FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For Quarter Ended June 27, 1999
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Commission file number 1-5837
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THE NEW YORK TIMES COMPANY
--------------------------
(Exact name of registrant as specified in its charter)
NEW YORK 13-1102020
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
229 WEST 43D STREET, NEW YORK, NEW YORK
---------------------------------------
(Address of principal executive offices)
10036
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(Zip Code)
Registrant's telephone number, including area code 212-556-1234
------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes |X| No |_|.
Number of shares of each class of the registrant's common stock outstanding as
of August 6, 1999 (exclusive of treasury shares):
Class A Common Stock 173,262,836 shares
Class B Common Stock 849,602 shares
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE NEW YORK TIMES COMPANY
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(Dollars and shares in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------- -------------------------
June 27, June 28, June 27, June 28,
1999 1998 1999 1998
------------------------- -------------------------
(13 Weeks) (26 Weeks)
<S> <C> <C> <C> <C>
Revenues
Advertising ................................... $ 562,467 $ 531,977 $ 1,085,268 $ 1,039,455
Circulation ................................... 173,003 170,503 345,560 340,025
Other ......................................... 43,915 46,710 87,615 92,273
----------- ----------- ----------- -----------
Total ...................................... 779,385 749,190 1,518,443 1,471,753
----------- ----------- ----------- -----------
Production costs
Raw materials ................................. 82,463 88,745 169,783 176,523
Wages and benefits ............................ 152,228 148,269 294,300 289,502
Other ......................................... 102,537 97,472 202,941 198,443
----------- ----------- ----------- -----------
Total ...................................... 337,228 334,486 667,024 664,468
Selling, general and administrative expenses ...... 287,296 269,590 581,317 545,801
----------- ----------- ----------- -----------
Total ...................................... 624,524 604,076 1,248,341 1,210,269
----------- ----------- ----------- -----------
Operating profit .................................. 154,861 145,114 270,102 261,484
Income from joint ventures ........................ 3,265 3,907 7,468 8,278
Interest expense - net ............................ 12,841 10,484 24,737 20,627
Gain on dispositions of assets .................... -- 8,000 -- 12,619
----------- ----------- ----------- -----------
Income before income taxes and
extraordinary item ............................ 145,285 146,537 252,833 261,754
Income taxes ...................................... 61,822 63,806 107,960 114,386
----------- ----------- ----------- -----------
Income before extraordinary item .................. 83,463 82,731 144,873 147,368
Extraordinary item, net of tax:
Debt extinguishment ........................... -- 7,716 -- 7,716
----------- ----------- ----------- -----------
Net Income ........................................ $ 83,463 $ 75,015 $ 144,873 $ 139,652
=========== =========== =========== ===========
Average number of common shares outstanding
Basic ........................................ 176,083 191,530 177,885 192,060
Diluted ...................................... 179,331 196,138 181,225 196,474
Per share of common stock
Basic earnings before extraordinary item ..... $ 0.47 $ 0.43 $ 0.81 $ 0.77
Extraordinary item, net of tax ............... -- (0.04) -- (0.04)
=========== =========== =========== ===========
Basic earnings after extraordinary item ...... $ 0.47 $ 0.39 $ 0.81 $ 0.73
=========== =========== =========== ===========
Diluted earnings before extraordinary item ... $ 0.47 $ 0.42 $ 0.80 $ 0.75
Extraordinary item, net of tax ............... -- (0.04) -- (0.04)
----------- ----------- ----------- -----------
Diluted earnings after extraordinary item .... $ 0.47 $ 0.38 $ 0.80 $ 0.71
=========== =========== =========== ===========
Dividends .................................... $ 0.105 $ 0.095 $ 0.200 $ 0.180
=========== =========== =========== ===========
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
2
<PAGE>
THE NEW YORK TIMES COMPANY
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
June 27, December 27,
1999 1998
---------- ------------
ASSETS (Unaudited)
Current Assets
Cash and short-term investments .................. $ 31,912 $ 35,991
Accounts receivable-net ......................... 342,533 331,933
Inventories
Newsprint and magazine paper .................. 22,163 27,705
Work-in-process and other ..................... 5,836 4,582
---------- ----------
Total inventories ......................... 27,999 32,287
Deferred income taxes ............................ 40,612 40,612
Other current assets ............................. 77,359 76,153
---------- ----------
Total current assets ...................... 520,415 516,976
---------- ----------
Other Assets
Investments in joint ventures .................... 128,358 122,273
Property, plant and equipment (less accumulated
depreciation of $961,952 in 1999
and $897,304 in 1998) ......................... 1,283,094 1,326,196
Intangible assets acquired
Cost in excess of net assets acquired (less
accumulated amortization of $255,610
in 1999 and $240,676 in 1998) ................. 948,413 963,347
Other intangible assets acquired (less
accumulated amortization of $75,261
in 1999 and $64,746 in 1998) .................. 353,711 364,226
Miscellaneous assets ............................. 223,578 172,091
---------- ----------
TOTAL ASSETS .................................... $3,457,569 $3,465,109
========== ==========
See Notes to Consolidated Condensed Financial Statements.
3
<PAGE>
THE NEW YORK TIMES COMPANY
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
June 27, December 27,
1999 1998
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited)
Current Liabilities
Commercial paper outstanding ................... $ 206,630 $ 124,100
Accounts payable ............................... 153,432 163,783
Accrued payroll and other related liabilities .. 83,030 87,265
Accrued expenses ............................... 170,474 166,761
Unexpired subscriptions ........................ 80,916 81,080
Current portion of long-term debt and
capital lease obligations ................... 1,756 1,867
----------- -----------
Total current liabilities ................... 696,238 624,856
----------- -----------
Other Liabilities
Long-term debt ................................. 513,965 513,695
Capital lease obligations ...................... 83,550 84,123
Deferred income taxes .......................... 177,117 165,268
Other .......................................... 581,916 545,697
----------- -----------
Total other liabilities ..................... 1,356,548 1,308,783
----------- -----------
Total liabilities ........................... 2,052,786 1,933,639
----------- -----------
Stockholders' Equity
Capital stock .................................. 18,863 18,661
Additional paid-in capital ..................... 28,282 --
Accumulated other comprehensive income (loss) .. 11,950 (2,609)
Retained earnings .............................. 1,786,740 1,677,469
Common stock held in treasury, at cost ......... (441,052) (162,051)
----------- -----------
Total stockholders' equity .................. 1,404,783 1,531,470
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ......... $ 3,457,569 $ 3,465,109
=========== ===========
See Notes to Consolidated Condensed Financial Statements.
4
<PAGE>
THE NEW YORK TIMES COMPANY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
----------------------
June 27, June 28,
1999 1998
----------------------
(26 Weeks)
<S> <C> <C>
OPERATING ACTIVITIES
Net cash provided by operating activities ...................... $ 228,290 $ 214,968
--------- ---------
INVESTING ACTIVITIES
Additions to property, plant and equipment ..................... (29,291) (37,601)
Net proceeds from dispositions ................................. 11,434 9,934
Other-net ...................................................... (10,238) 5,865
--------- ---------
Net cash used in investing activities .......................... (28,095) (21,802)
--------- ---------
FINANCING ACTIVITIES
Commercial paper borrowings .................................... 82,530 494
Debt extinguishment ............................................ -- (75,616)
Other long-term debt reduction ................................. (684) (2,184)
Capital shares
Issuances ................................................. 7,447 4,653
Repurchases ............................................... (257,965) (150,579)
Dividends paid to stockholders ................................. (35,602) (34,517)
--------- ---------
Net cash used in financing activities .......................... (204,274) (257,749)
--------- ---------
Decrease in cash and short-term investments .................... (4,079) (64,583)
Cash and short-term investments at the beginning of the year ... 35,991 106,820
--------- ---------
Cash and short-term investments at the end of the quarter ...... $ 31,912 $ 42,237
========= =========
</TABLE>
SUPPLEMENTAL CASH FLOW INFORMATION
NONCASH FINANCING AND INVESTING TRANSACTIONS
1. Repurchases of common stock in connection with noncash exercises under the
Company's stock option plans increased treasury stock by $21.5 million in
1999 and $25.5 million in 1998. Additional paid-in capital was increased
by a corresponding amount. The cost of shares reacquired in connection
with taxes due from optionees on noncash exercises under the Company's
stock option plans is included in repurchases in the consolidated
condensed statements of cash flows above and amounted to $12.9 million in
the first six months of 1999 and $17.7 million in the first six months of
1998.
2. In February 1999 the Company purchased a minority interest in
TheStreet.com for $15.0 million, of which $3.0 million was in cash and
$12.0 million represents an irrevocable credit for services to be used by
TheStreet.com through February 2003. Investment and deferred revenue
accounts were increased by $12.0 million accordingly.
OTHER
Amounts in these statements of cash flows are presented on a cash basis
and may differ from those shown in other sections of the financial
statements.
See Notes to Consolidated Condensed Financial Statements.
5
<PAGE>
THE NEW YORK TIMES COMPANY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. General
The accompanying Notes to Consolidated Condensed Financial Statements
should be read in conjunction with the Consolidated Financial Statements
included in the annual report on Form 10-K for the year ended December 27, 1998,
for The New York Times Company (the "Company") filed with the Securities and
Exchange Commission. In the opinion of management, all adjustments necessary for
a fair presentation of the financial position and results of operations, as of
and for the interim period ended, have been included. Due to the seasonal nature
of the Company's business, results for the interim periods are not necessarily
indicative of a full year's operations.
Certain reclassifications have been made to the 1998 Consolidated
Condensed Financial Statements to conform with classifications used at June 27,
1999.
2. Income Taxes
Reconciliations between the effective rate on income before income taxes
and extraordinary item, and the federal statutory rate are as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
--------------------------------------------------------------------------------
June 27, 1999 June 28, 1998 June 27, 1999 June 28,1998
- ----------------------------------------------------------------------------------------------------------------------------------
% of % of % of % of
(Dollars in thousands) Amount Pre-tax Amount Pre-tax Amount Pre-tax Amount Pre-tax
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tax at the federal statutory rate .............. $ 50,850 35.0% $ 48,488 35.0% $ 88,492 35.0% $ 87,197 35.0%
State and local income taxes-net of
federal benefit .............................. 8,249 5.7 9,296 6.7 14,355 5.7 16,817 6.8
Amortization of nondeductible intangible
assets acquired .............................. 2,627 1.8 2,632 1.9 4,572 1.8 4,852 1.9
Other-net ...................................... 96 0.1 (96) (0.1) 541 0.2 7 0.0
--------------------------------------------------------------------------------
Subtotal ....................................... $ 61,822 42.6% $ 60,320 43.5% $107,960 42.7% $108,873 43.7%
--------------------------------------------------------------------------------
Gain on dispositions of assets ................. -- -- 3,486 -- -- -- 5,513 --
--------------------------------------------------------------------------------
Income tax expense ............................. $ 61,822 -- $ 63,806 -- $107,960 -- $114,386 --
================================================================================
</TABLE>
3. Debt Obligations
In July 1999 the availability of funds under a revolving credit agreement
was increased to $200 million from $100 million, and that agreement expires in
June 2000. An additional $200 million revolving credit agreement remains
unchanged and expires in July 2002. The Company has a total of $400 million
available under revolving credit agreements, which require, among other
provisions, specified levels of stockholders' equity.
4. Stock Repurchase Program
During the first six months of 1999, the Company repurchased 7,585,000
shares of Class A Common Stock at a cost of $245,103,000. The average price of
these repurchases was $32 per share. On June 17, 1999, the Board of Directors
authorized additional repurchase expenditures of up to $500,000,000. As of
August 6, 1999, the remaining amount of repurchase authorizations from the
Company's Board of Directors was $548,475,000.
6
<PAGE>
5. Voluntary Staff Reductions
The Company recorded work force reduction charges of $4,000,000 in the
second quarter of 1999. No charges were recorded in the first quarter of 1999 or
in the first six months of 1998. Staff reduction accruals included in accrued
expenses on the Company's Consolidated Condensed Balance Sheets amounted to
$18,944,000 at June 27, 1999, and $22,000,000 at December 27, 1998. Most of the
accruals at June 27, 1999, will be paid within one year.
6. Comprehensive Income
The Statement of Financial Accounting Standards ("FASB") No. 130,
"Reporting Comprehensive Income" established standards for reporting
comprehensive income and requires that all components of comprehensive income be
presented in financial statements.
Comprehensive income for the Company principally includes an unrealized
gain on available-for-sale securities, as defined under FASB No. 115,
"Accounting For Certain Investments in Debt and Equity Securities," as well as
foreign currency translation adjustments, in addition to net income as reported
in the Company's Consolidated Condensed Statements of Income. The unrealized
appreciation on available-for-sale securities, which were purchased in 1999,
were included in miscellaneous assets on the Company's Consolidated Condensed
Balance Sheets and amounted to $24,968,000 as of June 27, 1999. Comprehensive
income was $97,669,000 for the quarter ended June 27, 1999, and $159,432,000 for
the first six months of 1999. For the quarter ended June 28, 1998, comprehensive
income was $75,515,000 and for the first six months of 1998 was $140,152,000.
The accumulated other comprehensive income (loss) on the Company's Consolidated
Condensed Balance Sheets was net of a deferred income tax liability of
$9,717,000 as of June 27, 1999, and net of a deferred income tax asset of
$2,135,000 as of December 27, 1998.
7
<PAGE>
7. Segment Statements of Income
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
--------------------------------------------------------------------
June 27, June 28, June 27, June 28,
(Dollars in thousands) 1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------------------
(13 Weeks) (26 Weeks)
<S> <C> <C> <C> <C>
REVENUES
Newspapers........................... $705,995 $671,786 $1,384,245 $1,329,116
Broadcast............................ 40,805 41,049 73,897 74,347
Magazines............................ 32,585 36,355 60,301 68,290
--------------------------------------------------------------------
Total.............................. $779,385 $749,190 $1,518,443 $1,471,753
====================================================================
OPERATING PROFIT (LOSS)
Newspapers........................... $143,814 $129,484 $ 256,175 $ 237,073
Broadcast............................ 14,705 13,610 21,691 20,894
Magazines............................ 8,107 12,003 12,576 20,321
Unallocated corporate expenses....... (11,765) (9,983) (20,340) (16,804)
--------------------------------------------------------------------
Total.............................. 154,861 145,114 270,102 261,484
--------------------------------------------------------------------
Income from joint ventures........... 3,265 3,907 7,468 8,278
Interest expense, net................ 12,841 10,484 24,737 20,627
Gain on dispositions of assets....... -- 8,000 -- 12,619
--------------------------------------------------------------------
Income before income taxes
and extraordinary item............. 145,285 146,537 252,833 261,754
Income taxes......................... 61,822 63,806 107,960 114,386
--------------------------------------------------------------------
Income before extraordinary item..... 83,463 82,731 144,873 147,368
Extraordinary item, net of tax:
Debt extinguishment................ -- 7,716 -- 7,716
--------------------------------------------------------------------
NET INCOME........................... $ 83,463 $ 75,015 $ 144,873 $ 139,652
====================================================================
</TABLE>
See Management's Discussion and Analysis of Financial Condition and
Results of Operations in this Form 10-Q for more details on the Company's
reportable operating segments.
8. Dividend Rate Increase
On June 17, 1999, the Board of Directors authorized a $.01 increase in the
quarterly dividend payments on both Class A and B Common Stock effective with
the September 1, 1999, record date.
9. Abuzz Acquisition
On July 22, 1999, the Company acquired Abuzz Technologies, Inc. ("Abuzz"),
an Internet knowledge management concern. The principal business of Abuzz
involves a software solution that facilitates the building of online communities
of interest by connecting people with questions to people with answers. This
acquisition is not material to the Company's consolidated financial statements.
8
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Advertising revenues accounted for approximately 72% and circulation
revenues accounted for 22% of the Company's revenues in the second quarter and
first six months of 1999. Advertising revenues influence the pattern of the
Company's consolidated revenues because they are seasonal in nature.
Traditionally, second-quarter and fourth-quarter advertising volume is higher
than that which occurs in the first and third quarters when economic activity
tends to be lower after the holiday season and in the summer period. Quarterly
trends are also affected by the overall economy and economic conditions that may
exist in specific markets served by each of the Company's business segments.
Newsprint is the major component of the Company's cost of raw materials.
The Company's cost of newsprint was lower in the second quarter and the first
six months of 1999 than in the comparable 1998 periods. The cost of newsprint
during the remainder of 1999 is expected to be below that of 1998.
The Company's consolidated financial results for the quarter and six
months ended June 27, 1999, compared with the quarter and six months ended June
28, 1998, were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
----------------------------------------------------------------------
June 27, June 28, June 27, June 28,
(Dollars in thousands, except per share data) 1999 1998 % Change 1999 1998 % Change
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $779,385 $749,190 4.0% $1,518,443 $1,471,753 3.2%
- ----------------------------------------------------------------------------------------------------------------------
Operating profit $154,861 $145,114 6.7% $ 270,102 $ 261,484 3.3%
- ----------------------------------------------------------------------------------------------------------------------
Net Income before special items $ 85,755 $ 78,227 9.6% $ 147,165 $ 140,273 4.9%
Special items (2,292) (3,212) N/A (2,292) (621) N/A
- ----------------------------------------------------------------------------------------------------------------------
Net Income $ 83,463 $ 75,015 11.3% $ 144,873 $ 139,652 3.7%
- ----------------------------------------------------------------------------------------------------------------------
Diluted earnings per share:
Net Income before special items $ 0.48 $ 0.40 20.0% $ 0.81 $ 0.72 12.5%
Special items (0.01) (0.02) N/A (0.01) (0.01) N/A
- ----------------------------------------------------------------------------------------------------------------------
Diluted earnings per share $ 0.47 $ 0.38 23.7% $ 0.80 $ 0.71 12.7%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
The 1999 second-quarter net income was $85.8 million or $.48 diluted
earnings per share compared with net income of $78.2 million or $.40 diluted
earnings per share in the second quarter of 1998, excluding special items. For
the first six months, net income was $147.2 million or $.81 diluted earnings per
share compared with net income of $140.3 million or $.72 diluted earning per
share for the first six months of 1998, excluding special items.
Including special items, the 1999 second-quarter net income was $83.5
million or $.47 diluted earnings per share compared with net income of $75.0
million or $.38 diluted earnings per share in the second quarter of 1998. For
the first six months net income, including special items, was $144.9 million or
$.80 diluted earnings per share compared with the net income of $139.7 million
or $.71 diluted earnings per share for the first six months of 1998.
Revenues for the second quarter of 1999 were $779.4 million, a 4.0%
increase over 1998 second-quarter revenues of $749.2 million. Revenues for the
first six months of 1999 were $1,518.4 million, a 3.2% increase from $1,471.8
million for the same period in 1998. The increase was primarily from higher
advertising rates.
Operating profit in the second quarter increased 9.5% to a record $158.9
million from $145.1 million, excluding special items. On the same basis,
operating profit for the first half of the year rose 4.8% to $274.1 million from
$261.5 million in the corresponding period of 1998.
Operating profit increased to $154.9 million in the second quarter of 1999
from $145.1 million in the second quarter of 1998, including special items. For
the first six months of 1999, operating profit rose to $270.1 million from
$261.5 million in the corresponding period of 1998.
Special items in the second quarter of 1999 included a $4.0 million
pre-tax charge ($.01 diluted earnings per share) for work force reduction
expenses at The Boston Globe. In the second quarter of 1998, special items
included a debt extinguishment charge and a gain on the sale of magazine
properties, which together amounted to a $5.7 million pre-tax
9
<PAGE>
charge ($.02 diluted earnings per share). In addition, in the first quarter of
1998 there was a pre-tax gain on the sale of equipment, which totaled $4.6
million ($.01 diluted earnings per share).
Excluding special items, EBITDA (earnings before interest, taxes,
depreciation and amortization) in the second quarter rose to $210.7 million from
$196.0 million in the 1998 second quarter. On the same basis, EBITDA for the six
months of 1999 was $378.6 million compared with $362.6 million in the same
period of 1998. The 1999 second-quarter EBITDA rose to $206.7 million from
$196.0 million in the comparable 1998 period, including special items. On the
same basis, EBITDA for the first six months of 1999 was $374.6 million compared
with $362.6 million in the same period of 1998.
EBITDA is presented since it is a widely accepted indicator of funds
available to service debt, although it is not a measure of liquidity or of
financial performance under generally accepted accounting principles ("GAAP").
The Company believes that EBITDA, while providing useful information, should not
be considered in isolation or as an alternative to net income or cash flows as
determined under GAAP.
Consolidated operating expenses for 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
----------------------------------------------------------------------------
June 27, June 28, June 27, June 28,
(Dollars in thousands) 1999 1998 % Change 1999 1998 % Change
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Production costs
Raw materials $ 82,463 $ 88,745 -7.1% $ 169,783 $ 176,523 -3.8%
Wages and benefits 152,228 148,269 2.7% 294,300 289,502 1.7%
Other 102,537 97,472 5.2% 202,941 198,443 2.3%
- ---------------------------------------------------------------------------------------------------
Total production costs 337,228 334,486 0.8% 667,024 664,468 0.4%
Selling, general and
administrative
expenses 287,296 269,590 6.6% 581,317 545,801 6.5%
- ---------------------------------------------------------------------------------------------------
Total expenses $624,524 $604,076 3.4% $1,248,341 $1,210,269 3.1%
- ---------------------------------------------------------------------------------------------------
</TABLE>
Production costs for the second quarter of 1999 were $337.2 million, a
0.8% increase from 1998 second-quarter production costs of $334.5 million. For
the first six months of 1999, production costs were $667.0 million, a 0.4%
increase from $664.5 million in the comparable period of 1998.
Selling, general and administrative expenses ("SGA expenses") in the
second quarter of 1999 were $287.3 million, a 6.6% increase over the 1998
second-quarter SGA expenses of $269.6 million. For the first six months of 1999,
SGA expenses were $581.3 million, a 6.5% increase, compared to $545.8 million
for the same period in 1998. These amounts include the $4.0 million buyout
charge for The Boston Globe in the second quarter of 1999. The higher level of
SGA expenses is partly attributable to increased national distribution and
promotion costs for The New York Times newspaper, as well as higher total salary
costs and buyouts.
Other Items
Interest expense-net increased to $12.8 million in the 1999 second quarter
and $24.7 million in the first six months of 1999 compared with $10.5 million
and $20.6 million in the comparable 1998 periods, principally due to additional
borrowings to fund the Company's share repurchase program.
The effective income tax rate for the second quarter of 1999 was 42.6%,
compared with 43.5% in the 1998 second quarter. For the first six months of 1999
the effective income tax rate was 42.7% compared with 43.7% in the first six
months of 1998. The decreases in the effective income tax rates were primarily
due to lower state and local income taxes.
10
<PAGE>
Consolidated revenues, EBITDA, depreciation and amortization and operating
profit by business segment were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
-------------------------------------------------------------------------------
June 27, June 28, June 27, June 28,
(Dollars in thousands) 1999 1998 % Change 1999 1998 % Change
- --------------------------------------------------------------------------------------------------------------------
(13 Weeks) (26 Weeks)
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Newspapers ...................... $ 705,995 $ 671,786 5.1% $ 1,384,245 $ 1,329,116 4.1%
Broadcast ....................... 40,805 41,049 -0.6% 73,897 74,347 -0.6%
Magazines ....................... 32,585 36,355 -10.4% 60,301 68,290 -11.7%
-------------------------------------------------------------------------------
Total ......................... $ 779,385 $ 749,190 4.0% $ 1,518,443 $ 1,471,753 3.2%
===============================================================================
EBITDA
Newspapers ...................... $ 184,850 $ 172,113 7.4% $ 338,391 $ 321,717 5.2%
Broadcast ....................... 19,068 18,020 5.8% 30,423 29,760 2.2%
Magazine ........................ 8,462 9,877 -14.3% 13,262 16,064 -17.4%
Unallocated Corporate Expenses .. (9,010) (7,969) -13.1% (15,093) (13,381) -12.8%
Joint Ventures .................. 3,353 3,995 -16.1% 7,644 8,454 -9.6%
-------------------------------------------------------------------------------
Total ......................... $ 206,723 $ 196,036 5.5% $ 374,627 $ 362,614 3.3%
===============================================================================
DEPRECIATION AND AMORTIZATION
Newspapers ...................... $ 41,036 $ 42,629 -3.7% $ 82,216 $ 84,644 -2.9%
Broadcast ....................... 4,362 4,410 -1.1% 8,732 8,866 -1.5%
Magazine ........................ 355 (2,126) N/A 686 (4,257) N/A
Corporate ....................... 2,756 2,014 36.9% 5,247 3,423 53.3%
Joint Ventures .................. 88 88 -- 176 176 --
-------------------------------------------------------------------------------
Total ......................... $ 48,597 $ 47,015 3.4% $ 97,057 $ 92,852 4.5%
===============================================================================
OPERATING PROFIT (LOSS)
Newspapers ...................... $ 143,814 $ 129,484 11.1% $ 256,175 $ 237,073 8.1%
Broadcast ....................... 14,705 13,610 8.1% 21,691 20,894 3.8%
Magazines ....................... 8,107 12,003 -32.5% 12,576 20,321 -38.1%
Unallocated Corporate Expenses .. (11,765) (9,983) -17.9% (20,340) (16,804) -21.0%
-------------------------------------------------------------------------------
Total ......................... $ 154,861 $ 145,114 6.7% $ 270,102 $ 261,484 3.3%
===============================================================================
</TABLE>
Newspaper Group: The Newspaper Group consists of The New York Times ("The
Times"), The Boston Globe ("The Globe"), 21 regional newspapers, newspaper
distributors, a news service, a features syndicate, TimesFax, licensing
operations of the New York Times databases and microfilm and Internet-related
ventures.
- --------------------------------------------------------------------------------
Three Months Ended Six Months Ended
-----------------------------------------------------
June 27, June 28, June 27, June 28,
(Dollars in thousands) 1999 1998 1999 1998
- --------------------------------------------------------------------------------
(13 Weeks) (26 Weeks)
Revenues $705,995 $671,786 $1,384,245 $1,329,116
- --------------------------------------------------------------------------------
EBITDA $184,850 $172,113 $ 338,391 $ 321,717
- --------------------------------------------------------------------------------
Operating Profit $143,814 $129,484 $ 256,175 $ 237,073
- --------------------------------------------------------------------------------
Revenues from Internet-related ventures in the Newspaper Group grew 41.4%
in the second quarter to $5.9 million versus $4.2 million in the 1998 second
quarter. For the first six months of 1999 revenue increased 31.8% to $10.7
million from $8.1 million in the comparable 1998 period.
11
<PAGE>
Internet-related revenue and operating loss in the Newspaper Group were as
follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
--------------------------------------------------------------------
June 27, June 28, June 27, June 28,
(Dollars in thousands) 1999 1998 % Change 1999 1998 % Change
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Advertising $ 5,130 $ 2,893 77.3% $ 9,103 $ 5,645 61.3%
Circulation and Other 771 1,281 -39.8% 1,622 2,492 -34.9%
--------------------------------------------------------------------
Total $ 5,901 $ 4,174 41.4% $ 10,725 $ 8,137 31.8%
====================================================================
Operating Loss $ (3,211) $(2,722) -18.0% $ (6,614) $(3,941) -67.8%
====================================================================
</TABLE>
Internet-related revenue and operating loss includes The New York Times on
the Web, New York Today, boston.com and the Regional Newspapers' Web sites. In
July 1998, The New York Times on the Web stopped charging users outside the
United States for subscription fees.
Total Newspaper Group revenues in the second quarter were $706.0 million
compared to $671.8 million in the comparable period of 1998. For the first six
months of 1999, revenues were $1,384.2 million compared with $1,329.1 million in
the first six months of 1998. The increase in 1999 revenues for the second
quarter and the first six months was primarily due to higher advertising rates.
Performance was strongest at The Times where advertising revenues increased 8.8%
for the quarter and 7.1% for the first six months. At the Regional Newspaper
Group, advertising revenues were also strong, increasing 6.0% for the quarter
and 6.4% for the first six months, due in part to the success of Celebrate 2000,
a comprehensive program of millennium-related advertising, circulation and
promotion initiatives. The Globe showed favorable variances in advertising
revenues, increasing 1.8% in the quarter, after experiencing two consecutive
quarters of declines. Circulation revenue was particularly strong at The Times,
increasing 2.7% for the quarter and 3.3% year to date, reflecting gains in both
daily and Sunday circulation. Second-quarter operating profit for the Newspaper
Group increased 14.2% to $147.8 million from $129.5 million in the 1998 second
quarter, excluding special items. For the first half of the year, operating
profit increased 9.7% to $260.2 million from $237.1 million in the comparable
1998 period, excluding special items.
12
<PAGE>
Advertising, circulation and other revenue, by major product of the
Newspaper Group, were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
---------------------------------------------------------------------------------------
June 27, June 28, June 27, June 28,
(Dollars in thousands) 1999 1998 % Change 1999 1998 % Change
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The New York Times
Advertising $292,683 $269,146 8.8% $ 568,236 $ 530,495 7.1%
Circulation 113,976 110,982 2.7% 227,594 220,397 3.3%
Other 34,031 33,924 0.3% 68,135 68,149 -
- ----------------------------------------------------------------------------------------------------------------
Total $440,690 $414,052 6.4% $ 863,965 $ 819,041 5.5%
- ----------------------------------------------------------------------------------------------------------------
The Boston Globe
Advertising $116,726 $114,616 1.8% $ 225,236 $ 225,911 -0.3%
Circulation 33,578 33,661 -0.3% 65,903 66,523 -0.9%
Other 2,153 2,093 2.9% 4,322 4,076 6.0%
- ----------------------------------------------------------------------------------------------------------------
Total $152,457 $150,370 1.4% $ 295,461 $ 296,510 -0.4%
- ----------------------------------------------------------------------------------------------------------------
Regional Newspapers
Advertising $ 89,773 $ 84,688 6.0% $ 177,667 $ 167,043 6.4%
Circulation 19,112 19,136 -0.1% 39,347 39,545 -0.5%
Other 3,963 3,540 12.0% 7,805 6,977 11.9%
- ----------------------------------------------------------------------------------------------------------------
Total $112,848 $107,364 5.1% $ 224,819 $ 213,565 5.3%
- ----------------------------------------------------------------------------------------------------------------
Total Newspaper Group
Advertising $499,182 $468,451 6.6% $ 971,139 $ 923,449 5.2%
Circulation 166,666 163,779 1.8% 332,844 326,465 2.0%
Other 40,147 39,556 1.5% 80,262 79,202 1.3%
- ----------------------------------------------------------------------------------------------------------------
Total $705,995 $671,786 5.1% $1,384,245 $1,329,116 4.2%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Advertising volume on a comparable basis for the quarter was as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Three Months Ended Six months Ended
-------------------------------------------------------------------------------------
(Inches in thousands,
preprints in thousands of June 27, June 28, June 27, June 28,
copies) 1999 1998 % Change 1999 1998 % Change
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The New York Times
Retail 137.4 136.0 1.0% 262.6 260.0 1.0%
National 379.6 352.0 7.8% 729.8 692.7 5.4%
Classified 264.2 263.7 0.2% 519.0 518.4 0.1%
Zoned 275.5 270.3 1.9% 499.7 492.8 1.4%
- ----------------------------------------------------------------------------------------------------------------
Total 1,056.7 1,022.0 3.4% 2,011.1 1,963.9 2.4%
- ----------------------------------------------------------------------------------------------------------------
Preprints 95,521 77,089 23.9% 192,030 151,988 26.3%
- ----------------------------------------------------------------------------------------------------------------
The Boston Globe
Retail 156.7 170.5 -8.1% 295.3 309.9 -4.7%
National 180.9 186.7 -3.1% 354.2 355.1 -0.3%
Classified 357.3 350.1 2.1% 694.7 693.0 0.2%
Zoned 75.0 79.1 -5.1% 130.7 140.6 -7.0%
- ----------------------------------------------------------------------------------------------------------------
Total 769.9 786.4 -2.1% 1,474.9 1,498.6 -1.6%
- ----------------------------------------------------------------------------------------------------------------
Preprints 190,836 181,132 5.4% 377,198 351,613 7.3%
- ----------------------------------------------------------------------------------------------------------------
Regional Newspapers
Retail 1,857.2 1,960.8 -5.3% 3,706.0 3,864.3 -4.1%
National 72.4 63.1 14.7% 140.9 132.5 6.4%
Legal 189.4 213.7 -11.4% 273.4 296.0 -7.6%
Classified 2,037.0 1,922.8 5.9% 3,954.8 3,714.8 6.5%
- ----------------------------------------------------------------------------------------------------------------
Total 4,156.0 4,160.4 -0.1% 8,075.1 8,007.6 0.8%
- ----------------------------------------------------------------------------------------------------------------
Preprints 269,634 258,854 4.2% 539,856 520,386 3.7%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Average circulation for The Times, The Globe and the Regional Newspapers
(excluding non-dailies) for the quarter and six months ended June 27, 1999,
compared with the quarter and six months ended June 28, 1998, was as follows:
13
<PAGE>
- --------------------------------------------------------------------------------
Three Months Ended
June 27, 1999
------------------------------------------------
(Copies in thousands) Weekday % Change Sunday % Change
- --------------------------------------------------------------------------------
Average Net Paid Circulation
The New York Times 1,102.6 2.9% 1,671.4 2.4%
The Boston Globe 462.1 -1.4% 722.8 -4.0%
Regional Newspapers 724.8 -- 765.6 -0.7%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Six Months Ended
June 27, 1999
------------------------------------------------
(Copies in thousands) Weekday % Change Sunday % Change
- --------------------------------------------------------------------------------
Average Net Paid Circulation
The New York Times 1,115.6 2.6% 1,689.4 2.7%
The Boston Globe 462.2 -0.7% 724.3 -3.4%
Regional Newspapers 749.8 -0.2% 795.9 -0.8%
- --------------------------------------------------------------------------------
Circulation growth for The Times was primarily due to improved
availability in major markets across the nation and programs to improve the
quality and levels of its home-delivery circulation base. Additionally, The
Times and The Globe have continued to make improvements in delivery service to
attract new readers and retain existing ones.
Broadcast Group: The Broadcast Group is comprised of eight
network-affiliated television stations and two radio stations.
- --------------------------------------------------------------------------------
Three Months Ended Six Months Ended
--------------------------------------------------------
June 27, June 28, June 27, June 28,
(Dollars in thousands) 1999 1998 1999 1998
- --------------------------------------------------------------------------------
(13 Weeks) (26 Weeks)
Revenues $40,805 $41,049 $73,897 $74,347
- --------------------------------------------------------------------------------
EBITDA $19,068 $18,020 $30,423 $29,760
- --------------------------------------------------------------------------------
Operating Profit $14,705 $13,610 $21,691 $20,894
- --------------------------------------------------------------------------------
Operating profit increased 8.1% in the second quarter to $14.7 million
from $13.6 million while revenues remained flat. For the first half of 1999,
revenues and operating profit totaled $73.9 million and $21.7 million compared
with $74.3 million and $20.9 million in the same period of 1998, when four of
the Company's eight television stations benefited from broadcasting the Winter
Olympics. Second-quarter and first-half operating profit and revenues were
adversely affected by tornado storm coverage at the Company's Oklahoma City
station.
14
<PAGE>
Magazine Group: The Magazine Group is comprised of three golf publications
and related activities in the golf field.
- --------------------------------------------------------------------------------
Three Months Ended Six Months Ended
-----------------------------------------------------
June 27, June 28, June 27, June 28,
(Dollars in thousands) 1999 1998 1999 1998
- --------------------------------------------------------------------------------
(13 Weeks) (26 Weeks)
Revenues
Magazines $32,585 $33,855 $60,301 $63,290
Non-Compete Agreement -- 2,500 -- 5,000
- --------------------------------------------------------------------------------
Total Revenues $32,585 $36,355 $60,301 $68,290
- --------------------------------------------------------------------------------
EBITDA $ 8,462 $ 9,877 $13,262 $16,064
- --------------------------------------------------------------------------------
Operating Profit
Magazines $ 8,107 $ 9,503 $12,576 $15,321
Non-Compete Agreement -- 2,500 -- 5,000
- --------------------------------------------------------------------------------
Total Operating Profit $ 8,107 $12,003 $12,576 $20,321
- --------------------------------------------------------------------------------
The Magazine Group's second-quarter revenues and operating profit were
$32.6 million and $8.1 million compared with $33.9 million and $9.5 million in
the 1998 second quarter. For the first half of 1999, revenues and operating
profit were $60.3 million and $12.6 million compared with $63.3 million and
$15.3 million in the first half of 1998. Excluded from these results is revenue
from the amortization of a non-compete agreement that ended last July, which
increased 1998 second-quarter and first-half operating profit by $2.5 million
and $5.0 million. Consolidation in the golf equipment industry and a competitive
rate environment adversely affected the Group's revenues.
Liquidity and Capital Resources
Net cash provided by operating activities was $228.3 million for the first
six months of 1999, compared with $215.0 million for the first six months of
1998. The increase of $13.3 million in 1999 was primarily due to improved
earnings. Net cash used in investing activities was $28.1 million in the first
six months of 1999, compared with $21.8 million in the 1998 comparable period.
The increase of $6.3 million in 1999 was primarily due to additional
contributions to minority interest investments in Internet-related companies.
This increase was partially offset by reduced levels of capital expenditures.
Net cash used in financing activities was $204.3 million in the first six months
of 1999, compared with $257.7 million in the 1998 comparable period. The
decrease of $53.4 million in 1999 was primarily related to an increase in
commercial paper borrowings to fund increased levels of stock repurchases, and
partially offset by the debt extinguishment in 1998.
The Company believes that cash generated from its operations and the
availability of funds from external sources 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 75% at June 27, 1999, and 87% at June 28,
1998. This decrease is principally due to an increase in commercial paper
outstanding at June 27, 1999, mostly resulting from the funding of stock
repurchases. The ratio of long-term debt and capital lease obligations as a
percentage of total capitalization was 30% at June 27, 1999, compared with 21%
at June 28, 1998. This increase was principally due to stock repurchases.
15
<PAGE>
Financing: The Company's total debt, including commercial paper and
capital leases, was $805.9 million at June 27, 1999, and $562.0 million at June
28, 1998. The increase in total debt was primarily from an increase in
commercial paper. Effective July 1999, the Company increased the funds available
under its revolving credit agreements from $300 million to $400 million, which
require, among other provisions, specified levels of stockholders' equity. A
revolving credit agreement for $200 million expires in June 2000, and an
additional revolving credit agreement for $200 million expires in July 2002. The
Company had $206.6 million in commercial paper outstanding at June 27, 1999,
which obligations are supported by these revolving credit agreements. No
commercial paper was outstanding at June 28, 1998. Approximately $564.0 million
of stockholders' equity was unrestricted under these agreements at June 27,
1999, and $898.6 million was unrestricted at June 28, 1998. This decrease was
principally due to stock repurchases.
Capital Expenditures: The Company currently estimates that capital
expenditures for 1999 will range from $90.0 million to $100.0 million. The
Company currently anticipates that depreciation and amortization expense will
approximate $195.0 million for 1999 compared with $188.2 million in 1998.
Year 2000 Readiness Disclosure: The Company has evaluated the potential
impact of the situation commonly known as the "Year 2000 problem." The Year 2000
problem, which is common to most corporations, concerns the ability of
information systems, primarily computer software programs, to properly recognize
and process date-sensitive information related to the Year 2000.
In April 1997 the Company began to identify all of its Year 2000 concerns
for all facets of its operations. A Year 2000 Program Office was established,
and a detailed inventory of all systems issues required to be addressed in
connection with the Year 2000 was created. Information was gathered for each
system including:
o type of system and its relative importance
o probable method and cost of remediation and
o targeted start and end dates for addressing Year 2000 issues.
This inventory includes systems to:
o create the Company's publications
o operate the Company's production and distribution facilities
o operate the Company's broadcast stations
o operate the Company's business and financial applications and
o control facility and infrastructure areas (building systems,
utilities, security systems, etc.).
The systems identified in the inventory were further categorized into five
priority classifications:
o Shutdown - highest priority. If these systems (e.g., editorial
systems, presses, and utilities) were to fail, the Company's ability
to continue its operations would be seriously impaired.
Approximately 8% of the identified systems are in this category.
o Impractical Workaround - If these systems were to fail, the
available alternatives are too expensive to implement. Approximately
9%.
16
<PAGE>
o Costly Workaround - If these systems were to fail, a feasible but
costly alternative exists. Approximately 28%.
o Additional But Manageable Cost - If these systems fail, an
alternative solution exists at a moderate cost. Approximately 22%.
o No Impact - Little if any consequence to the business if these
systems fail. Approximately 33%.
By October 1997 the Company had completed the inventory phase and turned
its attention to the remediation phase. Target dates for each item in the
inventory were identified and are continually monitored to ensure timely
resolution of the issues. The remediation strategy involves a mix of purchasing
new systems, modifying existing systems, retiring obsolete systems and
confirming vendor compliance. As of June 27, 1999, 97% of all systems had been
remediated and tested. Testing systems for Year 2000 compliance includes the use
of dates that simulate transactions and environments, both prior and subsequent
to the Year 2000, including specific testing for leap year.
The Company has communicated with most of its suppliers and other vendors,
and is contacting its significant advertisers, seeking assurances that they will
be Year 2000 compliant. Although there is no certainty that any major business
partner will function without disruption in the Year 2000, the Company's goal is
to obtain detailed information about its advertisers' and suppliers' Year 2000
plans and to identify those companies that could pose a significant risk of
failure. The Company will make alternate arrangements where necessary.
Generally, the Company is not dependent on a single source for any
products or services, except for products or services supplied by public
utilities. In the event a significant supplier or other vendor is unable to
provide products or services to the Company due to a Year 2000 failure, the
Company believes it has adequate alternate sources for such products or
services. There is no guarantee, however, that such alternate products or
services would be available at the same terms and conditions or that the Company
would not experience some adverse effects as a result of switching to alternate
sources.
To date, the Company has identified total estimated costs in connection
with the Year 2000 problem of between $15 million and $20 million. This estimate
does not include systems previously scheduled for replacement without regard to
the Year 2000 issue. Of this amount, approximately $10 million will be for
systems replacements involving capital outlays (which are not deducted as an
expense on the Company's Consolidated Statements of Income). The remaining
amount is being deducted as an expense on the Company's Consolidated Statements
of Income through 1999. Approximately 75% of this expense total is attributable
to the use of currently available internal resources. The cost of the Company's
Year 2000 remediation efforts is being funded with cash flows from operations.
With respect to its internal operations, those over which the Company has
direct control, the Company believes that all of its critical systems (i.e.,
those categorized in the shutdown or impractical workaround categories described
above) will be remediated and tested by the end of the third quarter of 1999.
Like most large business enterprises, the Company is reliant upon certain
critical vendors. Certain of these vendors have yet to provide a Year 2000
compliant product, while services that are provided by certain other vendors
cannot be tested (i.e., power and telecommunications). The Company believes the
possibility of critical vendor failures to be remote based on the information
supplied to date by such critical vendors.
17
<PAGE>
The Company's Year 2000 strategies include contingency planning,
encompassing business continuity both within the Company and in the external
business environment. The planning effort encompasses all critical Company
areas. The Company's contingency planning for the Year 2000 will address a
variety of scenarios that could occur.
Because of the Company's extensive efforts to formulate and carry out an
effective Year 2000 remediation program, the Company believes that such
remediation will be completed on a timely basis and should effectively minimize
any disruption to the Company's operations due to Year 2000 issues. The Company
does not expect Year 2000 issues to have a material effect on its results of
operations, liquidity or financial condition.
Factors That Could Affect Operating Results
Except for the historical information contained herein, the matters
discussed in this quarterly report are forward-looking statements that involve
risks and uncertainties that could cause actual results to differ materially
from those predicted by such forward-looking statements. These risks and
uncertainties include national and local conditions, as well as competition,
that could influence the levels (rate or volume) of retail, national and
classified advertising and circulation generated by the Company's various
markets and material increases in newsprint and magazine paper prices. They also
include other risks detailed from time to time in the Company's publicly-filed
documents, including the Company's Annual Report on Form 10-K for the period
ended December 27, 1998.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company's quantitative and qualitative market risk is principally
associated with market interest rate fluctuations related to its debt
obligations. The Company does not consider such market risk significant.
18
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
12 Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the period for which
this report is filed.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE NEW YORK TIMES COMPANY
(Registrant)
Date: August 11, 1999 /S/ John M. O'Brien
-----------------------------
John M. O'Brien
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
20
<PAGE>
Exhibit Index to Quarterly Report Form 10-Q
Quarter Ended June 27, 1999
Exhibit No. Exhibit
- ----------- -------
12 Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
21
THE NEW YORK TIMES COMPANY
Ratio of Earnings to Fixed Charges
(Dollars in thousands, except ratio)
(Unaudited)
Exhibit 12
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 27, June 28, June 27, June 28,
1999 1998 1999 1998
-------------------------------------------------
<S> <C> <C> <C> <C>
Earnings from continuing operations before fixed charges
Income before income taxes and income from joint ventures $142,020 $ 142,630 $245,365 $ 253,476
Less net gain on dispositions of assets -- (8,000) (12,619)
Distributed earnings from less than fifty percent owned affiliates 2,000 4,286 3,475 7,126
-------------------------------------------------
Adjusted pre-tax earnings from continuing operations 144,020 138,916 248,840 247,983
Fixed charges less capitalized interest 16,028 13,677 30,932 27,654
-------------------------------------------------
Earnings from continuing operations before fixed charges $160,048 $ 152,593 $279,772 $ 275,637
=================================================
Fixed charges
Interest expense, net of capitalized interest $ 13,387 $ 11,327 $ 25,723 $ 22,953
Capitalized interest 173
Portion of rentals representative of interest factor 2,641 2,350 5,209 4,701
-------------------------------------------------
Total fixed charges $ 16,028 $ 13,677 $ 30,932 $ 27,827
=================================================
Ratio of earnings to fixed charges 9.99 11.16 9.04 9.91
=================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Condensed Financial Statements as of and for the quarter ended
June 27, 1999 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-26-1999
<PERIOD-START> DEC-28-1998
<PERIOD-END> JUN-27-1999
<CASH> 31,912
<SECURITIES> 0
<RECEIVABLES> 383,235
<ALLOWANCES> 40,702
<INVENTORY> 27,999
<CURRENT-ASSETS> 520,415
<PP&E> 2,245,046
<DEPRECIATION> 961,952
<TOTAL-ASSETS> 3,457,569
<CURRENT-LIABILITIES> 696,238
<BONDS> 0
0
0
<COMMON> 18,863
<OTHER-SE> 1,385,920
<TOTAL-LIABILITY-AND-EQUITY> 3,457,569
<SALES> 0
<TOTAL-REVENUES> 1,518,443
<CGS> 0
<TOTAL-COSTS> 667,024
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,737
<INCOME-PRETAX> 252,833
<INCOME-TAX> 107,960
<INCOME-CONTINUING> 144,873
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 144,873
<EPS-BASIC> .81
<EPS-DILUTED> .80
</TABLE>
