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 March 26, 2000 -------------- Commission file number 1-5837 -------------- THE NEW YORK TIMES COMPANY -------------------------- (Exact name of registrant as specified in its charter) NEW YORK 13-1102020 ------------------------------ ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 229 WEST 43RD STREET, NEW YORK, NEW YORK ---------------------------------------- (Address of principal executive offices) 10036 ---------- (Zip Code) Registrant's telephone number, including area code 212-556-1234 ------------ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No __. Number of shares of each class of the registrant's common stock outstanding as of May 1, 2000 (exclusive of treasury shares): Class A Common Stock 169,094,763 shares Class B Common Stock 847,158 shares
PART I. FINANCIAL INFORMATION Item 1. Financial Statements THE NEW YORK TIMES COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars and shares in thousands, except per share data) <TABLE> <CAPTION> For the Quarters Ended ----------------------------- March 26, March 28, 2000 1999 ----------------------------- <S> <C> <C> Revenues Advertising ............................................................... $616,747 $522,886 Circulation ............................................................... 180,513 172,055 Other ..................................................................... 45,937 44,117 -------- -------- Total ................................................................. 843,197 739,058 -------- -------- Production costs Raw materials ............................................................. 85,589 87,291 Wages and benefits ........................................................ 165,205 151,222 Other ..................................................................... 108,494 104,612 -------- -------- Total ................................................................. 359,288 343,125 Selling, general and administrative expenses ................................... 328,976 280,692 -------- -------- Total ................................................................. 688,264 623,817 -------- -------- Operating profit ............................................................... 154,933 115,241 Income from joint ventures ..................................................... 3,627 4,203 Interest expense - net ......................................................... 15,342 11,896 -------- -------- Income before income taxes ..................................................... 143,218 107,548 Income taxes ................................................................... 60,155 46,138 -------- -------- Net income ..................................................................... $ 83,063 $ 61,410 ======== ======== Average number of common shares outstanding Basic ..................................................................... 172,960 179,686 Diluted ................................................................... 177,155 183,118 Per share of common stock Basic earnings ............................................................ $ .48 $ .34 ======== ======== Diluted earnings .......................................................... $ .47 $ .34 ======== ======== Dividends ................................................................. $ .105 $ .095 ======== ======== </TABLE> See Notes to Condensed Consolidated Financial Statements. 2
THE NEW YORK TIMES COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) <TABLE> <CAPTION> March 26, December 26, 2000 1999 ---------- ------------ ASSETS (Unaudited) <S> <C> <C> Current Assets Cash and cash equivalents ................................................. $ 36,110 $ 63,861 Accounts receivable-net ................................................... 363,544 366,754 Inventories Newsprint and magazine paper ......................................... 25,768 23,666 Work-in-process and other ............................................ 5,469 4,984 ---------- ---------- Total inventories ............................................... 31,237 28,650 Deferred income taxes ..................................................... 53,611 53,611 Assets held for sale ...................................................... 37,443 37,796 Other current assets ...................................................... 68,157 64,236 ---------- ---------- Total current assets ............................................ 590,102 614,908 ---------- ---------- Other Assets Investments in joint ventures ............................................. 122,952 121,940 Property, plant and equipment (less accumulated depreciation of $1,008,375 in 2000 and $976,767 in 1999) ................................................ 1,236,155 1,218,396 Intangible assets acquired Cost in excess of net assets acquired (less accumulated amortization of $279,694 in 2000 and $270,235 in 1999) ........................................ 1,096,400 953,709 Other intangible assets acquired (less accumulated amortization of $92,695 in 2000 and $85,365 in 1999) ......................................... 455,379 351,309 Miscellaneous assets ...................................................... 241,613 235,540 ---------- ---------- TOTAL ASSETS ................................................................... $3,742,601 $3,495,802 ========== ========== </TABLE> See Notes to Condensed Consolidated Financial Statements 3
THE NEW YORK TIMES COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) <TABLE> <CAPTION> March 26, December 26, 2000 1999 ----------- ----------- LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited) - ------------------------------------ <S> <C> <C> Current Liabilities Commercial paper outstanding .............................................................. $ 239,200 $ -- Accounts payable .......................................................................... 200,355 191,706 Accrued payroll and other related liabilities ............................................. 81,899 105,257 Accrued expenses .......................................................................... 223,656 193,553 Unexpired subscriptions ................................................................... 87,963 80,161 Current portion of long-term debt and capital lease obligations ............................................................ 102,725 102,837 ----------- ----------- Total current liabilities ............................................................ 935,798 673,514 ----------- ----------- Other Liabilities Long-term debt ............................................................................ 552,813 512,627 Capital lease obligations ................................................................. 85,011 85,700 Deferred income taxes ..................................................................... 132,222 141,033 Other ..................................................................................... 647,169 634,270 ----------- ----------- Total other liabilities .............................................................. 1,417,215 1,373,630 ----------- ----------- Total liabilities .................................................................... 2,353,013 2,047,144 ----------- ----------- Stockholders' Equity Capital stock of $.10 par value Class A - authorized 300,000,000 shares; issued: 2000 - 178,699,332; 1999 - 177,971,194 (including treasury shares: 2000 - 8,061,996; 1999 - 5,000,000) ........................................... 17,870 17,797 Class B - convertible - authorized 847,158 shares; issued: 2000 - 847,158; 1999 - 847,240 (including treasury shares: 2000 and 1999 - none) ......................................................... 85 85 Additional paid-in capital ................................................................ 10,871 -- Accumulated other comprehensive (loss) income ............................................. (829) 3,170 Retained earnings ......................................................................... 1,669,853 1,600,743 Common stock held in treasury, at cost .................................................... (308,262) (173,137) ----------- ----------- Total stockholders' equity ........................................................... 1,389,588 1,448,658 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ..................................................... $ 3,742,601 $ 3,495,802 =========== =========== </TABLE> See Notes to Condensed Consolidated Financial Statements 4
THE NEW YORK TIMES COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) <TABLE> <CAPTION> For the Quarters Ended --------------------------------- March 26, March 28, 2000 1999 --------------------------------- OPERATING ACTIVITIES <S> <C> <C> Net cash provided by operating activities .......................................... $ 148,722 $ 120,959 --------- --------- INVESTING ACTIVITIES Additions to property, plant and equipment ......................................... (13,578) (13,583) Business acquired .................................................................. (296,278) -- Other-net .......................................................................... (7,246) (1,599) --------- --------- Net cash used in investing activities .............................................. (317,102) (15,182) --------- --------- FINANCING ACTIVITIES Commercial paper borrowings ........................................................ 239,200 62,350 Long-term debt Increase ..................................................................... 40,000 (521) Reduction .................................................................... (393) -- Capital shares Issuances .................................................................... 15,667 4,544 Repurchases .................................................................. (135,709) (151,267) Dividends paid to stockholders ..................................................... (18,136) (17,064) --------- --------- Net cash provided by/(used in) financing activities ................................ 140,629 (101,958) --------- --------- (Decrease)/Increase in cash and cash equivalents ................................... (27,751) 3,819 Cash and cash equivalents at the beginning of the year ............................. 63,861 35,991 --------- --------- Cash and cash equivalents at the end of the quarter ................................ $ 36,110 $ 39,810 ========= ========= </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 March 26, 2000, a total of $2.2 million of advertising credit has been utilized. BUSINESS ACQUIRED The Company acquired certain assets ($308.5 million) and assumed certain liabilities ($12.2 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
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. Certain reclassifications have been made to the 1999 Condensed Consolidated Financial Statements to conform with classifications used at March 26, 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"). This Form S-3 has not yet become effective. At the Annual Meeting of Stockholders to be held on May 23, 2000, stockholders of record as of the close of business on April 6, 2000, are entitled to vote on the proposal to create this new class of stock. The Company separates for financial reporting purposes the NYTD group and the "NYT group" (the Company excluding the NYTD group except for a retained interest in the NYTD group) (see Note 11). The NYT group includes all of the other business segments of the Company: Newspaper, Broadcast and Magazines, except for the businesses that comprise the NYTD group. The NYT group also includes a retained interest in the NYTD group which is currently 100%. This retained interest will decline to reflect the 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 the 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 operations of the NYTD group. These segments will be evaluated regularly by key management in assessing performance and allocating resources. 6
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 was included (as of January 7, 2000) in the Company's Consolidated Financial Statements. A portion of the purchase price was allocated to goodwill ($152.2 million), a portion to other intangibles ($111.4 million) (principally advertiser 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 20 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., and the Marco Island Eagle in Marco Island, Fla. The net assets of these newspapers have been included in the caption "Assets held for sale" in the Company's Condensed Consolidated Balance Sheets as of March 26, 2000 and December 26, 1999, at their carrying value. The sale is expected to be completed by December 31, 2000. The results of operations for these newspapers are not material to the Company. 4. Income Taxes Reconciliations between the effective rate on income before income taxes and the federal statutory rate are as follows: <TABLE> <CAPTION> For the Quarters Ended --------------------------------------------------- March 26, March 28, 2000 1999 - -------------------------------------------------------------------------------------------------------------------- % of % of (Dollars in thousands) Amount Pre-tax Amount Pre-tax - -------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> Tax at the federal statutory rate............................ $50,126 35.0% $37,642 35.0% State and local income taxes-net of federal benefit.......... 7,165 5.0 6,174 5.7 Amortization of nondeductible intangible assests acquired............................................. 2,864 2.0 1,978 1.8 Other-net.................................................... -- -- 344 0.4 --------------------------------------------------- Income tax expense $60,155 42.0% $46,138 42.9% =================================================== </TABLE> 5. Debt Obligations 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. The Company has a total of $400.0 million in revolving credit agreements, which require, among other provisions, specified levels of stockholders' equity. As of March 26, 2000, the amount outstanding under the Company's commercial paper program which is supported by these revolving credit agreements was $239.2 million. The amount available under the Company's commercial paper program was $160.8 million as of March 26, 2000. No amounts were outstanding under the Company's revolving credit agreements as of March 26, 2000. Approximately $429.3 million of stockholders' equity was unrestricted under these agreements as of March 26, 2000. 7
As of March 26, 2000, the Company had outstanding $979.7 million in total debt, including commercial paper and capital leases, of which $100.0 million was paid on April 28, 2000. 6. Stock Repurchase Program During the first quarter of 2000, the Company repurchased 3.1 million shares of Class A Common Stock at a cost of $135.7 million. The average price of these repurchases was $44 per share. As of May 1, 2000, the remaining amount of repurchase authorizations from the Company's Board of Directors was $230.5 million. 7. Voluntary Staff Reductions Work force reduction accruals included in "Accrued expenses" on the Company's Condensed Consolidated Balance Sheets amounted to $13.9 million at March 26, 2000, and $20.0 million at December 26, 1999. Most of the accruals outstanding at March 26, 2000, will be paid within one year. 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, and net income as reported in the Company's Condensed Consolidated Statements of Income. Comprehensive income for 2000 and 1999 was as follows: <TABLE> <CAPTION> ------------------------------------------------------------------------------------------------------- For the Quarters Ended ---------------------------------- March 26, March 28, ---------------------------------- (Dollars in thousands) 2000 1999 ------------------------------------------------------------------------------------------------------- <S> <C> <C> Net Income $83,063 $61,410 Foreign currency translation (losses)/gains (239) 618 Change in unrealized (losses) on marketable securities (7,229) -- Income tax benefit/(charge) 3,469 (265) ------------------------------------------------------------------------------------------------------- Comprehensive income $79,064 $61,763 ------------------------------------------------------------------------------------------------------- </TABLE> The accumulated other comprehensive (loss) income on the Company's Condensed Consolidated Balance Sheets was net of a deferred income tax asset of $0.9 million as of March 26, 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 1, 2000, record date. 8
10. Segment Statements of Income <TABLE> <CAPTION> - -------------------------------------------------------------------------------------------------------------------------- For the Quarters Ended ------------------------------- March 26, March 28, (Dollars in thousands) 2000 1999 - -------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> REVENUES Newspapers ............................................................... $ 770,870 $ 675,160 Broadcast ................................................................ 34,351 33,093 Magazines ................................................................ 28,909 27,715 New York Times Digital ................................................... 11,569 3,823 Intersegment eliminations (A) ............................................ (2,502) (733) ----------------------------- Total .................................................................... $ 843,197 $ 739,058 ============================= OPERATING PROFIT (LOSS) Newspapers ............................................................... $ 163,069 $ 117,401 Broadcast ................................................................ 7,385 6,985 Magazines ................................................................ 4,505 4,531 New York Times Digital ................................................... (10,049) (5,100) Unallocated corporate expenses ........................................... (9,977) (8,576) ----------------------------- Total .................................................................... 154,933 115,241 Income from joint ventures ............................................... 3,627 4,203 Interest expense, net .................................................... 15,342 11,896 ----------------------------- Income before income taxes ............................................... 143,218 107,548 Income taxes ............................................................. 60,155 46,138 ----------------------------- NET INCOME ............................................................... $ 83,063 $ 61,410 ============================= </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. 9
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 NYTD group and the NYT group, including the allocation of revenues and expenses between the NYTD group and the NYT 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 to reflect the 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, and 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. Condensed CONSOLIDATING STATEMENTS OF INCOME <TABLE> <CAPTION> Quarter Ended March 26, 2000 ----------------------------------------------------------------------- The New The NYT The NYTD Elimina- York Times (In thousands) Group Group tions Company - ------------------------------------------------------------------------------------------------------------------------ <S> <C> <C> <C> <C> REVENUES External non-internet revenues $ 830,914 $ -- $ -- $ 830,914 External internet revenues 714 11,569 -- 12,283 Inter-group revenue 2,502 -- (2,502) -- - ------------------------------------------------------------------------------------------------------------------------ Total 834,130 11,569 (2,502) 843,197 - ------------------------------------------------------------------------------------------------------------------------ COSTS AND EXPENSES Production costs: External expenses 353,257 6,031 -- 359,288 Inter-group expense -- 2,502 (2,502) -- Selling, general and administrative expenses: External expenses 316,301 12,675 -- 328,976 Inter-group allocated expenses (410) 410 -- -- - ------------------------------------------------------------------------------------------------------------------------ Total 669,148 21,618 (2,502) 688,264 - ------------------------------------------------------------------------------------------------------------------------ OPERATING PROFIT (LOSS) 164,982 (10,049) -- 154,933 Income from joint ventures 3,627 -- -- 3,627 Interest expense, net 15,342 -- -- 15,342 - ------------------------------------------------------------------------------------------------------------------------ Income (loss) before income taxes 153,267 (10,049) -- 143,218 - ------------------------------------------------------------------------------------------------------------------------ Income taxes (benefit) 64,376 (4,221) -- 60,155 - ------------------------------------------------------------------------------------------------------------------------ NET INCOME/(LOSS) $ 88,891 $ (5,828) -- $ 83,063 - ------------------------------------------------------------------------------------------------------------------------ <CAPTION> Quarter Ended March 28, 1999 ----------------------------------------------------------------------- The New The NYT The NYTD Elimina- York Times (In thousands) Group Group tions Company - ------------------------------------------------------------------------------------------------------------------------ <S> <C> <C> <C> <C> REVENUES External non-internet revenues $ 734,761 $ -- $ -- $ 734,761 External internet revenues 474 3,823 -- 4,297 Inter-group revenue 733 -- (733) -- - ------------------------------------------------------------------------------------------------------------------------ Total 735,968 3,823 (733) 739,058 - ------------------------------------------------------------------------------------------------------------------------ COSTS AND EXPENSES Production costs: External expenses 339,826 3,299 -- 343,125 Inter-group expense -- 733 (733) -- Selling, general and administrative expenses: External expenses 276,382 4,310 -- 280,692 Inter-group allocated expenses (581) 581 -- -- - ------------------------------------------------------------------------------------------------------------------------ Total 615,627 8,923 (733) 623,817 - ------------------------------------------------------------------------------------------------------------------------ OPERATING PROFIT (LOSS) 120,341 (5,100) -- 115,241 Income from joint ventures 4,203 -- -- 4,203 Interest expense, net 11,896 -- -- 11,896 - ------------------------------------------------------------------------------------------------------------------------ Income (loss) before income taxes 112,648 (5,100) -- 107,548 - ------------------------------------------------------------------------------------------------------------------------ Income taxes (benefit) 48,326 (2,188) -- 46,138 - ------------------------------------------------------------------------------------------------------------------------ NET INCOME/(LOSS) $ 64,322 $ (2,912) $ -- $ 61,410 - ------------------------------------------------------------------------------------------------------------------------ </TABLE> 10
CONDENSED CONSOLIDATING BALANCE SHEETS <TABLE> <CAPTION> March 26, 2000 ----------------------------------------------------------------------------- Reclassifi- The New The NYT The NYTD cations/ York Times (In thousands) Group Group Eliminations Company - ----------------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> ASSETS Current assets $ 582,208 $ 7,894 $ -- $ 590,102 Investment in joint ventures 122,952 -- -- 122,952 Funds allocated to the NYTD group, net 42,886 -- (42,886) -- Property plant & equipment, net 1,225,221 10,934 -- 1,236,155 Intangible assets acquired, net 1,524,414 27,365 -- 1,551,779 Miscellaneous assets 241,011 602 -- 241,613 - ----------------------------------------------------------------------------------------------------------------------------------- Total $ 3,738,692 $ 46,795 $ (42,886) $ 3,742,601 - ----------------------------------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ 921,493 $ 14,305 $ -- $ 935,798 Other liabilities 1,375,775 41,440 -- 1,417,215 Funds allocated from the NYT group, net -- 42,886 (42,886) -- Common stock 17,955 -- -- 17,955 Additional paid-in capital 10,871 -- -- 10,871 Retained earnings (accumulated losses) 1,721,689 (51,836) -- 1,669,853 Common stock held in treasury, at cost, and other (309,091) -- -- (309,091) - ----------------------------------------------------------------------------------------------------------------------------------- Total $ 3,738,692 $ 46,795 $ (42,886) $ 3,742,601 - ----------------------------------------------------------------------------------------------------------------------------------- <CAPTION> December 26, 1999 ----------------------------------------------------------------------------- Reclassifi- The New The NYT The NYTD cations/ York Times (In thousands) Group Group Eliminations Company - ----------------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> ASSETS Current assets $ 605,350 $ 9,558 $ -- $ 614,908 Investment in joint ventures 121,940 -- -- 121,940 Funds allocated to the NYTD group, net 80,440 -- (80,440) -- Property plant & equipment, net 1,208,601 9,795 -- 1,218,396 Intangible assets acquired, net 1,276,134 28,884 -- 1,305,018 Miscellaneous assets 235,052 488 -- 235,540 - ----------------------------------------------------------------------------------------------------------------------------------- Total $ 3,527,517 $ 48,725 $ (80,440) $ 3,495,802 - ----------------------------------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ 660,978 $ 12,536 $ -- $ 673,514 Other liabilities 1,371,873 1,757 -- 1,373,630 Funds allocated from the NYT group, net -- 80,440 (80,440) -- Common stock 17,882 -- -- 17,882 Additional paid-in capital -- -- -- -- Retained earnings (accumulated losses) 1,646,751 (46,008) -- 1,600,743 Common stock held in treasury, at cost, and other (169,967) -- -- (169,967) - ----------------------------------------------------------------------------------------------------------------------------------- Total $ 3,527,517 $ 48,725 $ (80,440) $ 3,495,802 - ----------------------------------------------------------------------------------------------------------------------------------- </TABLE> SUPPLEMENTAL INFORMATION TO THE CONDENSED CONSOLIDATING BALANCE SHEETS FUNDS ALLOCATED TO/FROM THE NYTD GROUP <TABLE> <CAPTION> Funds Funds allocated Debt proceeds allocated to/ from the advanced to the from the NYT (In thousands) NYT group NYT group group, net -------------------------------------------------- <S> <C> <C> <C> Balance at December 26, 1999 ............................................ $ 80,440 $ -- $ 80,440 Funds allocated from the NYT group ................................... 2,446 -- 2,446 Debt proceeds advanced to the NYT group(A) ........................... -- (40,000) (40,000) -------------------------------------------------- Balance at March 26, 2000 ............................................... $ 82,886 $(40,000) $ 42,886 ================================================== </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. 11
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS <TABLE> <CAPTION> Quarter Ended March 26, 2000 ------------------------------------------------- The New The NYT The NYTD Elimina- York Times (In thousands) Group Group tions Company - ----------------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> OPERATING ACTIVITIES Net cash provided by operating activities $ 148,267 $ 455 $ -- $ 148,722 - ----------------------------------------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Additions to property, plant and equipment (11,653) (1,925) -- (13,578) Business acquired (296,278) -- -- (296,278) Other-net (7,246) -- -- (7,246) - ----------------------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (315,177) (1,925) -- (317,102) - ----------------------------------------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Commercial paper borrowings 239,200 -- -- 239,200 Long-term debt Increase -- 40,000 -- 40,000 Reduction (23) (370) -- (393) Capital shares Issuances 15,667 -- -- 15,667 Repurchases (135,709) -- -- (135,709) Dividends paid to stockholders (18,136) -- -- (18,136) Funds allocated between the NYT group to the NYTD group 38,325 (38,325) -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Net cash provided/(used in) by financing activities 139,324 1,305 -- 140,629 - ----------------------------------------------------------------------------------------------------------------------------------- Net (decrease) increase in cash and short-term investments (27,586) (165) -- (27,751) Cash and cash equivalents at the beginning of the year 63,677 184 -- 63,861 - ----------------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at the end of the year $ 36,091 $ 19 $ -- $ 36,110 - ----------------------------------------------------------------------------------------------------------------------------------- <CAPTION> Quarter Ended March 28, 1999 ------------------------------------------------- The New The NYT The NYTD Elimina- York Times (In thousands) Group Group tions Company - ----------------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> OPERATING ACTIVITIES Net cash provided by operating activities $ 121,373 $ (414) $ -- $ 120,959 - ----------------------------------------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Additions to property, plant and equipment (12,444) (1,139) -- (13,583) Business acquired -- -- -- -- Other-net (1,599) -- -- (1,599) - ----------------------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (14,043) (1,139) -- (15,182) - ----------------------------------------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Commercial paper borrowings 62,350 -- -- 62,350 Long-term debt Increase -- -- -- -- Reduction (521) -- -- (521) Capital shares Issuances 4,544 -- -- 4,544 Repurchases (151,267) -- -- (151,267) Dividends paid to stockholders (17,064) -- -- (17,064) Funds allocated to/from the NYT group to the NYTD group (1,785) 1,785 -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Net cash provided/(used in) by financing activities (103,743) 1,785 -- (101,958) - ----------------------------------------------------------------------------------------------------------------------------------- Net (decrease) increase in cash and short-term investments 3,587 232 -- 3,819 Cash and cash equivalents at the beginning of the year 35,950 41 -- 35,991 - ----------------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at the end of the year $ 39,537 $ 273 $ -- $ 39,810 - ----------------------------------------------------------------------------------------------------------------------------------- </TABLE> 12
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Advertising revenues accounted for approximately 73% and circulation revenues accounted for 21% of the Company's revenues in the first quarter 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. The Company's cost of newsprint was lower in the first quarter of 2000 compared with the first quarter of 1999. The cost of newsprint is expected to rise in 2000 over 1999 levels. The Company's consolidated financial results for the first quarter of 2000 compared with the first quarter of 1999, were as follows: <TABLE> <CAPTION> - ------------------------------------------------------------------------------------------------------------------ For the Quarters Ended ------------------------------------------------- March 26, March 28, (Dollars in thousands, except per share data) 2000 1999 % Change - ------------------------------------------------------------------------------------------------------------------ <S> <C> <C> <C> Revenues $843,197 $ 739,058 14.1% - ------------------------------------------------------------------------------------------------------------------ Operating profit $154,933 $ 115,241 34.4% - ------------------------------------------------------------------------------------------------------------------ Net Income $ 83,063 $ 61,410 35.3% - ------------------------------------------------------------------------------------------------------------------ Diluted earning per share $ 0.47 $ 0.34 38.2% - ------------------------------------------------------------------------------------------------------------------ </TABLE> Revenues for the first quarter of 2000 were $843.2 million, a 14.1% increase over 1999 first-quarter revenues of $739.1 million. Excluding revenues from the Worcester Telegram & Gazette (T&G), which was acquired on January 7, 2000, revenues rose 11.7% and advertising revenues grew 15.6%. The increase was primarily from strong national and help-wanted advertising at the Newspaper Group with the largest increases at The New York Times and The Boston Globe. Operating profit in the first quarter of 2000 increased 34.4% to $154.9 million from $115.2 million in the 1999 first quarter. The 2000 first-quarter net income was $83.1 million, or $0.47 diluted earnings per share, compared with net income of $61.4 million, or $0.34 diluted earnings per share, in the first quarter of 1999. This increase was principally from strong revenue growth. EBITDA (earnings before interest, taxes, depreciation and amortization) in the first quarter of 2000 rose to $210.2 million from $167.9 million in the 1999 first quarter. 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. 13
Consolidated operating expenses for the first quarter of 2000 and 1999 were as follows: - ------------------------------------------------------------------------------- For the Quarters Ended ------------------------------------------------- March 26, March 28, (Dollars in thousands) 2000 1999 % Change - ------------------------------------------------------------------------------- Production costs Raw materials $ 85,589 $87,291 -2.0% Wages and benefits 165,205 151,222 9.2% Other 108,494 104,612 3.7% - ------------------------------------------------------------------------------- Total production costs 359,288 343,125 4.7% Selling, general and administrative expenses 328,976 280,692 17.2% - ------------------------------------------------------------------------------- Total expenses $688,264 $623,817 10.3% - ------------------------------------------------------------------------------- Production costs for the first quarter of 2000 were $359.3 million, a 4.7% increase from the 1999 first-quarter production costs of $343.1 million. Excluding the T&G, production costs for the first quarter of 2000 were $353.9 million, a 3.1% increase from the 1999 first-quarter production costs of $343.1 million. For the first quarter of 2000 lower newsprint costs favorably affected raw material expenses. Selling, general and administrative expenses ("SGA expenses") in the first quarter of 2000 were $329.0 million, a 17.2% increase over the 1999 first quarter SGA expenses of $280.7 million. Excluding the T&G, SGA expenses in the first quarter of 2000 were $319.0 million, a $38.3 million or 13.7% increase over the 1999 first quarter SGA expenses of $280.7 million. 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 first-quarter results. 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 $15.3 million in the 2000 first quarter from $11.9 million in the 1999 first quarter 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 first quarter of 2000 was 42.0% compared with 42.9% in the 1999 first quarter. The decrease in the effective income tax rates were primarily due to lower state and local income taxes. 14
Consolidated revenues, EBITDA, depreciation and amortization and operating profit by business segment were as follows: <TABLE> <CAPTION> - ----------------------------------------------------------------------------------------------------------------------------------- For the Quarters Ended --------------------------------------------------------------- March 26, March 28, (Dollars in thousands) 2000 1999 % Change - ----------------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> REVENUES Newspapers .................................................. $ 770,870 $ 675,160 14.2% Broadcast ................................................... 34,351 33,093 3.8% Magazines ................................................... 28,909 27,715 4.3% New York Times Digital ...................................... 11,569 3,823 202.6% Intersegment eliminations (A) ............................... (2,502) (733) N/A --------------------------------------------------------------- Total .................................................... $ 843,197 $ 739,058 14.1% =============================================================== EBITDA Newspapers .................................................. $ 204,964 $ 158,283 29.5% Broadcast ................................................... 11,685 11,355 2.9% Magazines ................................................... 4,834 4,879 -0.9% New York Times Digital ...................................... (7,632) (4,799) -59.0% Unallocated corporate expenses .............................. (7,342) (6,084) -20.7% Joint ventures .............................................. 3,714 4,291 -13.4% --------------------------------------------------------------- Total .................................................... $ 210,223 $ 167,925 25.2% =============================================================== DEPRECIATION AND AMORTIZATION Newspapers .................................................. $ 41,895 $ 40,882 2.5% Broadcast ................................................... 4,300 4,370 -1.6% Magazines ................................................... 329 348 -5.5% New York Times Digital ...................................... 2,417 301 N/A Corporate ................................................... 2,635 2,492 5.7% Joint ventures .............................................. 87 87 -- --------------------------------------------------------------- Total .................................................... $ 51,663 $ 48,480 6.6% =============================================================== OPERATING PROFIT (LOSS) Newspapers .................................................. $ 163,069 $ 117,401 38.9% Broadcast ................................................... 7,385 6,985 5.7% Magazines ................................................... 4,505 4,531 -0.6% New York Times Digital ...................................... (10,049) (5,100) -97.0% Unallocated corporate expenses .............................. (9,977) (8,576) -16.3% --------------------------------------------------------------- Total .................................................... $ 154,933 $ 115,241 34.4% =============================================================== </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. - ------------------------------------------------------------------------------- For the Quarters Ended ----------------------------------------------- March 26, March 28, (Dollars in thousands) 2000 1999 % Change - ------------------------------------------------------------------------------- Revenues $770,870 $675,160 14.2% - ------------------------------------------------------------------------------- EBITDA $204,964 $158,283 29.5% - ------------------------------------------------------------------------------- Operating profit $163,069 $117,401 38.9% - ------------------------------------------------------------------------------- 15
Total Newspaper Group revenues in the first quarter of 2000 were $770.9 million, a 14.2% increase, compared with $675.2 million in the first quarter of 1999. Excluding the T&G, total Newspaper Group revenues increased 11.6% to $753.5 million in the first quarter of 2000 from $675.2 million in the same period of 1999, and advertising revenue grew 15.3%. Performance was strongest at The Times and The Globe where advertising revenues increased 19.9% and 13.3% for the first quarter of 2000. Both newspapers benefited from strong national and help-wanted advertising. Operating profit for the Newspaper Group increased 38.9% to $163.1 million ($161.0 million or 37.2% excluding the T&G) in the first quarter of 2000 from $117.4 million in the 1999 first quarter principally from strong revenue growth. The Company currently expects advertising revenue growth in the Newspaper Group, excluding the T&G, to be in the range of six to eight percent for 2000. Advertising, circulation and other revenue, by major product of the Newspaper Group, were as follows: <TABLE> <CAPTION> - ---------------------------------------------------------------------------------------------- For the Quarters Ended ------------------------------------------- March 26, March 28, (Dollars in thousands) 2000 1999 % Change - ---------------------------------------------------------------------------------------------- <S> <C> <C> <C> The New York Times Advertising $327,847 $273,431 19.9% Circulation 117,128 113,446 3.2% Other 36,191 34,422 5.1% - ---------------------------------------------------------------------------------------------- Total $481,166 $421,299 14.2% - ---------------------------------------------------------------------------------------------- New England Newspaper Group The Boston Globe Advertising $121,486 $107,253 13.3% Circulation 32,728 32,325 1.2% Other 2,581 2,314 11.5% - ---------------------------------------------------------------------------------------------- Subtotal $156,795 $141,892 10.5% - ---------------------------------------------------------------------------------------------- Worcester Telegram & Gazette Advertising $12,500 N/A N/A Circulation 4,485 N/A N/A Other 363 N/A N/A - ---------------------------------------------------------------------------------------------- Subtotal $17,348 N/A N/A - ---------------------------------------------------------------------------------------------- Total New England Newspaper Group Advertising $133,986 $107,253 24.9% Circulation 37,213 32,325 15.1% Other 2,944 2,314 27.2% - ---------------------------------------------------------------------------------------------- Total $174,143 $141,892 22.7% - ---------------------------------------------------------------------------------------------- Regional Newspapers Advertising $ 91,119 $87,891 3.7% Circulation 20,286 20,235 0.3% Other 4,156 3,843 8.1% - ---------------------------------------------------------------------------------------------- Total $115,561 $111,969 3.2% - ---------------------------------------------------------------------------------------------- Total Newspaper Group Advertising $552,952 $468,575 18.0% Circulation 174,627 166,006 5.2% Other 43,291 40,579 6.7% - ---------------------------------------------------------------------------------------------- Total $770,870 $675,160 14.2% ============================================================================================== </TABLE> 16
Advertising volume was as follows: <TABLE> <CAPTION> - ------------------------------------------------------------------------------------------------------------ For the Quarters Ended -------------------------------------------- March 26, March 28, (Inches in thousands, preprints in thousands of copies) 2000 1999 % Change - ------------------------------------------------------------------------------------------------------------ <S> <C> <C> <C> The New York Times Retail 125.4 125.1 0.2% National 415.2 351.0 18.3% Classified 251.3 252.8 -0.6% Zoned 245.1 226.1 8.4% - ------------------------------------------------------------------------------------------------------------ Total 1,037.0 955.0 8.6% - ------------------------------------------------------------------------------------------------------------ Preprints 98,527 96,509 2.1% - ------------------------------------------------------------------------------------------------------------ New England Newspaper Group The Boston Globe Retail 125.5 138.6 -9.5% National 191.5 173.3 10.5% Classified 345.5 337.4 2.4% Zoned 56.2 55.7 0.9% - ------------------------------------------------------------------------------------------------------------ Total 718.7 705.0 1.9% - ------------------------------------------------------------------------------------------------------------ Preprints 185,505 186,362 -0.5% - ------------------------------------------------------------------------------------------------------------ Worcester Telegram & Gazette Retail 63.5 N/A N/A National 12.3 N/A N/A Classified 126.1 N/A N/A Zoned 97.9 N/A N/A - ------------------------------------------------------------------------------------------------------------ Total 299.8 N/A N/A - ------------------------------------------------------------------------------------------------------------ Preprints 42,247 N/A N/A - ------------------------------------------------------------------------------------------------------------ Regional Newspapers Retail 1,819.1 1,848.8 -1.6% National 72.6 68.5 6.0% Classified 1,969.5 1,917.8 2.7% Legal 86.0 84.0 2.4% - ------------------------------------------------------------------------------------------------------------ Total 3,947.2 3,919.1 0.7% - ------------------------------------------------------------------------------------------------------------ Preprints 273,650 270,222 1.3% - ------------------------------------------------------------------------------------------------------------ </TABLE> 17
Average circulation for The Times, The Globe, the T&G and the Regional Newspapers (excluding non-dailies) for the first quarter of 2000, compared with the first quarter of 1999, was as follows: <TABLE> <CAPTION> - ------------------------------------------------------------------------------------------------ For the Quarter Ended March 26, 2000 ----------------------------------------------------------- (Copies in thousands) Weekday % Change Sunday % Change - ------------------------------------------------------------------------------------------------ <S> <C> <C> <C> <C> Average Net Paid Circulation The New York Times 1,154.5 2.3% 1,724.2 1.1% New England Newspaper The Boston Globe 466.6 0.9% 719.1 -1.0% Worcester Telegram & Gazette 103.6 N/A 128.8 N/A Regional Newspapers 764.8 -1.2% 815.1 -1.2% - ------------------------------------------------------------------------------------------------ <CAPTION> - ------------------------------------------------------------------------------------------------ For the Quarter Ended March 28, 1999 ----------------------------------------------------------- (Copies in thousands) Weekday % Change Sunday % Change - ------------------------------------------------------------------------------------------------ <S> <C> <C> <C> <C> Average Net Paid Circulation The New York Times 1,128.8 2.2% 1,705.8 3.0% The Boston Globe 462.4 0.1% 726.1 -2.7% Regional Newspapers 773.9 -0.5% 825.4 -1.0% - ------------------------------------------------------------------------------------------------ </TABLE> 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 have continued 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. - -------------------------------------------------------------------------------- For the Quarters Ended ------------------------------------- March 26, March 28, (Dollars in thousands) 2000 1999 % Change - -------------------------------------------------------------------------------- Revenues $34,351 $33,093 3.8% - -------------------------------------------------------------------------------- EBITDA $11,685 $11,355 2.9% - -------------------------------------------------------------------------------- Operating Profit $ 7,385 $ 6,985 5.7% - -------------------------------------------------------------------------------- Revenues increased 3.8% in the 2000 first quarter to $34.4 million from $33.1 million in the 1999 first quarter, while operating profit improved 5.7% to $7.4 million from $7.0 million in the first-quarter of last year. The improvement is mainly due to political advertising associated with the presidential primaries. 18
Magazine Group: The Magazine Group is comprised of three golf publications and related activities in the golf field. - -------------------------------------------------------------------------------- For the Quarters Ended ------------------------------------- March 26, March 28, (Dollars in thousands) 2000 1999 % Change - -------------------------------------------------------------------------------- Revenues $28,909 $27,715 4.3% - -------------------------------------------------------------------------------- EBITDA $ 4,834 $ 4,879 -0.9% - -------------------------------------------------------------------------------- Operating Profit $ 4,505 $ 4,531 -0.6% - -------------------------------------------------------------------------------- Revenue increased 4.3% in the 2000 first quarter to $28.9 million compared with $27.7 million in the 1999 first quarter. Operating profit remained flat in the 2000 first quarter compared to the 1999 first quarter. While revenues rose, total expenses increased, principally from the March launch of Golf Digest Woman and higher paper costs. 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. - ------------------------------------------------------------------------------ For the Quarters Ended --------------------------------------------- March 26, March 28, (Dollars in thousands) 2000 1999 % Change - ------------------------------------------------------------------------------ Revenues $ 11,569 $ 3,823 202.6% - ------------------------------------------------------------------------------ EBITDA $ (7,632) $ (4,799) -59.0% - ------------------------------------------------------------------------------ Operating loss $(10,049) $ (5,100) -97.0% - ------------------------------------------------------------------------------ NYTD group revenues for the first quarter of 2000 were $11.6 million compared with $3.8 million in the first quarter of 1999. The $7.8 million increase in 2000 revenues was primarily due to strong growth in advertising volume. Advertising revenue accounts for 90% of NYTD group total revenues for the first quarter of 2000 and 1999. Operating loss for the 2000 first quarter was $10.0 million compared with $5.1 million in the first quarter of 1999. The $4.9 million increase was the result of increased staffing, advertising, promotion and the acquisition of Abuzz Technologies, Inc., which was acquired in July 1999. The Company anticipates that costs for each quarter for the remainder of 2000 associated with the NYTD group will continue to increase over the 2000 first quarter, depending on the timing and extent of various marketing expenses and initiatives. Liquidity and Capital Resources Net cash provided by operating activities was $148.7 million in the 2000 first quarter compared with $121.0 million in the 1999 first quarter. The increase of $27.7 million was primarily due to improved earnings. Net cash used in investing activities was $317.1 million in the first quarter of 2000 compared with $15.2 million in the 1999 first quarter. The increase of $301.9 million was primarily due to the acquisition of the T&G. Net cash provided by financing activities was $140.6 million in the first quarter of 2000 compared with $102.0 million used in financing activities in the 1999 first quarter. The increase of $242.6 million was primarily related to increases in commercial paper outstanding used to fund the T&G acquisition. 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% at March 26, 2000, and 73% at March 28, 1999. This decrease is principally due to an increase in commercial paper outstanding at March 26, 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 31% at March 26, 2000, compared with 30% at March 28, 1999. 19
Financing: The Company's total debt, including commercial paper and capital leases, was $979.7 million at March 26, 2000, and $785.8 million at March 28, 1999. The increase in total debt was primarily from an increase in commercial paper outstanding and the issuance of additional medium-term notes to fund stock repurchases and the acquisition of the T&G. On April 28, 2000, $100.0 million of debt was repaid; the remainder of the Company's debt and capital leases generally mature between March 2003 and March 2025. The Company has $400.0 million available under its revolving credit agreements. These agreements require, among other provisions, specified levels of stockholders' equity. A revolving credit agreement for $200.0 million expires in June 2000, which date the Company intends to extend, and an additional revolving credit agreement for $200.0 million expires in July 2002. The Company had $239.2 million in commercial paper outstanding at March 26, 2000, and $186.5 million at March 28, 1999, which obligations are supported by these revolving credit agreements. No amounts are outstanding under these revolving credit agreements as of March 26, 2000. The amount available under the commercial paper program was $160.8 million as of March 26, 2000. Approximately $429.3 million of stockholders' equity was unrestricted under these agreements at March 26, 2000, and $583.2 million was unrestricted at March 28, 1999. The decline in the level of unrestricted stockholders' equity was primarily due to stock repurchases. 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 $120.0 million to $140.0 million. The Company currently anticipates that depreciation and amortization expense will approximate $215.0 million for 2000 compared with $197.5 million in 1999. 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. This Form S-3 has not yet become effective. At the Annual Meeting of Stockholders to be held on May 23, 2000, stockholders of record as of the close of business on April 6, 2000, are entitled to vote on the proposal to create this new class of stock. The Company separates for financial reporting purposes the NYTD group and the "NYT group" (the Company excluding the NYTD group) except for a retained interest in the NYTD group (see Note 11 of the Notes to the Consolidated Financial Statements). The NYT group includes all of the other business segments of the Company: Newspaper, Broadcast and Magazines, except for the businesses that comprise the NYTD group. The NYT group also includes a retained interest in the NYTD group which is currently 100%. This retained interest will decline to reflect the 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 Notes to the Condensed Consolidated Financial 20
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 operations of 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. 21
PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 3.2 By-laws as amended through April 27, 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. 22
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: May 10, 2000 /s/ John M. O'Brien ------------ --------------------------- John M. O'Brien Senior Vice President and Chief Financial Officer (Principal Financial Officer) 23
Exhibit Index to Quarterly Report Form 10-Q Quarter Ended March 26, 2000 Exhibit No. Exhibit - ----------- ------- 3.2 By-laws as amended through April 27, 2000 12 Ratio of Earnings to Fixed Charges 27 Financial Data Schedule 24