not
exceed 10% of the total assets of the Company and its subsidiaries on a
consolidated basis.
(9.1) Globe Voting Trust Agreement, dated as of October 1, 1993, as
amended effective October 1, 1995 (filed as an Exhibit to the Company's Form
10-K dated March 11, 1996, and incorporated by reference herein).
(10.1) The Company's Executive Incentive Compensation Plan as amended
through December 20, 1990 (filed as an Exhibit to the Company's Form 10-K dated
March 1, 1991, and incorporated by reference herein).
(10.2) The Company's 1991 Executive Stock Incentive Plan, as amended
through February 19, 1998.
(10.3) The Company's 1991 Executive Cash Bonus Plan, as amended through
September 19, 1996 (filed as an Exhibit to the Company's 10-Q dated November 12,
1996, and incorporated by reference herein).
(10.4) The Company's Non-Employee Directors' Stock Option Plan, as amended
through February 19, 1998.
(10.5) The Company's Supplemental Executive Retirement Plan, as amended
and restated through January 1, 1993 (filed as an Exhibit to the Company's Form
10-K dated March 11, 1996, and incorporated by reference herein).
(10.6) Amendment No. 1, dated May 1, 1997, to the Company's Supplemental
Executive Retirement Plan (filed as an Exhibit to the Company's Form 10-Q dated
March 30, 1997, and incorporated by reference herein).
(10.7) Lease (short form) between the Company and Z Edison Limited
Partnership dated April 8, 1987 (filed as an Exhibit to the Company's Form 10-K
dated March 27, 1988, and incorporated by reference herein).
(10.8) Agreement of Lease, dated as of December 15, 1993, between The City
of New York, Landlord, and the Company, Tenant (as successor to New York City
Economic Development Corporation (the "EDC"), pursuant to an Assignment and
Assumption of Lease With Consent, made as of December 15, 1993, between the EDC,
as Assignor, to the Company,
<PAGE>
as Assignee) (filed as an Exhibit to the Company's Form 10-K dated March 21,
1994, and incorporated by reference herein).
(10.9) Funding Agreement #1, dated as of December 15, 1993, between the
EDC and the Company (filed as an Exhibit to the Company's Form 10-K dated March
21, 1994, and incorporated by reference herein).
(10.10) Funding Agreement #2, dated as of December 15, 1993, between the
EDC and the Company (filed as an Exhibit to the Company's Form 10-K dated March
21, 1994, and incorporated by reference herein).
(10.11) Funding Agreement #3, dated as of December 15, 1993, between the
EDC and the Company (filed as an Exhibit to the Company's Form 10-K dated March
21, 1994, and incorporated by reference herein).
(10.12) Funding Agreement #4, dated as of December 15, 1993, between the
EDC and the Company (filed as an Exhibit to the Company's Form 10-K dated March
21, 1994, and incorporated by reference herein).
(10.13) New York City Public Utility Service Power Service Agreement, made
as of May 3, 1993, between The City of New York, acting by and through its
Public Utility Service, and The New York Times Newspaper Division of the Company
(filed as an Exhibit to the Company's Form 10-K dated March 21, 1994, and
incorporated by reference herein).
(10.14) Employment Agreement, dated May 19, 1993, between API, Globe
Newspaper Company and William O. Taylor (filed as an Exhibit to the Company's
Form 10-K dated March 21, 1994, and incorporated by reference herein).
(10.15) API's 1989 Stock Option Plan (filed as Annex F-1 to API's Proxy
Statement-Joint Prospectus, dated as of April 28, 1989, contained in API's
Registration Statement on Form S-4 (Registration Statement No. 33-28373)
declared effective April 28, 1989, and incorporated by reference herein).
(10.16) API's Supplemental Executive Retirement Plan, as amended effective
December 17, 1996.
(10.17) API's 1990 Stock Option Plan (Restated 1991) (filed as Exhibit 1
to API's Quarterly Report on Form 10-Q for the Quarter ended June 30, 1991
(Commission File No. 1-10251), and incorporated by reference herein).
(10.18) Form of Substituted Stock Option Agreement/Incentive 88 among API,
its predecessor company and certain employees (filed as Exhibit 10.31 to
Post-Effective Amendment No. 1 filed August 11, 1989, to API's Registration
Statement on Form S-4 (Registration Statement No. 33-28373) declared effective
April 28, 1989, and incorporated by reference herein).
(10.19) The Company's Deferred Executive Compensation Plan.
(10.20) The New York Times Designated Employees Deferred Earnings Plan.
(10.21) The Company's Non-Employee Directors Deferral Plan (filed as an
Exhibit to the Company's Form 10-Q dated November 12, 1997, and incorporated by
reference herein).
(21) Subsidiaries of the Company.
(23) Consent of Deloitte & Touche LLP.
(27) Financial Data Schedule.
<PAGE>
EXHIBIT 3.2
THE NEW YORK TIMES COMPANY
BY-LAWS
As Amended by the
Board of Directors
October 21, 1968, February 26, 1969, March 24, 1971, March
29, 1972, March 28, 1973, May 30, 1973, November 28, 1973,
March 27, 1974, March 31, 1976, April 26, 1977, January 30,
1978, October 25, 1978, April 3, 1979, July 23, 1979, March
20, 1980, May 15, 1980, March 19, 1981, March 18, 1982,
February 17, 1983, April 28, 1983, February 16, 1984, July
18, 1985, February 20, 1986, April 30, 1986, October 16,
1986, February 19, 1987, February 18, 1988, March 16, 1989,
February 15, 1990, February 21, 1991, February 20, 1992,
February 18, 1993, October 21, 1993, December 16, 1993,
February 17, 1994, February 16, 1995, March 20, 1997,
October 16, 1997 and February 19, 1998.
As Ratified by the
Class B Stockholders
April 22, 1969
and the Class A and Class B Stockholders
(Article XI only)
April 19, 1988
<PAGE>
BY-LAWS
OF
THE NEW YORK TIMES COMPANY
<TABLE>
<CAPTION>
As Amended by the
Board of Directors
<S> <C>
October 21, 1968 As Ratified by the
February 26, 1969 Class B Stockholders
March 24, 1971 April 22, 1969
March 29, 1972 and the Class A and
March 28, 1973 Class B Stockholders
May 30, 1973 (Article XI only)
November 28, 1973 April 19, 1988
March 27, 1974
March 31, 1976
April 26, 1977
January 30, 1978
October 25, 1978
April 3, 1979
July 23, 1979
March 20, 1980
May 15, 1980
March 19, 1981
March 18, 1982
February 17, 1983
April 28, 1983
February 16, 1984
July 18, 1985
February 20, 1986
April 30, 1986
October 16, 1986
February 19, 1987
February 18, 1988
March 16, 1989
February 15, 1990
February 21, 1991
February 20, 1992
February 18, 1993
October 21, 1993
December 16, 1993
February 17, 1994
February 16, 1995
March 20, 1997
October 16, 1997
February 19, 1998
</TABLE>
<PAGE>
INDEX
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C>
ARTICLE I. STOCKHOLDERS.......................................................................... 1
1. Annual Meeting..................................................................... 1
2. Special Meetings................................................................... 1
3. Notice of Meetings................................................................. 1
4. Quorum............................................................................. 1
5. Voting............................................................................. 1
ARTICLE II. CLOSING TRANSFER BOOKS; SETTING RECORD DATE........................................... 2
1. Qualification of Voters............................................................ 2
2. Determination of Stockholders of Record for Other Purposes......................... 2
ARTICLE III. BOARD OF DIRECTORS.................................................................... 2
1. Number, Classification, Election and Qualifications................................ 2
2. Vacancies.......................................................................... 2
3. Regular Meetings................................................................... 2
4. Special Meetings................................................................... 3
5. Quorum............................................................................. 3
6. Committees......................................................................... 3
7. Salaries........................................................................... 3
8. Resignation........................................................................ 4
9. Telephonic Meetings................................................................ 4
ARTICLE IV. OFFICERS.............................................................................. 4
1. Appointment........................................................................ 4
2. Term of Office..................................................................... 4
3. The Chairman of the Board.......................................................... 4
4. The Vice Chairman of the Board..................................................... 4
5. The President...................................................................... 4
6. Vice Presidents.................................................................... 5
7. The Secretary...................................................................... 5
8. The Treasurer...................................................................... 5
9. Duties of Officers may be Delegated................................................ 5
ARTICLE V. STOCK CERTIFICATES.................................................................... 5
1. Issuance of Stock Certificates..................................................... 5
2. Lost Stock Certificates............................................................ 5
3. Transfers of Stock................................................................. 5
4. Regulations........................................................................ 6
ARTICLE VI. SEAL.................................................................................. 6
ARTICLE VII. CHECKS................................................................................ 6
ARTICLE VIII. BOOKS OF ACCOUNT AND STOCK BOOK....................................................... 6
ARTICLE IX. FISCAL YEAR........................................................................... 6
ARTICLE X. VOTING SECURITIES..................................................................... 6
ARTICLE XI. INDEMNIFICATION....................................................................... 7
1. Directors and Officers............................................................. 7
2. Non-Exclusivity.................................................................... 7
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C>
3. Continuity of Rights............................................................... 7
ARTICLE XII. INTEREST OF DIRECTORS AND OFFICERS IN CONTRACTS WITH THE COMPANY...................... 7
ARTICLE XIII. NOTICES............................................................................... 8
ARTICLE XIV. AMENDMENT............................................................................. 8
</TABLE>
iii
<PAGE>
THE NEW YORK TIMES COMPANY
BY-LAWS
ARTICLE I
STOCKHOLDERS
1. ANNUAL MEETING. The Annual Meeting of Stockholders for the election
of directors and for the transaction of such other business as may properly
come before the meeting shall be held on the third Thursday in April, at
such time and place either within or without the State of New York as may be
specified by the Board of Directors.
2. SPECIAL MEETINGS. Special meetings of the stockholders, to be held
at such place either within or without the State of New York and for the
purpose or purposes as may be specified in the notices of such meetings, may
be called by the Chairman of the Board or the President and shall be called
by the President or the Secretary at the request of a majority of the Board
of Directors or of stockholders owning 25 per cent or more of the shares or
stock of the Company issued and outstanding and entitled to vote on any
action proposed by such stockholders for such meetings. Such request shall
be in writing and shall state the purpose or purposes of the proposed
meeting.
3. NOTICE OF MEETINGS. Notice of the time, place and purpose or
purposes of every meeting of stockholders shall be in writing, signed by the
President or the Secretary, and shall be mailed by the Secretary, or the
person designated by him to perform this duty, at least ten, and not more
than fifty, days before the meeting, to each stockholder of record entitled
to vote at such meeting and to each stockholder of record who would be
entitled to have his stock appraised if the action proposed at such meeting
were taken. Such notice shall be directed to a stockholder at his address as
it appears on the stock book, unless he shall have filed with the Secretary
a written request that notices intended for him be mailed to some other
address, in which case it will be mailed to the address designated in such
request.
4. QUORUM. The holders of record of a majority of the shares of stock
issued and outstanding and entitled to vote thereat, present in person or by
proxy, shall be requisite and shall constitute a quorum at each meeting of
stockholders for the transaction of business, except as otherwise provided
by law, by the Certificate of Incorporation or by these By-laws; provided
that, when any specified action is required to be voted upon by a class of
stock voting as a class, the holders of a majority of the shares of such
class shall be requisite and shall constitute a quorum for the transaction
of such specified action. If, however, there shall be no quorum, the officer
of the Company presiding as chairman of the meeting shall have the power to
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present, when any
business may be transacted which might have been transacted at the meeting
as first convened had there been a quorum.
5. VOTING. Each stockholder entitled to vote on any action proposed at
a meeting of stockholders shall be entitled to one vote in person or by
proxy for each share of voting stock held of record by him. Every proxy must
be executed in writing by the stockholder or by his duly authorized
attorney. No proxy shall be valid after the expiration of eleven months from
the date of its execution, unless the person executing it shall have
specified therein its duration.
The vote for directors shall be by ballot, and the election of each director
shall be decided by a plurality vote. Except as otherwise provided by law,
by the Certificate of Incorporation, by other certificate filed pursuant to
law or by these By-laws, votes on any other matters coming before any
meeting of stockholders shall be decided by the vote of the holders of a
majority of the shares represented at such meeting, in person or by proxy,
and entitled to vote on the specific matter. Except as required by law, by
the Certificate of Incorporation, by other certificate filed pursuant to law
or by
1
<PAGE>
these By-laws, the chairman presiding at any meeting of stockholders may
rule on questions of order or procedure coming before the meeting or submit
such questions to the vote of the meeting, which vote may at his direction
be by ballot. The chairman shall submit any such questions to the vote of
the meeting at the request of any stockholder entitled to vote present in
person or by proxy at the meeting, which vote shall be by ballot.
ARTICLE II
CLOSING TRANSFER BOOKS; SETTING RECORD DATE
1. QUALIFICATION OF VOTERS. The Board of Directors may prescribe a
period, not exceeding fifty days prior to the date of any meeting of the
stockholders or prior to the last day on which the consent or dissent of
stockholders may be effectively expressed for any purpose without a meeting,
as the time as of which stockholders entitled to notice of and to vote at
such a meeting or whose consent or dissent is required or may be expressed
for any purpose, as the case may be, shall be determined, and all persons
who were holders of record of voting stock at such time and no others shall
be entitled to notice of and to vote at such meeting or to express their
consent or dissent, as the case may be.
2. DETERMINATION OF STOCKHOLDERS OF RECORD FOR OTHER PURPOSES.The Board
of Directors may fix a time, not exceeding forty days preceding the date
fixed for the payment of any dividend or for the making of any distribution
or for the delivery of evidences of rights or evidences of interests arising
out of any change, conversion or exchange of capital stock, as a record time
for the determination of the stockholders entitled to receive any such
dividend, distribution, rights or interests, and in such case only
stockholders of record at the time so fixed shall be entitled to receive
such dividend, distribution, rights or interests.
ARTICLE III
BOARD OF DIRECTORS
1. NUMBER, CLASSIFICATION, ELECTION AND QUALIFICATIONS.The affairs of
the Company shall be managed by a Board of Directors consisting of fifteen
members. For the purpose of election of directors only, and not for any
other purpose, the fifteen directors shall be divided into two classes, the
five directors whom the holders of Class A Common Stock are entitled to
elect, to be designated the Class A directors, and the ten directors whom
the Class B Common Stock are entitled to elect, to be designated the Class B
directors. The directors shall, except as provided in Section 2 of this
Article III, be elected by the classes of shares entitled to elect them, by
ballot at each annual meeting of stockholders, and shall hold office until
the next annual meeting of stockholders and until their successors shall be
elected and qualified. All directors must be of full age and at least one
shall be a citizen of the United States and a resident of New York State.
2. VACANCIES. Any vacancy in the Board of Directors, whether caused by
resignation, death, increase in the number of directors, disqualification or
otherwise, may be filled by a majority of the directors in office after the
vacancy has occurred, although less than a quorum. A director so elected
shall hold office for the unexpired term in respect of which such vacancy
occurred.
3. REGULAR MEETINGS. A regular meeting of the Board shall be held in
each year immediately following the Annual Meeting of Stockholders or if
such meeting be adjourned, the final adjournment thereof at the same place
as such meeting of stockholders. No notice of such meeting shall be
necessary to the newly elected directors in order to legally constitute the
meeting. Other regular meetings of the Board may be held at such time and
place, either within or without the State of New York, as shall from time to
time be determined by a resolution of the Board. Any business may be
transacted at any regular meeting at which a quorum is present. The time and
place of any such
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regular meeting may be changed (i) at the preceding regular meeting; or (ii)
subsequent to the adjournment of the preceding regular meeting by consent in
writing signed by a majority of the whole Board; provided, however, that in
either case notice of such change be served on each director personally or
by telegram two days or by mail five days prior to the date originally
designated for such regular meeting.
4. SPECIAL MEETINGS. A special meeting of the Board of Directors may be
held at the time fixed by resolution of the Board or upon call of the
Chairman of the Board, the President or any two directors and may be held at
any place within or without the State of New York. Except as otherwise
provided by law, by the Certificate of Incorporation, by other certificate
filed pursuant to law or by these By-laws, notice of the time and place of
any special meeting of the Board shall be given by the Secretary or other
person designated by him to perform this duty by serving the same personally
or by telegram on each director at his post office address as the same shall
appear on the books of the Company at least two days previous to such
meeting or by mailing a copy of such notice, postage prepaid, to each
director at such address at least five days previous to such meeting;
provided, however, that no notice need be given to any director if waived by
him either before or after the meeting or if he shall be present at such
meeting, and any meeting of the Board may be held at any time without notice
if all the directors then in office shall be present thereat.
Any such notice shall also state the items of business which are expected to
come before the meeting, and the items of business transacted at any special
meeting of the Board shall be limited to those stated in such notice, unless
all the directors are present at the meeting, or all those absent consent in
writing either before or after the meeting, to the transaction of an item or
items of business not stated in such notice.
5. QUORUM. At all meetings of the Board, the presence of any five of
the directors in office shall be necessary and sufficient to constitute a
quorum for the transaction of business, and, except as otherwise required by
law, by the Certificate of Incorporation, by other certificate filed
pursuant to law or by these By-laws, the affirmative vote of a majority of
the directors present at any meeting at which a quorum is present shall be
necessary for the adoption of any business or resolution which may come
before the meeting; provided, however, that in the absence of a quorum a
majority of the directors present or any director solely present may adjourn
any meeting from time to time until a quorum is present. No notice of any
adjournment to a later hour on the date originally designated for the
holding of a meeting need be given, but immediate telegraphic notice shall
be given by the Secretary or other person designated by him to perform this
duty to all directors of any adjournment to any subsequent date, and such
notice shall be deemed sufficient, though less than the notice required by
Section 3 if such meeting be an adjourned regular meeting of the Board, or
by Section 4 if such meeting be an adjourned special meeting of the Board.
6. COMMITTEES. The Board of Directors may by resolution or resolutions
passed by a majority of the whole Board designate one or more committees,
each committee to consist of three or more of the directors, which, to the
extent provided in said resolution or resolutions, shall have and may
exercise powers of the Board of Directors in the management of the business
and affairs of the Company and may have power to authorize the seal of the
Company to be affixed to all papers which may require it. Such committee or
committees shall have such name or names as may be determined from time to
time by resolution adopted by the Board of Directors. All committees so
appointed shall keep regular minutes of the business transacted at their
meetings.
7. SALARIES. Directors, as such, shall not receive any stated salary
for their services, but by resolution of the Board may receive an annual
retainer and, in addition, a fixed sum and expenses of attendance, if any,
may be allowed for attendance at each regular or special meeting, or
adjourned session thereof, of the Board; provided that nothing herein
contained shall be construed to preclude any director from serving the
Company in any other capacity and receiving compensation therefor.
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Members of committees may be allowed such compensation as may be fixed from
time to time by the Board for attending committee meetings.
8. RESIGNATION. Any director may, at any time, resign, such resignation
to take effect upon receipt of written notice thereof by the President or
the Secretary, unless otherwise stated in the resignation.
9. TELEPHONIC MEETINGS. One or more directors may participate in a
meeting of the Board of Directors, or a committee designated pursuant to
Section 6 of this Article III, by a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear and speak to each other. Participation in a meeting
pursuant to this provision shall constitute actual attendance at such
meeting.
ARTICLE IV
OFFICERS
1. APPOINTMENT. The Board of Directors may appoint from their number a
Chairman of the Board and a Vice Chairman of the Board. The Board of
Directors shall appoint a President, a Secretary and a Treasurer and may
also appoint one or more Vice Presidents, none of whom need be members of
the Board, and may from time to time appoint such other officers as they may
deem proper. Any two of the aforesaid offices, except those of President and
Vice President, or President and Secretary, may be filled by the same
person. The compensation of all officers of the Company shall be fixed by
the Board.
2. TERM OF OFFICE. The officers of the Company shall hold office at the
pleasure of the Board of Directors. Any officer elected or appointed by the
Board may be removed from office at any time for or without cause by the
affirmative vote of a majority of the whole Board of Directors. Any officer
may resign his office at any time, such resignation to take effect upon
receipt of written notice thereof by the Company, unless otherwise stated in
the resignation. If the office of any officer becomes vacant for any reason,
the vacancy may be filled by the Board.
3. THE CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside
at all meetings of the Board of Directors and all meetings of the
stockholders. He shall have final authority, subject to the control of the
Board of Directors, over the general policy and business of the Company, and
shall have such other powers and duties as may from time to time be
prescribed by the Board of Directors.
4. THE VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the Board shall
have such powers and duties as may from time to time be prescribed by the
Board of Directors or by the Chairman of the Board. In the absence or
inability to act of the Chairman of the Board, the Vice Chairman of the
Board shall preside at all meetings of the Board of Directors and all
meetings of the stockholders.
5. THE PRESIDENT. The President shall be the chief executive officer of
the Company and as such shall have the general control and management of the
business and affairs of the Company subject, however, to the control of the
Chairman of the Board. The President shall have the power, subject to the
control of the Chairman of the Board, to appoint or discharge and to
prescribe the duties and to fix the compensation of such agents and
employees of the Company as he may deem necessary. He shall have, as does
the Chairman of the Board, the authority to make and sign bonds, mortgages
and other contracts and agreements in the name and on behalf of the Company,
except when the Board of Directors by resolution instructs the same to be
done by some other officer or agent. He shall see that all orders and
resolutions of the Board of Directors are carried into effect and shall
perform all other duties necessary to his office or properly required of him
by the Board of Directors subject, however, to the right of the directors to
delegate any specific powers, except such as may by statute be exclusively
conferred upon the President, to any other officer or officers of the
Company. In the
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absence or inability to act of the Chairman of the Board, the President
shall have the duties prescribed for the Chairman of the Board subject,
however, to Section 4 of this Article IV.
6. VICE PRESIDENTS. Each Vice President shall have such powers and
perform such duties as may be assigned to him from time to time by the
Chairman of the Board or the President.
7. THE SECRETARY. The Secretary shall attend all sessions of the Board
and all meetings of the stockholders and record all votes and the minutes of
all proceedings in a book to be kept for that purpose, and shall perform
like duties for committees when required. He shall give, or cause to be
given, notice of all meetings of the stockholders and meetings of the Board
of Directors, and shall perform such other duties as may be prescribed by
the Board of Directors or the President. He shall keep in safe custody the
seal of the Company and shall see that it is affixed to all documents, the
execution of which, on behalf of the Company, under its seal, is necessary
or proper, and when so affixed may attest the same.
8. THE TREASURER. The Treasurer shall, if required by the Board of
Directors, give a bond for the faithful discharge of his duties in such
amount and with such surety or sureties as the Board of Directors may
determine; the cost of any such bond, and any expenses incurred in
connection therewith, shall be borne by the Company. He shall have the
custody of the corporate funds and securities, except as otherwise provided
by the Board, and shall cause to be kept full and accurate accounts of
receipts and disbursements in books belonging to the Company and shall
deposit all moneys and other valuable effects in the name and to the credit
of the Company in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Company as may be ordered by
the Board, taking proper vouchers for such disbursements, and shall render
to the President and the directors, at the regular meetings of the Board, or
whenever they may require it, an account of all his transactions as
Treasurer and of the financial condition of the Company.
9. DUTIES OF OFFICERS MAY BE DELEGATED. In the case of the absence of
any officer, or for any other reason that the Board may deem sufficient, the
President or the Board may delegate for the time being the powers or duties
of such officer to any other officer or to any director.
ARTICLE V
STOCK CERTIFICATES
1. ISSUANCE OF STOCK CERTIFICATES. The Capital Stock of the Company
shall be represented by certificates signed by the Chairman or the President
or a Vice President and by the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer and sealed with the seal of the Company.
Such seal may be a facsimile, engraved or printed and where any such
certificate is signed by a transfer agent or transfer clerk and by a
registrar the signatures of any officers appearing thereon may be
facsimiles, engraved or printed.
2. LOST STOCK CERTIFICATES. The Board of Directors may by resolution
adopt, from time to time, such regulations concerning the issue of any new
or duplicate certificates for lost, stolen or destroyed stock certificates
of the Company as shall not be inconsistent with the provisions of the laws
of the State of New York as presently in effect or as they may hereafter be
amended.
3. TRANSFERS OF STOCK. Transfers of stock shall be made only on the
stock transfer books of the Company, and, except in the case of any such
certificate which has been lost, stolen or destroyed, in which case the
resolutions of the Board then in effect respecting lost, stolen or destroyed
stock certificates shall be complied with, such transfer shall only be made
upon surrender to the Company of a certificate for shares for cancellation
duly endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer. Upon the issue of a new certificate to the person
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entitled thereto, the Company shall cancel the old certificate and record
the transaction upon its books.
4. REGULATIONS. Except to the extent that the exercise of such power
shall be prohibited or circumscribed by these By-laws, by the Certificate of
Incorporation, or other certificate filed pursuant to law, or by statute,
the Board of Directors shall have power to make such rules and regulations
concerning the issuance, registration, transfer and cancellation of stock
certificates as it shall deem appropriate.
ARTICLE VI
SEAL
The seal of the Company shall be circular in form, shall bear the legend:
"The New York Times Company--1851 Inc. 1896" and shall contain in the center
the letters NYT.
ARTICLE VII
CHECKS
All checks or demands for money and notes of the Company shall be signed by
such officer or officers or such other person or persons as the Board of
Directors may from time to time designate.
ARTICLE VIII
BOOKS OF ACCOUNT AND STOCK BOOK
The Company shall keep at its principal office correct books of account of
all its business and transactions. A book to be known as the stock book,
containing the names alphabetically arranged, of all persons who are
stockholders of the Company, showing their places of residence, the number
of shares of stock held by them respectively, the times when they
respectively became the owners thereof, and the amount paid thereon, shall
be kept at the principal office of the Company or its transfer agent.
ARTICLE IX
FISCAL YEAR
The fiscal year of the Company shall be the calendar year unless otherwise
provided by the Board of Directors.
ARTICLE X
VOTING SECURITIES
Unless otherwise ordered by the Board of Directors, the President, or, in
the event of his absence or inability to act, the Vice Presidents, in order
of seniority or priority established by the Board or by the President,
unless and until the Board shall otherwise direct, shall have full power and
authority on behalf of the Company to attend and to act and to vote, or to
execute in the name and on behalf of the Company a proxy authorizing an
agent or attorney-in-fact for the Company to attend and to act and to vote
at any meetings of security holders of corporations in which the Company may
hold securities, and at such meetings he or his duly authorized agent or
attorney-in-fact shall possess and may exercise any and all rights and
powers incident to the ownership of such securities, and which as the owner
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thereof the Company might have possessed and exercised, if present. The
Board of Directors by resolution from time to time may confer like powers
upon any other person or persons.
ARTICLE XI
INDEMNIFICATION
1. DIRECTORS AND OFFICERS. The Company shall, to the fullest extent
permitted by applicable law as the same exists or may hereafter be in
effect, indemnify any person who is or was made or threatened to be made a
party to or is involved in any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative,
including an action by or in the right of the Company to procure a judgment
in its favor and an action by or in the right of any other corporation of
any type or kind, domestic or foreign, or any partnership, joint venture,
trust, employee benefit plan or any other entity, which any director or
officer of the Company is serving, has served or has agreed to serve in any
capacity at the request of the Company, by reason of the fact that such
person or such person's testator or intestate is or was or has agreed to
become a director or officer of the Company, or is or was serving or has
agreed to serve such other corporation, partnership, joint venture, trust,
employee benefit plan or other entity in any capacity, against judgments,
fines, amounts paid or to be paid in settlement, taxes or penalties, and
costs, charges and expenses, including attorneys' fees, incurred in
connection with such action or proceeding or any appeal therein; provided,
however, that no indemnification shall be provided to any such person if a
judgment or other final adjudication adverse to the director or officer
establishes that (i) his or her acts were committed in bad faith or were the
result of active and deliberate dishonesty and, in either case, were
material to the cause of action so adjudicated or (ii) he or she personally
gained in fact a financial profit or other advantage to which he or she was
not legally entitled.
2. NON-EXCLUSIVITY. Nothing contained in this Article XI shall limit
the right to indemnification and advancement of expenses to which any person
would be entitled by law in the absence of this Article, or shall be deemed
exclusive of any other rights to which such person seeking indemnification
or advancement of expenses may have or hereafter may be entitled under law,
any provision of the Certificate of Incorporation, or By-laws, any agreement
approved by the Board of Directors, or a resolution of stockholders or
directors; and the adoption of any such resolution or entering into of any
such agreement approved by the Board of Directors is hereby authorized.
3. CONTINUITY OF RIGHTS. The indemnification and advancement of
expenses provided by, or granted pursuant to, this Article XI shall (i)
apply with respect to acts or omissions occurring prior to the adoption of
this Article XI to the fullest extent permitted by law and (ii) survive the
full or partial repeal or restrictive amendment hereof with respect to
events occurring prior thereto.
ARTICLE XII
INTEREST OF DIRECTORS AND OFFICERS IN CONTRACTS WITH THE COMPANY
A director or officer of the Company shall not be disqualified by his office
from dealing or contracting with the Company either as a vendor, purchaser
or otherwise, nor shall any transaction or contract of the Company be void
or voidable by reason of the fact that any director or officer or any firm
of which any director or officer is a member or any corporation of which any
director or officer is a shareholder, officer or director, is in any way
interested in such transaction or contract, provided that such transaction
or contract is or shall be authorized, ratified or approved either (1) by a
vote of a majority of a quorum of the Board of Directors, without counting
in such majority or quorum any director so interested or member of a firm so
interested, or a shareholder, officer or director of a corporation so
interested, or (2) by the written consent, or by the vote at any
stockholders' meeting of the holders of record of a majority of all the
outstanding shares of stock of the Company entitled to
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vote on such transaction or contract; nor shall any director or officer be
liable to account to the Company for any profits realized by or from or
through any such transaction or contract of the Company authorized, ratified
or approved as aforesaid by reason of the fact that he, or any firm of which
he is a member or any corporation of which he is a shareholder, officer or
director, was interested in such transaction or contract. Nothing herein
contained shall create liability in the events above described or prevent
the authorization, ratification or approval of such transactions or
contracts in any other manner permitted by law.
ARTICLE XIII
NOTICES
Whenever, under the provisions of these By-laws, notice is required to be
given to any director, officer, or stockholder, it shall not be construed to
mean personal notice, but unless otherwise expressly stated in these
By-laws, such notice may be given in writing by depositing the same in a
post office or letter box in a postpaid sealed wrapper, addressed to such
stockholder, officer or director, at such address as appears on the books of
the Company, and such notice shall be deemed to have been given at the time
when the same was thus mailed.
ARTICLE XIV
AMENDMENT
These By-laws may be amended, altered, changed, added to or repealed by a
majority vote of all the Class B Common Stock issued and outstanding and
entitled to vote at any annual or special meeting of the stockholders,
provided that such amendments are not inconsistent with any provisions of
the Company's Certificate of Incorporation.
The Board of Directors, at any regular or at any special meeting, by a
majority vote of the whole Board, may amend, alter, change, add to or repeal
these By-laws, provided that such amendments are not inconsistent with any
provisions of the Company's Certificate of Incorporation, and provided
further that if any By-law regulating an impending election of directors is
adopted or amended or repealed by the Board, there shall be set forth in the
notice of the next stockholders meeting for the election of directors the
By-laws so adopted or amended or repealed, together with a concise statement
of the changes made.
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EXHIBIT 10.2
THE NEW YORK TIMES COMPANY
1991 EXECUTIVE STOCK INCENTIVE PLAN
AS AMENDED
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 in the Consolidated
Transactions of the American Stock Exchange ("AMSE") (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 AMSE, 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.
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(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."
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.
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.
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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 200,000
(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 20,000,000 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
stock certificates will be delivered only against such payment. Such purchase
price may be paid in such form as the Committee may determine. 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, (iii) by delivering to the Company shares of
Common Stock previously owned, (iv) by electing to have the Company retain
Common Stock which would be otherwise issued on exercise of the Option, or (v)
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 or retained by 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
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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. 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.
(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. 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
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members of the Participant's immediate family, to a partnership of which the
only partners are members of the Participant's immediate family, or to a
trust established by the Participant for the 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, grandchildren and the
spouses of such parents, 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, in addition to such other terms as the
Committee may deem advisable, that the optionee must remain in the employ of the
Company for one year before such optionee will be entitled to exercise the
Option, except as provided in Section 10 hereof with respect to death,
Disability and Retirement, and specifying the installments, if any, in which
such Option shall become exercisable.
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"); and
(e) Performance Awards ("Performance Awards") or other forms of
Awards ("Other Awards"), as provided in Part IIE of the Plan.
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.
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 ten cents ($.10) 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
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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 1,000,000 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.
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, which are to be made
exclusively as set forth in Section 27A) 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, which are to be
made exclusively as set forth in Section 27A) 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 Section 27A) 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) 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
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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 shall be
subject to the provisions of Section 27A, and further provided 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;
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, 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 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.
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(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 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 hold the
certificates representing such shares of Restricted Stock for the
Participant 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) LAPSE OF 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, which shall in no event be less than one year, and thereafter shall
lapse in such installments, if any, as provided by the Committee in the
Award.
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(c) LEGEND. Each certificate issued in respect of shares of Restricted
Stock transferred or issued to a Participant under an Award shall be
registered in the name of the Participant and 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) ISSUANCE OF NEW CERTIFICATES. 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 issue new share certificates respecting such
shares registered in the name of the Participant without the legend
described in Section 21(c) in exchange for those previously issued.
PART IIC RETIREMENT UNIT AWARDS
22. DETERMINATION OF RETIREMENT UNIT AWARDS
Each year the Committee shall designate those Participants who shall
receive Retirement Unit 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
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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 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.
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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);
(iv) return on stockholders' equity of the Company for the year
(net income of the Company for the year divided by average stockholders'
equity during such year); and
(v) operating profit 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
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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 $1.5 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 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.
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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.
(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 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 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, 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, 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.
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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 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 or to have the Company retain from the
distribution shares of Common Stock, in each case having a Fair Market Value
equal to the amount to be withheld or deducted.
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(b), or (3) materially affects the provisions of Sections
13(a) or (b) of the Plan, or (4) 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.
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(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.
(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 DATES
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, 2000, or such earlier expiration date as may be designated by resolution of
the Board.
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EXHIBIT 10.4
THE NEW YORK TIMES COMPANY
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
AS AMENDED
1. PURPOSE
The purpose of The New York Times Company Non-Employee Directors' Stock
Option Plan (the "Plan") is to secure for The New York Times Company (the
"Company") and its stockholders the benefits of the incentive inherent in
increased common stock ownership by the members of the Board of Directors
(the "Board") of the Company who are not employees of the Company or any of
its subsidiaries.
2. ADMINISTRATION
The Plan shall be administered by the Board. The Board shall have all the
powers vested in it by the terms of the Plan, such powers to include authority
(within the limitations described herein) to prescribe the form of the agreement
embodying awards of stock options made under the Plan ("Options"). The Board
shall, subject to the provisions of the Plan, have the power to construe the
Plan, to determine all questions arising thereunder and to adopt and amend such
rules and regulations for the administration of the Plan as it may deem
desirable. Any decision of the Board in the administration of the Plan, as
described herein, shall be final and conclusive. The Board may act only by a
majority of its members in office, except that the members thereof may authorize
any one or more of their number or the Secretary or any other officer of the
Company to execute and deliver documents on behalf of the Board. No member of
the Board shall be liable for anything done or omitted to be done by such member
or by any other member of the Board in connection with the Plan, except in
circumstances involving actual bad faith.
3. AMOUNT OF STOCK
The stock which may be issued and sold under the Plan will be the Class A
Common Stock of the Company ("Common Stock"), of a total number not exceeding
250,000 shares, subject to adjustment as provided in Section 6 below. The stock
to be issued may be either authorized and unissued shares, treasury shares,
issued shares acquired by the Company or its subsidiaries or any combination
thereof. In the event that Options granted under the Plan shall terminate or
expire without being exercised in whole or in part, new Options may be granted
covering the shares not purchased under such lapsed Options.
4. ELIGIBILITY
Each member of the Board who is not an employee of the Company or any of its
subsidiaries (a "Non-Employee Director") shall be eligible to receive an Option
in accordance with the specific provisions of Section 5 below. The adoption of
this Plan shall be not deemed to give any director any right to be granted an
Option to purchase Common Stock except to the extent and upon such terms and
conditions consistent with the Plan as may be determined by the Board.
5. TERMS AND CONDITIONS OF OPTIONS
Each Option granted under the Plan shall be evidenced by an agreement in
such form as the Board shall prescribe from time to time in accordance with the
Plan and shall comply with the following terms and conditions:
(a) The Option exercise price shall be the Fair Market Value of the
shares of Common Stock (as defined in Section 7(a) hereof) subject to such
Option on the date the Option is granted.
(b) Each year, as of the date of the Annual Meeting of Stockholders of
the Company, each Non-Employee Director who has been elected or re-elected
or who is continuing as a member of the Board
<PAGE>
as of the adjournment of the Annual Meeting shall automatically receive an
Option for 2,000 shares of Common Stock.
(c) No Option shall be transferable otherwise than by will or by the
laws of descent and distribution. Notwithstanding the foregoing
sentence, the Board 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 of which the only partners are members of the
Partcipant's immediate family, or to a trust established by the
Participant for the benefit of one or more members of the
Participant's immediate family. For this purpose, "immediate family"
means the Participant's spouse, parents, children, grandchildren and
the spouses of such parents, 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 Board shall determine.
(d) No Option or any part of an Option shall be exercisable:
(i) before the Non-Employee Director has served one term-year as a
member of the Board since the date the Option was granted (as used
herein, the term "term-year" means that period from one Annual Meeting to
the subsequent Annual Meeting), except as provided in subsection
5(d)(iv)(B) below;
(ii) after the expiration of ten years from the date the Option was
granted;
(iii) unless written notice of the exercise is delivered to the
Company specifying the number of shares to be purchased and payment in
full is made for the shares of Common Stock being acquired thereunder at
the time of exercise; such payment shall be made
(A) in United States dollars by certified check or bank draft, or
(B) by tendering to the Company shares of Common Stock owned by
the person exercising the Option and having a Fair Market Value on
the date of exercise equal to the cash exercise price applicable to
such Option, or
(C) by electing to have the Company retain shares of Common Stock
which would be otherwise issued on exercise of the Option and having
a Fair Market Value on the date of exercise equal to the cash
applicable to such Option, or
(D) any combination of the foregoing forms; and
(iv) unless the person exercising the Option has been, at all times
during the period beginning with the date of grant of the Option and
ending on the date of such exercise, a Non-Employee Director of the
Company, except that
(A) if such a person shall cease to be such a Non-Employee
Director for reasons other than Retirement (as defined in Section
7(a) hereof) or death, while holding an Option then exercisable that
has not expired, such person, at any time within one year after the
date he ceases to be such a Non-Employee Director (but in no event
after the Option has expired under the provisions of subsection
5(d)(ii) above), may exercise the Option with respect to any shares
of Common Stock as to which such person could have but has not
exercised the Option on the date the person ceased to be such a
Non-Employee Director;
(B) if such a person shall cease to be such a Non-Employee
Director by reason of Retirement or death while holding an Option
(whether or not then exercisable) that has not expired,
notwithstanding the provisions of subsection 5(d)(i) above, such
person, or in the case of death (either while a Non-Employee Director
or after Retirement), his executors, administrators, heirs, legatees
or distributees, as the case may be, may, at any time until the
expiration of such Option as provided in subsection 5(d)(ii) above,
exercise the Option with respect to any shares of
2
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Common Stock as to which such person has not exercised the Option on
the date the person ceased to be such a Non-Employee Director; and
(C) if any person who has ceased to be such a Non-Employee
Director for reasons other than death or Retirement shall die holding
an Option, such person's executors, administrators, heirs, legatees
or distributees, as the case may be, may, at any time within one year
after the date of death (but in no event after the Option has expired
under the provisions of subsection 5(d)(ii) above), exercise the
Option with respect to any shares as to which the decedent could have
exercised the Option at the time of death.
In the event any Option is exercised by the executors, administrators,
heirs, legatees or distributees of the estate of a deceased optionee or by the
guardian or legal representative of a disabled optionee, the Company shall be
under no obligation to issue stock thereunder unless and until the Company is
satisfied that the person or persons exercising the Option are the duly
appointed legal representatives of the deceased optionee's estate or the proper
legatees or distributees thereof or the duly appointed guardian or legal
representative of the disabled optionee.
6. ADJUSTMENT IN THE EVENT OF CHANGE IN STOCK
In the event of changes in the outstanding Common Stock of the Company by
reason of dividends (other than cash dividends), recapitalizations, mergers,
consolidations, split-ups, combinations or exchanges of shares and the like, the
aggregate number and class of shares available under the Plan, the number, class
and the price of shares of Common Stock subject to outstanding Options and the
number of shares constituting an Option grant under Section 5(b) hereof, shall
be appropriately adjusted by the Board, whose determination shall be conclusive.
7. MISCELLANEOUS PROVISIONS
(a) The following terms shall have the meanings specified below:
(i) "Fair Market Value" means the arithmetic mean of the highest and
lowest sales prices of the Common Stock as reported in the Consolidated
Transactions of the American Stock Exchange ("AMSE") (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 AMSE, 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 Board in accordance with Treasury
Regulations applicable to incentive stock options.
(ii) "Retirement" means retirement from the Board at the age of 65 or
thereafter or resignation from the Board by reason of disability.
(b) Except as expressly provided for in the Plan, no Non-Employee Director
or other person shall have any claim or right to be granted an Option under the
Plan. Neither the Plan nor any action taken hereunder shall be construed as
giving any Non-Employee Director any right to be retained in the service of the
Company.
(c) An optionee's rights and interest under the Plan may not be assigned or
transferred in whole or in part either directly or by operation of law or
otherwise (except in the event of an optionee's death, by will or the laws of
descent and distribution), including, but not by way of limitation, execution,
levy, garnishment, attachment, pledge, bankruptcy or in any other manner and no
such right or interest of any participant in the Plan shall be subject to any
obligation or liability of such participant.
3
<PAGE>
(d) No shares of Common Stock shall be issued hereunder unless counsel for
the Company shall be satisfied that such issuance will be in compliance with
applicable federal, state and other securities laws and regulations.
(e) It shall be a condition to the obligation of the Company to issue shares
of Common Stock upon exercise of an Option, that the optionee (or any
beneficiary or person entitled to act under subsection 5(d)(iv) above) pay to
the Company, upon its demand, such amount as may be requested by the Company for
the purpose of satisfying any liability to withhold federal, state, local or
foreign income or other taxes. If the amount requested is not paid, the Company
may refuse to issue shares of Common Stock.
(f) The expenses of the Plan shall be borne by the Company.
(g) The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the issuance of shares upon exercise of any Option under the
Plan and issuance of shares upon exercise of Options shall be subordinate to the
claims of the Company's general creditors.
(h) By accepting any Option or other benefit under the Plan, each optionee
and each person claiming under or through such person shall be conclusively
deemed to have indicated his acceptance and ratification of, and consent to, any
action taken under the Plan by the Company or the Board.
(i) It is the intent of the Company that the transactions involving options
under the Plan comply in all respects with Rule 16b-3 or any successor rule
("Rule 16b-3") under the Securities Exchange Act of 1934, as amended, 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 Board may adopt rules and regulations under, and amend, the Plan in
furtherance of the intent of the foregoing.
8. AMENDMENT OF DISCONTINUANCE
The Plan may be amended at any time and from time to time by the Board as
the Board shall deem advisable, including, but not limited to, amendments
necessary to qualify for any exemption or to comply with applicable law or
regulations; provided, however, that except as provided in Section 6 above, the
Board may not, without further 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, voting together as one class, increase the maximum number of
shares of Common Stock as to which Options may be granted under the Plan,
increase the number of shares subject to an Option, change the Option exercise
price described in subsection 5(a) above, extend the period during which Options
may be granted or exercised under the Plan or change the class of persons
eligible to receive Options under the Plan. Subject to the provision of Section
7(i) hereof relating to Rule 16b-3, no amendment of the Plan shall materially
and adversely effect any right of any optionee with respect to any Option
theretofore granted without such optionee's written consent. It is intended that
the Plan be a "formula plan" under Rule 16b-3 and will comply with all
applicable rules, regulations and staff interpretations of the Securities and
Exchange Commission.
9. TERMINATION
This Plan shall terminate upon the earlier of the following dates or events
to occur:
(a) upon the adoption of a resolution of the Board terminating the Plan;
or
(b) ten years from the date the Plan is initially approved and adopted
by the stockholders of the Company in accordance with Section 10 below.
10. EFFECTIVE DATE OF PLAN
The Plan shall become effective as of April 16, 1991 or such later date as
the Board may determine, provided that the adoption of the Plan shall have been
approved 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.
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Exhibit 10.16
AFFILIATED PUBLICATIONS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Affiliated Publications, Inc. (the "Company") hereby restates, effective
December 17, 1996, this Executive Supplemental Retirement Plan (the "Plan") for
the benefit of executives of the Company and its affiliates listed on Exhibit A
(collectively, the "Executives"):
1. Purpose. The purpose of this Plan is to provide supplemental
retirement payments and supplemental death payments for Executives in salary
grades 1 through 17 who become entitled to receive benefits under the Globe
Newspaper Company Retirement Plan, as in effect from time to time (the
"Retirement Plan"). Capitalized terms used herein shall have the meanings given
them in the Retirement Plan unless otherwise defined in this Plan.
2. Supplemental Retirement Payments. The Company or an affiliate shall
pay to each Executive who has completed 36 months in this Plan (or to such
person or persons as may at that time be entitled to receive payments with
respect to such an Executive under the Retirement Plan) the amount by which (a)
any benefit that would have been payable under the Retirement Plan if (i) the
expression "1.83-1/3%" in the definition of "Gross Amount" in the Retirement
Plan were changed to "2%," and (ii) clause (c) of the definition of "Gross
Amount" were changed to read "the number of his/her Years of Accrual Service not
in excess of 25 plus, if the Executive had more than 25 Years of Accrual
Service, his/her Additional Earned Service, as defined in Section 2 of the
Supplemental Executive Retirement Plan of Affiliated Publications, Inc.," and
(iii) his/her regular compensation and regular annual bonuses (including any
amounts deferred under The New York Times Company Deferred Compensation Plan)
were included in the calculation of the accrued amount under the Retirement Plan
(except that for purposes of calculating this amount, the period used for
calculating the average monthly rate of compensation will be the 260 consecutive
weeks prior to normal retirement date or date of earlier termination), and (iv)
the amount so calculated were payable without reference to any benefit limits
affecting the Executive other than limits on the Family Death Benefit exceeds
(b) the sum of (i) the benefit actually paid from time to time under the
Retirement Plan and (ii) the appropriate offset amount, as defined in the
Retirement Plan. The amount payable with respect to an Executive who shall have
completed less than 36 months in this plan shall be calculated as set forth in
the preceding sentence but excluding therefrom all
<PAGE>
service and compensation before the Executive became listed on Exhibit A.
Supplemental retirement payments hereunder shall be made on the same dates and
over the same period as payments under the Retirement Plan are made. The
Additional Earned Service for any Executive who was in salary grade 16 or 17
when last employed by the Company or an affiliate shall be .5 times the number
by which the Executive's Years of Accrual Service, not to exceed 30, exceed 25;
and the Additional Earned Service for any Executive who was in salary grades 1
through 15 when last employed shall be .75 times the number by which the
Executive's Years of Accrual Service, not to exceed 35, exceed 25. Exhibit A
shall state for each employed Executive his/her salary grade.
3. Return to Active Employment Following Commencement of Benefit. In the
event an Executive who has begun to receive a benefit hereunder is reemployed by
the Company or an affiliate and his/her benefit under the Retirement Plan is
suspended, his/her benefit shall be suspended during the period of such
reemployment that benefits under the Retirement Plan are suspended. Upon
his/her subsequent retirement or earlier termination of employment, he/she shall
become entitled to an increased benefit, reduced by the actuarial equivalent of
the payments made to him/her prior to reemployment.
4. Supplemental Death Payments. The Company, directly or through an
insurance trust or other vehicle, shall pay as a supplemental death benefit to
the designated beneficiary of an Executive an amount equal to (a) the product of
(i) his/her regular annual compensation from the Company and its affiliates in
effect on his/her date of death or his/her date of retirement, whichever is
applicable, and (ii) the multiplier specified below for the status of Executive
at the time of death (the "Multiplier"):
Executive's Status
at Date of Death Applicable Multiplier
(1) Employed by Company and/or Multiplier set
its subsidiaries, listed on opposite name on
Exhibit A and less than Exhibit A
65 years of age
(2) Employed by Company and/or 50% of Multiplier set
its subsidiaries, listed on opposite name on
Exhibit A and 65 years Exhibit A
of age or older
(3) Retired from employment Multiplier set
by Company and its opposite name on
2
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subsidiaries at any time Exhibit B
after 36 months prior to
Normal Retirement Date
(4) Employed by Company and/or Multiplier set
its subsidiaries, Normal opposite name on
Retirement Date has not Exhibit C
occurred but taken off
Exhibit A within 36 months
prior to Normal Retirement
Date
(5) Listed on Exhibit D Multiplier set
opposite name on
Exhibit D
"Normal Retirement Date" of an Executive means the first day of the month
coinciding with or next following the first of the following events (a) his/her
65th birthday or, (b) his/her 62nd birthday if the Executive has then completed
30 calendar years in which the Executive has 1,000 Hours of Service.
5. Effect on Other Agreements. Nothing in this Plan shall limit the
right of an Executive to receive payments pursuant to any other agreement if
such payments are greater than the supplemental payments contemplated by
Sections 2 and 3 of this Plan.
6. Vesting. If an Executive completes 10 years of employment with the
Company and its affiliates, but is removed from Exhibit A before payments begin
under the Retirement Plan, his/her name shall be added to Exhibit D together
with the date on which he/she was removed from Exhibit A and his/her length of
service as of that date, and the amount contemplated by Section 2 shall be paid
to the Executive when such payments begin, subject to forfeiture under Section
7. In that event, the amount payable shall be calculated with regard to
compensation, if any, from the Company and its affiliates after removal from
Exhibit A, but without regard to length of service after that date. If the
Executive fails so to complete 10 years of employment and is so removed, he/she
shall have no benefit under this Plan.
7. Forfeiture. The right of any Executive to a benefit under this Plan
shall be forfeited if the Executive is discharged for gross neglect of duty,
insubordination or serious misconduct. No Executive shall at any time either
during employment or, following his/her retirement, during the period in which
any payments are being made to him/her pursuant to this Plan carry on
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activities which, in the opinion of the Company, are plainly detrimental in a
material way to the best interests of the Company or its affiliates. Upon
making a determination that the activities of any Executive are so detrimental,
the Company shall so inform the Executive by written notice. If the Executive
shall not cease and terminate such detrimental activities within 30-day period
from receipt of such written notice, the Company shall have no further
obligations under this Plan, and all payments to and rights and benefits of the
Executive, any designated beneficiary or beneficiaries or any contingent
beneficiary hereunder shall immediately cease and terminate and be forfeited and
the Company shall have no further liability hereunder.
8. Unsecured Rights. The rights of each Executive, his/her designated
beneficiary or beneficiaries and any contingent beneficiary shall be solely
those of a general, unsecured creditor of the Company. The Company shall be
under no obligation to set aside or segregate any funds or resources of any kind
to meet any of its obligations hereunder, and no one shall have any rights on
account of this Plan in or to any of the specific funds or resources of the
Company.
9. Amendment; Revision of Exhibits A-D. Effective January 1, 1997, the
ERISA Committee of The New York Times Company ("NYT Co.") Board of Directors
(the "Board Committee"), except insofar as such authority has been delegated by
the Board Committee to the ERISA Management Committee, shall have the power at
any time or times to amend the Plan, acting at a meeting or by consent as
evidenced by a copy of the document amending the Plan executed by the Secretary
of NYT Co., but no amendment shall deprive any Executive of rights vested
pursuant to Section 6. In addition, Exhibits A-D may be replaced at any time by
new Exhibits A-D, changing one or more of the Executives listed thereon, their
salary grades or their Multipliers, signed and dated by either the Chief
Financial Officer of the Company or the Director of Executive Compensation of
the Company. The most recently executed Exhibits A-D shall control.
IN WITNESS WHEREOF, Affiliated Publications, Inc., pursuant to action by
the Employee Benefits Committee of its Board of Directors on December 17, 1996,
has caused this restatement to be executed and delivered by its Clerk as of
December 17, 1996.
AFFILIATED PUBLICATIONS, INC.
By: /s/ Catherine E.C. Henn
--------------------------------
Catherine E. C. Henn, Clerk
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EXHIBIT 10.19
THE NEW YORK TIMES COMPANY
DEFERRED EXECUTIVE COMPENSATION PLAN
ARTICLE I
INTRODUCTION
1.1 PURPOSE OF PLAN. The Employer has adopted the Plan set forth herein
to provide a means by which certain employees may elect to defer receipt of
designated percentages or amounts of their Compensation.
1.2 STATUS OF PLAN. The Plan is intended to be "a plan which is unfunded
and is maintained by an employer primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees"
within the meaning of Sections 201(2) and 301(a)(3) of the Employee Retirement
Income Security Act of 1974 ("ERISA"), and shall be interpreted and administered
to the extent possible in a manner consistent with that intent.
ARTICLE II
DEFINITIONS
Wherever used herein, the following terms have the meanings set forth
below, unless a different meaning is clearly required by the context:
2.1 ACCOUNT means, for each Participant, the account established for his
or her benefit under Section 5.1.
2.2 CHANGE OF CONTROL MEANS:
(a) any individual, partnership, corporation (including a business
trust), joint stock company, trust, unincorporated association, joint venture or
other entity, or a government or any political subdivision or agency thereof (a
"Person") (or two or more Persons acting in concert), other than any descendent
(or any spouse thereof) of Iphigene Ochs Sulzberger (a "Family Member") or a
beneficiary or trustee (as the same may change from time to time) of a trust
over 50% of the individual beneficiaries of which are Family Members, acquiring
the power to elect a majority of the directors of The New York Times Company
(the "Company") in a transaction or series of transactions not approved in
advance by a vote of at least three quarters of the Continuing Directors (as
defined below); or
(b) individuals who, as of the date hereof, constitute the Board of
Directors of the Company (as of the date hereof the "Continuing Directors")
ceasing for any reason to constitute at least a majority of the Board of
Directors, provided that any person becoming a director subsequent to the
date hereof whose election, or a nomination for election by the Company's
shareholders, was approved in advance by a vote of at least three quarters of
the Continuing Directors (other than a nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
solicitation with respect to the election or removal of the directors of the
Company, as such terms are used in Rule 14a-11 of the Regulation 14A
promulgated under the Exchange Act) shall be, for purposes of this Agreement,
considered as though such person were a Continuing Director; or
(c) approval by the stockholders of the Company of a reorganization,
merger, consolidation, liquidation or dissolution of the Company or of the sale
(in one transaction or a series of related transactions) of all or substantially
all of the assets of the Company other than a reorganization, merger,
consolidation, liquidation, dissolution or sale approved in advance by three
quarters of the Continuing Directors.
2.3 CODE means the Internal Revenue Code of 1986, as amended from time to
time. Reference to any section or subsection of the Code includes reference to
any comparable or succeeding provisions of any legislation which amends,
supplements or replaces such section or subsection.
<PAGE>
2.4 COMPENSATION means the annual bonus of the Participant and any portion
of such Participant's base salary that the ERISA Committee of the Board of
Directors of the Employer, in its sole discretion, may designate from time to
time. The portion of the salary included in Compensation shall be listed in
Appendix A.
For purposes of the Plan, Compensation shall be determined before giving
effect to Elective Deferrals and other salary reduction amounts which are not
included in the Participant's gross income under Code Sections 125, 401(k),
402(h) or 403(b).
2.5 EFFECTIVE DATE means July 1, 1994.
2.6 ELECTION FORM means the participation election form as approved and
prescribed by the Plan Administrator.
2.7 ELECTIVE DEFERRAL means the portion of Compensation which is deferred
by a Participant under Article IV.
2.8 ELIGIBLE EMPLOYEE means, on the Effective Date or on any date
thereafter, each employee of the Employer who is in the class of employees
eligible to receive options under The New York Times Company 1991 Executive
Stock Incentive Plan, whose eligibility for such options is not dependent on the
achievement of specific performance measures and actually receives such options
in the year prior to the year for which such employee defers any Compensation
under the Plan, and who is not eligible to participate in any other non-
qualified deferred compensation plan sponsored by the Employer and/or its
subsidiaries and affiliates.
2.9 EMPLOYER means The New York Times Company, any successor to all or
a major portion of the Employer's assets or business which assumes the
obligations of the Employer, and each other entity that is affiliated with
the Employer whose employees, with the consent of the Company, are eligible,
as provided under Section 2.8, to participate in the Plan.
2.10 ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time. Reference to any section or subsection of ERISA
includes reference to any comparable or succeeding provisions of any legislation
which amends, supplements or replaces such section or subsection.
2.11 INSOLVENCY means either (i) the Company is unable to pay its debts as
they become due, or (ii) the Company is subject to a pending proceeding as a
debtor under the United States Bankruptcy Code.
2.12 PARTICIPANT means any Eligible Employee who participates in the Plan
in accordance with Article 3.
2.13 PLAN means The New York Times Company Deferred Executive Compensation
Plan and all amendments thereto.
2.14 PLAN ADMINISTRATOR means the person, persons or entity designated by
the Employer under Article VIII to oversee the administration of the Plan and to
serve as the agent for the Company with respect to the Trust as contemplated by
the agreement establishing the Trust. If no such person or entity is so serving
at any time, the Employer shall be the Plan Administrator.
2.15 PLAN YEAR means the 12-month period beginning on January 1 and ending
on December 31 of each year, except for the first plan year which begins on July
1, 1994, and ends on December 31, 1994.
2.16 RECORDKEEPER means the person(s) or entity appointed or hired by the
ERISA Management Committee under Section 8.1.
2.17 TOTAL AND PERMANENT DISABILITY means the inability of a Participant to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less
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than 12 months, and the permanence and degree of which shall be supported by
medical evidence satisfactory to the Plan Administrator.
2.18 TRUST means the trust established by the Employer that identifies the
Plan as a plan with respect to which assets are to be held by the Trustee. Plan
assets in the trust are subject to the general creditors of The New York Times
Company in the event of bankruptcy or Insolvency.
2.19 TRUSTEE means the trustee or trustees under the Trust.
2.20 VALUATION OPTION means the performance of the investment funds listed
in Appendix B of the Plan.
ARTICLE III
PARTICIPATION
3.1 COMMENCEMENT OF PARTICIPATION. Any Eligible Employee who elects to
defer part of his or her Compensation in accordance with Article IV shall become
a Participant in the Plan as of the date such deferrals commence in accordance
with such Article.
3.2 CONTINUED PARTICIPATION. A Participant in the Plan shall continue to
be a Participant so long as any amount remains credited to his or her Account.
However, future deferrals under the Plan may be made only if such Participant
continues to be an Eligible Employee under the Plan.
ARTICLE IV
ELECTIVE DEFERRALS
4.1 ELECTIVE DEFERRALS. An individual who is an Eligible Employee on the
Effective Date may, by completing an Election Form and filing it with the Plan
Administrator by the end of the first month following the Effective Date, elect
to defer the receipt of a percentage or dollar amount of one or more payments of
Compensation for a period of at least three Plan Years and on such terms as the
ERISA Management Committee may permit. Thereafter, any Eligible Employee may
elect to defer the receipt of a percentage or dollar amount of one or more
payments of Compensation for a period of a least three Plan Years and on such
terms as the ERISA Management Committee may permit, commencing with Compensation
paid in the next succeeding Plan Year, by completing an Election Form during the
annual enrollment period for the Plan as determined by the Plan Administrator.
No Participant may defer more than 100% of his or her Compensation for a Plan
Year. A Participant's Compensation shall be reduced in accordance with the
Participant's election hereunder and amounts deferred hereunder shall be paid by
the Employer to the Trust as soon as administratively feasible and credited to
the Participant's Account as of the date the amounts are received by the
Trustee.
4.2 INVESTMENT ELECTION. An individual who is an Eligible Employee and
elects to defer Compensation under this Plan shall elect to have his or her
Account valued based on the Valuation Option represented by the performance of
one or more of the investment funds listed in Appendix B of the Plan. Such
Appendix B may be amended at any time by an action of the ERISA Management
Committee. If a Participant does not elect a Valuation Option for any portion of
his or her Account, that portion shall be valued based on the Valuation Option
represented by the performance of Fund A.
ARTICLE V
ACCOUNTS
5.1 ACCOUNTS. The Plan Administrator and/or the Recordkeeper shall
establish an Account for each Participant reflecting his or her Elective
Deferrals made for the Participant's benefit together with any adjustments for
income, gain or loss and any payments from the Account. The Trustee will
maintain
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and invest separate asset accounts corresponding to each Participant's
Account. The Plan Administrator and/or the Recordkeeper shall establish
sub-accounts for each Participant that has more than one election in effect
under Section 7.1 and such other sub-accounts as are necessary for the proper
administration of the Plan. As of the last business day of each calendar
quarter, the Plan Administrator shall provide, or cause to be provided, the
Participant with a statement of his or her Account reflecting the income, gains
and losses (realized and unrealized), amounts of deferrals, fund transfers and
distributions of such Account since the prior statement.
5.2 INVESTMENTS. The assets of the Trust shall be invested in such
investments as the Trustee shall determine. The Trustee may (but is not
required to) consider the Employer's or a Participant's investment
preferences when investing the assets attributable to a Participant's
Account.
ARTICLE VI
VESTING
6.1 VESTING. A Participant shall be immediately vested in, i.e., shall
have a nonforfeitable right to, all Elective Deferrals, and all income and gain
attributable thereto, credited to his or her Account.
ARTICLE VII
PAYMENTS
7.1 ELECTION AS TO FORM OF PAYMENT. Payments to participants shall be
made in annual installments over a period of 10 years commencing between
January 1 and March 15 immediately following the end of the deferral period. The
amount of each installment payment will equal the balance of a Participant's
account immediately prior to the installment payment divided by the number of
installment payments remaining to be made.
The above notwithstanding, a Participant may elect in writing to receive
his or her Elective Deferrals in one lump sum, in annual installments over a
period of five years, or in annual installments over a period of fifteen years,
so long as such election is made at least 13 months prior to the beginning of
the 10-year installment payments.
7.2 EXTENSION OF DEFERRAL PERIODS. A Participant may make an election
in writing to extend any deferral period for at least three additional Plan
Years so long as such Participant makes an election therefor at least 13
months prior to the expiration of the deferral period.
7.3 CHANGE OF CONTROL. As soon as possible following a Change of Control
of the Employer, each Participant shall be paid his or her entire Account
balance in a single lump sum.
7.4 TERMINATION OF EMPLOYMENT OR DISABILITY. Upon termination of a
Participant's employment for any reason other than death, the Participant's
Account shall be paid to the Participant in the form of payment in effect at the
time the disability or termination of employment occurs and after the expiration
of each deferral period.
The above notwithstanding, the Plan Administrator, in its sole discretion,
may: (a) pay out a Participant's Account balance in one lump sum at any time
prior to or after the expiration of each deferral period; (b) accelerate the
beginning of payments of deferrals to any time prior to the expiration of a
deferral period; and (c) revoke the deferral elections of a Participant for the
year of the termination of his/her employment.
7.5 DEATH. If a Participant dies prior to the complete distribution of
his or her Account, the balance of the Account shall be paid as soon as
practicable to the Participant's designated beneficiary or beneficiaries, in the
form elected by the Participant at the time of his or her death, provided,
however, that
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the ERISA Management Committee and/or the Plan Administrator may, in their
sole discretion, pay out the balance of such Participant's Account in one
lump sum.
Any designation of beneficiary and form of payment to such beneficiary
shall be made by the Participant on an Election Form filed with the Plan
Administrator and may be changed by the Participant at any time by filing
another Election Form containing the revised instructions. If no beneficiary is
designated or no designated beneficiary survives the Participant, payment shall
be made to the Participant's surviving spouse or, if none, to his or her issue
per stirpes, in a single payment. If no spouse or issue survives the
Participant, payment shall be made in a single lump sum to the Participant's
estate.
7.6 TAXES. All federal, state or local taxes that the Plan Administrator
determines are required to be withheld from any payments made pursuant to this
Article 7 shall be withheld.
ARTICLE VIII
PLAN ADMINISTRATION
8.1 PLAN ADMINISTRATION AND INTERPRETATION. The ERISA Management
Committee (the "Committee") shall oversee the administration of the Plan,
shall serve as the agent of the Company with respect to the trust, and shall
appoint a Plan Administrator and/or Recordkeeper for the day-to-day
operations of the Plan. Such Plan Administrator and/or Recordkeeper shall be
listed in Appendix C to this Plan. The Committee shall have complete control
and authority to determine the rights and benefits under all claims, demands
and actions arising out of the provisions of the Plan of any Participant,
beneficiary, deceased Participant, or other person having or claiming to have
any interest under the Plan. The Committee shall have complete discretion to
interpret the Plan and to decide all matters under the Plan. Such
interpretation and decision shall be final, conclusive and binding on all
Participants and any person claiming under or through any Participant. Any
individual(s) serving on the Committee who is a Participant will not vote or
act on any matter relating solely to himself or herself.
8.2 COMMITTEE POWERS, DUTIES, PROCEDURES, ETC. The Committee shall have
such powers and duties, may adopt such rules and regulations, may act in
accordance with such procedures, may appoint such agents, may delegate such
powers and duties, may receive such reimbursements and compensation, and shall
follow such claims and appeal procedures with respect to the Plan as it may
establish.
8.3 PLAN ADMINISTRATOR'S DUTIES. The Plan Administrator shall be
responsible for the day-to-day operations of the Plan. His or her duties shall
include, but not be limited to, the following:
(a) Keeping track of employees eligible to participate in the Plan and
the date each employee becomes eligible to participate.
(b) Maintaining, or causing to be maintained by the Recordkeeper,
Participants' Accounts, including all sub-accounts required for different
contribution types and payment elections made by Participants under the Plan and
any other relevant information.
(c) Transmitting, or causing to be transmitted by the Recordkeeper,
various communications to the Participant and obtaining information from
Participants such as changes in investment selections.
(d) Filing reports required by various governmental agencies.
When making a determination or calculation, the Plan Administrator and the
Recordkeeper shall be entitled to rely on information furnished by a
Participant, a beneficiary, the Employer or the Trustee. The Plan Administrator
shall have the responsibility for complying with any reporting and disclosure
requirements of ERISA.
8.4 INFORMATION. To enable the Plan Administrator and/or Recordkeeper to
perform their functions, the Employer shall supply full and timely information
to the Plan Administrator and/or Recordkeeper on all matters relating to the
compensation of Participants, their employment, retirement,
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death, termination of employment, and such other pertinent facts as the Plan
Administrator and/or Recordkeeper may require.
8.5 INDEMNIFICATION OF COMMITTEE AND PLAN ADMINISTRATOR. The Employer
agrees to indemnify and to defend to the fullest extent permitted by law any
officer(s) or employee(s) who serve on the Committee or as Plan Administrator
(including any such individual who formerly served on the Committee or as
Plan Administrator) against all liabilities, damages, costs and expenses
(including attorneys' fees and amounts paid in settlement of any claims
approved by the Employer) occasioned by any act or omission to act in
connection with the Plan, if such act or omission is in good faith.
ARTICLE IX
AMENDMENT AND TERMINATION
9.1 AMENDMENTS. The Employer shall have the right to amend the Plan from
time to time, subject to Section 9.3, by an action of the ERISA Committee of the
Board of Directors of the Employer. However, the preceding notwithstanding, the
ERISA Management Committee shall have the power to amend at any time the payment
provisions under Article VII of the Plan.
9.2 TERMINATION OF PLAN. This Plan is strictly a voluntary undertaking on
the part of the Employer and shall not be deemed to constitute a contract
between the Employer and any Eligible Employee (or any other employee) or a
consideration for, or an inducement or condition of employment for, the
performance of the services by any Eligible Employee (or other employee). The
Employer reserves the right to terminate the Plan at any time, subject to
Section 9.3, by an action of the ERISA Committee of the Board of Directors. Upon
termination, the Employer may (a) elect to continue to maintain the Trust to pay
benefits hereunder as they become due as if the Plan had not terminated or
(b) direct the Trustee to pay promptly to Participants (or their beneficiaries)
the vested balance of their Accounts.
9.3 EXISTING RIGHTS. No amendment or termination of the Plan shall
adversely affect the rights of any Participant with respect to amounts that have
been credited to his or her Account prior to the date of such amendment or
termination.
ARTICLE X
MISCELLANEOUS
10.1 NO FUNDING. The Plan constitutes a mere promise by the Employer to
make payments in accordance with the terms of the Plan and Participants and
beneficiaries shall have the status of general unsecured creditors of the
Employer. Nothing in the Plan will be construed to give any employee or any
other person rights to any specific assets of the Employer or of any other
person. In all events, it is the intent of the Employer that the Plan be treated
as unfunded for tax purposes and for purposes of Title I of ERISA.
10.2 NON-ASSIGNABILITY. None of the benefits, payments, proceeds or
claims of any Participant or beneficiary shall be subject to any claim of any
creditor of any Participant or beneficiary and, in particular, the same shall
not be subject to attachment or garnishment or other legal process by any
creditor of such Participant or beneficiary, nor shall any Participant or
beneficiary have any right to alienate, anticipate, commute, pledge, encumber
or assign any of the benefits or payments or proceeds which he or she may
expect to receive, contingently or otherwise, under the Plan.
10.3 LIMITATION OF PARTICIPANTS' RIGHTS. Nothing contained in the Plan
shall confer upon any person a right to be employed or to continue in the employ
of the Employer, or interfere in any way with the right of the Employer to
terminate the employment of a Participant in the Plan at any time, with or
without cause.
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10.4 PARTICIPANTS BOUND. Any action with respect to the Plan taken by the
Plan Administrator or the Employer or the Trustee or any action authorized by or
taken at the direction of the Plan Administrator, the Employer or the Trustee
shall be conclusive upon all Participants and beneficiaries entitled to benefits
under the Plan.
10.5 RECEIPT AND RELEASE. Any payment to any Participant or beneficiary in
accordance with the provisions of the Plan shall, to the extent thereof, be in
full satisfaction of all claims against the Employer, the Plan Administrator and
the Trustee under the Plan, and the Plan Administrator may require such
Participant or beneficiary, as a condition precedent to such payment, to execute
a receipt and release to such effect. If any Participant or beneficiary is
determined by the Plan Administrator to be incompetent by reason of physical or
mental disability (including minority) to give a valid receipt and release, the
Plan Administrator may cause the payment or payments becoming due to such person
to be made to another person for his or her benefit without responsibility on
the part of the Plan Administrator, the Employer or the Trustee to follow the
application of such funds.
10.6 GOVERNING LAW. The Plan shall be construed, administered, and
governed in all respects under and by the laws of the State of New York. If any
provision shall be held by a court of competent jurisdiction to be invalid or
unenforceable, the remaining provisions hereof shall continue to be fully
effective.
10.7 HEADINGS AND SUBHEADINGS. Heading and subheadings in this Plan are
inserted for convenience only and are not to be considered in the construction
of the provisions hereof.
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APPENDIX A
COMPENSATION
For the 1994 and 1995 Plan Years, Compensation shall include each
Participant's annual bonus and no portion of his/her salary.
For the 1996 Plan Year and until changed by the Committee, Compensation
shall include up to 33% of base salary.
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APPENDIX B
VALUATION OPTIONS
For 1994 and until changed by the ERISA Management Committee, each Participant
may elect to value his or her account based on the performance of one or more of
the following funds:
1. Fund A: AIM Limited Maturity Treasury
2. Fund B: AIM Aggressive Growth
3. Fund C: AIM Value
4. Fund D: Merrill Lynch Federal Securities
5. Fund E: Merrill Lynch Capital
6. Fund F: Templeton Foreign
7. Fund G: Merrill Lynch Global Allocation
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APPENDIX C
PLAN ADMINISTRATOR AND RECORD KEEPER
1.1 PLAN ADMINISTRATOR
For the Plan Year 1995, and until removed, the Plan Administrator shall be
Phil Ryan.
For the Plan Year 1997, and until removed, the Plan Administrator shall be
Diane Zubalsky.
1.2 RECORDKEEPER
For the Plan Year 1994, and until removed, the Recordkeeper shall be
Actuarial Information Management Systems.
From June 1, 1996, and thereafter until removed, the Recordkeeper shall be
Merrill Lynch
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EXHIBIT 10.20
THE NEW YORK TIMES
DESIGNATED EMPLOYEES DEFERRED EARNINGS PLAN
ARTICLE I
INTRODUCTION
1.1 PURPOSE OF PLAN. The Employer has adopted the Plan set forth
herein to provide a means by which a select group of designated employees may
elect to defer receipt of designated percentages of amounts of their
Compensation.
1.2 STATUS OF PLAN. The Plan is intended to be "a plan which is
unfunded and is maintained by an employer primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees" within the meaning of Section 201(2) and 301(a)(3) of
the Employee Retirement Income Security Act of 1974 ("ERISA"), and shall be
interpreted and administered to the extent possible in a manner consistent
with that intent.
ARTICLE II
DEFINITIONS
Wherever used herein, the following terms have the meanings set forth
below, unless a different meaning is clearly required by the context:
2.1 ACCOUNT means, for each Participant, the account established for
his or her benefit under Section 5.1.
2.2 CHANGE OF CONTROL means
(a) any individual, partnership, corporation (including a business
trust), joint stock company, trust, unincorporated association, joint venture
or other entity, or a government or any political subdivision or agency
thereof (a "Person") (or two or more Persons acting in concert), other than
any descendent (or any spouse thereof) of Iphigene Ochs Sulzberger (a "Family
Member") or a beneficiary or trustee (as the same may change from time to
time) of a trust over 50% of the individual beneficiaries of which are Family
Members, acquiring the power to elect a majority of the directors of The New
York Times Company (the "Company") in a transaction or series of transactions
not approved in advance by a vote of at least three quarters of the
Continuing Directors (as defined below); or
(b) individuals who, as of the date hereof, constitute the Board
of Directors of the Company (as of the date hereof the "Continuing
Directors") ceasing for any reason to constitute at least a majority of the
Board, provided that any person becoming a director subsequent to the date
hereof whose elections, or a for election by the Company's shareholders, was
approved in advance by a vote of at least three quarters of the Continuing
Directors (other than a nomination of an individual whose initial assumption
of office is in connection with an actual or threatened solicitation with
respect to the election or removal of the directors of the Company, as such
terms are used in Rule 14a-11 of the Regulation 14A promulgated under the
Exchange Act) shall be, for purposes of this Agreement, considered as though
such person were a Continuing Director; or
(c) approval by the stockholders of the Company of a reorganization,
merger, consolidation, liquidation or dissolution of the Company or of the
sale (in one transaction or a series of related transactions) of all or
substantially all of the assets of the Company other than a reorganization,
merger, consolidation, liquidation, dissolution or sale approved in advance
by three quarters of the Continuing Directors.
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2.3 CODE means the Internal Revenue Code of 1986, as amended from time
to time. Reference to any section or subsection of the Code includes
reference to any comparable or succeeding provisions of any legislation which
amends, supplements or replaces such section or subsection.
2.4 COMPENSATION means the advertising and circulation sales incentive
plan, the Management By Objective annual bonus and up to 35% of a
Participant's base salary.
For purposes of the Plan, Compensation shall be determined before giving
effect to Elective Deferrals and other salary reduction amounts which are not
included in the Participant's gross income under Code Sections 125, 401(k),
402(h) or 403 (b).
2.5 EFFECTIVE DATE means January 1, 1998.
2.6 ELECTION FORM means the participation election form as approved and
prescribed by the Plan Administrator.
2.7 ELECTIVE DEFERRAL means the portion of Compensation which is
deferred by a Participant under Article IV.
2.8 ELIGIBLE EMPLOYEE means, on the Effective Date or on any date
thereafter, each employee of The New York Times, a division of the Employer,
who is eligible to receive, based on specific performance measures, stock
options under The New York Times Company 1991 Executive Stock Incentive Plan,
and who is not eligible to participate in any other non-qualified deferred
compensation plan sponsored by the Employer and/or its subsidiaries and
affiliates.
2.9 EMPLOYER means The New York Times Company, any successor to all or
a major portion of the Employer's assets or business which assumes the
obligations of the Employer.
2.10 ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time. Reference to any section or subsection of ERISA
includes reference to any comparable or succeeding provisions of any
legislation which amends, supplements or replaces such section or subsection.
2.11 ERISA BOARD COMMITTEE means a committee of the Board of Directors of
The New York Times Company.
2.12 ERISA MANAGEMENT COMMITTEE means the persons appointed by the ERISA
Board Committee.
2.13 INSOLVENCY means either (i) the Employer is unable to pay its debts
as they become due, or (ii) the Employer is subject to a pending proceeding
as a debtor under the United States Bankruptcy Code.
2.14 PARTICIPANT means any Eligible Employee who participates in the Plan
in accordance with Article 3.
2.15 PLAN means The New York Times Designated Employees Deferred Earnings
Plan and all amendments thereto.
2.16 PLAN ADMINISTRATOR means the person, persons or entity designated
by the ERISA Management Committee under Article VIII for the day-to-day
administration of the Plan and to serve as the agent for the Company with
respect to the Trust as contemplated by the agreement establishing the Trust.
If no such person or entity is so serving at any time, the Employer shall be
the Plan Administrator.
2.17 PLAN YEAR means the 12-month period beginning on January 1 and
ending on December 31 of each year.
2.18 RECORDKEEPER means the person(s) or entity appointed or hired by the
ERISA Management Committee under Section 8.1.
2.19 RETIREE means a Participant who retires under The New York Times
Companies Pension Plan.
2
<PAGE>
2.20 TOTAL AND PERMANENT DISABILITY means the inability of a Participant
to engage in substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period
of not less than 12 months, and the permanence and degree of which shall be
supported by medical evidence satisfactory to the Plan Administrator.
2.21 TRUST means the trust established by the Employer that identifies
the Plan as a plan with respect to which assets are to be held by the
Trustee. The assets of the Trust shall be subject to claims of general
creditors of The New York Times Company in the event of its bankruptcy or
Insolvency.
2.22 TRUSTEE means the trustee or trustees under the Trust.
2.23 VALUATION OPTION means the performance of the investment funds
listed in Appendix A of the Plan
ARTICLE III
PARTICIPATION
3.1 COMMENCEMENT OF PARTICIPATION. Any Eligible Employee who elects to
defer part of his or her Compensation in accordance with Article IV shall
become a Participant in the Plan as of the date such deferrals commence in
accordance with such Article.
3.2 CONTINUED PARTICIPATION. A Participant in the Plan shall continue
to be a Participant so long as any amount remains credited to his or her
Account.
ARTICLE IV
ELECTIVE DEFERRALS
4.1 ELECTIVE DEFERRALS. Any Eligible Employee may elect to defer the
receipt of a percentage or dollar amount of one or more payments of
Compensation for a period of at least three Plan Years and no more than five
Plan Years and on such terms as the ERISA Management Committee may permit,
commencing with Compensation paid in the next succeeding Plan Year by
completing an Election Form during the annual enrollment period for the Plan
as determined by the Plan Administrator. No Participant may defer more than
100% of his or her Compensation for a Plan Year. A Participant's Compensation
shall be reduced in accordance with the Participant's election hereunder and
amounts deferred hereunder shall be paid by the Employer to the Trust as soon
as administratively feasible and credited to the Participant's Account as of
the date the amounts are received by the Trustee.
4.2 INVESTMENT ELECTION. An individual who is an Eligible Employee and
elects to defer Compensation under this Plan shall elect to have his or her
Account valued based on the Valuation Option represented by the performance
of one or more of the investment funds listed in Appendix A of the Plan. Such
Appendix A may be amended at any time by an action of the ERISA Management
Committee. If a Participant does not elect a Valuation Option for any portion
of his or her Account, that portion shall be valued based on the Valuation
Option represented by the performance of Fund A.
ARTICLE V
ACCOUNTS
5.1 ACCOUNTS. The Plan Administrator and/or the Recordkeeper shall
establish an Account for each Participant reflecting his or her Elective
Deferrals made for the Participant's benefit together with any adjustments
for income, gain or loss and any payments from the Account. The Trustee will
maintain and invest separate asset accounts corresponding to each
Participant's Account. The Plan Administrator and/or the Recordkeeper shall
establish sub-accounts for each Participant that has more than one election
in
3
<PAGE>
effect under Section 7.1 and such other sub-accounts as are necessary for
the proper administration of the Plan. As of the last business day of each
calendar quarter, the Plan Administrator shall provide, or cause to be
provided, the Participant with a statement of his or her Account reflecting
the income, gains and losses (realized and unrealized), amounts so deferrals,
fund transfers and distribution of such Account since the prior statement.
5.1 INVESTMENTS. The assets of the Trust shall be invested in such
investments as the Trustee shall determine. The Trustee may (but is not
required to) consider the Employer's or a Participant's investment
preferences when investing the assets attributable to a Participant's
account.
ARTICLE VI
VESTING
6.1 VESTING. A participant shall be immediately vested in, i.e., shall
have a nonforfeitable right to, all Elective Deferrals, and all income, gain
and loss attributable thereto, credited to his or her Account.
ARTICLE VII
PAYMENTS
7.1 ELECTION AS TO FORM OF PAYMENT. Payments to participants shall be
made in annual installments over a period of 10 years commencing between
January 1 and March 15 immediately following the end of the deferral period.
The amount of each installment payment will equal the balance of a
Participant's account immediately prior to the installment payment divided by
the number of installment payments remaining to be made.
The above notwithstanding, a Participant may elect in writing to receive
his or her Elective Deferrals in one lump sum or in annual installments over
a period of five years, so long as such election is made at least 13 months
prior to the beginning of any previously scheduled payments.
7.2 EXTENSION OF DEFERRAL PERIODS. A Participant who is an active
employee or a Retiree, or who is on Total and Permanent Disability may make
an election in writing to extend any deferral period for at least five and no
more than ten additional Plan Years so long as such Participant makes an
election therefor at least 13 months prior to the expiration of the deferral
period. Participants whose employment with the Employer has been terminated,
may not extend his/her deferral periods and shall begin to receive
distributions in accordance with Section 7.4.
7.3 CHANGE OF CONTROL. As soon as possible following a Change of Control
of the Employer, each Participant shall be paid his or her entire Account
balance in a single lump sum.
7.4 TERMINATION OF EMPLOYMENT OR DISABILITY. Upon termination of a
Participant's employment for any reason other than death, the Participant's
Account shall be paid to the Participant in the form of payment in effect at
the time the disability or termination of employment occurs and after the
expiration of each deferral period.
7.5 DEATH. If a Participant dies prior to the complete distribution of
his or her Account, the balance of the Account shall be paid as soon as
practicable to the Participant's designated beneficiary or beneficiaries, as
most recently designated by the Participant prior to the time of his or her
death, provided, however, that the ERISA Management Committee and/or the Plan
Administrator may, in their sole discretion, pay out the balance of such
Participant's Account in one lump sum.
Any designation of beneficiary and form of payment to such beneficiary
shall be made by the Participant on a Beneficiary Election Form filed with
the Plan Administrator and may be changed by the Participant at any time by
filing another Beneficiary Election Form containing the revised instructions.
If no beneficiary is designated or no designated beneficiary survives the
Participant, payment shall be made
4
<PAGE>
to the Participant's surviving spouse or, if none, to his or her issue per
stirpes, in a single payment. If no spouse or issue survives the Participant,
payment shall be made in a single lump sum to the Participant's estate. The
most recent Beneficiary Election Form executed by the Participant prior to
his death shall apply to all Election Deferrals credited to the Participant's
Account at the date of his death.
7.6 TAXES. All federal, state or local taxes that the Plan Administrator
determines are required to be withheld from any payments made pursuant to
this Article 7 shall be withheld prior to any distribution under this Plan.
ARTICLE VIII
PLAN ADMINISTRATION
8.1 PLAN ADMINISTRATION AND INTERPRETATION. The ERISA Management
Committee shall oversee the administration of the Plan, shall serve as the
agent of the Company with respect to the trust, and shall appoint a Plan
Administrator and/or Recordkeeper for the day-to-day operations of the Plan.
Such Plan Administrator and/or Recordkeeper shall be listed in Appendix B to
this Plan. The Committee shall have complete control and authority to
determine the rights and benefits under all claims, demands and actions
arising out of the provisions of the Plan of any Participant, beneficiary,
deceased Participant, or other person having or claiming to have any interest
under the Plan. The Committee shall have complete discretion to interpret the
Plan and to decide all matters under the Plan. Such interpretation and
decision shall be final, conclusive and binding on all Participants and any
person claiming under or through any Participant. Any individual(s) serving
on the Committee who is a Participant will not vote or act on any matter
relating solely to himself or herself.
8.2 COMMITTEE POWERS, DUTIES, PROCEDURES, ETC. The Committee shall have
such procedures, may appoint such agents, may delegate such powers and
duties, may receive such reimbursements and compensation, and shall follow
such claims and appear procedures with respect to the Plan as it may
establish.
8.3 PLAN ADMINISTRATOR'S DUTIES. The Plan Administrator shall be
responsible for the day-to-day operations of the Plan. His or her duties
shall include, but not be limited to, the following:
(a) Keeping track of employees eligible to participate in the Plan and
the date each employee becomes eligible to participate.
(b) Maintaining, or causing to be maintained by the Recordkeeper,
Participants' Accounts, including all sub-accounts required for different
contribution types and payment elections made by Participants under the Plan
and any other relevant information.
(c) Transmitting, or causing to be transmitted by the Recordkeeper,
various communications to the Participant and obtaining information from
Participants such as changes in investment elections.
(d) Filing reports required by various governmental agencies. When
making a determination or calculation, the Plan Administrator and the
Recordkeeper shall be entitled to rely on information furnished by a
Participant, a beneficiary, the Employer or the Trustee. The Plan
Administrator shall be have the responsibility for complying with any
reporting and disclosure requirements of ERISA.
8.4 INFORMATION. To enable the Plan Administrator and/or Recordkeeper to
perform their functions, the Employer shall supply full and timely
information to the Plan Administrator and/or Recordkeeper on all matters
relating to the compensation of Participants, their employment, retirement,
death, termination of employment, and such other pertinent facts as the Plan
Administrator and/or Recordkeeper may require.
8.5 INDEMNIFICATION OF COMMITTEE AND PLAN ADMINISTRATOR. The Employer
agrees to indemnify and to defend to the fullest extent permitted by law any
officer(s) or employee(s) who serve on the Committee or as Plan Administrator
(including any such individual who formerly served on the Committee or
5
<PAGE>
as Plan Administrator) against all liabilities, damages, costs and expenses
(including attorney's fees and amounts paid in settlement of any claims
approved by the Employer) occasioned by any act or omission to act in
connection with the Plan, is such act or omission is in good faith.
ARTICLE IX
AMENDMENT AND TERMINATION
9.1 AMENDMENTS. The Employer shall have the right to amend the Plan
from time to time, subject to Section 9.3, by an action of the ERISA Board
Committee. However, the preceding notwithstanding, the ERISA Management
Committee shall have the power to amend at any time the payment provisions
under Article VII of the Plan.
9.2 TERMINATION OF THE PLAN. This plan is strictly a voluntary
undertaking on the part of the Employer and shall not be deemed to constitute
a contract between the Employer and any Eligible Employee (or any other
employee) or a consideration for, or an inducement or condition of employment
for, the performance of the services by any Eligible Employee (or other
employee). The Employer reserves the right to terminate the Plan at any time,
subject to Section 9.3, by an action of the ERISA Board Committee. Upon
termination, the Employer may (a) elect to continue to maintain the Trust to
pay benefits hereunder as they become due as if the Plan had not terminated or
(b) direct the Trustee to pay promptly to Participants (or their
beneficiaries) the vested balance of their Accounts.
9.3 EXISTING RIGHTS. No amendment, or termination of the Plan shall
adversely affect the rights of any Participant with respect to amounts that
have been credited to his or her Account prior to the date of such amendment
or termination.
ARTICLE X
MISCELLANEOUS
10.1 NO FUNDING. The Plan constitutes a mere promise by the Employer to
make payments in accordance with the terms of the Plan and Participants and
beneficiaries shall have the status of general unsecured creditors of the
Employer. Nothing in the Plan will be construed to give any employee or any
other person rights to any specific assets of the Employer or of any other
person. In all events, it is the intent of the Employer that the Plan be
treated as unfunded for tax purposes and for purposes of Title I of ERISA.
10.2 NON-ASSIGNABILITY. None of the benefits, payments, proceeds or
claims of any Participant or beneficiary shall be subject to any claim of any
creditor of any Participant or beneficiary and, in particular, the same shall
not be subject to attachment or garnishment or other legal process by any
creditor of such Participant or beneficiary, nor shall any Participant or
beneficiary have any right to alienate, anticipate, commute, pledge, encumber
or assign any of the benefits or payments or proceeds which he or she may
expect to receive, contingently or otherwise, under the Plan.
10.3 LIMITATION OF PARTICIPANTS' RIGHTS. Nothing contained in the Plan
shall confer upon any person a right to be employed or to continue in the
employ of the Employer, or interfere in any way with the right of the
Employer to terminate the employment of a Participant in the Plan at any
time, with or without cause.
10.4 PARTICIPANTS BOUND. Any action with respect to the Plan taken by
the Plan Administrator or the Employer or the Trustee or any action
authorized by or taken at the direction of the Plan Administrator, the
Employer or the Trustee shall be conclusive upon all Participants and
beneficiaries entitled to benefits under the Plan.
10.5 RECEIPT AND RELEASE. Any payment to any Participant or
beneficiary in accordance with the provisions of the Plan shall, to the
extent thereof, be in full satisfaction of all claims against the Employer,
6
<PAGE>
the Plan Administrator and the Trustee under the Plan, and the Plan
Administrator may require such Participant or beneficiary, as a condition
precedent to such payment, to execute a receipt and release to such effect.
If any Participant or beneficiary is determined by the Plan Administrator to
be incompetent by reason of physical or mental disability (including
minority) to give a valid receipt and release, the Plan Administrator may
cause the payment or payments becoming due to such person to be made to
another person for his or her benefit without responsibility on the part of
the Plan Administrator, the Employer or the Trustee to follow the application
of such funds.
10.6 GOVERNING LAW. The Plan shall be construed, administered, and
governed in all respects under and by the laws of the State of New York
(regardless of any conflict of law provision). If any provision shall be
held by a court of competent jurisdiction to be invalid or unenforceable, the
remaining provisions hereof shall continue to be fully effective.
10.7 HEADINGS AND SUBHEADINGS. Headings and subheadings in the Plan
are inserted for convenience only and are not to be considered in the
construction of the provisions thereof.
7
<PAGE>
APPENDIX A
VALUATION OPTIONS
For 1998 and until changed by the ERISA Management Committee, each
Participant may elect to his or her account valued based on the performance
of one or more of the following funds:
1. Fund A: AIM Limited Maturity Treasury
2. Fund B: AIM Aggressive Growth
3. Fund C: AIM Value
4. Fund F: Templeton Foreign
5. Fund E: Merrill Lynch Capital
6. Fund D: Merrill Lynch Federal Securities
7. Fund G. Merrill Lynch Global Allocation
8
<PAGE>
APPENDIX B
PLAN ADMINISTRATOR AND RECORDKEEPER
1.1 PLAN ADMINISTRATOR
For the Plan Year 1998 and until removed by the ERISA Management
Committee the Plan Administrator shall be Diane Zubalsky.
1.2 RECORDKEEPER
For the Plan Year 1998 and until removed by the ERISA Management Committee
the Recordkeeper shall be Merrill Lynch.
9
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY(1),(2)
Jurisdiction of
Incorporation or
Name of Subsidiary Organization
------------------ -----------------
Affiliated Publications, Inc................................... Massachusetts
Globe Newspaper Company.................................... Massachusetts
Boston Globe Electronic Publishing, Inc................. Massachusetts
Boston Globe Investments, Inc........................... Massachusetts
Zakrzewska Ltd. Partnership (99%)................... Massachusetts
Community Newsdealers Inc............................... Massachusetts
Globe Specialty Products, Inc........................... Massachusetts
Retail Sales, Inc....................................... Massachusetts
City & Suburban Delivery Systems, Inc.......................... Delaware
Comet-Press Newspapers, Inc.................................... Delaware
Crossroads Holding Corporation................................. New Jersey
Donohue Malbaie Inc. (49%)..................................... Canada
Fernandina Beach News-Leader, Inc.............................. Florida
Gainesville Sun Publishing Company............................. Florida
Hendersonville Newspaper Corporation........................... North Carolina
International Herald Tribune S.A.S. (50%)...................... France
Lake City Reporter, Inc........................................ Florida
Lakeland Ledger Publishing Corporation......................... Florida
London Bureau Limited.......................................... United Kingdom
Northern SC Paper Corporation (80%)............................ Delaware
Madison Paper Industries (partnership)..................... Maine
NYT 1896T, Inc................................................. Delaware
NYT Capital, Inc............................................... Delaware
NYTRNG, Inc.................................................... Delaware
NYT Shared Service Center, Inc................................. Delaware
Ocala Star-Banner Corporation.................................. Florida
Rome Bureau S.r.l.............................................. Italy
Sarasota Herald-Tribune Co..................................... Florida
Sebring News-Sun, Inc.......................................... Florida
The Dispatch Publishing Company, Inc........................... North Carolina
The Gadsden Times, Inc......................................... Delaware
The Houma Courier Newspaper Corporation........................ Delaware
The New York Times Broadcasting Service, Inc................... Tennessee
Interstate Broadcasting Company, Inc....................... New York
The Times Southwest Broadcasting, Inc...................... Arkansas
The New York Times Company Magazine Group, Inc................. Delaware
NYT Special Services, Inc.................................. Delaware
The New York Times Distribution Corporation.................... Delaware
The New York Times Electronic Media Company.................... Delaware
The New York Times Sales, Inc.................................. Delaware
The New York Times Syndication Sales Corporation............... Delaware
The Palatka Daily News, Inc.................................... Florida
The Santa Rosa Democrat, Inc................................... Delaware
The Spartanburg Herald-Journal, Inc............................ Delaware
The Tuscaloosa News, Inc....................................... Delaware
Times Leasing, Inc............................................. Delaware
Times On-Line Services, Inc.................................... New Jersey
TSP Newspapers, Inc............................................ Delaware
Times Daily, Inc........................................... Alabama
Wilmington Star-News, Inc...................................... New York
WNEP-TV, Inc................................................... Pennsylvania
WTKR-TV, Inc................................................... Delaware
- - ----------
(1) 100% owned unless otherwise indicated.
(2) The names of certain subsidiaries have been omitted because, considered in
the aggregate, as a single subsidiary, they would not constitute a
significant subsidiary.
<PAGE>
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
The New York Times Company:
We consent to the incorporation by reference in Registration Statements
No. 333-43369, No. 333-43371, No. 333-37331, No. 333-09447, No. 2-91826,
33-31538, 33-43210, 33-43211, 33-50461, 33-50465, 33-50457, 33-50467,
33-50459 and 33-56219 on Form S-8 and in Registration Statement No. 33-57403
on Form S-3 of our report dated January 30, 1998, appearing in the Annual
Report on Form 10-K of The New York Times Company (the "Company") for the
year ended December 28, 1997.
We also consent to the reference to us under the heading "Experts" in
Registration Statements No. 2-91826 and No. 33-31538 on Form S-8 and No.
33-57403 on Form S-3.
DELOITTE & TOUCHE LLP
New York, New York
February 27, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
RESTATED FINANCIAL DATA SCHEDULE
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 41,419
<SECURITIES> 0
<RECEIVABLES> 275,907
<ALLOWANCES> 28,157
<INVENTORY> 30,545
<CURRENT-ASSETS> 411,774
<PP&E> 1,818,768
<DEPRECIATION> 660,017
<TOTAL-ASSETS> 3,137,631
<CURRENT-LIABILITIES> 448,595
<BONDS> 0
0
1,753
<COMMON> 10,862
<OTHER-SE> 1,532,677
<TOTAL-LIABILITY-AND-EQUITY> 3,137,631
<SALES> 0
<TOTAL-REVENUES> 2,396,517
<CGS> 0
<TOTAL-COSTS> 1,302,459
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,162
<INCOME-PRETAX> 388,736
<INCOME-TAX> 175,387
<INCOME-CONTINUING> 213,349
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 213,349
<EPS-PRIMARY> 2.05
<EPS-DILUTED> 2.04
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<PAGE>
<ARTICLE> 5
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RESTATED FINANCIAL DATA SCHEDULE
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 91,442
<SECURITIES> 0
<RECEIVABLES> 303,839
<ALLOWANCES> 25,865
<INVENTORY> 42,844
<CURRENT-ASSETS> 472,628
<PP&E> 2,007,473
<DEPRECIATION> 740,864
<TOTAL-ASSETS> 3,389,704
<CURRENT-LIABILITIES> 512,546
<BONDS> 0
0
1,753
<COMMON> 10,952
<OTHER-SE> 1,599,397
<TOTAL-LIABILITY-AND-EQUITY> 3,389,704
<SALES> 0
<TOTAL-REVENUES> 2,428,124
<CGS> 0
<TOTAL-COSTS> 1,333,483
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,230
<INCOME-PRETAX> 233,839
<INCOME-TAX> 97,979
<INCOME-CONTINUING> 135,860
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 135,860
<EPS-PRIMARY> 1.40
<EPS-DILUTED> 1.39
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<ARTICLE> 5
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RESTATED FINANCIAL DATA SCHEDULE
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-29-1996 DEC-29-1996 DEC-29-1996 DEC-29-1996
<PERIOD-END> MAR-31-1996 JUN-30-1996 SEP-29-1996 DEC-29-1996
<CASH> 55,481 113,668 43,769 39,103
<SECURITIES> 0 0 0 0
<RECEIVABLES> 323,466 311,447 315,384 340,476
<ALLOWANCES> 27,462 31,772 29,361 31,312
<INVENTORY> 46,135 38,709 25,940 33,808
<CURRENT-ASSETS> 453,847 486,539 438,191 478,772
<PP&E> 2,057,304 2,075,244 2,144,857 2,165,149
<DEPRECIATION> 766,188 772,712 784,890 807,120
<TOTAL-ASSETS> 3,377,517 3,440,730 3,519,567 3,539,871
<CURRENT-LIABILITIES> 487,656 517,746 562,212 642,886
<BONDS> 0 0 0 0
0 0 0 0
1,753 1,753 1,753 1,753
<COMMON> 10,976 11,009 11,021 11,119
<OTHER-SE> 1,619,068 1,649,104 1,556,041 1,612,260
<TOTAL-LIABILITY-AND-EQUITY> 3,377,517 3,440,730 3,519,567 3,539,871
<SALES> 0 0 0 0
<TOTAL-REVENUES> 627,575 1,277,081 1,908,484 2,628,271
<CGS> 0 0 0 0
<TOTAL-COSTS> 347,517 685,577 1,021,964 1,361,084
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 6,438 12,400 20,375 26,430
<INCOME-PRETAX> 58,867 145,386 104,995 197,909
<INCOME-TAX> 26,153 65,860 73,153 113,375
<INCOME-CONTINUING> 32,714 79,526 31,842 84,534
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 32,714 79,526 31,842 84,534
<EPS-PRIMARY> 0.33 0.81 0.33 0.87
<EPS-DILUTED> 0.33 0.81 0.32 0.86
</TABLE>
<TABLE> <S> <C>
<PAGE>
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<LEGEND>
RESTATED FINANCIAL DATA SCHEDULE
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-28-1997 DEC-28-1997 DEC-28-1997
<PERIOD-END> MAR-30-1997 JUN-29-1997 SEP-28-1997
<CASH> 45,772 38,525 37,843
<SECURITIES> 0 0 0
<RECEIVABLES> 324,164 331,713 340,118
<ALLOWANCES> 28,632 29,435 27,540
<INVENTORY> 37,742 31,743 30,198
<CURRENT-ASSETS> 469,301 462,302 474,371
<PP&E> 2,226,127 2,261,575 2,271,947
<DEPRECIATION> 832,671 864,305 888,007
<TOTAL-ASSETS> 3,563,498 3,535,705 3,531,047
<CURRENT-LIABILITIES> 628,079 639,341 619,370
<BONDS> 0 0 0
0 0 0
1,753 1,753 1,753
<COMMON> 11,233 11,267 11,296
<OTHER-SE> 1,643,272 1,610,075 1,630,633
<TOTAL-LIABILITY-AND-EQUITY> 3,563,498 3,535,705 3,531,047
<SALES> 0 0 0
<TOTAL-REVENUES> 692,461 1,414,408 2,097,989
<CGS> 0 0 0
<TOTAL-COSTS> 346,486 691,752 1,041,755
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 8,318 19,707 31,406
<INCOME-PRETAX> 94,252 213,264 296,259
<INCOME-TAX> 42,413 76,476 113,243
<INCOME-CONTINUING> 51,839 136,788 183,016
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 51,839 136,788 183,016
<EPS-PRIMARY> 0.53 1.41 1.89
<EPS-DILUTED> 0.52 1.38 1.86
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the 1997
Form 10K and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-END> DEC-31-1997
<CASH> 106,820
<SECURITIES> 0
<RECEIVABLES> 357,174
<ALLOWANCES> 25,887
<INVENTORY> 32,134
<CURRENT-ASSETS> 615,835
<PP&E> 2,235,205
<DEPRECIATION> 868,274
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0
0
<COMMON> 11,385
<OTHER-SE> 1,716,677
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<SALES> 0
<TOTAL-REVENUES> 2,866,418
<CGS> 0
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<INCOME-PRETAX> 437,365
<INCOME-TAX> 175,064
<INCOME-CONTINUING> 262,301
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<EXTRAORDINARY> 0
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<EPS-PRIMARY> 2.72
<EPS-DILUTED> 2.66
</TABLE>
