FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For Quarter Ended June 25, 2000
-------------
Commission file number 1-5837
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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 43RD STREET, NEW YORK, NEW YORK
----------------------------------------
(Address of principal executive offices)
10036
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(Zip Code)
Registrant's telephone number, including area code 212-556-1234
------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes |X| No |_|.
Number of shares of each class of the registrant's common stock outstanding as
of August 4, 2000 (exclusive of treasury shares):
Class A Common Stock 166,125,783 shares
Class B Common Stock 847,158 shares
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars and shares in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------- ----------------------------
June 25, June 27, June 25, June 27,
2000 1999 2000 1999
---------------------------- ----------------------------
(13 Weeks) (26 Weeks)
<S> <C> <C> <C> <C>
Revenues
Advertising .............................. $ 658,320 $ 562,170 $1,275,073 $1,085,056
Circulation .............................. 180,185 172,801 360,609 344,857
Other .................................... 47,083 44,414 92,838 88,530
---------- ---------- ---------- ----------
Total ................................. 885,588 779,385 1,728,520 1,518,443
---------- ---------- ---------- ----------
Production costs
Raw materials ............................ 87,915 82,468 173,504 169,760
Wages and benefits ....................... 163,950 159,173 329,407 310,395
Other .................................... 113,106 104,904 222,821 209,514
---------- ---------- ---------- ----------
Total ................................. 364,971 346,545 725,732 689,669
Selling, general and administrative expenses 334,739 277,979 661,977 558,672
---------- ---------- ---------- ----------
Total ................................. 699,710 624,524 1,387,709 1,248,341
---------- ---------- ---------- ----------
Operating profit ........................... 185,878 154,861 340,811 270,102
Income from joint ventures ................. 3,622 3,265 7,249 7,468
Interest expense - net ..................... 15,190 12,841 30,532 24,737
---------- ---------- ---------- ----------
Income before income taxes ................. 174,310 145,285 317,528 252,833
Income taxes ............................... 72,572 61,822 132,727 107,960
---------- ---------- ---------- ----------
Net income ................................. $ 101,738 $ 83,463 $ 184,801 $ 144,873
========== ========== ========== ==========
Average number of common shares outstanding
Basic .................................... 169,501 176,083 171,233 177,885
Diluted .................................. 173,047 179,331 175,110 181,225
Per share of common stock
Basic earnings ........................... $ .60 $ .47 $ 1.08 $ .81
========== ========== ========== ==========
Diluted earnings ......................... $ .59 $ .47 $ 1.06 $ .80
========== ========== ========== ==========
Dividends ................................ $ .115 $ .105 $ .220 $ .200
========== ========== ========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
June 25, December 26,
2000 1999
---------- ------------
ASSETS (Unaudited)
<S> <C> <C>
Current Assets
Cash and cash equivalents ..................... $ 37,549 $ 63,861
Accounts receivable-net ....................... 370,613 366,754
Inventories
Newsprint and magazine paper ............... 26,866 23,666
Work-in-process and other .................. 5,429 4,984
---------- ----------
Total inventories ....................... 32,295 28,650
Deferred income taxes ......................... 53,611 53,611
Assets held for sale .......................... 36,581 37,796
Other current assets .......................... 66,818 64,236
---------- ----------
Total current assets .................... 597,467 614,908
---------- ----------
Other Assets
Investments in joint ventures ................. 121,216 121,940
Property, plant and equipment (less accumulated
depreciation of $1,038,025 in 2000
and $976,767 in 1999) ....................... 1,216,475 1,218,396
Intangible assets acquired
Cost in excess of net assets acquired (less
accumulated amortization of $292,898
in 2000 and $270,235 in 1999) ............... 1,090,633 953,709
Other intangible assets acquired (less
accumulated amortization of $96,151
in 2000 and $85,365 in 1999) ................ 441,023 351,309
Miscellaneous assets .......................... 240,863 235,540
---------- ----------
TOTAL ASSETS ..................................... $3,707,677 $3,495,802
========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
June 25, December 26,
2000 1999
----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited)
<S> <C> <C>
Current Liabilities
Commercial paper outstanding .................................... $ 363,480 $ --
Accounts payable ................................................ 194,973 191,706
Accrued payroll and other related liabilities ................... 93,262 105,257
Accrued expenses ................................................ 203,044 193,553
Unexpired subscriptions ......................................... 81,369 80,161
Current portion of long-term debt and
capital lease obligations ................................... 2,593 102,837
----------- -----------
Total current liabilities ................................... 938,721 673,514
----------- -----------
Other Liabilities
Long-term debt .................................................. 553,009 512,627
Capital lease obligations ....................................... 84,433 85,700
Deferred income taxes ........................................... 125,946 141,033
Other ........................................................... 663,160 634,270
----------- -----------
Total other liabilities ..................................... 1,426,548 1,373,630
----------- -----------
Total liabilities ........................................... 2,365,269 2,047,144
----------- -----------
Stockholders' Equity
Capital stock of $.10 par value
Class A - authorized 300,000,000 shares; issued: 2000 -
179,019,788; 1999 - 177,971,194 (including treasury shares:
2000 - 11,592,263; 1999 - 5,000,000) ...................... 17,902 17,797
Class B - convertible - authorized 847,158 shares; issued:
2000 - 847,158; 1999 - 847,240 ............................ 85 85
Additional paid-in capital ...................................... 27,055 --
Accumulated other comprehensive (loss) income ................... (4,442) 3,170
Retained earnings ............................................... 1,752,819 1,600,743
Common stock held in treasury, at cost .......................... (451,011) (173,137)
----------- -----------
Total stockholders' equity .................................... 1,342,408 1,448,658
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ......................... $ 3,707,677 $ 3,495,802
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
---------------------------
June 25, June 27,
2000 1999
---------------------------
(26 Weeks)
<S> <C> <C>
OPERATING ACTIVITIES
Net cash provided by operating activities ............ $ 299,140 $ 228,290
--------- ---------
INVESTING ACTIVITIES
Additions to property, plant and equipment ........... (28,157) (29,291)
Business acquired .................................... (296,278) --
Net proceeds from dispositions ....................... -- 11,434
Other-net ............................................ (9,634) (10,238)
--------- ---------
Net cash used in investing activities ................ (334,069) (28,095)
--------- ---------
FINANCING ACTIVITIES
Commercial paper borrowings .......................... 363,480 82,530
Long-term debt
Proceeds ......................................... 40,000 --
Payments ......................................... (101,433) (684)
Capital shares
Issuances ........................................ 23,329 7,447
Repurchases ...................................... (279,160) (257,965)
Dividends paid to stockholders ....................... (37,599) (35,602)
--------- ---------
Net cash provided by/(used in) financing activities .. 8,617 (204,274)
--------- ---------
Decrease in cash and cash equivalents ................ (26,312) (4,079)
Cash and cash equivalents at the beginning of the year 63,861 35,991
--------- ---------
Cash and cash equivalents at the end of the quarter .. $ 37,549 $ 31,912
========= =========
</TABLE>
SUPPLEMENTAL CASH FLOW INFORMATION
NONCASH FINANCING AND INVESTING TRANSACTIONS
In 1999 the Company purchased a minority interest in TheStreet.com for
$15.6 million, of which $3.6 million was in cash and $12.0 million
represents an irrevocable credit for services to be used by TheStreet.com
through February 2003. Investment and deferred revenue accounts were
increased by $12.0 million accordingly. As of June 25, 2000, approximately
$2.3 million of advertising credits have been utilized.
BUSINESS ACQUIRED
In January of 2000 the Company acquired certain assets ($313.8 million)
and assumed certain liabilities ($17.5 million) of a newspaper, the
Worcester Telegram & Gazette, for $296.3 million in cash (see Note 3).
OTHER
Amounts in these statements of cash flows are presented on a cash basis
and may differ from those shown in other sections of the financial
statements.
See Notes to Condensed Consolidated Financial Statements.
5
<PAGE>
THE NEW YORK TIMES COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. General
The accompanying Notes to Condensed Consolidated Financial Statements
should be read in conjunction with the Consolidated Financial Statements
included in the annual report on Form 10-K for the year ended December 26, 1999,
for The New York Times Company (the "Company") filed with the Securities and
Exchange Commission (the "SEC"). In the opinion of management, all adjustments
necessary for a fair presentation of the financial position and results of
operations, as of and for the interim period ended, have been included. Due to
the seasonal nature of the Company's business, results for the interim periods
are not necessarily indicative of a full year's operations. The fiscal periods
included herein comprise 13 weeks for the three-month periods and 26 weeks for
the six-month periods.
Certain reclassifications have been made to the 1999 Condensed
Consolidated Financial Statements to conform with classifications used at June
25, 2000.
2. Proposed Tracking Stock
On January 20, 2000, the Board of Directors of the Company authorized,
subject to shareholder approval, the issuance of a new class of stock ("Class C
Stock"). On January 28, 2000, the Company filed a registration statement with
the SEC on Form S-3 (the "Form S-3") related to a proposed initial public
offering of Class C Stock, which is intended to track the performance of the
Company's Internet business division, New York Times Digital ("NYTD group"). At
the Annual Meeting of Stockholders held on May 23, 2000, stockholders authorized
the filing of an amendment to the Company's certificate of incorporation to
create this new class of stock. As of the date of this report, the Form S-3 has
not become effective and the amendment to the certificate of incorporation has
not been filed with the Secretary of State. The Company is currently evaluating
market conditions.
The Company separates for financial reporting purposes the NYT group and
the NYTD group (see Note 11). The NYT group includes all of the other business
segments of the Company: Newspaper, Broadcast and Magazine, except for the
businesses of the NYTD group. The NYT group also includes a retained interest in
the NYTD group, which is currently 100%. This retained interest will decline
upon any issuance of Class C Stock. The NYTD group includes NYTimes.com,
NYToday.com, Boston.com, WineToday.com, GolfDigest.com and Abuzz. The NYTD
group's operating results as presented in the financial statements included in
Note 11 of the Notes to Condensed Consolidated Financial Statements reflect the
effect of various inter-group arrangements and policies for license fees,
inter-group services and income taxes.
Beginning in 2000, and coinciding with the effective date of these various
arrangements (January 1, 2000), the Company's management determined that its
reportable segments consist of newspapers, broadcast, magazines and the NYTD
group. These segments will be evaluated regularly by key management in assessing
performance and allocating resources.
6
<PAGE>
3. Acquisitions/Dispositions
On January 7, 2000, the Company acquired certain assets and assumed
certain liabilities of a newspaper, the Worcester Telegram & Gazette ("T&G"), in
Worcester, Mass., for $296.3 million in cash. The cost of this acquisition was
funded through the Company's commercial paper program. This transaction was
accounted for as a purchase and, accordingly, the T&G has been included in the
Company's Condensed Consolidated Financial Statements (as of January 7, 2000). A
portion of the purchase price was allocated to goodwill ($163.2 million), a
portion to other intangibles ($100.5 million) (principally advertising and
subscriber relationships) and the remainder to other assets acquired net of
liabilities assumed. The amount allocated to goodwill will be amortized over a
40-year period and the amount allocated to other intangibles will be amortized
over an average of 19 years. The purchase price allocation is preliminary and
further adjustments are possible based on the completion of a final valuation.
If this acquisition had occurred in the beginning of 1999, it would not have had
a material impact on the results of operations for periods presented herein.
On February 17, 2000, the Company made a decision to offer for sale the
Santa Barbara News-Press in Santa Barbara, Calif., the Daily World in Opelousas,
La., the Daily News in Palatka, Fla., the Lake City Reporter in Lake City, Fla.,
The News-Sun in Sebring/Avon Park, Fla., The News-Leader in Fernandina Beach,
Fla., the Marco Island Eagle in Marco Island, Fla., and the operations of all
nine of its telephone directories, which were a part of the Regional Newspaper
Group. The net assets of these newspapers and telephone directory operations
have been included in the caption "Assets held for sale" in the Company's
Condensed Consolidated Balance Sheets at their carrying value of $36.6 million
at June 25, 2000, and $37.8 million at December 26, 1999. The sales are expected
to be completed by December 31, 2000. The operations of these newspapers and
telephone directories are not material to the Company.
On June 26, 2000, the Company agreed to sell to TransWestern Publishing
Company, LLC, all nine telephone directories. This transaction closed on July
18, 2000. On July 7, 2000, the Company agreed to sell the Santa Barbara
News-Press to Ampersand Publishing, LLC. This sale, which is subject to
regulatory approval, is expected to close in the third quarter of 2000.
4. Income Taxes
Reconciliations between the effective rate on income before income taxes
and the federal statutory rate are as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------------------------------------------------------------------------------------------------------------
June 25, 2000 June 27, 1999 June 25, 2000 June 27, 1999
------------------------------------------------------------------------------------------------------------------------------------
% of % of % of % of
(Dollars in thousands) Amount Pre-tax Amount Pre-tax Amount Pre-tax Amount Pre-tax
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tax at the federal statutory rate ................. $ 61,009 35.0% $ 50,850 35.0% $ 111,135 35.0% $ 88,492 35.0%
State and local income taxes-net of federal benefit 8,572 4.9% 8,378 5.8% 16,266 5.1% 15,045 6.0%
Amortization of nondeductible intangible
assets acquired ................................... 3,156 1.8% 2,594 1.8% 5,734 1.8% 4,572 1.8%
Other-net ......................................... (165) -0.1% -- -- (408) -0.1% (149) -0.1%
------------------------------------------------------------------------------
Income tax expense ................................ $ 72,572 41.6% $ 61,822 42.6% $ 132,727 41.8% $ 107,960 42.7%
==============================================================================
</TABLE>
7
<PAGE>
5. Debt Obligations
In June 2000 total available funds under revolving credit agreements were
increased to $600.0 million from $400.0 million. The Company's one-year
agreement was renewed and increased to $300.0 million from $200.0 million and
will now mature in June 2001. The Company's multi-year agreement was renewed and
increased to $300.0 million from $200.0 million and will now mature in June
2005.
The revolving credit agreements require, among other provisions, specified
levels of stockholders' equity. Approximately $356.7 million of stockholders'
equity was unrestricted under these agreements as of June 25, 2000, and $509.2
million was unrestricted at December 26, 1999. The decline in the level of
unrestricted stockholders' equity was primarily due to stock repurchases.
As of June 25, 2000, the amount outstanding under the Company's commercial
paper program, which is supported by these revolving credit agreements, was
$363.5 million. The amount available under these facilities was $236.5 million
as of June 25, 2000. No amounts were outstanding under the Company's revolving
credit agreements as of June 25, 2000.
In March 2000 the Company issued $40.0 million of 7% subordinated notes
due March 21, 2003, to three venture capital firms. After the consummation of
the proposed initial public offering of Class C stock, this debt will be
convertible, at the election of the venture capital firms, into shares of Class
C stock intended to represent approximately 6.7% of the pre-offering equity of
the NYTD group. If there is no offering, this debt will not be convertible. The
Company has agreed to give the venture capital firms piggyback and demand
registration rights for Class C stock issued upon conversion.
As of June 25, 2000, and December 26, 1999, the Company had outstanding
$1.0 billion and $701.2 million in total debt including commercial paper and
capital leases. The increase is primarily attributable to higher levels of
commercial paper outstanding. On April 28, 2000, the Company repaid $100.0
million due on its six and one-half year senior notes. The remainder of the
Company's debt and capital leases generally mature between March 2003 and March
2025.
6. Stock Repurchase Program
During the first six months of 2000, the Company repurchased 6.6 million
shares of Class A Common Stock at a cost of $279.2 million. The average price of
these repurchases was $42 per share. As of August 4, 2000, the remaining amount
of repurchase authorization from the Company's Board of Directors was $97.7
million.
7. Voluntary Staff Reductions
No charges for work force reductions were recorded for the first six
months of 2000 or for the first quarter of 1999. A $4.0 million work force
reduction charge was recorded in the second quarter of 1999. Work force
reduction accruals are included in "Accrued expenses" on the Company's Condensed
Consolidated Balance Sheets and amounted to $10.8 million at June 25, 2000, and
$20.0 million at December 26, 1999. Most of the accruals outstanding at June 25,
2000, will be paid within one year.
8
<PAGE>
8. Comprehensive Income
Comprehensive income for the Company principally includes unrealized
gains/(losses) on available-for-sale securities, as defined under SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," foreign
currency translation adjustments, as well as net income reported in the
Company's Condensed Consolidated Statements of Income.
Comprehensive income for 2000 and 1999 was as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
------------------------------------------------------------------------------------------------------------------------
June 25, June 27, June 25, June 27,
(Dollars in thousands) 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Income $ 101,738 $ 83,463 $ 184,801 $ 144,873
Foreign currency translation gains 1,127 825 888 1,443
Change in unrealized (losses)/gains on marketable securities (8,539) 24,968 (15,768) 24,968
Income tax benefit/(charge) 4,035 (11,587) 7,268 (11,852)
------------------------------------------------------------------------------------------------------------------------
Comprehensive income $ 98,361 $ 97,669 $ 177,189 $ 159,432
------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Accumulated other comprehensive (loss) income on the Company's
Condensed Consolidated Balance Sheets was net of a deferred income tax asset of
$4.7 million as of June 25, 2000, and net of a deferred income tax liability of
$2.6 million as of December 26, 1999.
9. Dividend Rate Increase
On April 27, 2000, the Board of Directors authorized a $.01 per share
increase in the quarterly dividend on its Class A and Class B Common Stock from
$.105 per share to $.115 per share, effective with the June 2000 dividend.
9
<PAGE>
10. Segment Statements of Income
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
-----------------------------------------------------------------------------------------------------
June 25, June 27, June 25, June 27,
(Dollars in thousands) 2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Newspapers ....................... $ 798,203 $ 701,900 $ 1,568,808 $ 1,377,060
Broadcast ........................ 41,322 40,804 75,673 73,897
Magazines ........................ 35,583 32,584 64,491 60,299
New York Times Digital ........... 13,464 5,009 25,033 8,832
Intersegment eliminations (A) (2,984) (912) (5,485) (1,645)
--------------------------------------------------------------
Total ............................ $ 885,588 $ 779,385 $ 1,728,520 $ 1,518,443
==============================================================
OPERATING PROFIT (LOSS)
Newspapers ....................... $ 187,673 $ 148,568 $ 350,742 $ 265,968
Broadcast ........................ 13,625 14,705 21,010 21,691
Magazines ........................ 9,592 8,191 14,097 12,722
New York Times Digital ........... (15,472) (4,619) (25,521) (9,719)
Unallocated corporate expensess... (9,540) (11,984) (19,517) (20,560)
--------------------------------------------------------------
Total ............................ 185,878 154,861 340,811 270,102
Income from joint ventures ....... 3,622 3,265 7,249 7,468
Interest expense, net ............ 15,190 12,841 30,532 24,737
--------------------------------------------------------------
Income before income taxes ....... 174,310 145,285 317,528 252,833
Income taxes ..................... 72,572 61,822 132,727 107,960
--------------------------------------------------------------
NET INCOME ....................... $ 101,738 $ 83,463 $ 184,801 $ 144,873
==============================================================
</TABLE>
See Management's Discussion and Analysis of Financial Condition and
Results of Operations in this Form 10-Q for more information on the Company's
reportable operating segments.
(A) Intersegment eliminations primarily include revenues between New York Times
Digital and other segments.
10
<PAGE>
11. Consolidating Information
Below is the consolidating financial information of the NYT group and the
NYTD group. The financial information reflects the businesses of the NYT group
and the NYTD group, including the allocation of revenues and expenses between
the NYT group and the NYTD group in accordance with the Company's allocation
policies. The NYT group presented below excludes its retained interest in the
NYTD group, which is currently 100%. This retained interest will decline upon
any issuance of Class C Stock.
The allocations are as follows: a) Inter-group advertising revenues
between the NYT and NYTD groups, b) a portion of classified advertising revenues
from the NYT group to the NYTD group, c) license fees charged by the NYT group
to the NYTD group for the electronic use of the trademarks and copyrights owned
by the NYT group, d) a portion of NYT group expenses for general and
administrative services and shared processing services from the NYT group to the
NYTD group. Additionally, the income tax benefit relating to the operations of
the NYTD group, which could be utilized on a consolidated basis, were allocated
to the NYTD group. The Company believes that the aforementioned allocations were
made on a reasonable basis.
11
<PAGE>
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended June 25, 2000 Three Months Ended June 27, 1999
------------------------------------------------------------------------------------- --------------------------------------------
The New The New
The NYT The NYTD Elimina- York Times The NYT The NYTD Elimina- York Times
(In thousands) Group Group tions Company Group Group tions Company
------------------------------------------------------------------------------------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
External non-internet revenues $ 872,057 $ -- $ -- $ 872,057 $ 773,835 $ -- $ -- $ 773,835
External internet revenues 785 12,746 -- 13,531 541 5,009 -- 5,550
Inter-group revenue 2,266 718 (2,984) -- 912 -- (912) --
------------------------------------------------------------------------------------- --------------------------------------------
Total 875,108 13,464 (2,984) 885,588 775,288 5,009 (912) 779,385
------------------------------------------------------------------------------------- --------------------------------------------
COSTS AND EXPENSES
Production costs:
External expenses 357,878 7,093 -- 364,971 342,822 3,723 -- 346,545
Inter-group expense 219 1,310 (1,529) -- -- 912 (912) --
Selling, general and administrative
expenses:
External expenses 315,572 19,167 -- 334,739 273,564 4,415 -- 277,979
Inter-group allocated expenses 89 1,366 (1,455) -- (578) 578 -- --
------------------------------------------------------------------------------------- --------------------------------------------
Total 673,758 28,936 (2,984) 699,710 615,808 9,628 (912) 624,524
------------------------------------------------------------------------------------- --------------------------------------------
OPERATING PROFIT (LOSS) 201,350 (15,472) -- 185,878 159,480 (4,619) -- 154,861
Income from joint ventures 3,622 -- -- 3,622 3,265 -- -- 3,265
Interest expense, net 15,048 142 -- 15,190 12,841 -- -- 12,841
------------------------------------------------------------------------------------- --------------------------------------------
Income (loss) before income taxes 189,924 (15,614) -- 174,310 149,904 (4,619) -- 145,285
------------------------------------------------------------------------------------- --------------------------------------------
Income tax expense (benefit) 79,130 (6,558) -- 72,572 63,804 (1,982) -- 61,822
------------------------------------------------------------------------------------- --------------------------------------------
NET INCOME/(LOSS) $ 110,794 $ (9,056) $ -- $ 101,738 $ 86,100 $ (2,637) $ -- $ 83,463
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 25, 2000 Six Months Ended June 27, 1999
------------------------------------------------------------------------------------- --------------------------------------------
The New The New
The NYT The NYTD Elimina- York Times The NYT The NYTD Elimina- York Times
(In thousands) Group Group tions Company Group Group tions Company
------------------------------------------------------------------------------------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
External non-internet revenues $ 1,703,513 $ -- $ -- $ 1,703,513 $1,508,597 $ -- $ -- $1,508,597
External internet revenues 1,502 23,505 -- 25,007 1,014 8,832 -- 9,846
Inter-group revenue 3,957 1,528 (5,485) -- 1,645 -- (1,645) --
------------------------------------------------------------------------------------- --------------------------------------------
Total 1,708,972 25,033 (5,485) 1,728,520 1,511,256 8,832 (1,645) 1,518,443
------------------------------------------------------------------------------------- --------------------------------------------
COSTS AND EXPENSES
Production costs:
External expenses 712,608 13,124 -- 725,732 682,648 7,021 -- 689,669
Inter-group expense 433 2,340 (2,773) -- -- 1,645 (1,645) --
Selling, general and administrative
expenses:
External expenses 629,324 32,653 -- 661,977 549,946 8,726 -- 558,672
Inter-group allocated expenses 275 2,437 (2,712) -- (1,159) 1,159 -- --
------------------------------------------------------------------------------------- --------------------------------------------
Total 1,342,640 50,554 (5,485) 1,387,709 1,231,435 18,551 (1,645) 1,248,341
------------------------------------------------------------------------------------- --------------------------------------------
OPERATING PROFIT (LOSS) 366,332 (25,521) -- 340,811 279,821 (9,719) -- 270,102
Income from joint ventures 7,249 -- -- 7,249 7,468 -- -- 7,468
Interest expense, net 30,390 142 -- 30,532 24,737 -- -- 24,737
------------------------------------------------------------------------------------- --------------------------------------------
Income (loss) before income taxes 343,191 (25,663) -- 317,528 262,552 (9,719) -- 252,833
------------------------------------------------------------------------------------- --------------------------------------------
Income tax expense (benefit) 143,505 (10,778) -- 132,727 112,130 (4,170) -- 107,960
------------------------------------------------------------------------------------- --------------------------------------------
NET INCOME/(LOSS) $ 199,686 $ (14,885) $ -- $ 184,801 $ 150,422 $ (5,549) $ -- $ 144,873
------------------------------------------------------------------------------------- --------------------------------------------
</TABLE>
12
<PAGE>
CONDENSED CONSOLIDATING BALANCE SHEETS
<TABLE>
<CAPTION>
June 25, 2000 December 26, 1999
------------------------------------------------- ------------------------------------------------
Reclassifi- The New Reclassifi- The New
The NYT The NYTD cations/ York Times The NYT The NYTD cations/ York Times
(In thousands) Group Group Eliminations Company Group Group Eliminations Company
------------------------------------------------------------------------------- ------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets $ 588,595 $ 8,872 $ -- $ 597,467 $ 605,350 $ 9,558 $ -- $ 614,908
Investments in joint
ventures 121,216 -- -- 121,216 121,940 -- -- 121,940
Funds allocated to the
NYTD group, net 46,363 -- (46,363) -- 80,440 -- (80,440) --
Property plant
& equipment, net 1,204,955 11,520 -- 1,216,475 1,208,601 9,795 -- 1,218,396
Intangible assets
acquired, net 1,505,895 25,761 -- 1,531,656 1,276,134 28,884 -- 1,305,018
Miscellaneous assets 239,663 1,200 -- 240,863 235,052 488 -- 235,540
------------------------------------------------------------------------------- ------------------------------------------------
Total $3,706,687 $ 47,353 $ (46,363) $3,707,677 $3,527,517 $ 48,725 $ (80,440) $3,495,802
------------------------------------------------------------------------------- ------------------------------------------------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities $ 918,351 $ 20,370 $ -- $ 938,721 $ 660,978 $ 12,536 $ -- $ 673,514
Other liabilities 1,385,035 41,513 -- 1,426,548 1,371,873 1,757 -- 1,373,630
Funds allocated from the
NYT group, net -- 46,363 (46,363) -- -- 80,440 (80,440) --
Common stock 17,987 -- -- 17,987 17,882 -- -- 17,882
Additional paid-in capital 27,055 -- -- 27,055 -- -- -- --
Retained earnings
(accumulated losses) 1,813,712 (60,893) -- 1,752,819 1,646,751 (46,008) -- 1,600,743
Common stock held
in treasury, at cost,
and other (455,453) -- -- (455,453) (169,967) -- -- (169,967)
------------------------------------------------------------------------------- ------------------------------------------------
Total $3,706,687 $ 47,353 $ (46,363) $3,707,677 $3,527,517 $ 48,725 $ (80,440) $3,495,802
------------------------------------------------------------------------------- ------------------------------------------------
</TABLE>
13
<PAGE>
SUPPLEMENTAL INFORMATION TO THE CONDENSED CONSOLIDATING BALANCE SHEETS
FUNDS ALLOCATED TO/FROM THE NYTD GROUP
<TABLE>
<CAPTION>
Debt Funds
Funds proceeds allocated
allocated advanced to to/from the
from the NYT the NYT NYT group,
(In thousands) group group net
---------------------------------------------
<S> <C> <C> <C>
Balance at December 26, 1999 ................. $ 80,440 $ -- $ 80,440
Funds allocated from the NYT group ........ 2,446 3,477 5,923
Debt proceeds advanced to the NYT group (A) -- (40,000) (40,000)
---------------------------------------------
Balance at June 25, 2000 ..................... $ 82,886 $(36,523) $ 46,363
===========================================
</TABLE>
(A) The Company will make the proceeds of this debt (see Note 5) available to
the NYTD group as they are needed and as such the NYTD group will accrue
interest income on the amount of proceeds still available to the NYTD group at
the Company's short-term interest rate.
Advertising Credits
On March 3, 2000, the NYT group committed to provide $30.0 million in
advertising credits to the NYTD group to be utilized in any of the NYT group's
print publications. It is the NYTD group's current intention to use these
credits as consideration to effect strategic alliances, investments and
acquisitions.
The advertising credits will be recorded on the NYTD group's financial
statements as they are committed to independent third parties. The fair market
value of what is received or the value of the advertising given up, whichever is
more readily determinable, will be recorded as an asset with a corresponding
amount recorded as funds allocated from the NYT group to the NYTD group, in the
NYTD group's financial statements. As of June 25, 2000, none of the advertising
credits have been utilized.
14
<PAGE>
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended June 25, 2000 Six Months Ended June 27, 1999
--------------------------------------------- -----------------------------------------------
The New The New
The NYT The NYTD Elimina- York Times The NYT The NYTD Elimina- York Times
(In thousands) Group Group tions Company Group Group tions Company
------------------------------------------------------------------------------- -----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net cash provided by/(used in)
operating activities $ 300,191 $ (1,051) $ -- $ 299,140 $ 228,080 $ 210 $ -- $ 228,290
------------------------------------------------------------------------------- -----------------------------------------------
INVESTING ACTIVITIES
Additions to property, plant
and equipment (24,246) (3,911) -- (28,157) (28,053) (1,238) -- (29,291)
Business acquired (296,278) -- -- (296,278) -- -- -- --
Net proceeds from dispositions -- -- -- -- 11,434 -- -- 11,434
Other-net (9,634) -- -- (9,634) (10,238) -- -- (10,238)
------------------------------------------------------------------------------- -----------------------------------------------
Net cash used in investing
activities (330,158) (3,911) -- (334,069) (26,857) (1,238) -- (28,095)
------------------------------------------------------------------------------- -----------------------------------------------
FINANCING ACTIVITIES
Commercial paper borrowings 363,480 -- -- 363,480 82,530 -- -- 82,530
Long-term debt
Proceeds -- 40,000 -- 40,000 -- -- -- --
Payments (100,850) (583) -- (101,433) (684) -- -- (684)
Capital shares
Issuances 23,329 -- -- 23,329 7,447 -- -- 7,447
Repurchases (279,160) -- -- (279,160) (257,965) -- -- (257,965)
Dividends paid to stockholders (37,599) -- -- (37,599) (35,602) -- -- (35,602)
Funds allocated between the NYT
group and the NYTD group, net 34,569 (34,569) -- -- (807) 807 -- --
------------------------------------------------------------------------------- -----------------------------------------------
Net cash provided by/(used in)
financing activities 3,769 4,848 -- 8,617 (205,081) 807 -- (204,274)
------------------------------------------------------------------------------- -----------------------------------------------
Net (decrease) increase in cash
and short-term investments (26,198) (114) -- (26,312) (3,858) (221) -- (4,079)
Cash and cash equivalents
at the beginning of the year 63,677 184 -- 63,861 35,950 41 -- 35,991
------------------------------------------------------------------------------- -----------------------------------------------
Cash and cash equivalents
at the end of the quarter $ 37,479 $ 70 $ -- $ 37,549 $ 32,092 $ (180) $ -- $ 31,912
------------------------------------------------------------------------------- -----------------------------------------------
</TABLE>
15
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Advertising revenues accounted for approximately 74% and circulation
revenues accounted for 21% of the Company's revenues in the second quarter and
for the first six months of 2000. Advertising revenues influence the pattern of
the Company's consolidated revenues because they are seasonal in nature.
Traditionally, second-quarter and fourth-quarter advertising volume is higher
than that which occurs in the first and third quarters when economic activity
tends to be lower after the holiday season and in the summer period. Quarterly
trends are also affected by the overall economy and economic conditions that may
exist in specific markets served by each of the Company's business segments.
Newsprint is the major component of the Company's cost of raw materials.
Newsprint market prices began increasing in the second quarter of 2000 over 1999
levels and for the remainder of the year are expected to continue to rise over
1999 levels.
The Company's consolidated financial results for the quarter and six
months ended June 25, 2000, compared with the quarter and six months ended June
27, 1999, were as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
---------------------------------------------------------------------------------------------------------------------------
June 25, June 27, June 25, June 27,
(Dollars in thousands, except per share data) 2000 1999 % Change 2000 1999 % Change
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $885,588 $779,385 13.6% $1,728,520 $1,518,443 13.8%
---------------------------------------------------------------------------------------------------------------------------
Operating profit $185,878 $154,861 20.0% $ 340,811 $ 270,102 26.2%
---------------------------------------------------------------------------------------------------------------------------
Net Income before special items $101,738 $ 85,755 18.6% $ 184,801 $ 147,165 25.6%
Special items -- (2,292) N/A -- (2,292) N/A
---------------------------------------------------------------------------------------------------------------------------
Net Income $101,738 $ 83,463 21.9% $ 184,801 $ 144,873 27.6%
---------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share: $ 0.59 $ 0.48 22.9% $ 1.06 $ 0.81 30.9%
Net Income before special items
Special items -- (0.01) N/A -- (0.01) N/A
---------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share $ 0.59 $ 0.47 25.5% $ 1.06 $ 0.80 32.5%
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The 2000 second-quarter net income increased 18.6% compared with the
second quarter of 1999, excluding special items. For the first six months of
2000, net income increased 25.6% compared with the first six months of 1999,
excluding special items.
Including special items, the 2000 second-quarter net income increased
21.9% compared with the second quarter of 1999. For the first six months of 2000
net income, including special items, increased 27.6% compared with the first six
months of 1999.
Revenues for the second quarter of 2000 were $885.6 million, a 13.6%
increase over 1999 second-quarter revenues of $779.4 million. Revenues for the
first six months of 2000 were $1,728.5 million, a 13.8% increase from $1,518.4
million for the same period in 1999. Excluding revenues from the Worcester
Telegram & Gazette (T&G), which was acquired on January 7, 2000, total revenues
in the second quarter of 2000 grew 10.9% and advertising revenues grew 14.3%
over the second quarter of 1999. In the first six months of 2000 total revenues
grew 11.3% and advertising revenues grew 14.9% compared with the same period a
year ago, excluding the T&G. The increase was primarily due to strong national
and help-wanted advertising at the Newspaper Group with the largest increases at
The New York Times and The Boston Globe.
16
<PAGE>
Operating profit in the second quarter of 2000 increased 17.0% to $185.9
million from $158.9 million, excluding special items. On the same basis,
operating profit for the first half of the year rose 24.3% to $340.8 million
from $274.1 million in the corresponding period of 1999. The operating profit
increases were principally from strong revenue growth.
Operating profit increased to 20.0% in the second quarter of 2000
including special items. On the same basis, for the first six months of 2000
operating profit increased 26.2% from the corresponding period of 1999.
There were no special items in the first half of 2000 or in the first
quarter of 1999. Special items in the second quarter of 1999 included a $4.0
million pre-tax charge ($.01 diluted earnings per share) for work force
reduction expenses at The Boston Globe.
Excluding special items, EBITDA (earnings before interest, taxes,
depreciation and amortization) in the second quarter of 2000 rose to $241.9
million from $210.7 million in the 1999 second quarter. On the same basis,
EBITDA for the first six months of 2000 was $452.2 million compared with $378.7
million in the same period of 1999. EBITDA in the 2000 second quarter rose to
$241.9 million from $206.7 million in the second quarter of 1999, including
special items. On the same basis, EBITDA for the first six months of 2000 was
$452.2 million compared with $374.7 million in the same period of 1999.
EBITDA is presented since it is a widely accepted indicator of funds
available to service debt, although it is not a measure of liquidity or of
financial performance under generally accepted accounting principles ("GAAP").
The EBITDA presented may not be comparable to similarly titled measures reported
by other companies. The Company believes that EBITDA, while providing useful
information, should not be considered in isolation or as an alternative to net
income or cash flows as determined under GAAP.
Consolidated operating expenses for the second quarter and first half of
2000 and 1999 were as follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
----------------------------------------------------------------------------------------------------
June 25, June 27, June 25, June 27,
(Dollars in thousands) 2000 1999 % Change 2000 1999 % Change
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Production costs
Raw materials $ 87,915 $ 82,468 6.6% $ 173,504 $ 169,760 2.2%
Wages and benefits 163,950 159,173 3.0% 329,407 310,395 6.1%
Other 113,106 104,904 7.8% 222,821 209,514 6.4%
----------------------------------------------------------------------------------------------------
Total production costs 364,971 346,545 5.3% 725,732 689,669 5.2%
Selling, general and
administrative expenses 334,739 277,979 20.4% 661,977 558,672 18.5%
----------------------------------------------------------------------------------------------------
Total expenses $ 699,710 $ 624,524 12.0% $1,387,709 $1,248,341 11.2%
----------------------------------------------------------------------------------------------------
</TABLE>
Production costs for the second quarter of 2000 increased 5.3% from the
second quarter of 1999 and for the first six months of 2000 production costs
increased 5.2% from the comparable period in 1999. Excluding the T&G, production
costs for the second quarter and for the first six months of 2000 increased 2.9%
and 3.0%.
In the second quarter of 2000, the Company's newsprint expense rose 4.6%
compared with the 1999 second quarter, excluding the T&G. Of this increase, 0.6%
resulted from an increase in the average cost of newsprint and 4.0% resulted
from an increase in consumption. For the first six months of 2000 compared with
the first six months of 1999, excluding the T&G, the Company's newsprint expense
declined by 0.8%. This decline resulted from a decrease in the average cost of
newsprint of 5.8%, offset by an increase in consumption of 5.0%.
17
<PAGE>
Selling, general and administrative expenses ("SGA expenses") in the
second quarter and the first six months of 2000 increased 20.4% and 18.5%,
compared with the corresponding periods in the prior year. Excluding the T&G,
SGA expenses increased 17.2% and 15.4% for the same periods. The higher level of
SGA expenses, excluding the addition of the T&G, is partly attributable to the
continuing national expansion of The New York Times newspaper, increased costs
for the expansion of New York Times Digital and higher incentive pay linked to
strong performance. SGA expenses for the second quarter and the first six months
of 1999 include a $4.0 million work force reduction charge for The Boston Globe.
The Company currently expects growth in its total expenses, excluding the
effects of newsprint, New York Times Digital and the T&G, to be in the range of
four to six percent for 2000.
Other Items
Interest expense-net increased to $15.2 million in the 2000 second quarter
and $30.5 million in the first six months of 2000 compared with $12.8 million
and $24.7 million in the comparable 1999 periods principally due to additional
borrowings to fund the purchase of the T&G and the Company's share repurchase
program.
The effective income tax rate for the second quarter of 2000 was 41.6%
compared with 42.6% in the 1999 second quarter. For the first six months of 2000
the effective income tax rate was 41.8% compared with 42.7% in the first six
months of 1999. The decreases for both the quarter and for the first six months
of 2000 were primarily due to lower state and local income taxes.
18
<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 25, June 27, June 25, June 27,
(Dollars in thousands) 2000 1999 % Change 2000 1999 % Change
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Newspapers ................... $ 798,203 $ 701,900 13.7% $ 1,568,808 $ 1,377,060 13.9%
Broadcast .................... 41,322 40,804 1.3% 75,673 73,897 2.4%
Magazines .................... 35,583 32,584 9.2% 64,491 60,299 7.0%
New York Times Digital ....... 13,464 5,009 168.8% 25,033 8,832 183.4%
Intersegment eliminations (A) (2,984) (912) -227.2% (5,485 )(1,645) -233.4%
------------------------------------------------------------------------------------------
Total ..................... $ 885,588 $ 779,385 13.6% $ 1,728,520 $ 1,518,443 13.8%
==========================================================================================
EBITDA
Newspapers ................... $ 229,727 $ 189,303 21.4% $ 434,692 $ 347,586 25.1%
Broadcast .................... 17,926 19,068 -6.0% 29,612 30,423 -2.7%
Magazines .................... 9,911 8,555 15.9% 14,745 13,434 9.8%
New York Times Digital ....... (12,594) (4,318) -191.7% (20,226) (9,117) -121.9%
Unallocated corporate expenses (6,745) (9,227) 26.9% (14,000) (15,311) 8.6%
Joint ventures ............... 3,710 3,353 10.7% 7,337 7,644 -4.0%
------------------------------------------------------------------------------------------
Total ..................... $ 241,935 $ 206,734 17.0% $ 452,160 $ 374,659 20.7%
==========================================================================================
DEPRECIATION AND AMORTIZATION
Newspapers ................... $ 42,054 $ 40,735 3.2% $ 83,950 $ 81,616 2.9%
Broadcast .................... 4,301 4,362 -1.4% 8,602 8,732 -1.5%
Magazines .................... 318 364 -12.6% 648 712 -9.0%
New York Times Digital ....... 2,878 301 856.2% 5,296 603 778.3%
Corporate .................... 2,795 2,756 1.4% 5,428 5,051 7.5%
Joint ventures ............... 88 88 N/A 175 175 N/A
------------------------------------------------------------------------------------------
Total ..................... $ 52,434 $ 48,606 7.9% $ 104,099 $ 96,889 7.4%
==========================================================================================
OPERATING PROFIT (LOSS)
Newspapers ................... $ 187,673 $ 148,568 26.3% $ 350,742 $ 265,968 31.9%
Broadcast .................... 13,625 14,705 -7.3% 21,010 21,691 -3.1%
Magazines .................... 9,592 8,191 17.1% 14,097 12,722 10.8%
New York Times Digital ....... (15,472) (4,619) -235.0% (25,521) (9,719) -162.6%
Unallocated corporate expenses (9,540) (11,984) 20.4% (19,517) (20,560) 5.1%
------------------------------------------------------------------------------------------
Total ..................... $ 185,878 $ 154,861 20.0% $ 340,811 $ 270,102 26.2%
==========================================================================================
</TABLE>
(A) Intersegment eliminations primarily include revenues between New York Times
Digital and other segments.
Newspaper Group: The Newspaper Group consists of The New York Times ("The
Times"), The Boston Globe ("The Globe"), 22 other newspapers, newspaper
distributors, a news service, a features syndicate, TimesFax, licensing
operations of the New York Times databases and microfilm.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
--------------------------------------------------------------------------------
June 25, June 27, June 25, June 27,
(Dollars in thousands) 2000 1999 % Change 2000 1999 % Change
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 798,203 $ 701,900 13.7% $1,568,808 $1,377,060 13.9%
-----------------------------------------------------------------------------------------------------------
EBITDA $ 229,727 $ 189,303 21.4% $ 434,692 $ 347,586 25.1%
-----------------------------------------------------------------------------------------------------------
Operating profit $ 187,673 $ 148,568 26.3% $ 350,742 $ 265,968 31.9%
-----------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
Total Newspaper Group revenues in the second quarter and the first six
months of 2000 increased 13.7% and 13.9%, over the comparable periods in 1999.
Excluding the T&G, total Newspaper Group revenues increased 10.7% and 11.2% for
the quarter and the first six months of 2000. Performance was strongest at The
Times and The Globe where advertising revenues increased 16.5% and 14.8% for the
second quarter of 2000 and 18.2% and 14.1% in the first six months of 2000. Both
newspapers benefited from increased national and help-wanted advertising.
Second-quarter operating profit for the Newspaper Group increased 23.0%
compared to the 1999 second quarter, excluding special items. For the first half
of the year, operating profit increased 29.9% from the comparable 1999 period,
excluding special items. Excluding the T&G, total Newspaper Group operating
profit increased 23.8% and 29.7% for the second quarter and the first six months
of 2000.
The Company currently expects advertising revenue growth in the Newspaper
Group, excluding the T&G, to be in the range of seven to nine percent for 2000.
20
<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 25, June 27, June 25, June 27,
(Dollars in thousands) 2000 1999 % Change 2000 1999 % Change
---------------------------------------------------------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The New York Times
Advertising $ 337,731 $ 289,878 16.5% $ 665,578 $ 563,307 18.2%
Circulation 117,123 114,148 2.6% 234,251 227,594 2.9%
Other 36,873 33,993 8.5% 73,064 68,415 6.8%
---------------------------------------------------------------------------------- -------------------------------------
Total $ 491,727 $ 438,019 12.3% $ 972,893 $ 859,316 13.2%
---------------------------------------------------------------------------------- -------------------------------------
New England Newspaper Group
The Boston Globe
Advertising $ 132,043 $ 115,013 14.8% $ 253,529 $ 222,266 14.1%
Circulation 33,057 33,578 -1.6% 65,785 65,904 -0.2%
Other 2,997 2,448 22.4% 5,578 4,763 17.1%
---------------------------------------------------------------------------------- -------------------------------------
Subtotal $ 168,097 $ 151,039 11.3% $ 324,892 $ 292,933 10.9%
---------------------------------------------------------------------------------- -------------------------------------
Worcester Telegram & Gazette
Advertising $ 15,851 N/A N/A $ 28,357 N/A N/A
Circulation 4,943 N/A N/A 9,339 N/A N/A
Other 287 N/A N/A 468 N/A N/A
---------------------------------------------------------------------------------- -------------------------------------
Subtotal $ 21,081 N/A N/A $ 38,164 N/A N/A
---------------------------------------------------------------------------------- -------------------------------------
Total New England Newspaper
Group
Advertising $ 147,894 $ 115,013 28.6% $ 281,886 $ 222,266 26.8%
Circulation 38,000 33,578 13.2% 75,124 65,904 14.0%
Other 3,284 2,448 34.1% 6,046 4,763 26.9%
---------------------------------------------------------------------------------- -------------------------------------
Total $ 189,178 $ 151,039 25.3% $ 363,056 $ 292,933 23.9%
---------------------------------------------------------------------------------- -------------------------------------
Regional Newspapers
Advertising $ 94,328 $ 89,767 5.1% $ 185,447 $ 177,658 4.4%
Circulation 18,913 19,112 -1.0% 39,199 39,347 -0.4%
Other 4,057 3,963 2.4% 8,213 7,806 5.2%
---------------------------------------------------------------------------------- -------------------------------------
Total $ 117,298 $ 112,842 3.9% $ 232,859 $ 224,811 3.6%
---------------------------------------------------------------------------------- -------------------------------------
Total Newspaper Group
Advertising $ 579,953 $ 494,658 17.2% $1,132,911 $ 963,231 17.6%
Circulation 174,036 166,838 4.3% 348,574 332,845 4.7%
Other 44,214 40,404 9.4% 87,323 80,984 7.8%
---------------------------------------------------------------------------------- -------------------------------------
Total $ 798,203 $ 701,900 13.7% $1,568,808 $1,377,060 13.9%
---------------------------------------------------------------------------------- -------------------------------------
</TABLE>
21
<PAGE>
Advertising volume was as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
--------------------------------------------------------------------
(Inches in thousands, preprints in thousands of copies) June 25, June 27, June 25, June 27,
2000 1999 % Change 2000 1999 % Change
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The New York Times
Retail 142.7 137.1 4.1% 268.1 262.2 2.3%
National 426.5 380.5 12.1% 837.4 731.5 14.5%
Classified 255.0 260.3 -2.0% 506.9 513.1 -1.2%
Zoned 275.5 279.9 -1.6% 523.2 505.9 3.4%
---------------------------------------------------------------------------------------------------------------------------------
Total 1,099.7 1,057.8 4.0% 2,135.6 2,012.7 6.1%
---------------------------------------------------------------------------------------------------------------------------------
Preprints 104,760 96,547 8.5% 203,015 193,056 5.2%
---------------------------------------------------------------------------------------------------------------------------------
New England Newspaper Group
The Boston Globe
Retail 156.0 156.7 -0.5% 281.4 295.3 -4.7%
National 210.1 180.9 16.2% 401.6 354.1 13.4%
Classified 358.1 357.3 0.2% 703.6 694.7 1.3%
Zoned 71.6 75.1 -4.5% 127.8 130.8 -2.2%
---------------------------------------------------------------------------------------------------------------------------------
Total 795.8 770.0 3.4% 1,514.4 1,474.9 2.7%
---------------------------------------------------------------------------------------------------------------------------------
Preprints 199,536 190,836 4.6% 385,041 377,198 2.1%
---------------------------------------------------------------------------------------------------------------------------------
Worcester Telegram & Gazette
Retail 86.9 N/A N/A 150.5 N/A N/A
National 23.1 N/A N/A 35.4 N/A N/A
Classified 144.4 N/A N/A 270.5 N/A N/A
Zoned 145.1 N/A N/A 243.0 N/A N/A
---------------------------------------------------------------------------------------------------------------------------------
Total 399.5 N/A N/A 699.4 N/A N/A
---------------------------------------------------------------------------------------------------------------------------------
Preprints 49,637 N/A N/A 91,884 N/A N/A
---------------------------------------------------------------------------------------------------------------------------------
Regional Newspapers
Retail 1,834.7 1,857.2 -1.2% 3,653.8 3,706.0 -1.4%
National 76.4 72.4 5.5% 149.0 140.9 5.8%
Classified 2,053.7 2,037.0 0.8% 4,023.2 3,954.8 1.7%
Legal 248.3 189.4 31.1% 334.3 273.4 22.3%
---------------------------------------------------------------------------------------------------------------------------------
Total 4,213.1 4,156.0 1.4% 8,160.3 8,075.1 1.1%
---------------------------------------------------------------------------------------------------------------------------------
Preprints 279,327 269,634 3.6% 552,977 539,856 2.4%
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
Average circulation for The Times, The Globe, the T&G and the Regional
Newspapers (excluding non-dailies) for the quarter and six months ended June 25,
2000, compared with the second quarter and six months ended June 27, 1999, was
as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Three Months Ended
June 25, 2000
------------------------------------------------------------------------------------
(Copies in thousands) Weekday % Change Sunday % Change
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average Net Paid Circulation
The New York Times 1,093.7 -0.8% 1,689.4 1.1%
New England Newspaper Group
The Boston Globe 461.6 -0.1% 714.9 -1.1%
Worcester Telegram & Gazette 105.9 N/A 130.1 N/A
Regional Newspapers 710.0 -2.0% 751.9 -1.8%
------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Six Months Ended
June 25, 2000
------------------------------------------------------------------------------------
(Copies in thousands) Weekday % Change Sunday % Change
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average Net Paid Circulation
The New York Times 1,124.1 0.8% 1,707.6 1.1%
New England Newspaper Group
The Boston Globe 464.0 0.4% 716.4 -1.1%
Worcester Telegram & Gazette 105.1 N/A 129.7 N/A
Regional Newspapers 737.8 -1.6% 784.0 -1.5%
------------------------------------------------------------------------------------
</TABLE>
For the first six months of 2000 circulation growth for The Times was
primarily due to additional availability and promotion in major markets across
the nation combined with programs to improve the quality and levels of its home
delivery circulation base. Additionally, The Times and The Globe are continuing
to make improvements in delivery and customer service to attract new readers and
retain existing ones.
Broadcast Group: The Broadcast Group is comprised of eight network-affiliated
television stations and two radio stations.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
---------------------------------------------------------------------
June 25, June 27, June 25, June 27,
(Dollars in thousands) 2000 1999 % Change 2000 1999 % Change
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $41,322 $40,804 1.3% $75,673 $73,897 2.4%
-----------------------------------------------------------------------------------------------
EBITDA $17,926 $19,068 -6.0% $29,612 $30,423 -2.7%
-----------------------------------------------------------------------------------------------
Operating Profit $13,625 $14,705 -7.3% $21,010 $21,691 -3.1%
-----------------------------------------------------------------------------------------------
</TABLE>
Revenues increased 1.3% in the 2000 second quarter to $41.3 million from
$40.8 million in the 1999 second quarter, while operating profit decreased 7.3%
to $13.6 million from $14.7 million in the second quarter of last year. For the
first half of 2000, revenues and operating profit totaled $75.7 million (a 2.4%
increase) and $21.0 million (a 3.1% decrease) compared with $73.9 million and
$21.7 million in the same period of 1999. Operating profit decreased mainly due
to higher personnel costs.
Magazine Group: The Magazine Group is comprised of four golf publications
and related activities in the golf field.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
---------------------------------------------------------------------
June 25, June 27, June 25, June 27,
(Dollars in thousands) 2000 1999 % Change 2000 1999 % Change
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $35,583 $32,584 9.2% $64,491 $60,299 7.0%
-----------------------------------------------------------------------------------------------
EBITDA $ 9,911 $ 8,555 15.9% $14,745 $13,434 9.8%
-----------------------------------------------------------------------------------------------
Operating Profit $ 9,592 $ 8,191 17.1% $14,097 $12,722 10.8%
-----------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
Second-quarter 2000 revenues increased 9.2% to $35.6 million from $32.6
million in the 1999 second quarter. Operating profit in the 2000 second quarter
increased 17.1% to $9.6 million from $8.2 million in the second quarter of 1999.
For the first half of 2000, revenues and operating profit were $64.5 million (a
7.0% increase) and $14.1 million (a 10.8% increase) compared with $60.3 million
and $12.7 million in the first half of 1999. Revenues rose primarily due to the
50th Anniversary issue of Golf Digest magazine.
New York Times Digital: New York Times Digital ("NYTD group") is the
Company's Internet business division, which consists of NYTimes.com, Boston.com,
NYToday.com, WineToday.com, GolfDigest.com and Abuzz. Abuzz develops and deploys
technology to enable online communities to share knowledge, interests and
experience.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
-----------------------------------------------------------------------
June 25, June 27, June 25, June 27,
(Dollars in thousands) 2000 1999 % Change 2000 1999 % Change
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 13,464 $ 5,009 168.8% $ 25,033 $ 8,832 183.4%
-------------------------------------------------------------------------------------------------
EBITDA $(12,594) $(4,318) -191.7% $(20,226) $(9,117) -121.9%
-------------------------------------------------------------------------------------------------
Operating loss $(15,472) $(4,619) -235.0% $(25,521) $(9,719) -162.6%
-------------------------------------------------------------------------------------------------
</TABLE>
NYTD group revenues for the second quarter of 2000 increased 168.8%
compared with the second quarter of 1999. For the first half of 2000, revenues
increased 183.4% compared with the first half of 1999. These increases were
primarily due to increased growth in advertising volume. Advertising revenue
accounted for 88% of NYTD group total revenues for the first six months of 2000.
Operating losses for the second quarter and for the first six months of
2000 were 235.0% and 162.6% higher than the second quarter and the first six
months of 1999. Higher operating losses were mainly due to increased staffing,
promotion, advertising and costs associated with the operations of Abuzz
Technologies, Inc., which was acquired in July 1999. Operating losses in the
second quarter of 2000 were higher than those in the first quarter of the year
as NYTD group, late in the second quarter, increased staffing and initiated
advertising and promotional campaigns. These campaigns will continue into the
third quarter, when advertisers traditionally place fewer advertisements, as
well as the fourth quarter, a seasonally strong advertising period.
Liquidity and Capital Resources
Net cash provided by operating activities was $299.1 million for the first
six months of 2000 compared with $228.3 million for the first six months of
1999. The increase of $70.9 million was primarily due to improved earnings. Net
cash used in investing activities was $334.1 million for the first six months of
2000 compared with $28.1 million for the first six months of 1999. The increase
in cash utilized of $306.0 million was primarily due to the acquisition of the
T&G. Net cash provided by financing activities was $8.6 million for the first
six months of 2000 compared with $204.3 million used in financing activities for
the first six months of 1999. This change was primarily related to increases in
commercial paper borrowings mostly used to fund the T&G acquisition partially
offset by the repayment of $100.0 million in debt in 2000. In both periods, the
repurchase of shares was a use of cash in financing activities.
24
<PAGE>
The Company believes that cash generated from its operations and the
availability of funds from external sources should be adequate to cover all cash
requirements, including working capital needs, stock repurchases, planned
capital expenditures and acquisitions, and dividend payments to stockholders.
The ratio of current assets to current liabilities was 63.7% at June 25, 2000,
and 74.8% at June 27, 1999. This decrease is principally due to an increase in
commercial paper outstanding at June 25, 2000, mostly resulting from the funding
of the T&G acquisition. The ratio of long-term debt and capital lease
obligations as a percentage of total capitalization was 32.2% at June 25, 2000,
compared with 29.8% at June 27, 1999. This increase is principally the result of
financing repurchases and the acquisition of the T&G under the Company's
commercial paper program.
Financing: The Company's total debt, including commercial paper and capital
leases, was $1.0 billion at June 25, 2000, and $805.9 million at June 27, 1999.
The increase in total debt was primarily from an increase in commercial paper
outstanding. On April 28, 2000, $100.0 million of the Company's six and one-half
year senior notes was repaid; the remainder of the Company's debt and capital
leases generally mature between March 2003 and March 2025. In June 2000 total
available funds under the revolving credit agreements were increased to $600.0
million from $400.0 million. The Company's one-year agreement was renewed and
increased to $300.0 million from $200.0 million and will now mature in June
2001. The Company's multi-year agreement was renewed and increased to $300.0
million from $200.0 million and will now mature in June 2005.
The Company's revolving credit agreements require, among other provisions,
specified levels of stockholders' equity. Approximately $356.7 million of
stockholders' equity was unrestricted under these agreements at June 25, 2000,
and $564.0 million was unrestricted at June 27, 1999. The decline in the level
of unrestricted stockholders' equity was primarily due to stock repurchases.
The Company had $363.5 million in commercial paper outstanding at June 25,
2000, and $206.6 million at June 27, 1999. These obligations are supported by
the revolving credit agreements, and no amounts are outstanding under these
revolving credit agreements as of June 25, 2000. The amount available under
these facilities was $236.5 million as of June 25, 2000, and $93.4 million as of
June 27, 1999.
In March 2000 the Company issued $40.0 million of 7% subordinated notes
due March 21, 2003, to three venture capital firms. After the consummation of a
proposed initial public offering of a new class of stock, this debt will be
convertible, at the election of the venture capital firms, into shares of a new
class of stock intended to represent approximately 6.7% of the pre-offering
equity of the NYTD group. If there is no offering, this debt will not be
convertible. The Company has agreed to give the venture capital firms piggyback
and demand registration rights for the new class of stock issued upon conversion
(see Proposed Tracking Stock below).
Capital Expenditures: The Company currently estimates that capital
expenditures for 2000 will range from $100.0 million to $120.0 million. The
Company currently anticipates that depreciation and amortization expense for
2000 will be in the range of $210.0 million to $215.0 million compared with
$197.5 million in 1999.
25
<PAGE>
Proposed Tracking Stock
On January 20, 2000, the Board of Directors of the Company authorized,
subject to shareholder approval, the issuance of a new class of stock ("Class C
Stock"). On January 28, 2000, the Company filed a registration statement with
the SEC on Form S-3 (the "Form S-3") related to a proposed initial public
offering of Class C Stock, which is intended to track the performance of the
Company's Internet business division, the NYTD group. At the Annual Meeting of
Stockholders held on May 23, 2000, stockholders authorized the filing of an
amendment to the Company's certificate of incorporation to create this new class
of stock. As of the date of this report, the Form S-3 has not become effective
and the amendment to the certificate of incorporation has not been filed with
the Secretary of State. The Company is currently evaluating market conditions.
The Company separates for financial reporting purposes the NYT group and
the NYTD group (see Note 11 of the Notes to Condensed Consolidated Financial
Statements). The NYT group includes all of the other business segments of the
Company: Newspaper, Broadcast and Magazine, except for the businesses of the
NYTD group. The NYT group also includes a retained interest in the NYTD group,
which is currently 100%. This retained interest will decline upon any issuance
of Class C Stock. The NYTD group includes NYTimes.com, NYToday.com, Boston.com,
WineToday.com, GolfDigest.com and Abuzz. The NYTD group's operating results as
presented in the financial statements included in Note 11 of the Notes to
Condensed Consolidated Financial Statements reflect the effect of various
inter-group arrangements and policies for license fees, inter-group services and
income taxes.
Beginning in 2000, and coinciding with the effective date of these various
arrangements (January 1, 2000), the Company's management has determined that its
reportable segments consist of newspapers, broadcast, magazines and the NYTD
group. These segments will be evaluated regularly by key management in assessing
performance and allocating resources.
Factors That Could Affect Operating Results
Except for the historical information contained herein, the matters
discussed in this quarterly report are forward-looking statements that involve
risks and uncertainties that could cause actual results to differ materially
from those predicted by such forward-looking statements. These risks and
uncertainties include national and local conditions, as well as competition,
that could influence the levels (rate and volume) of retail, national and
classified advertising and circulation generated by the Company's various
markets and material increases in newsprint and magazine paper prices. They also
include other risks detailed from time to time in the Company's publicly-filed
documents, including the Company's Annual Report on Form 10-K for the period
ended December 26, 1999.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company's quantitative and qualitative market risk is principally
associated with market interest rate fluctuations related to its debt
obligations. The Company does not consider such market risk significant.
26
<PAGE>
Item 4. Submission of Matters to a Vote of Security-Holders
(a) The Company's annual meeting of stockholders was held on May 23,
2000.
(b) The following matters were voted on at the annual meeting:
1. The stockholders (with Class A and Class B stockholders voting
separately) elected all of management's nominees for election as Class A
Directors and Class B Directors. The results of the vote taken were as follows:
Class A Directors For Withheld
----------------- --- --------
Raul E. Cesan 144,175,222 1,077,570
Robert A. Lawrence 144,050,167 1,202,625
Charles H. Price II 144,150,813 1,101,979
Henry B. Schacht 144,127,495 1,125,297
Donald M. Stewart 144,167,901 1,084,891
Class B. Directors
------------------
John F. Akers 839,644 0
Brenda C. Barnes 839,644 0
Jacqueline H. Dryfoos 839,644 0
Richard L. Gelb 839,644 0
Michael Golden 839,644 0
Russell T. Lewis 839,644 0
David E. Liddle 839,644 0
Ellen R. Marram 839,644 0
Arthur Ochs Sulzberger 839,644 0
Arthur Sulzberger, Jr. 839,644 0
2. The stockholders (with Class A and Class B stockholders voting
together) ratified the amendments to the Company's 1991 Executive Cash Bonus
Plan and 1991 Executive Stock Incentive Plan described in Proposal 2 in the
Company's 2000 Proxy Statement. The result of the vote taken was as follows:
For: 107,971,171
Against: 23,364,683
Abstain: 960,835
Broker Non-Vote: 13,795,747
Total Against, Abstain and Broker Non-Vote*: 38,121,265
3. The stockholders (with Class A and Class B stockholders voting
together) ratified the amendment to the Company's 1991 Executive Stock Incentive
Plan described in Proposal 3 in the Company's 2000 Proxy Statement. The result
of the vote taken was as follows:
For: 94,648,784
Against: 36,875,379
Abstain: 772,526
Broker Non-Vote: 13,795,747
Total Against, Abstain and Broker Non-Vote*: 51,443,652
--------
* An abstention had the same effect as a vote against this matter.
27
<PAGE>
4. The stockholders (with Class A and Class B stockholders voting
together) reapproved the material terms of the performance goals for annual and
long-term performance awards contained in the Company's 1991 Executive Cash
Bonus Plan and 1991 Executive Stock Incentive Plan and described in Proposal 4
of the Company's 2000 Proxy Statement. The result of the vote taken was as
follows:
For: 141,465,421
Against: 3,604,274
Abstain: 1,022,741
Total Against and Abstain*: 4,627,015
5. The stockholders (with Class A and Class B stockholders voting
together) ratified the amendment of the Company's Non-Employee Directors' Stock
Option Plan described in Proposal 5 in the Company's 2000 Proxy Statement. The
result of the vote taken was as follows:
For: 109,731,479
Against: 21,715,335
Abstain: 849,875
Broker Non-Vote: 13,795,747
Total Against, Abstain and Broker Non-Vote*: 36,360,957
6. The stockholders (with Class A and Class B stockholders voting
together) ratified the selection, by the Audit Committee of the Board of
Directors, of Deloitte & Touche LLP, independent certified public accountants,
as auditors of the Company for the year ending December 31, 2000. The result of
the vote taken was as follows:
For: 142,660,852
Against: 2,977,845
Abstain: 453,739
Total Against and Abstain*: 3,431,584
--------
* An abstention had the same effect as a vote against this matter.
28
<PAGE>
7. The stockholders (with Class A and Class B stockholders voting
separately) ratified the Company's Amended and Restated Certificate of
Incorporation substantially in the form annexed to the Company's 2000 Proxy
Statement. The result of the vote taken was as follows:
Class A Stockholders
--------------------
For: 103,318,744
Against: 27,308,321
Abstain: 842,868
Broker Non-Vote: 13,782,859
Total Against, Abstain and Broker Non-Vote*: 41,934,048
Class B Stockholders
--------------------
For: 826,756
Against: 0
Abstain: 0
Broker Non-Vote: 12,888
Total Against, Abstain and Broker Non-Vote*: 12,888
8. The stockholders (with Class A and Class B stockholders voting
together) ratified the New York Times Digital Stock Incentive Plan,
substantially in the form annexed to the Company's 2000 Proxy Statement. The
result of the vote taken was as follows:
For: 97,691,812
Against: 33,918,213
Abstain: 686,664
Broker Non-Vote: 13,795,747
Total Against, Abstain and Broker Non-Vote*: 48,400,624
--------
* An abstention had the same effect as a vote against this matter.
29
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.18 The New York Times Company Deferred Executive Compensation
Plan, as amended on March 2, 2000
12 Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the period for which
this report is filed.
30
<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 9, 2000 /s/ John M. O'Brien
------------------- ----------------------------------
John M. O'Brien
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
31
<PAGE>
Exhibit Index to Quarterly Report Form 10-Q
Quarter Ended June 25, 2000
Exhibit No.
(a) Exhibit
10.18 The New York Times Company Deferred Executive Compensation
Plan, as amended on March 2, 2000
12 Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
