UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☑ Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 26, 2021 |
| | | | |
For the fiscal year ended December 30, 2018 | | ☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ___ to ___ 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
incorporation or organization)
| | | | | (I.R.S. Employer
Identification No.)
|
| 620 Eighth Avenue, | New York, N.Y. | New York | 10018 | |
| (Address and zip code of principal executive offices) | | (Zip code) |
Registrant’s telephone number, including area code: (212) 556-1234
Securities registered pursuant to Section 12(b) of the Act:
|
| | | | | | | |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Class A Common Stock of $.10 par value | NYT | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act: Not Applicable
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ ☑No ¨☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes¨ ☐ Noþ☑
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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ☑ No ¨☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes þ ☑No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
|
| | | | | | | | | | | | | |
| Large Accelerated Filer | Large accelerated filer ☑
| þ
| Accelerated filer | ¨☐ |
| Non-accelerated filer | ¨☐ | Smaller reporting company | ¨☐ |
| | | Emerging growth company | ¨
☐ |
If an emerging growth company, indicate by the check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ¨☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No þ☑
The aggregate worldwide market value of Class A Common Stock held by non-affiliates, based on the closing price on June 29, 2018,25, 2021, the last business day of the registrant’s most recently completed second quarter, as reported on the New York Stock Exchange, was approximately $4.1$7.3 billion. As of such date, non-affiliates held 59,77634,341 shares of Class B Common Stock. There is no active market for such stock.
The number of outstanding shares of each class of the registrant’s common stock as of February 21, 201917, 2022 (exclusive of treasury shares), was as follows: 165,113,286166,751,793 shares of Class A Common Stock and 803,408781,724 shares of Class B Common Stock.
Documents incorporated by reference
Portions of the Proxy Statement relating to the registrant’s 20192022 Annual Meeting of Stockholders, to be held on May 2, 2019,April 27, 2022, are incorporated by reference into Part III of this report.
|
| |
INDEX TO THE NEW YORK TIMES COMPANY 20182021 ANNUAL REPORT ON FORM 10-K |
|
| |
| FORWARD-LOOKING STATEMENTS |
This Annual Report on Form 10-K, including the sections titled “Item 1 — Business,” “Item 1A — Risk Factors” and “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements that relatewithin the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Terms such as “aim,” “anticipate,” “believe,” “confidence,” “contemplate,��� “continue,” “conviction,” “could,” “drive,” “estimate,” “expect,” “forecast,” “future,” “goal,” “guidance,” “intend,” “likely,” “may,” “might,” “objective,” “opportunity,” “optimistic,” “outlook,” “plan,” “position,” “potential,” “predict,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “would” or similar statements or variations of such words and other similar expressions are intended to future events or our future financial performance. We may also make written and oralidentify forward-looking statements, in our Securities and Exchange Commission (“SEC”) filings and otherwise. We have tried, where possible, to identify such statements by using words such as “believe,” “expect,” “intend,” “estimate,” “anticipate,” “will,” “could,” “project,” “plan” and similar expressions in connection with any discussion of future operating or financial performance. Anyalthough not all forward-looking statements contain such terms. Forward-looking statements are and will be based upon our then-currentcurrent expectations, estimates and assumptions regarding future events and are applicable only as of the dates of such statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
By their nature, forward-looking statements are subject toinvolve risks and uncertainties that could causechange over time; actual results tocould differ materially from those anticipated in anypredicted by such statements. You should bear this in mind as you consider forward-looking statements. Factors that we think could, individually or in the aggregate, cause our actual results to differ materially from expected and historical results include those described in “Item 1A — Risk Factors” below, as well as other risks and factors identified from time to time in our SECSecurities and Exchange Commission (“SEC”) filings. You are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
OVERVIEW
The New York Times Company (the “Company”) was incorporated on August 26, 1896, under the laws of the State of New York. The Company and its consolidated subsidiaries are referred to collectively in this Annual Report on Form 10-K as “we,” “our” and “us.”
We are a global media organization focused on creating, collecting and distributing high-quality news and information. Our continued commitment to premium contentinformation that helps our audience understand and engage with the world. We believe that The Times’s original, independent and high-quality reporting, storytelling and journalistic excellence across topics and formats set us apart from other news organizations and is at the heart of what makes our journalism worth paying for. The New York Times brand a trusted source of news and information for readers and viewers across various platforms. Recognized widely for the quality of our reporting and content, our publications havecoverage has been awardedwidely recognized with many industry and peer accolades, including 125132 Pulitzer Prizes and citations, more than any other news organization.
The Company includes newspapers,our digital and print and digital products and related businesses. We have one reportable segment with businesses, that include:including:
•our newspaper,core news product, The New York Times (“The Times”);
our websites, including NYTimes.com;
, which is available on our mobile applications, on our website (NYTimes.com) and as a printed newspaper, and associated content such as our podcasts;
•our other interest-specific products, including Games, Cooking and Audm (our read-aloud audio service), which are available on mobile applications and websites; Wirecutter, our online review and recommendation product; and, following our acquisition of The Times’s core news applications, as well as interest-specific applications, including Athletic Media Company on February 1, 2022 (as further described below), The Athletic; and
•our Crossword and Cooking products;and
related businesses, such as our licensing division; our digital marketing agencies; our product review and recommendation website, Wirecutter;operations; our commercial printing operations; NYT Live (ourour live events business);business; and other products and services under The Times brand.
On February 1, 2022, we completed the acquisition of The Athletic Media Company (“The Athletic”), a global digital subscription-based sports media business that provides national and local coverage of more than 200 clubs and teams in the United States and around the world.
We generate revenues principally from the sale of subscriptions and advertising. Subscription revenues consist of revenues from subscriptions to our printdigital and digitalprint products (which include our news products,product, as well as our CrosswordGames, Cooking, Audm and CookingWirecutter products) and single-copy and bulk sales of our print newspaper.products. Advertising revenue is derived from the sale of our advertising products and services on our print and digital platforms.services. Revenue information for the Company appears under “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Revenues, operating profit and identifiable assets of our foreign operations each represent less than 10% of our total revenues, operating profit and identifiable assets.
During 2018, we continued to make significant investments in our journalism, while taking further steps to position our organization to operate more efficiently in a digital environment. The Times continued to break stories and produce investigative reports that sparked global conversations on wide-ranging topics. We launched
THE NEW YORK TIMES COMPANY – P. 1
groundbreaking digital journalism projects and new news and opinion podcasts that complement The Daily, our news podcast that launched in 2017 and was the most downloaded podcast on Apple’s iTunes in 2018. We also announced the creation of a new television show, “The Weekly,” which will begin airing in mid-2019. In addition, we continued to create innovative digital advertising solutions across our platforms and expand our creative services offerings.
We believe that the significant growth over the last year in subscriptions to our products demonstrates the success of our “subscription-first” strategy and the willingness of our readers to pay for high-quality journalism. We had approximately 4.3 million subscriptions to our products asAs of December 30, 2018,26, 2021, approximately 7.6 million subscribers had purchased approximately 8.8 million paid subscriptions across our products, more than at any point in our history. Our non-news products Games and Cooking each crossed one million subscriptions just before the end of 2021.
In early 2019, we established a goal of reaching 10 million subscriptions by 2025, a target we have now surpassed with the acquisition of The Athletic in 2022. In February 2022, we announced a new target: at least 15 million total subscribers by year-end 2027. During 2021, we continued to make significant investments in our journalism and our digital product experience as well as in the back-end technology and underlying capabilities that allow users to seamlessly move among various devices and products. The Times continued to break stories, produce investigative reports and help our audience understand a wide range of topics, including the coronavirus (Covid-19) pandemic and its many reverberations, the intersection of race and culture in America, and the varied effects of climate change. In addition, we continue to innovate advertising offerings that integrate well with the user experience, including solutions that use proprietary first-party data — rather than third-party data — to generate predictive insights and help inform our clients’ advertising strategies while leveraging our audiences in privacy-forward ways, as well as our audio advertising offerings. We also expanded subscriptions to our non-news products by launching a subscription option to our Wirecutter product during the third quarter of 2021.
In January 2022, we acquired Wordle, a popular digital word game, to join our Games portfolio.
The global Covid-19 pandemic, efforts to contain it and the resulting economic disruptions have impacted and may further impact our business in various ways. See “Item 1A — Risk Factors” and “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more information.
PRODUCTS
The Company’s principal business consists of distributing content generated by our newsroom through our digital and print platforms. In addition, we distribute selected content on third-party platforms.
Our core news website, NYTimes.com, was launched in 1996. Since 2011, we have charged consumers for content provided on this website and our core news website (NYTimes.com) and mobile application.applications. Digital subscriptions can be purchased individuallyby individual consumers or throughas part of group education or group corporate or group education subscriptions. Our meteredcore news access model generally offers users who have registered free access to a setlimited number of articles per month and then chargesbefore requiring users to subscribe for access to content beyond that limit.additional content. We have made the choice at times to suspend limits on registered users’ free access to particularly important coverage.
In addition to subscriptions to our digital news product, we offer an All Digital Access subscription package that includes bundled access to our news website and mobile application, Games, Cooking and Wirecutter products. We also offer standalone subscriptions to other digitalour Games, Cooking, Audm and Wirecutter products, namelyand effective February 1, 2022, The Athletic. Our access model for our CrosswordGames, Cooking and Cooking products. Certain digital news product subscription packages includeWirecutter products generally offers users who have registered free access to our Crossword and Cooking products.limited pieces of content before requiring users to subscribe for access to additional content.
Our products also include news and opinion podcasts, which are distributed both on our digital platforms and on third-party platforms. We generate advertising and licensing revenue from this content, but do not charge users for access.content.
The Times’s print edition newspaper, published seven days a week in the United States, commenced publication in 1851. The Times also has an international edition that is tailored for global audiences. First published in 2013, and previously called the International New York Times, the international edition succeeded the International Herald Tribune, a leading daily newspaper that commenced publishing in Paris in 1887. Our print newspapers are sold in the United States and around the world through individual home-delivery subscriptions, bulk subscriptions (primarily by schools and hotels) and single-copy sales. All printPrint home-delivery subscribers are entitled to receive free access to some or all of our digital news, Games, Cooking and Wirecutter products.
P. 2 – THE NEW YORK TIMES COMPANY
SUBSCRIBERS, SUBSCRIPTIONS AND AUDIENCE
Our content reaches a broad audience through ourboth digital and print platforms.As of December 30, 2018, we26, 2021, approximately 7.6 million subscribers had purchased approximately 4.3 million8,789,000 paid subscriptions across 217236 countries and territories to our digital and print products. As of December 31, 2021, The Athletic, which we acquired on February 1, 2022, had approximately 1.2 million subscribers.
Paid digital-only subscriptions totaled approximately 3,360,0008,005,000 as of December 30, 2018,26, 2021, an increase of approximately 27%19% compared with December 31, 2017.27, 2020. This amount includes standalone paid subscriptions to our CrosswordGames, Cooking, Audm and Cooking products, which totaled approximately 647,000 as of December 30, 2018.Wirecutter products. International digital-only news subscriptions represented approximately 16%18% of our digital-only news subscriptions as of December 30, 2018.26, 2021.
The number of paid digital-only subscriptions also includes estimated group corporateeducation and group educationcorporate subscriptions (which collectively represent approximately 6%5% of total paid digital subscriptions to our news products). The numbernumbers of paid group subscriptions isand subscribers are derived using the value of the relevant contract and a discounted basic subscription rate. The actual number of users who have access to our products through group subscriptionssales is substantially higher.
According to comScore Media Metrix, an online audience measurement service, in 2021, NYTimes.com had a monthly average of approximately 90 million unique visitors in the United States on either desktop/laptop computers or mobile devices. Globally, including the United States, NYTimes.com had a monthly average of approximately 125 million unique visitors on either desktop/laptop computers or mobile devices, according to internal data estimates.
In the United States, The Times had the largest daily and Sunday print circulation of all seven-day newspapers for the three-monthsix-month period ended September 30, 2018,2021, according to data collected by the Alliance for Audited Media (“AAM”), an independent agency that audits circulation of most U.S. newspapers and magazines.
For the fiscal year ended December 30, 2018,26, 2021, The Times’s average print circulation (which includes paid and qualified circulation of the newspaper in print) was approximately 487,000343,000 for weekday (Monday to Friday) and 992,000820,000 for Sunday. (Under AAM’s reporting guidance, qualified circulation represents copies available for individual
P. 2 – THE NEW YORK TIMES COMPANY
consumers that are either non-paid or paid by someone other than the individual, such as copies delivered to schools and colleges and copies purchased by businesses for free distribution.)
Internationally, averageAverage circulation for the international edition of our newspaper (which includes paid circulation of the newspaper in print and electronic replica editions) for the fiscal years ended December 30, 2018,26, 2021, and December 31, 2017,27, 2020, was approximately 170,00091,100 (estimated) and 173,000,104,800, respectively. These figures follow the guidance of Office de Justification de la Diffusion, an agency based in Paris and a member of the International Federation of Audit Bureaux of Circulations that audits the circulation of most newspapers and magazines in France. For 2020, this guidance excludes data from March through June 2020 in the calculation of the annual average. The final 20182021 figure will not be available until April 2019.2022.
According to comScore Media Metrix, an online audience measurement service, in 2018, NYTimes.com had a monthly average of approximately 94 million unique visitors in the United States on either desktop/laptop computers or mobile devices. Globally, including the United States, NYTimes.com had a 2018 monthly average of approximately 134 million unique visitors on either desktop/laptop computers or mobile devices, according to internal data estimates. THE NEW YORK TIMES COMPANY – P. 3
ADVERTISING
We have a comprehensive portfolio of advertising products and services. Our advertisingAdvertising revenue is divided into two main categories:
Display Advertising
Display advertising revenue is principally generated from advertisers (such as technology, luxury goods and financial institutions, movie studios, department stores, American and international fashion and technology)companies) promoting products, services or brands on digital platforms in the form of display ads, audio and video, and in print, in the form of column-inch ads.
The majority of our advertising revenue is derived from offerings sold directly to marketers by our advertising sales teams. A smaller proportion of our total advertising revenues is generated through programmatic auctions run by third-party advertising exchanges.
Digital advertising includes our core digital advertising business and print platforms.other digital advertising. Our core digital advertising includes direct-sold website, mobile application, podcast, email and video advertisements. Our digital advertising offerings include solutions that use proprietary first-party data — rather than third-party data — to generate predictive insights and help inform our clients’ advertising strategies while leveraging our audiences in privacy-forward ways. Other digital advertising includes advertising revenues generated by open-market programmatic advertising, creative services associated with branded content, advertisements appearing on our Wirecutter product and classified advertising. In 2021, digital advertising represented approximately 62% of our advertising revenues.
In print,At the time of its acquisition, The Athletic had a limited advertising business, consisting primarily of podcast advertising. We expect to develop a broader set of advertising products and services for the site over time.
Print advertising for The Times includes revenue from column-inch ads and classified advertising, including line-ads as well as preprinted advertising, also known as freestanding inserts. Column-inch ads are priced according to established rates, with premiums for color and positioning.positioning, and classified advertising is paid for on a per-line basis. The Times newspaper had the largest market share in 20182021 in print advertising revenue among a national newspaper set that consists of USA Today, The Wall Street Journal and The Times, according to MediaRadar, an independent agency that measures advertising sales volume and estimates advertising revenue.
On our digital platforms, display advertising comprises banners, video, rich media and other interactive ads. Display advertising also includes branded content on The Times’s platforms. Branded content is longer form marketing content that is distinct from The Times’s editorial content.
volume. In 2018,2021, print and digital display advertising represented approximately 84%38% of our advertising revenues.
Other Advertising
Other print advertising primarily includes classified advertising paid for on a per line basis; revenues from preprinted advertising, also known as free standing inserts; and advertising revenues from our licensing division.
Other digital advertising primarily includes creative services fees associated with our branded content studio and our digital marketing agencies, including HelloSociety and Fake Love; advertising revenue generated by our podcasts; advertising revenue generated by our product review and recommendation website, Wirecutter; and classified advertising, which includes line ads sold in the major categories of real estate, help wanted, automotive and other on either a per-listing basis for bundled listing packages, or as an add on to a print classified ad.
In 2018, print and digital other advertising represented approximately 16% of our advertising revenues.
Seasonality
Our business is affected in part by seasonal patterns in advertising, with generally higher advertising volume in the fourth quarter due to holiday advertising.
THE NEW YORK TIMES COMPANY – P. 3
COMPETITION
Our printWe face a market undergoing profound transformation and digital productssignificant competition in all aspects of our business. We compete for audience, subscribers, and advertising against a wide variety of digital and print media companies, including digital and traditional print content providers, news aggregators, search engines, social media platforms and streaming services, any of which might attract audiences and/or advertisers to their platforms and away from ours. Our news product most directly competes for audience, subscriptions and advertising with other U.S. and global news and information digital and print products, including The Washington Post, The Wall Street Journal, CNN, BBC News, Vox, The Guardian and Financial Times. Our digital news product also competes with customized news feeds, news aggregators and social media in their respective markets. products of companies such as Apple, Alphabet, Meta Platforms and Twitter. Our other digital products compete with comparable content providers, as well as other digital media of general interest. In addition, we compete for advertising on digital advertising networks and exchanges with real-time bidding and other programmatic buying channels.
Competition for subscription revenue and readershipaudience is generally based upon platform, format, content breadth, depth, originality, quality service, timeliness and timeliness; product experience; format; price and access model; visibility on search engines and social media platforms and in mobile application stores; and service, while competition for advertising is generally based upon audience levels and demographics, advertising rates, service, targeting capabilities, advertising results and breadth of advertising offerings. We believe that The Times’s original, independent and high-quality reporting, storytelling and journalistic excellence across topics and formats set us apart from others and is at the heart of what makes our journalism worth paying for, and we believe our journalism attracts valuable audiences providing a safe and trusted platform for advertisers’ brands.
Our print newspaper competes for subscriptions and advertising primarily with national newspapers such as The Wall Street Journal and The Washington Post; newspapers of general circulation in New York City and its suburbs; other daily and weekly newspapers and television stations and networks in markets in which The Times is circulated; and some national news and lifestyle magazines. The international edition of our newspaper competes with international sources of English-language news, including the Financial Times, Time, Bloomberg Business Week and The Economist.P. 4 – THE NEW YORK TIMES COMPANY
As our industry continues to experience a shift from print to digital media, our products face competition for audience, subscriptions and advertising from a wide variety of digital media (some of which are free to users), including news and other information websites and mobile applications, news aggregators, sites that cover niche content, social media platforms, and other forms of media. In addition, we compete for advertising on digital advertising networks and exchanges and real-time bidding and other programmatic buying channels, and our branded content studio and digital marketing agencies compete with other marketing agencies that provide similar services, including those of other publishers.
Our news and other digital products most directly compete for audience, subscriptions and advertising with other U.S. news and information websites, mobile applications and digital products, including The Washington Post, The Wall Street Journal, CNN, Vox, Vice, Buzzfeed, NBC News, NPR, Fox News, Yahoo! News and HuffPost. We also compete for audience and advertising with customized news feeds and news aggregators such as Facebook Newsfeed, Apple News and Google News. Internationally, our websites and mobile applications compete with international online sources of English-language news, including BBC News, CNN, The Guardian, the Financial Times, The Wall Street Journal, The Economist and Reuters.
OTHER BUSINESSES
We also derive revenue from other businesses, which primarily include:
•The Company’s licensing of our intellectual property. Our licensing division which transmits articles, graphics and photographs from The Times and other publications to approximately 1,800over 1,500 clients, including newspapers, magazines and websites in over 10095 countries and territories worldwide. ItThe licensing division also comprises a number of other businesses that primarily includehandles digital archive distribution, which licenses electronic databases to resellers in the business, professional and library markets; magazine licensing; news digests; book developmentdevelopment; and rights and permissions;permissions. In addition, the Company licenses select content to third-party digital platforms for access by their users. Finally, the Company licenses content for use in, and collaborates with third parties in the development and production of, television and films;
•In addition to advertising and subscription revenue, our Wirecutter a product review and recommendation website acquired in October 2016 that serves as a guide to technology gear, home products and other consumer goods. This website generates affiliate referral revenue (revenue generated by offering direct links to merchants in exchange for a portion of the sale price), which we record as other revenues;price upon completion of a transaction);
•The Company’s commercial printing operations, which utilize excess printing capacity at our facility in College Point, facility in orderN.Y., to print and distribute products for third parties; and
•The Company’s NYT Livelive events business, a platform forwhich hosts physical and virtual live events to connect audiences with our live journalism that convenesjournalists and outside thought leaders, from business, academia and government at conferencesis monetized through sponsorship and events to discuss topics ranging from education to sustainability to the luxury business. advertising.
P. 4 – THE NEW YORK TIMES COMPANY
PRINT PRODUCTION AND DISTRIBUTION
The Times is currently printed at our production and distribution facility in College Point, N.Y., as well as under contract at 2624 remote print sites across the United States. We also utilize excess printing capacity at our College Point facility for commercial printing and distribution for third parties. The Times is delivered to newsstands and retail outlets in the New York metropolitan area through a combination of third-party wholesalers and our own drivers.drivers and agreements with other newspapers and third-party delivery agents. In other markets in the United States and Canada, The Times is delivered through agreements with other newspapers and third-party delivery agents.
The international edition of The Times is printed under contract at 3728 sites throughout the world and is sold in over 13485 countries and territories. It is distributed through agreements with other newspapers and third-party delivery agents.
RAW MATERIALS
The primary raw materials we use are newsprint and coated paper, which we purchase from a number of North American and European producers. A significant portion of our newsprint is purchased from Resolute FP US Inc., a subsidiary of Resolute Forest Products Inc., a large global manufacturer of paper, market pulp and wood products with which we shared ownership in Donahue Malbaie Inc. (“Malbaie”), a Canadian newsprint company, before we sold our interest in the fourth quarter of 2017.products.
In 20182021 and 2017,2020, we used the following types and quantities of paper:
| | | | | | | | | | | | | | |
| (In metric tons) | | 2021 | | 2020 |
Newsprint(1) | | 63,600 | | | 71,600 | |
Coated and Supercalendered Paper(2) | | 9,800 | | | 10,200 | |
|
| | | | | | |
| (In metric tons) | | 2018 |
| | 2017 |
|
Newsprint(1) | | 94,400 |
| | 90,500 |
|
Coated and Supercalendared Paper(2) | | 14,600 |
| | 16,500 |
|
(1) 2018 newsprint Newsprint usage includes paper used for commercial printing.
(2) The Times uses a mix of coated and supercalendered paper for The New York Times Magazine, and coated paper for T: The New York
Times Style Magazine.
THE NEW YORK TIMES COMPANY – P. 5
EMPLOYEES AND LABOR RELATIONSHUMAN CAPITAL
The talented employees who make up our inclusive workplace are vital to the continued success of our mission and business and central to our long-term strategy. In order to attract, develop and maximize the contributions of world-class talent, we are working to create a rewarding employee experience in a variety of ways, including building a more diverse, equitable and inclusive workplace; developing and promoting talent; providing equitable and competitive compensation and benefits (total rewards); and supporting employees’ health, safety and well-being.
Building a more diverse, equitable and inclusive workplace
Each year since 2017, we have prepared an in-depth report on diversity and inclusion at The Times to promote accountability over time. Steps to advance our diversity, equity and inclusion goals include:
•Investing in dedicated resources. In 2021, we continued to build out a dedicated team to lead and support our diversity, equity and inclusion initiatives.
•Adopting policies, processes and guidelines to promote an equitable and respectful organizational culture. This includes a rigorous and transparent process for investigating workplace complaints and concerns, as well as ongoing efforts to codify and promote behavioral expectations for employees working at The Times on how to approach their work, and engage with, manage and lead each other.
•Focusing on pay equity. Every two years, including in 2021, we conduct a pay-equity study, an in-depth review of our compensation practices conducted with an outside expert to identify, assess and rectify any inconsistencies in pay. We analyze average differences across race and gender of people performing similar work, taking into account factors that explain legitimate differences in pay, such as tenure and performance, and also perform a thorough analysis of individual pay.
•Investing in diversifying the employee pipeline. We are creating and expanding programs like The New York Times Fellowship Program (a one-year work program for up-and-coming journalists), hosting an annual Student Journalism Institute for journalists of color, and supporting many outside organizations dedicated to increasing diversity in journalism, technology and media.
•Evolving opportunities for identity-based connection. We currently have 13 active employee resource groups providing opportunities for employees with a shared identity to support each other and serving as a forum through which to develop leadership and management skills.
Developing and promoting talent
We recognize the importance of creating opportunities for employees to evolve and succeed, at every level.
Identifying and putting in place effective executive leadership is critically important to our success. Our Board of Directors works with senior management to ensure that strategic plans are in place for both short- and long-term executive succession. The Board conducts an annual detailed review of the Company’s leadership pipeline and succession plans for key senior leadership roles.
We also value ongoing development and continuous learning, and strive to support and provide enriching opportunities to our employees. We have made significant investments to bolster role-based and professional development learning and skill building to further meet the needs of our workforce.
Providing equitable and competitive total rewards
Talent – including our employees and those we seek to hire – is in high demand, particularly journalists and people working in digital product development disciplines.
We offer comprehensive total rewards, which are designed to meet the needs of our current and future employees; support the Company’s strategic goals, mission and values; drive a high-performance culture; and offer competitive and equitable pay. In line with our business goals, our total rewards philosophy links compensation to achieving sustained high performance. Along with the compensation and benefits we provide, our reputation, workplace culture, and focus on equity and inclusion are all factors that help us attract and retain highly skilled people of diverse backgrounds.
P. 6 – THE NEW YORK TIMES COMPANY
Supporting employees’ health, safety and well-being
Our employees’ well-being is vital to our success, and their physical and mental health, safety and work-life balance are a top priority. We have invested in programs that help support their day-to-day wellness needs and goals including, but not limited to: access to licensed professional counselors, health coaching and advocacy services, fitness resources, child and elder care help, and more.
As a result of the Covid-19 pandemic, the vast majority of our employees continue to work remotely. During 2021, we continued and broadened some of the benefits we introduced in the early stages of the pandemic that were designed to support employees during an extended period of working from home, including dependent care relief, office-supply reimbursement, ergonomic resources, and mental health and wellness support. We also continue to evolve our remote and distributed work policies and practices. These include protocols to protect the health and safety of our employees, including those who do not work remotely, such as those who are working in our offices, our journalists in the field and employees working in our College Point, N.Y., printing and distribution facility.
We also continue to adapt to ever-changing workplace and workforce dynamics, and plan to transition to a hybrid work model with employees working both from our offices and remotely. We are focused on building capabilities to support a variety of work styles where individuals, teams, and our business can be successful.
Workforce Demographics
We had approximately 4,3205,000 full-time equivalent employees as of December 30, 2018.26, 2021, which includes more than 2,000 involved in our journalism operation.
As of December 30, 2018, nearly halfApproximately 38% of our full-time equivalent employees were represented by unions.unions as of December 26, 2021. In addition, some of our technology employees are seeking to form a union. The following is a list of collective bargaining agreements covering various categories of the Company’s employees and their corresponding expiration dates. As indicated below, one collective bargaining agreement, under which approximately 26% of our full-time equivalent employees are covered, has expired and negotiations for a new contract are ongoing. Additionally, as indicated below, one collective bargaining agreement, under which less than 10%1% of our full-time equivalent employees are covered, will expire within one year and we expect negotiations for a new contract to begin in the near future. We cannot predict the timing or the outcome of these negotiations.
|
| | | | |
| Employee Category | Expiration Date |
Mailers | March 30, 2019 |
Typographers | March 30, 2020 |
NewsGuild of New York (The New York Times) | March 30, 2021 |
PaperhandlersMachinists | March 30, 2021 |
Pressmen | March 30, 2021 |
Stereotypers | March 30, 2021 |
Machinists | March 30, 2022 |
DriversMailers | March 30, 2023 |
| Voice Actors | October 31, 2023 |
NewsGuild of New York (Wirecutter) | February 28, 2024 |
| Drivers | March 30, 2025 |
| Typographers | March 30, 2025 |
| Paperhandlers | March 30, 2026 |
| Pressmen | March 30, 2026 |
| Stereotypers | March 30, 2026 |
THE NEW YORK TIMES COMPANY – P. 57
AVAILABLE INFORMATION
We maintain a corporate website at http://www.nytco.com, and we encourage investors and other interested persons to use it as a way of easily finding information about us. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports, and the Proxy Statement for our Annual Meeting of Stockholders are made available, free of charge, on ourthis website at http://www.nytco.com, as soon as reasonably practicable after such reports have been filed with or furnished to the SEC.
In addition, we may periodically make announcements or disclose important information for investors on this website, including press releases or news regarding our financial performance and other items that may be material or of interest to our investors. Therefore, we encourage investors, the media, and others interested in our Company to review the information we post on this website. We have included our website addresses throughout this report as inactive textual references only. The information contained on the websites referenced herein is not incorporated into this filing.
P. 68 – THE NEW YORK TIMES COMPANY
This section highlights specific risks that could affect us and our businesses. You should carefully consider each of the risk factors described below,following risks, as well as the other information included in this Annual Report on Form 10-K. Our business, financial condition, or results of operations and/or the price of our publicly traded securities could be materially adversely affected by any or all of these risks, or by other risks or uncertainties not presently known or currently deemed immaterial, that may adversely affect us in the future.
Risks Related to Our Business and Industry
We face a market undergoing profound transformation and significant competition in all aspects of our business.
Our industry is transforming as consumer demand transitions from traditional media — such as print newspapers — to digital, resulting in rapid changes in consumer behavior, advertiser behavior, talent behavior and competitive boundaries. The future structure of our industry remains unpredictable, leading to significant opportunity and uncertainty for our business and our competitors.
We operate in a highly competitive environment. We compete for audience share and subscribers, as well as subscription andrevenue, advertising revenue, with both traditional and other revenues such as licensing and affiliate referral revenues. Our competitors include content providers and distributors, as well as news aggregators, search engines and social media platforms. Competition among these companies offering online content is intense,robust, and new competitors can quickly emerge.
Our ability to compete effectively depends on many factors both within and beyond our control, including among others:
•our ability to continue delivering a breadth of high-quality journalism and content that is interesting and relevant to our audience;
•our reputation and brand strength relative to those of our competitors;
•the popularity, usefulness, ease of use, performance, reliability and reliabilityvalue of our digital products, compared with those of our competitors;
•the sustained engagement of our current usersaudience directly with our products, and products;
•our ability to reach new users;users in the United States and abroad;
•our ability to develop, maintain and monetize our products;
•the pricing of our products;products and our content access model;
•our marketing and selling efforts, including our ability to differentiate our products and services from those of our competitors;
the•our visibility of our content and products on search engines and social media platforms and in mobile app stores, compared with that of our competitors;
our ability to provide marketers with a compelling return on their investments;
•our ability to attract, retain, and motivate talented employees, including journalists and people working in digital product and technology specialists;development disciplines, among others, who are in high demand;
•our ability to provide advertisers with a compelling return on their investments; and
•our ability to manage and grow our business in a cost-effective manner; and
our reputation and brand strength relative to those of our competitors.manner.
Some of our current and potential competitors may have greater resources than we do, which may allow them to compete more effectively than us. In addition, several of the companies that have competing digital news destinations, subscriptions and other products, such as Apple and Alphabet, also control some of the primary environments in which we develop relationships with new users and market and sell subscriptions to our products, and therefore can affect our ability to compete effectively. Some of these companies encourage their large audiences to consume our content within their products, impacting our ability to attract, engage and monetize users directly.
THE NEW YORK TIMES COMPANY – P. 9
Our ability to grow the size and profitability of our subscriber base depends on many factors, both within and beyond our control, and a failure to do so could adversely affect our results of operations and business.
Revenue from subscriptions to our digital and print products makes up a majority of our total revenue. Our future growth and profitability depend upon our ability to retain, grow and effectively monetize our audience and digital subscriber base in the United States and abroad. We have invested and will continue to invest significant resources in our efforts to do so, but there is no assurance that we will be able to successfully grow our subscriber base in line with our expectations, or that we will be able to do so without taking steps such as adjusting our pricing or incurring subscription acquisition costs that could adversely affect our subscription revenues, margin and/or profitability.
Our ability to attract and grow our digital subscriber base depends on the size of our audience and its sustained engagement directly with our products, including the breadth, depth and frequency of use. The size and engagement of our audience is dependent on many factors both within and beyond our control, including significant news events, user sentiment about the quality of our content and products in comparison to our competitors, the free access we provide to our content, and our ability to successfully manage changes implemented by search engines that affect the visibility of our content, among other factors. If users become less engaged with our products, they may be less likely to subscribe.
We have set a goal to reach 15 million subscribers by the end of 2027 (from approximately 7.6 million as of year-end 2021) based on our historical performance, as well as internal and external research on the market of adults globally who are paying — or are willing to pay — for English-language news, sports information, puzzles, recipes, expert shopping advice and/or podcasting. The actual size and speed of development of this market, as well as our ability to penetrate this market to grow our subscriber base, are uncertain. Consumers’ willingness to subscribe to our products may depend on a variety of factors, including subscriber engagement, our subscription and pricing model, our ability to adapt to varied and changing consumer expectations, general economic conditions and their potential impact on consumer discretionary spending, and our marketing expenditures and effectiveness, as well as other factors within and outside our control. We may also face additional challenges in expanding our subscriber base to new audiences within and outside of the United States, which is part of our strategy, and the growth of our business could be harmed if our expansion efforts do not succeed. For example, although we have a significant number of users outside of the United States, we could be at a disadvantage compared with local and multinational competitors who may devote more resources to local or regional coverage than we do. Additionally, with our acquisition of The Athletic, we will need to appeal to a new and different subscriber base that currently has modest overlap with the subscriber base of our other products. Our continued expansion will depend on our ability to adapt, on a cost-effective basis, our content, products, pricing and marketing for global audiences. This will include adapting to differences in content preferences; product-feature preferences; culture; language; and market dynamics such as user behavior, spending capability and payment processing systems. As we grow larger and increase our subscriber base, we expect it will become increasingly difficult to maintain our rate of growth.
We must also manage the rate at which subscribers cancel their subscriptions to our products — what we refer to as our “churn.” Subscription cancellations are caused by many and varied reasons, including subscribers’ perception that they do not engage with our content sufficiently, the end of promotional pricing or in response to increases or other adjustments we may implement from time to time in our subscription pricing, changes in local credit card regulations and broader consumer protection regulations, and the expiration of subscribers’ credit cards; they may also be facilitated by the rollout of certain new account management features like the ability to cancel a subscription online. As we adjust our access model to encourage users who may spend less time with our products to subscribe, new subscriber cohorts may not retain at the same rate as prior cohorts of subscribers.
The future growth of our business and profitability also depend on our ability to successfully monetize our subscriber relationships and maintain attractive unit economics. We are investing in efforts to encourage subscribers to use and pay for multiple products, primarily through our multi-product package (“bundle”), but there can be no assurance that such efforts will be successful. We have also implemented and may continue to implement changes in our pricing model, such as price increases, that could have an adverse impact on our ability to attract, engage and retain subscribers.
Print subscriptions continue to decline as the media industry has transitioned from being primarily print-focused to digital and we do not expect this trend to reverse. As print subscriptions fall, we may be unable to slow the resulting print revenue declines with revenue from home-delivery price increases. In addition, if we are unable to
P. 10 – THE NEW YORK TIMES COMPANY
offset and ultimately replace continued print subscription revenue declines with other sources of revenue, such as digital subscriptions, our operating results will be adversely affected.
Our ability to manage and grow the size and profitability of our subscriber base is dependent on metrics that are subject to inherent challenges in measurement.
We rely on certain metrics, such as subscriptions, subscribers, average revenue per subscriber and registered users, which we use to evaluate growth trends, measure our performance and make strategic decisions. These metrics are calculated using internal company data as well as information we receive from our business affiliates, and are subject to inherent challenges in measurement. For example, there may be individuals who have multiple Times subscriptions or registrations, which we treat as multiple subscribers or registrations, as well as single subscriptions and registrations that are used by more than one person. Accordingly, the calculations of our subscribers and registered users may not reflect the actual number of people using our products. The accuracy of our metrics also depends on accurate reporting by third parties such as Apple and Alphabet, as some of our subscribers purchase their subscriptions through these intermediaries. Inaccuracies in these metrics may affect our understanding of certain details of our business, which could result in incorrect business decisions and/or affect our longer-term strategies. In addition, as our tools for measuring these metrics evolve, the methodologies for tracking may change over time, which could result in unexpected changes to our metrics. Real or perceived material inaccuracies in these metrics could harm our reputation, subject us to legal or regulatory actions and/or adversely affect our operating and financial results.
Our success depends on our ability to improve and scale our technical and data infrastructure and respond and adapt to changes in technology and consumer behavior.
TechnologyOur ability to attract and retain our users is dependent upon the reliable performance and increasing capabilities of our products and our underlying technical and data infrastructure. As we invest in our array of products and our digital business grows in size, scope and complexity, we must continue to invest in maintaining, integrating, improving and scaling our technical infrastructure. Our failure to do so effectively, or any significant disruption in our service, could damage our reputation, result in a potential loss or ineffective monetization of users, and adversely affect our financial results.
The continuing rapid evolution of technology in the media industry continues to evolve rapidly. Advances in technology have led to an increased number of methods for the delivery and consumption of news and other content. These developments are also driving changes in the preferences and expectations of consumers as they seek more control over how they consume content.
Changes in technology and consumer behavioralso pose a number of challenges that could adversely affect our revenues and competitive position. For example, among others:
•we may be unable to develop digital productsmaintain or update our technology infrastructure quickly enough and in a way that consumers find engaging, that work with a variety of operating systemsmeets market and networks and that achieve a high level of market acceptance;consumer demands;
•we may introduce new products or services, or make changes to existing products and services, that are not favorably received by consumers;
there may be changes in user sentiment about the quality or usefulness of our existing products or concerns related to privacy, security or other factors;
THE NEW YORK TIMES COMPANY – P. 7
failurefail to successfully manage changes implemented by social media platforms, search engines, news aggregators, or mobile app stores and device manufacturers, including those that encourage user engagement with our content in their environments rather than directing users to our products, and those affecting how our content and applications are discovered, prioritized, displayed and monetized, could affect our business;monetized;
consumers may increasingly use technology (such as incognito browsing) that decreases our ability to obtain a complete view of the behavior of users who engage with our products;
we may be unable to maintain or update our technology infrastructure in a way that meets market and consumer demands; and
•the consumption of our content on delivery platforms of third parties may lead to limitations on monetization of our products, the loss of control over distribution of our content and of a direct relationship with our audience, and lower engagement and subscription rates.rates;
Responding to these changes•consumers may require significant investment. We may be limited inincreasingly use technology that decreases our ability to invest fundsenforce limits on the free access we provide to our content and/or obtain useful information with respect to the behavior of users who engage with our products; and resources in
•we may fail to successfully adapt our digital products services or opportunities,to meet changing consumer preferences and weexpectations regarding privacy and security.
We continue to invest significant resources to mitigate these potential risks and to build, maintain and evolve our products, data and technology infrastructure. These investments may incur expenseadversely impact our operating results in building, maintainingthe near term and evolvingthere can be no assurance as to our technology infrastructure.
Unless we are ableability to use new and existing technologies to distinguish our products and services from those of our competitors, and develop in a timely manner compelling new products and services that engage users, across platforms,or sufficiently improve and scale our technical infrastructure and prevent disruptions in our service. If we are not successful in adapting our technical and data infrastructure and responding to changes in technology and consumer behavior, our business, financial condition and prospects may be adversely affected.
A failure to continue to retain and grow our subscriber base could adversely affect our results of operations and business.THE NEW YORK TIMES COMPANY – P. 11
Revenue from subscriptions to our print and digital products makes up a majority of our total revenue. Subscription revenue is sensitive to discretionary spending available to subscribers in the markets we serve, as well as economic conditions. To the extent poor economic conditions lead consumers to reduce spending on discretionary activities, our ability to retain current and obtain new subscribers could be hindered, thereby reducing our subscription revenue. In addition, the growth rate of new subscriptions to our news products that are driven by significant news events, such as an election, and/or promotional pricing may not be sustainable.
Print subscriptions have continued to decline, primarily due to increased competition from digital media formats (which are often free to users), higher subscription prices and a growing preference among many consumers to receive all or a portion of their news from sources other than a print newspaper. If we are unable to offset continued revenue declines resulting from falling print subscriptions with revenue from home-delivery price increases, our print subscription revenue will be adversely affected. In addition, if we are unable to offset continued print subscription revenue declines with digital subscription revenue, our subscription revenue will be adversely affected.
Subscriptions to content provided on our digital platforms generate substantial revenue for us, and our future growth depends upon our ability to retain and grow our digital subscriber base and audience. To do so will require us to evolve our subscription model, address changing consumer demands and developments in technology and improve our digital product offering while continuing to deliver high-quality journalism and content that is interesting and relevant to readers. We have invested, and will continue to invest, significant resources in these efforts, but there is no assurance that we will be able to successfully maintain and increase our digital subscriber base or that we will be able to do so without taking steps such as reducing pricing or incurring subscription acquisition costs that would affect our margin or profitability.
Our ability to retain and grow our subscriber base also depends on the engagement of users with our products, including the frequency, breadth and depth of their use. If users become less engaged with our products, they may be less likely to purchase subscriptions or renew their existing subscriptions, which would adversely affect our subscription revenues. In addition, we may implement changes in the free access we provide to our content or the pricing of our subscriptions that could have an adverse impact on our ability to attract and retain subscribers.
Our advertising revenues are affected by numerous factors, including economic conditions, market dynamics, audience fragmentation and evolving digital advertising trends.trends and the evolution of our strategy.
We derive substantial revenues from the sale of advertising in our products. Advertising spending is sensitive to overall economic conditions, and our advertising revenues could be adversely affected if advertisers respond to weak andor uneven economic conditions by reducing their budgets or shifting spending patterns or priorities, or if they are forced to consolidate or cease operations.
P. 8 – THE NEW YORK TIMES COMPANY
In determining whether to buy advertising, our advertisers consider Worldwide economic conditions in the demand for our products, demographics of our reader base, advertising rates, results observed by advertisers, breadth of advertising offerings and alternative advertising options.
Although print advertising revenue continues to represent a majority of our total advertising revenue (approximately 54% of our total advertising revenues in 2018), the overall proportion continues to decline. The increased popularity of digital media among consumers, particularly as a source for news and other content, has driven a corresponding shift in demand from print advertising to digital advertising. However, our digital advertising revenue has not replaced, and may not replace in full, print advertising revenue lost as a resultaftermath of the shift.
The increasing number of digital media options available,Covid-19 pandemic, including through social media platformssupply chain disruptions and news aggregators, has expanded consumer choice significantly, resulting in audience fragmentation. Competition from digital content providers and platforms, some of which charge lower rates than we do or have greater audience reach and targeting capabilities, and the significant increase in inventory of digital advertising space, have affected and will likely continue to affect our ability to attract and retain advertisers and to maintain or increase our advertising rates. In recent years, large digital platforms, such as Facebook, Google and Amazon, which have greater audience reach and targeting capabilities than we do, have commanded an increased share of the digital display advertising market, and we anticipate that this trend will continue.
The digital advertising market itself continues to undergo significant change. Digital advertising networks and exchanges, real-time bidding and other programmatic buying channels that allow advertisers to buy audiences at scale are playing a more significant role in the advertising marketplace andinflationary pressures, may cause further downward pricing pressure. Newer delivery platforms may also lead to a loss of distribution and pricing control and loss of a direct relationship with consumers. Growing consumer reliance on mobile devices creates additional pressure, as mobile display advertising may not command the same rates as desktop advertising. In addition, changes in the standards for the delivery of digital advertising could also negatively affect our digital advertising revenues.
Technologies have been developed, and will likely continue to be developed, that enable consumers to circumvent digital advertising on websites and mobile devices. Advertisements blocked by these technologies are treated as not delivered and any revenue we would otherwise receive from the advertiser for that advertisement is lost. Increased adoption of these technologies couldmaterially adversely affect our advertising revenues, particularly if we are unable to develop effective solutions to mitigate their impact.
We have continued to take steps intended to retain and grow our subscriber base, which we expect to have long-term benefits for our advertising revenue, but may have the near-term effect of reducing inventory for digital programmatic advertising in our products.revenues.
As the digital advertising market continues to evolve, our ability to compete successfully for advertising budgets will depend on, among other things, our ability to engage and grow digital audiences, collect and proveleverage data, and demonstrate the value of our advertising and the effectiveness of our platformsproducts to advertisers. In determining whether to buy advertising with us, our advertisers consider the demand for our products, demographics of our audience, advertising rates, results observed by advertisers, breadth and perceived effectiveness of advertising offerings and alternative advertising options.
Large digital platforms, such as Meta Platforms, Alphabet and Amazon, which have greater audience reach, audience data and targeting capabilities than we do, command a large share of the digital display advertising market, and we anticipate that this will continue. The remaining market is subject to significant competition among publishers and other content providers, and audience fragmentation. These dynamics have affected, and will likely continue to affect, our ability to attract and retain advertisers and to maintain or increase our advertising rates.
Additionally, digital advertising networks and exchanges with real-time bidding and other programmatic buying channels that allow advertisers to buy audiences at scale also play a significant role in the marketplace and represent another competitive threat. They have caused and may continue to cause further downward pricing pressure and the loss of a direct relationship with marketers, especially during periods of economic downturn.
The evolving standards for delivery of digital advertising, as well as the development and implementation of technology, regulations, policies and practices that adversely affect our ability to deliver, target or measure the effectiveness of advertising (such as blocking the display of advertising, the phase-out of browser support for third-party cookies and of mobile operating systems for advertising identifiers), may also adversely affect our advertising revenues if we are unable to develop effective solutions to mitigate their impact.
Additionally, our digital advertising offerings also now include products that use proprietary first-party data — rather than third-party data — to generate predictive insights and help inform our clients’ advertising strategies. Our ability to quickly and effectively evolve these products; the volume, quality, and price of competitive products; and continued changes to industry regulation all have the potential to impact the success of this strategy.
We have also taken further steps intended to improve our users’ experiences and retain and grow our subscriber base. For example, in order to improve users’ experiences, we ceased presenting open-market programmatic advertising in our iOS and Android mobile applications. While these changes may result in long-term benefits for our advertising revenue, they have reduced and may further reduce the inventory for some of our digital advertising products and may otherwise impact advertising revenues.
Our digital advertising operations also rely on a small number of significant technologies (particularly Alphabet’s ad manager) which, if interrupted or meaningfully changed, or if the providers leverage their power to alter the economic structure, could have an adverse impact on our advertising revenues, operating costs and/or operating results.
Although print advertising revenue continues to represent a significant portion of our total advertising revenue (approximately 38% of our total advertising revenues in 2021), the overall proportion continues to decline and we do not expect this trend to reverse. This trend was further accelerated by the impact of the Covid-19 pandemic and efforts to contain it on some of our traditional print advertisers, such as entertainment and retail. A further decline in the economic prospects of these and other advertisers could alter current or prospective advertisers’ spending priorities or result in consolidation or closures across various industries, which may reduce the Company’s print and overall advertising revenue.
P. 12 – THE NEW YORK TIMES COMPANY
Our brand and reputation are key assets of the Company. Negative perceptions or publicity could adversely affect our business, financial condition and results of operations.
We believe The New York Times brand is a powerful and trusted brand with an excellent reputation for high-quality independent journalism and content, and this brand is a key element of our business. Our brand might be damaged by incidents that erode consumer trust (such as negative publicity), a perception that our journalism is unreliable or a decline in the perceived value of independent journalism or general trust in the media, which may be in part as a result of changing political and cultural environments in the United States and abroad or active campaigns by domestic and international political and commercial actors. We may introduce new products or services that users do not like and that may negatively affect our brand. We also may fail to provide adequate customer service, which could erode confidence in our brand. Our brand and reputation could also be adversely impacted by negative claims or publicity regarding the Company or its operations, products, employees, practices (including social and environmental practices) or business affiliates (including advertisers); as well as our potential inability to adequately respond to such negative claims or publicity, even if such claims are untrue. Our reputation could also be damaged by failures of third-party vendors we rely on in many contexts. We are investing in defining and enhancing our brand. These investments are considerable and may not be successful. To the extent our brand and reputation are damaged, our ability to attract and retain readers, subscribers, advertisers and/or employees could be adversely affected, which could in turn have an adverse impact on our business, revenues and operating results.
The continuing impact of the Covid-19 pandemic is difficult to predict and creates considerable uncertainty for our business.
The global Covid-19 pandemic continues to have widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets and business practices. The pandemic, efforts to contain it, and the resulting disruptions have impacted our business in various ways. There is substantial uncertainty as to the nature and degree of the continued effects of the pandemic over time.
For example, during 2020 we experienced significant growth in the number of subscriptions to our digital news and other products, which we believe was attributable in part to an increase in traffic given the news environment and as a result of the pandemic. The rate of digital subscription growth moderated in 2021, although it was our second-best year for net subscription additions, and we do not expect the 2020 growth rate to be indicative of results for future periods. The growth in subscriptions to our products during the pandemic may also in part reflect changes in how our users spend their time during the pandemic, and our ability to attract and retain subscribers may continue to be impacted by patterns of behavior influenced by the course of the pandemic. In addition, revenues from the single-copy and bulk sales of our print newspaper have been, and we expect will continue to be, adversely affected as a result of continued increased levels of remote working and reductions in travel.
The worldwide economic slowdown caused by the pandemic led to a significant decline in our advertising revenues in 2020 as advertisers reduced their spending. While we experienced significantly increased demand for advertising in 2021, particularly with respect to digital advertising as the broader advertising market recovered, there is no assurance that this recovery will be sustained, and developments related to the pandemic such as global supply chain disruptions and labor shortages, among others, could adversely impact our advertising revenues in the future if our advertisers were to reduce their advertising spend as a result. We expect reduced print advertising spending by businesses that continue to be negatively impacted by the pandemic, along with secular trends, to continue to adversely affect our print advertising revenues, and some of our print advertising revenues may not return to pre-pandemic levels. In addition, the pandemic and attempts to contain it have resulted in the postponement and cancellation of live events, and while this impact moderated in 2021, this continues to adversely affect our revenues from live events and related services.
As a result of the ongoing pandemic, we altered certain aspects of our operations and the vast majority of our employees continue to work remotely. Remote work may heighten operational risk (including cybersecurity risk), result in a decline in productivity or otherwise negatively affect our ability to manage the business. In addition, if a significant portion of our workforce is unable to work due to illness, power outages, connectivity issues or other causes that impact our employees’ ability to work remotely, our operations may be negatively impacted. We will continue to actively monitor these other comparable issues raised by the pandemic and may take further actions that alter our business operations as may be required or that we determine are appropriate. It is not clear what effects any such alterations or modifications may have on our business and financial results.
THE NEW YORK TIMES COMPANY – P. 13
The Times newspaper is printed at our production and distribution facility in College Point, N.Y., as well as under contract at remote print sites, and significant operational disruptions at these facilities, or at our newsprint suppliers or print and distribution partners, could adversely affect our operating results. If a significant percentage of our College Point employees were unable to work as a result of the pandemic or because of vaccination mandates, our ability to print and distribute the newspaper and other commercial print products in the New York area could be negatively affected. To the extent our newsprint suppliers or print and distribution partners are further affected by financial pressures, labor shortages, supply chain issues or other circumstances relating to Covid-19 that lead to reduced operations or consolidations or closures of print sites and/or distribution routes, this could lead to an increase in costs to print and distribute our newspapers and/or a decrease in revenues if printing and distribution are disrupted.
The future impact that the Covid-19 pandemic will have on our business, operations and financial results is uncertain and will depend on numerous evolving factors and future developments that we are not able to reliably predict or mitigate, including the extent of variants and resurgences; the effect of ongoing vaccination and mitigation efforts; the impact of the pandemic on economic conditions and the companies with which we do business, including our advertisers; governmental, business and other’s actions in response to the pandemic; and changes in consumer behavior as a result of the pandemic, among many other factors. It is also possible that the Covid-19 pandemic may accelerate or worsen the other risks discussed in this section.
The international scope of our business exposes us to economic, geopolitical and other risks inherent in foreign operations.
We have news bureaus and other offices around the world, and our digital and print products are generally offered globally. We are focused on further expanding the international scope of our business and face the inherent risks associated with doing business abroad, including:
•government policies and regulations that restrict our products and operations, including censorship or other restrictions on access to our content and products; the expulsion of journalists or other employees; or other restrictive or retaliatory actions or behavior;
•effectively managing and staffing foreign operations, including complying with local laws and regulations in each different jurisdiction;
•providing for the safety and security of our journalists and other employees and affiliates;
•potential economic, legal, political or social uncertainty and volatility in local or global market conditions or catastrophic events (e.g., a natural disaster, an act of terrorism, a pandemic (such as the Covid-19 pandemic), epidemic or outbreak of a disease or severe weather) that could adversely affect the companies with which we do business, cause changes in discretionary spending, restrict our journalists’ travel or otherwise adversely impact our operations and business;
•navigating local customs and practices;
•protecting and enforcing our intellectual property and other rights under varying legal regimes;
•complying with international laws and regulations, including those governing intellectual property, libel and defamation, labor and employment, tax, payment processing, consumer privacy and the collection, use, retention, sharing and security of consumer and staff data;
•restrictions on the ability of U.S. companies to do business in foreign countries, including restrictions on foreign ownership, foreign investment or repatriation of funds;
•higher-than-anticipated costs of entry; and
•currency exchange rate fluctuations.
Adverse developments in any of these areas could have an adverse impact on our business, financial condition and results of operations. For example, we may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply.
P. 14 – THE NEW YORK TIMES COMPANY
Attracting and maintaining a talented and diverse workforce, which is vital to our success, is increasingly challenging and costly; failure to do so could have a negative impact on our competitive position, reputation, business, financial condition and results of operations.
Our ability to attract, develop and maximize the contributions of world-class talent, and to create the conditions for our people to do their best work, is vital to the continued success of our mission and business and central to our long-term strategy. Talent is in high demand, particularly journalists and people working in digital product development disciplines. Our employees and individuals we seek to hire are highly sought after by our competitors and other companies, some of which have greater resources than we have and may offer compensation packages that are perceived to be better than ours. As a result, we may not be able to retain our existing employees or hire new employees quickly enough to meet our needs.
Our continued ability to attract and retain highly skilled talent from diverse backgrounds for all areas of our organization depends on many factors, including our reputation; workplace culture; progress with respect to diversity, equity and inclusion efforts; and the compensation and benefits we provide. Employee-related costs are our main operating costs, and these costs have increased in recent years as we have invested in our business and competed for talent, and may further increase. Stock-based compensation is an increasing component of our overall compensation costs, and if the perceived value of our equity awards relative to our competitors declines, including as a result of volatility or declines in the market price of our Class A common stock or changes in perception about our future prospects, that may adversely affect our ability to recruit and retain talent. We must also continue to adapt to ever-changing workplace and workforce dynamics and other changes in the business and cultural landscape. We plan to transition to a hybrid work model, with employees working both from our offices and remotely, which may challenge our corporate culture, make us undesirable to talent that prefers different working arrangements, pressure our operations and introduce additional costs as we invest in our offices and technological improvements to support hybrid work. Failing to adapt effectively to these changes or to otherwise meet workforce expectations could impact our ability to compete effectively (including for talent) or have an adverse impact on our corporate culture or operations. Effective succession planning is also important to our long-term success, and a failure to effectively ensure the transfer of knowledge and train and integrate new employees could hinder our strategic planning and execution. If we are unable to attract and maintain a talented and diverse workforce, it would negatively disrupt our operations and our ability to complete ongoing projects; would impact our competitive position and reputation; and could adversely affect our business, financial condition or results of operations.
A significant number of our employees are unionized, and our business and results of operations could be adversely affected if labor agreements were to further restrict our ability to maximize the efficiency of our operations.
Approximately 38% of our full-time equivalent employees were represented by unions as of December 26, 2021, including certain employees at Wirecutter who formed a union in 2019. As a result, we are required to negotiate the wages, benefits and other terms and conditions of employment with many of our employees collectively. In addition, some of our technology employees are seeking to form a union. Our business and results could be adversely affected if future labor negotiations or contracts were to further restrict our ability to maximize the efficiency of our operations, or if a larger percentage of our employees were to unionize. If we are unable to negotiate labor contracts on reasonable terms, or if we were to experience significant labor unrest or other business interruptions in connection with labor negotiations or otherwise, our ability to produce and deliver our products could be impaired. Labor unrest or campaigns by labor organizations have resulted in and may continue to result in negative publicity, which can adversely impact our reputation and our ability to recruit, retain and motivate talent, as well as divert management’s attention and resources. In addition, our ability to make adjustments to control compensation and benefits costs, change our strategy or otherwise adapt to changing business needs may be further limited by the terms and duration of our collective bargaining agreements.
Adverse results from litigation or governmental investigations can impact our business practices and operating results.
From time to time, we are party to litigation, including matters relating to alleged libel or defamation and employment-related matters, as well as regulatory, environmental and other proceedings with governmental authorities and administrative agencies. See Note 18 of the Notes to the Consolidated Financial Statements regarding certain matters. Adverse outcomes in lawsuits or investigations could result in significant monetary damages or injunctive relief that could adversely affect our results of operations or financial condition as well as our ability to conduct our business as it is presently being conducted. In addition, regardless of merit or outcome, such proceedings
THE NEW YORK TIMES COMPANY – P. 15
can have an adverse impact on the Company as a result of legal costs, diversion of management and other personnel, harm to our reputation, and other factors.
Risks Related to Acquisitions, Divestitures and Investments
We incurred substantial costs in our recent acquisitions of The Athletic, and our future investments in connection with the acquisition may prove costlier than we anticipate. As a result, we may not realize the expected benefits as and when we have forecasted or at all.
We completed the acquisition of The Athletic, a global digital subscription-based sports media business, on February 1, 2022 for an all-cash price of approximately $550 million, subject to customary closing adjustments. We also incurred significant non-recurring expenses in connection with this acquisition, including legal, accounting, financial advisory, integration planning and other expenses. We intend to invest additional amounts in an effort to scale The Athletic’s subscriptions business, build its advertising business and make The Athletic, which operated at a loss prior to the acquisition, accretive to our overall profitability.
In addition, while we intend to operate The Athletic as a standalone product, we expect that it will still require significant attention and resources from our management team and others working on the transition. This will include the implementation of public company policies and procedures, including effective internal control over financial reporting and disclosure controls and procedures, legal standards and compliance and information security practices. Devoting resources to this integration of The Athletic into the Company means that these resources will be redeployed to varying degrees from their normal day-to-day activities. This could impair our effectiveness and efficiency and may have an adverse impact on our financial condition or results of operations.
The success of The Athletic acquisition will depend, in part, on our ability to apply our subscription, advertising, marketing and operational expertise to help scale their growth in a profitable, efficient and effective manner. We may not be able to manage The Athletic successfully, or doing so may be costlier than we anticipate, and we may experience difficulty in realizing the expected benefits of this acquisition. Potential difficulties that may be encountered may include the loss of key employees, unknown liabilities, unforeseen expenses and/or other complexities associated with the integration.
We may experience further downward pressurefail to meet our publicly announced guidance about the impact of The Athletic on our advertisingbusiness and future operating results, which would cause our stock price to decline.
Our publicly announced guidance and expectations with respect to the impact of The Athletic acquisition on our revenue margins.
The charactergrowth and operating results are based on forecasts prepared by our management. Forecasts are based upon a number of assumptions and estimates that are inherently subject to significant business, economic and competitive uncertainties and contingencies relating to our business, many of which are beyond our control and/or are based upon specific assumptions with respect to future business decisions, which may change. While all guidance is necessarily speculative in nature, guidance relating to the anticipated results of operations of a recently acquired business is inherently more speculative in nature than other guidance as management will, necessarily, be less familiar with the business, procedures and operations of the recently acquired business. It is possible that some or all of our advertising continuesassumptions regarding The Athletic underlying any guidance furnished by us may turn out not to change, as demand for newer forms of advertising, such as branded contentbe correct and other customized advertising increases. The margin on revenues from some of these advertising forms is generally lower than the margin on revenues we generateactual results may vary significantly from our print advertisingguidance.
Our business will be impacted by risks applicable to The Athletic.
While we intend to operate The Athletic as a standalone product, its results will be consolidated with ours and traditional digital display advertising. Consequently,accordingly, from the completion of the acquisition, our results are subject to risks and uncertainties affecting its business. These risks include many of the risks outlined elsewhere in these risk factors, as well as others. In our review of The Athletic in connection with the acquisition, we may experience further downward pressurehave failed to identify or fully prepare for all of the problems, liabilities or other shortcomings or challenges facing the business, including issues related to intellectual property, privacy, data protection, information security practices, regulatory compliance practices and tax and employment practices. To the extent unexpected liabilities arise, our recourse to the former owners of The Athletic will be limited and our remedies under customary representation and warranty insurance we obtained in connection with the acquisition may not be adequate to offset such liabilities. As a result, any such liabilities, if significant, could have a material adverse effect on our advertising revenue margins as a greater percentage of advertising revenues comes from these newer forms.us.
P. 16 – THE NEW YORK TIMES COMPANY
Investments we make in new and existing products and services expose us to risks and challenges that could adversely affect our operations and profitability.
We have invested and expect to continue to invest significant resources to enhance and expand our existing products and services and to acquire and develop new products and services. These investments have included, in addition to The Athletic, among others: enhancements to our core news product; our lifestyleproduct and other products (including our existing CrosswordGames, Cooking, Audm and Cooking products, as well as a new Parenting product we plan to launch)Wirecutter); investments in our podcastsvarious audio, film and upcoming television program, The Weekly; as well asand children’s product initiatives; and investments in our commercial printing and other ancillary operations. These efforts present numerous risks and challenges, including the potential need for us to appeal to new audiences, develop additional expertise in certain areas;areas, overcome technological and operational challenges; the need tochallenges and effectively allocate capital resources; new and/or increased costs (including marketing costs and costs to recruit, integrate and retain skilledtalented employees); risks
THE NEW YORK TIMES COMPANY – P. 9
associated with new strategic relationships;relationships such as content licensing; new competitors (some of which may have more resources and experience in certain areas); and additional legal and regulatory risks from expansion into new areas. As a result of these and other risks and challenges, growth into new areas may divert internal resources and the attention of our management and other personnel, including journalists and product and technology specialists.
Although we believe we have an establisheda strong and well-established reputation as a global media company, our ability to market our products effectively, and to gain and maintain an audience, particularly for some of our new digital products, is not certain, and if they are not favorably received, our brand may be adversely affected. Even if our new products and services, or enhancements to existing products and services, are favorably received, they may not advance our business strategy as expected, may result in unanticipated costs or liabilities and may fall short of expected return on investment targets or fail to generate sufficient revenue to justify our investments, which could adversely affect our business, results of operations and financial condition.
The fixed cost nature of significant portions of our expenses may limit our operating flexibility and could adversely affect our results of operations.
We continually assess our operations in an effort to identify opportunities to enhance operational efficiencies and reduce expenses. However, significant portions of our expenses are fixed costs that neither increase nor decrease proportionately with revenues. In addition, our ability to make short-term adjustments to manage our costs or to make changes to our business strategy may be limited by certain of our collective bargaining agreements. If we were unable to implement cost-control efforts or reduce our fixed costs sufficiently in response to a decline in our revenues, our results of operations will be adversely affected.
The size and volatility of our pension plan obligations may adversely affect our operations, financial condition and liquidity.
We sponsor several single-employer defined benefit pension plans. Although we have frozen participation and benefits under all but one of these qualified pension plans, and have taken other steps to reduce the size and volatility of our pension plan obligations, our results of operations will be affected by the amount of income or expense we record for, and the contributions we are required to make to, these plans.
We are required to make contributions to our plans to comply with minimum funding requirements imposed by laws governing those plans. As of December 30, 2018, our qualified defined benefit pension plans were underfunded by approximately $81 million. Our obligation to make additional contributions to our plans, and the timing of any such contributions, depends on a number of factors, many of which are beyond our control. These include: legislative changes; assumptions about mortality; and economic conditions, including a low interest rate environment or sustained volatility and disruption in the stock and bond markets, which impact discount rates and returns on plan assets.
As a result of required contributions to our qualified pension plans, we may have less cash available for working capital and other corporate uses, which may have an adverse impact on our results of operations, financial condition and liquidity.
In addition, the Company sponsors several non-qualified pension plans, with unfunded obligations totaling $223 million. Although we have frozen participation and benefits under these plans, and have taken other steps to reduce the size and volatility of our obligations under these plans, a number of factors, including changes in discount rates or mortality tables, may have an adverse impact on our results of operations and financial condition.
Our participation in multiemployer pension plans may subject us to liabilities that could materially adversely affect our results of operations, financial condition and cash flows.
We participate in, and make periodic contributions to, various multiemployer pension plans that cover many of our current and former production and delivery union employees. Our required contributions to these plans could increase because of a shrinking contribution base as a result of the insolvency or withdrawal of other companies that currently contribute to these plans, the inability or failure of withdrawing companies to pay their withdrawal liability, low interest rates, lower than expected returns on pension fund assets, other funding deficiencies, or potential legislative action. Our withdrawal liability for any multiemployer pension plan will depend on the nature and timing of any triggering event and the extent of that plan’s funding of vested benefits.
If a multiemployer pension plan in which we participate has significant underfunded liabilities, such underfunding will increase the size of our potential withdrawal liability. In addition, under federal pension law, special funding rules apply to multiemployer pension plans that are classified as “endangered,” “critical” or “critical
P. 10 – THE NEW YORK TIMES COMPANY
and declining.” If plans in which we participate are in critical status, benefit reductions may apply and/or we could be required to make additional contributions.
We have recorded significant withdrawal liabilities with respect to multiemployer pension plans in which we formerly participated (primarily in connection with the sales of the New England Media Group in 2013 and the Regional Media Group in 2012) and may record additional liabilities in the future. In addition, due to declines in our contributions, we have recorded withdrawal liabilities for actual and estimated partial withdrawals from several plans in which we continue to participate. Until demand letters from some of the multiemployer plans’ trustees are received, the exact amount of the withdrawal liability will not be fully known and, as such, a difference from the recorded estimate could have an adverse effect on our results of operations, financial condition and cash flows. Several of the multiemployer plans in which we participate are specific to the newspaper industry, which continues to undergo significant pressure. A withdrawal by a significant percentage of participating employers may result in a mass withdrawal declaration by the trustees of one or more of these plans, which would require us to record additional withdrawal liabilities.
If, in the future, we elect to withdraw from these plans or if we trigger a partial withdrawal due to declines in contribution base units or a partial cessation of our obligation to contribute, additional liabilities would need to be recorded that could have an adverse effect on our business, results of operations, financial condition or cash flows. Legislative changes could also affect our funding obligations or the amount of withdrawal liability we incur if a withdrawal were to occur.
Security breaches and other network and information systems disruptions could affect our ability to conduct our business effectively and damage our reputation.
Our systems store and process confidential subscriber, employee and other sensitive personal and Company data, and therefore maintaining our network security is of critical importance. In addition, we rely on the technology and systems provided by third-party vendors (including cloud-based service providers) for a variety of operations, including encryption and authentication technology, employee email, domain name registration, content delivery to customers, administrative functions (including payroll processing and certain finance and accounting functions) and other operations.
We regularly face attempts by third parties to breach our security and compromise our information technology systems. These attackers may use a blend of technology and social engineering techniques (including denial of service attacks, phishing attempts intended to induce our employees and users to disclose information or unwittingly provide access to systems or data and other techniques), with the goal of service disruption or data exfiltration. Information security threats are constantly evolving, increasing the difficulty of detecting and successfully defending against them. To date, no incidents have had, either individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations.
In addition, our systems, and those of third parties upon which our business relies, may be vulnerable to interruption or damage that can result from natural disasters or the effects of climate change (such as increased storm severity and flooding), fires, power outages or internet outages, acts of terrorism or other similar events.
We have implemented controls and taken other preventative measures designed to strengthen our systems against such incidents and attacks, including measures designed to reduce the impact of a security breach at our third-party vendors. Although the costs of the controls and other measures we have taken to date have not had a material effect on our financial condition, results of operations or liquidity, there can be no assurance as to the costs of additional controls and measures that we may conclude are necessary in the future.
There can also be no assurance that the actions, measures and controls we have implemented will be effective against future attacks or be sufficient to prevent a future security breach or other disruption to our network or information systems, or those of our third-party providers, and our disaster recovery planning cannot account for all eventualities. Such an event could result in a disruption of our services, improper disclosure of personal data or confidential information, or theft or misuse of our intellectual property, all of which could harm our reputation, require us to expend resources to remedy such a security breach or defend against further attacks, divert management’s attention and resources or subject us to liability under laws that protect personal data, or otherwise adversely affect our business. While we maintain cyber risk insurance, the costs relating to any data breach could be substantial, and our insurance may not be sufficient to cover all losses related to any future breaches of our systems.
THE NEW YORK TIMES COMPANY – P. 11
Our brand and reputation are key assets of the Company, and negative perceptions or publicity could adversely affect our business, financial condition and results of operations.
We believe that The New York Times brand is a powerful and trusted brand with an excellent reputation for high-quality independent journalism and content, but that our brand could be damaged by incidents that erode consumer trust. For example, to the extent consumers perceive our journalism to be less reliable, whether as a result of negative publicity or otherwise, our ability to attract readers and advertisers may be hindered. In addition, we may introduce new products or services that users do not like and that may negatively affect our brand. We also may fail to provide adequate customer service, which could erode confidence in our brand. Our reputation could also be damaged by failures of third-party vendors we rely on in many contexts. We are investing in defining and enhancing our brand. These investments are considerable and may not be successful. To the extent our brand and reputation are damaged by these or other incidents, our revenues and profitability could be adversely affected.
Our international operations expose us to economic and other risks inherent in foreign operations.
We have news bureaus and other offices around the world, and our digital and print products are generally available globally. We are focused on further expanding the international scope of our business, and face the inherent risks associated with doing business abroad, including:
effectively managing and staffing foreign operations, including complying with local laws and regulations in each different jurisdiction;
ensuring the safety and security of our journalists and other employees;
navigating local customs and practices;
government policies and regulations that restrict the digital flow of information, which could block access to, or the functionality of, our products, or other retaliatory actions or behavior by government officials;
protecting and enforcing our intellectual property and other rights under varying legal regimes;
complying with international laws and regulations, including those governing intellectual property, libel and defamation, consumer privacy and the collection, use, retention, sharing and security of consumer and staff data;
potential economic, legal, political or social uncertainty and volatility in local or global market conditions (e.g., as a result of the implementation of the United Kingdom’s referendum to withdraw membership from the European Union, commonly referred to as Brexit);
restrictions on the ability of U.S. companies to do business in foreign countries, including restrictions on foreign ownership, foreign investment or repatriation of funds;
higher-than-anticipated costs of entry; and
currency exchange rate fluctuations.
Adverse developments in any of these areas could have an adverse impact on our business, financial condition and results of operations. For example, we may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply.
In addition, we have limited experience in developing and marketing our digital products in certain international regions and non-English languages and could be at a disadvantage compared with local and multinational competitors.
Failure to comply with laws and regulations, including with respect to privacy, data protection and consumer marketing practices, could adversely affect our business.
Our business is subject to various laws and regulations of local and foreign jurisdictions, including laws and regulations with respect to online privacy and the collection and use of personal data, as well as laws and regulations with respect to consumer marketing practices.
Various federal and state laws and regulations, as well as the laws of foreign jurisdictions, govern the collection, use, retention, processing, sharing and security of the data we receive from and about our users. Failure to protect confidential user data, provide users with adequate notice of our privacy policies or obtain required valid consent, for
P. 12 – THE NEW YORK TIMES COMPANY
example, could subject us to liabilities imposed by these jurisdictions. Existing privacy-related laws and regulations are evolving and subject to potentially differing interpretations, and various federal and state legislative and regulatory bodies, as well as foreign legislative and regulatory bodies, may expand current or enact new laws regarding privacy and data protection. For example, the General Data Protection Regulation adopted by the European Union imposed more stringent data protection requirements and significant penalties for noncompliance as of May 25, 2018; California’s recently adopted Consumer Privacy Act creates new data privacy rights effective in 2020; and the European Union’s forthcoming ePrivacy Regulation is expected to impose, with respect to electronic communications, stricter data protection and data processing requirements.
In addition, various federal and state laws and regulations, as well as the laws of foreign jurisdictions, govern the manner in which we market our subscription products, including with respect to pricing and subscription renewals. These laws and regulations often differ across jurisdictions.
Existing and newly adopted laws and regulations (or new interpretations of existing laws and regulations) may impose new obligations in areas affecting our business, require us to incur increased compliance costs and cause us to further adjust our advertising or marketing practices. Any failure, or perceived failure, by us or the third parties upon which we rely to comply with laws and regulations that govern our business operations, as well as any failure, or perceived failure, by us or the third parties upon which we rely to comply with our own posted policies, could result in claims against us by governmental entities or others, negative publicity and a loss of confidence in us by our users and advertisers. Each of these potential consequences could adversely affect our business and results of operations.
A significant increase in the price of newsprint, or significant disruptions in our newsprint supply chain or newspaper printing and distribution channels, would have an adverse effect on our operating results.
The cost of raw materials, of which newsprint is the major component, represented approximately 5% of our total operating costs in 2018. The price of newsprint has historically been volatile and could increase as a result of various factors, including:
•a reduction in the number of newsprint suppliers due to restructurings, bankruptcies, consolidations and conversions to other grades of paper;
•increases in supplier operating expenses due to rising raw material or energy costs or other factors;
•currency volatility;
•duties on certain paper imports from Canada into United States; and
•an inability to maintain existing relationships with our newsprint suppliers.
We also rely on suppliers for deliveries of newsprint, and the availability of our newsprint supply may be affected by various factors, including labor unrest, transportation issues and other disruptions that may affect deliveries of newsprint.
Outside the New York area, The Times is printed and distributed under contracts with print and distribution partners across the United States and internationally. Financial pressures, newspaper industry economics or other circumstances affecting these print and distribution partners could lead to reduced operations or consolidations of print sites and/or distribution routes, which could increase the cost of printing and distributing our newspapers.
If newsprint prices increase significantly or we experience significant disruptions in our newsprint supply chain or newspaper printing and distribution channels, our operating results may be adversely affected.
Acquisitions, divestitures, investments and other transactions could adversely affect our costs, revenues, profitability and financial position.
In order to position our business to take advantage of growth opportunities, we intend to continue to engage in discussions, evaluate opportunities and enter into agreements for possible additional acquisitions, divestitures, investments and other transactions. We may also consider the acquisition of, or investment in, specific properties, businesses or technologies that fall outside our traditional lines of business and diversify our portfolio, including those that may operate in new and developing industries, if we deem such properties sufficiently attractive.
THE NEW YORK TIMES COMPANY – P. 13
Acquisitions may involve significant risks and uncertainties, including:
•difficulties in integrating acquired businesses (including cultural challenges associated with integratingtransitioning employees from the acquired company into our organization);
•failure to identify in advance liabilities, deficiencies, or other claims;
•diversion of management attention from other business concerns or resources;
•use of resources that are needed in other parts of our business;
•possible dilution of our brand or harm to our reputation;
•the potential loss of key employees;
•risks associated with new strategic relationships;
•risks associated with integrating financial reporting, internal control and information technology systems; and
•other unanticipated problems and liabilities.
Competition for certain types of acquisitions particularly digital properties, is significant. We may not be able to find suitable acquisition candidates, and we may not be able to complete acquisitions or other strategic transactions on favorable terms, or at all. Even if successfully negotiated, closed and integrated, certain acquisitions or investments may prove not to advance our business strategy, may cause us to incur unanticipated costs or liabilities, may result in write-offs of impaired assets, and may fall short of expected return on investment targets, which could adversely affect our business, results of operations and financial condition.
THE NEW YORK TIMES COMPANY – P. 17
In addition, we have divested and may in the future divest certain assets or businesses that no longer fit with our strategic direction or growth targets. Divestitures involve significant risks and uncertainties that could adversely affect our business, results of operations and financial condition. These include, among others, the inability to find potential buyers on favorable terms, disruption to our business and/or diversion of management attention from other business concerns, loss of key employees and possible retention of certain liabilities related to the divested business.
Finally, we have made investments in companies, and we may make similar investments in the future. Investments in these businesses subject us to the operating and financial risks of these businesses and to the risk that we do not have sole control over the operations of these businesses. Our investments are generally illiquid and the absence of a market may inhibit our ability to dispose of them. In addition, if the book value of an investment were to exceed its fair value, we would be required to recognize an impairment charge related to the investment.
ARisks Related to Our Operating Costs
The nature of significant numberportions of our employeesexpenses may limit our operating flexibility and could adversely affect our results of operations.
Our main operating costs are unionized,employee-related costs, and these costs have increased in recent years as we have invested in our business and results of operations could be adversely affected if labor agreements were tocompeted for talent that is in high demand, and may further restrict our ability to maximize the efficiency of our operations.
Nearly half of our full-time equivalent work force is unionized. As a result, we are required to negotiate the wage, benefits and other terms and conditions of employmentincrease. Employee-related costs generally do not decrease proportionately with many of our employees collectively. Our results could be adversely affected if future labor negotiations or contracts were to further restrict our ability to maximize the efficiency of our operations, or if a larger percentage of our workforce were to be unionized. If we are unable to negotiate labor contracts on reasonable terms, or if we were to experience labor unrest or other business interruptions in connection with labor negotiations or otherwise, our ability to produce and deliver our products could be impaired.revenues. In addition, our ability to make short-term adjustments to control compensation and benefitsmanage our costs changeor to make changes to our strategy or otherwise adapt to changing business needsstrategy may be limited by the terms and durationcertain of our collective bargaining agreements. If we were unable to implement cost-control efforts or reduce our operating costs sufficiently in response to a decline in our revenues, our profitability will be adversely affected.
The size and volatility of our pension plan obligations may adversely affect our operations, financial condition and liquidity.
We sponsor a frozen single-employer defined benefit pension plan. Although we have frozen participation and benefits under our single-employer plan and have taken other steps to reduce the size and volatility of our pension plan obligations, our results of operations will be affected by the amount of income or expense we record for, and the contributions we are required to make to, this plan.
In addition, the Company and the NewsGuild of New York jointly sponsor a defined benefit plan that continues to accrue active benefits for employees represented by the NewsGuild.
We are required to make contributions to our plans to comply with minimum funding requirements imposed by laws governing those plans. As of December 26, 2021, our qualified defined benefit pension plans had plan assets that were approximately $74 million above the present value of future benefit obligations. Our obligation to make additional contributions to our plans, and the timing of any such contributions, depends on a number of factors, many of which are beyond our control. These include legislative changes; assumptions about mortality; and economic conditions, including a low interest rate environment or sustained volatility and disruption in the stock and bond markets, which impact discount rates and returns on plan assets.
As a result of required contributions to our qualified pension plans, we may have less cash available for working capital and other corporate uses, which may have an adverse impact on our results of operations, financial condition and liquidity.
In addition, the Company sponsors several non-qualified pension plans, with unfunded obligations totaling $239 million as of December 26, 2021. Although we have frozen participation and benefits under all but one of these plans, and have taken other steps to reduce the size and volatility of our obligations under these plans, a number of factors, including changes in discount rates or mortality tables, may have an adverse impact on our results of operations and financial condition.
Our participation in multiemployer pension plans may subject us to liabilities that could materially adversely affect our results of operations, financial condition and cash flows.
We participate in, and make periodic contributions to, various multiemployer pension plans that cover many of our current and former production and delivery employees and a small number of voice actors who work on Audm, our read-aloud audio service. Our required contributions to certain plans have increased as our commercial printing operations have expanded.
P. 18 – THE NEW YORK TIMES COMPANY
The risks of participating in multiemployer plans are different from single-employer plans in that assets contributed are pooled and may be used to provide benefits to employees of other participating employers. If a participating employer withdraws from or otherwise ceases to contribute to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. Our required contributions to these plans could increase because of a shrinking contribution base as a result of the insolvency or withdrawal of other companies that currently contribute to these plans, the inability or failure of withdrawing companies to pay their withdrawal liability, low interest rates, lower than expected returns on pension fund assets, other funding deficiencies, or potential legislative action. Our withdrawal liability for any multiemployer pension plan will depend on the nature and timing of any triggering event and the extent of that plan’s funding of vested benefits.
If a multiemployer pension plan in which we participate has significant underfunded liabilities, such underfunding will increase the size of our potential withdrawal liability. In addition, under federal pension law, special funding rules apply to multiemployer pension plans that are classified as “endangered,” “critical” or “critical and declining.” When a multiemployer pension plan in which we participate enters “endangered,” “critical” or “critical and declining” status, we can be required to make additional contributions and/or benefit reductions may apply. Currently, three of the significant multiemployer plans in which we participate are classified as “critical and declining.”
We have recorded significant withdrawal liabilities with respect to multiemployer pension plans in which we formerly participated (primarily in connection with the sales of the New England Media Group in 2013 and the Regional Media Group in 2012) and may record additional liabilities in the future. In addition, due to declines in our contributions, we have recorded withdrawal liabilities for actual and estimated partial withdrawals from several plans in which we continue to participate. Until demand letters from some of the multiemployer pension funds are received, the exact amount of the withdrawal liability will not be fully known and, as such, a difference from the recorded estimate could have an adverse effect on our results of operations, financial condition and cash flows. All of the significant multiemployer plans in which we participate are specific to the newspaper and broader printing and publishing industries, which continue to undergo significant pressure. A withdrawal by a significant percentage of participating employers may result in a mass withdrawal declaration by the trustees of one or more of these plans, which would require us to record additional withdrawal liabilities.
If, in the future, we elect to withdraw from these plans or if we trigger a partial withdrawal due to declines in contribution base units or a partial cessation of our obligation to contribute, additional liabilities would need to be recorded that could have an adverse effect on our business, results of operations, financial condition or cash flows. Legislative changes could also affect our funding obligations or the amount of withdrawal liability we incur if a withdrawal were to occur.
Significant disruptions in our newsprint supply chain or newspaper printing and distribution channels, or a significant increase in the costs to print and distribute our newspaper, would have an adverse effect on our operating results.
The Times newspaper, as well as other commercial print products, are printed at our production and distribution facility in College Point, N.Y. Outside of the New York area, The Times is printed and distributed under contracts with print and distribution partners across the United States and internationally.
Our production and distribution facility and our print partners rely on suppliers for deliveries of newsprint, and the availability of newsprint supply may be affected by various factors, including supply chain disruptions, transportation issues, labor shortages or unrest, and other disruptions that may affect production or deliveries of newsprint. In addition, the price of newsprint has historically been volatile and could increase as a result of various factors. A significant disruption in our or our partners’ newsprint supply chain, or a significant increase in the price of newsprint, would adversely affect our operating results.
To the extent that financial pressures, newspaper industry trends or economics, labor shortages or unrest, or other circumstances affect our print and distribution partners and/or lead to reduced operations or consolidations or closures of print sites and/or distribution routes, this could increase the cost of printing and distributing our newspapers and/or decrease our revenues if printing and distribution are disrupted. Some of our print and distribution partners have taken steps to reduce their geographic scope and/or the frequency with which newspapers are printed and distributed that have not been reversed, and additional partners may take similar steps. The geographic scope and frequency with which newspapers are printed and distributed by our partners at times affects our ability to print and distribute our newspaper and can adversely affect our operating results.
THE NEW YORK TIMES COMPANY – P. 19
If we experience significant disruptions in our newsprint supply chain or newspaper printing and distribution channels, or a significant increase in the costs to print and distribute our newspaper, our operating results may be adversely affected.
Risks Related to Information Systems and Other Technology
Security breaches and other network and information systems disruptions could affect our ability to conduct our business effectively and damage our reputation.
Our systems store and process confidential subscriber, employee and other sensitive personal and Company data, and therefore maintaining our network security is of critical importance. In addition, we rely on the technology and systems provided by third-party vendors (including cloud-based service providers) for a variety of operations, including encryption and authentication technology, employee email, domain name registration, content delivery to customers, administrative functions (including payroll processing and certain finance and accounting functions) and other operations.
We regularly face attempts by malicious actors to breach our security and compromise our information technology systems. These attackers may use a blend of technology and social engineering techniques (including denial of service attacks, phishing attempts intended to induce our employees and users to disclose information or unwittingly provide access to systems or data, and other techniques) to disrupt service or exfiltrate data. Information security threats are constantly evolving, increasing the difficulty of detecting and successfully defending against them. We and the third parties with which we work may be more vulnerable to the risk from activities of this nature as a result of operational changes such as significant increases in remote working. To date, no incidents have had, either individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations.
In addition, our systems, and those of the third parties with which we work and on which we rely, may be vulnerable to interruption or damage that can result from the effects of natural disasters or climate change (such as increased storm severity and flooding); fires; power, systems or internet outages; acts of terrorism; pandemics (such as Covid-19); or other similar events.
We have implemented controls and taken other preventative measures designed to strengthen our systems against such incidents and attacks, including measures designed to reduce the impact of a security breach at our third-party vendors. Efforts to prevent hackers from disrupting our service or otherwise accessing our systems are expensive to develop, implement and maintain. These efforts require ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated, and may limit the functionality of or otherwise negatively impact our products, services and systems. Although the costs of the controls and other measures we have taken to date have not had a material effect on our financial condition, results of operations or liquidity, the costs and effort to respond to a security breach and/or to mitigate any security vulnerabilities that may be identified in the future could be significant.
There can also be no assurance that the actions, measures and controls we have implemented will be effective against future attacks or be sufficient to prevent a future security breach or other disruption to our network or information systems, or those of our third-party providers, and our disaster recovery planning cannot account for all eventualities. Such an event could result in a disruption of our services, improper disclosure of personal data or confidential information, or theft or misuse of our intellectual property, all of which could harm our reputation, require us to expend resources to remedy such a security breach or defend against further attacks, divert management’s attention and resources or subject us to liability under laws that protect personal data, or otherwise adversely affect our business. While we maintain cyber risk insurance, the costs relating to any data breach could be substantial, and our insurance may not be sufficient to cover all losses related to any future breaches of our systems.
Failure to comply with laws and regulations with respect to privacy, data protection and consumer marketing practices could adversely affect our business.
Our business is subject to various laws and regulations of local and foreign jurisdictions with respect to privacy and the collection and use of personal data, as well as laws and regulations with respect to consumer marketing practices.
P. 20 – THE NEW YORK TIMES COMPANY
Various federal and state laws and regulations, as well as the laws of foreign jurisdictions, govern the processing (including the collection, use, retention and sharing) and security of the data we receive from and about individuals. Failure to protect confidential data, provide individuals with adequate notice of our privacy policies or obtain required valid consent, for example, could subject us to liabilities imposed by these jurisdictions. Existing privacy-related laws and regulations are evolving and subject to potentially differing interpretations, and various federal and state legislative and regulatory bodies, as well as foreign legislative and regulatory bodies, may expand current or enact new laws regarding privacy and data protection. For example, the General Data Protection Regulation adopted by the European Union imposes stringent data protection requirements and significant penalties for noncompliance; California’s Consumer Privacy Act and Consumer Privacy Rights Act, and associated regulations, create new data privacy rights; and the European Union’s forthcoming ePrivacy Regulation is expected to impose, with respect to electronic communications, stricter data protection and data processing requirements.
In addition, various federal and state laws and regulations, as well as the laws of foreign jurisdictions, govern the manner in which we market our subscription products, including with respect to subscriptions, billing and automatic-renewal. These laws and regulations often differ across jurisdictions and continue to evolve. These laws, as well as any changes in these laws, could adversely affect our ability to attract and retain subscribers.
Existing and newly adopted laws and regulations with respect to privacy, the collection and use of personal data, and consumer marketing practices (or new interpretations of existing laws and regulations) have imposed and may continue to impose obligations that may affect our business, place increasing demands on our technical infrastructure and resources, require us to incur increased compliance costs and cause us to further adjust our advertising or marketing practices. Any failure, or perceived failure, by us or the third parties upon which we rely to comply with laws and regulations that govern our business operations, as well as any failure, or perceived failure, by us or the third parties upon which we rely to comply with our own posted policies, could result in claims against us by governmental entities or others, negative publicity and a loss of confidence in us by our users and advertisers. Each of these potential consequences could adversely affect our business and results of operations.
We are subject to payment processing risk.
We accept payments through third parties using a variety of different payment methods, including credit and debit cards and direct debit. We rely on internalthird parties’ systems as well as those of third partiesour own internal systems to process payments. Acceptance and processing of these payment methods are subject to certain certifications, rules, regulations and regulations.industry standards. To the extent that there are disruptions in our or third-party payment processing systems, errors in charges made to subscribers, material changes in the payment ecosystem failure to recertifysuch as large re-issuances of payment cards by credit card issuers, and/or changes to rules, regulations or regulationsindustry standards concerning payment processing, we could experience increased costs and/or be subject to fines and/or civil liability, or lose our ability to accept credit and debit card payments, which wouldcould harm our reputation and adversely impact our revenue, operating expenses and results of operations.
In addition, we have experienced, and from time to time may continue to experience, fraudulent use of payment methods for subscriptions to our digital products. If we are unable to adequately control and manage this practice, it could result in inaccurately inflated subscription figures used for internal planning purposes and public reporting, which could adversely affect our ability to manage our business and harm our reputation. If we are unable to maintain our fraud and chargeback rate at acceptable levels, our card approval rate may be impacted and card networks could impose fines and additional card authentication requirements, or terminate our ability to process payments which would impact our business and results of operations as well as result in negative consumer perceptions of our brand. We have taken measures to detect and reduce fraud but these measures may not be effective and may need to be continually improved as fraudulent schemes become more sophisticated. These measures may add friction to our subscription processes, which could adversely affect our ability to add new subscribers.
The termination of our ability to accept payments on any major payment method would significantly impair our ability to operate our business, including our ability to add and retain subscribers and collect subscription and advertising revenues, and would adversely affect our results of operations.
THE NEW YORK TIMES COMPANY – P. 21
Defects, delays or interruptions in the cloud-based hosting services we utilize could adversely affect our reputation and operating results.
We currently utilize third-party subscription-based software services as well as public cloud infrastructure services to provide solutions for many of our computing and bandwidth needs. Any interruptions to these services generally could result in interruptions in service to our subscribers and advertisers and/or the Company’s critical business functions, notwithstanding any business continuity or disaster recovery plans or agreements that may currently be in place with some of these providers. This could result in unanticipated downtime and/or harm to our operations, reputation and operating results. A transition of these services to different cloud providers would be difficult to implement and cause us to incur significant time and expense. In addition, if hosting costs increase over time and/or if we require more computing or storage capacity as a result of subscriber growth or otherwise, our costs could increase disproportionately.
Risks Related to Intellectual Property
Our business may suffer if we cannot protect our intellectual property.
Our business depends on our intellectual property, including our valuable brands,brand, content, services and internally developed technology. We believe the protection and monetization of our proprietary trademarks and other intellectual property rights are importantcritical to our continued success and our competitive position. Unauthorized parties may attempt to copy or otherwisehave unlawfully obtain and usemisappropriated our brand, content, services, technology and other intellectual property or may attempt to do so, and we cannot
P. 14 – THE NEW YORK TIMES COMPANY
be certain that the stepsmeasures we have taken to protect and enforce our proprietary rights willmay not be sufficient to fully address or prevent any misappropriation or confusion among consumers and merchants, or unauthorized use of these rights.all third-party infringement.
AdvancementsThe Internet, combined with advancements in technology, havehas made the unauthorized duplicationcopying and wide dissemination of unlicensed content easier, makingincluding by anonymous foreign actors. At the same time, enforcement of intellectual property rights more challenging. In addition, as our business and the risk of misappropriation of our intellectual property rights havehas become more challenging. As our business and the presence and impact of bad actors become more global in scope, we may not be able to protect our proprietary rights in a cost-effective manner in a multitude of jurisdictions with varying laws.other jurisdictions. In addition, intellectual property protection may not be available in every country in which our products and services are distributed or made available through the Internet.
If we are unable to procure, protect and enforce our intellectual property rights, including maintaining and monetizing our intellectual property rights to our content, we may not realizesucceed in realizing the full value of theseour assets, and our business, brand and profitability may suffer. In addition, if we must litigate in the United States or elsewhere to enforce our intellectual property rights, or determine the validity and scope of the proprietary rights of others, such litigation may be costly.costly and time consuming.
We have been, and may be in the future, subject to claims of intellectual property infringement that could adversely affect our business.
We periodically receive claims from third parties alleging infringement, misappropriation or other violations of their intellectual property rights. These third parties include rights holders seeking to monetize intellectual property theyTo the extent the Company gains greater public recognition and scale worldwide, and publishes more content on its own or otherwise have rights to through assertingplatforms and third-party platforms (like social media), the likelihood of receiving claims of infringement or misuse. Even if we believe that these claims ofmay rise. Defending against intellectual property infringement are without merit, defendingclaims against the claimsus can be time-consuming, be expensive to litigate or settle and causea diversion of management attention. In addition, litigation regarding intellectual property rights is inherently uncertain due to the complex issues involved, and we may not be successful in defending ourselves in such matters.
TheseIf successful, third-party intellectual property infringement claims if successful, may require us to enter into royalty or licensing agreements on unfavorable terms, use more costly alternative technology, alter how we present our content to our users, alter certain of our operations and/or otherwise incur substantial monetary liability. Additionally, these claims may require us to significantly alter certain of our operations. The occurrence of any of these events as a result of these claims could result in substantially increased costs or otherwise adversely affect our business. For claims against us, insurance may be insufficient or unavailable, and for claims related to actions of third parties, either indemnification or remedies against those parties may be insufficient or unavailable.
P. 22 – THE NEW YORK TIMES COMPANY
Risks Related to the Terms of Our Debt and Common Stock
The terms of our credit facility impose restrictions on our operations that could limit our ability to undertake certain actions.
In September 2019, we entered into a $250 million five-year unsecured credit facility (the “Credit Facility”). Certain of our domestic subsidiaries have guaranteed our obligations under the Credit Facility. As of December 26, 2021, there were no outstanding borrowings under the Credit Facility. See “Note 7 of the Notes to the Consolidated Financial Statements” for a description of the Credit Facility.
The Credit Facility contains various customary affirmative and negative covenants, including certain financial covenants and various incurrence-based negative covenants imposing potentially significant restrictions on our operations. These covenants restrict, subject to various exceptions, our ability to, among other things:
•incur debt (directly or by third-party guarantees);
•grant liens;
•pay dividends;
•make investments;
•make acquisitions or dispositions; and
•prepay debt.
Any of these restrictions and limitations could make it more difficult for us to execute our business strategy.
We may not have access to the capital markets on terms that are acceptable to us or may otherwise be limited in our financing options.
From time to time the Company may need or desire to access the long-term and short-term capital markets to obtain financing. The Company’s access to, and the availability of, financing on acceptable terms and conditions in the future will be impacted by many factors, including, but not limited to:to (1) the Company’s financial performance; (2) the Company’s credit ratings or absence of a credit rating; (3) liquidity of the overall capital marketsmarkets; and (4) the state of the economy. There can be no assurance that the Company will continue to have access to the capital markets on terms acceptable to it.
In addition, macroeconomic conditions, such as volatility or disruption in the credit markets, could adversely affect our ability to obtain financing to support operations or to fund acquisitions or other capital-intensive initiatives.
Our Class B Common Stock is principally held by descendants of Adolph S. Ochs, through a family trust, and this control could create conflicts of interest or inhibit potential changes of control.
We have two classes of stock: Class A Common Stock and Class B Common Stock. Holders of Class A Common Stock are entitled to elect 30% of the Board of Directors and to vote, with holders of Class B Common Stock, on the reservation of shares for equity grants, certain material acquisitions and the ratification of the selection of our auditors. Holders of Class B Common Stock are entitled to elect the remainder of the Board of Directors and to vote on all other matters. Our Class B Common Stock is principally held by descendants of Adolph S. Ochs, who purchased The Times in 1896. A family trust holds approximately 90%95% of the Class B Common Stock. As a result, the trust has the ability to elect 70% of the Board of Directors and to direct the outcome of any matter that does not require a vote of the Class A Common Stock. Under the terms of the trust agreement, the trustees are directed to retain the Class B Common Stock held in trust and to vote such stock against any merger, sale of assets or other transaction pursuant to which control of The Times passes from the trustees, unless they determine that the primary objective of the trust can be achieved better by the implementation of such transaction. Because this concentrated control could discourage others from initiating any potential merger, takeover or other change of control transaction that may otherwise be beneficial to our businesses, the market price of our Class A Common Stock could be adversely affected.
THE NEW YORK TIMES COMPANY – P. 1523
Adverse results from litigation or governmental investigations can impact our business practices and operating results.
From time to time, we are party to litigation, including matters relating to alleged libel or defamation and employment-related matters, as well as regulatory, environmental and other proceedings with governmental authorities and administrative agencies. See Note 19 of the Notes to the Consolidated Financial Statements regarding certain matters. Adverse outcomes in lawsuits or investigations could result in significant monetary damages or injunctive relief that could adversely affect our results of operations or financial condition as well as our ability to conduct our business as it is presently being conducted. In addition, regardless of merit or outcome, such proceedings can have an adverse impact on the Company as a result of legal costs, diversion of management and other personnel, and other factors.
|
| |
| ITEM 1B. UNRESOLVED STAFF COMMENTS |
None.
Our principal executive offices are located at 620 Eighth Avenue, New York, New York, in our New York headquarters building, in the Times Square area. The buildingwhich was completed in 2007 and consists of approximately 1.54 million gross square feet, of which approximately 828,000 gross square feet of space have been allocated to us.feet. We ownedown a leasehold condominium interest representing approximately 58%828,000 gross square feet in the building (the “Company Headquarters”). In December 2019, we repurchased the portion of the New York headquarters building until March 2009, whencondominium interest that we entered into an agreement to sellhad sold and simultaneously leaseleased back 21 floors, or approximately 750,000 rentable square feet, occupied by usin 2009 (the “Condo Interest”). The sale price for the Condo Interest was $225.0 million. The lease term is 15 years,$245.3 million and, as a result, we have three renewal options that could extend the term for an additional 20 years. We have an option to repurchase the Condo Interest for $250.0 millionnow own our interest in the fourth quarterbuilding unencumbered. As of 2019, andDecember 26, 2021, we have provided notice of our intent to exercise this option. We continue to own a leasehold condominium interest in seven floors in our New York headquarters building, totalinghad leased approximately 216,000 rentable square feet that were not included in the sale-leaseback transaction, all of which are currently leased to third parties.
As part of the Company’s redesign of our headquarters building, which was substantially completed in the fourth quarter of 2018, we consolidated the Company’s operations from the 17 floors we previously occupied and we have leased five and a half additional11.5 floors to third parties as of December 30, 2018.parties.
In addition, we have a printing and distribution facility with 570,000 gross square feet located in College Point, N.Y., on a 31-acre sitesite. In 2019, we exercised our option to purchase the property, which was previously owned by the City of New York, for which we have a ground lease. We have an option to purchase the property before the lease ends in 2019 forapproximately $6.9 million. As of December 30, 2018, we also owned other properties with an aggregate of approximately 3,000 gross square feet and leased other properties with an aggregate of approximately 187,000 rentable square feet in various locations.
|
| |
| ITEM 3. LEGAL PROCEEDINGS |
We are involved in various legal actions incidental to our business that are now pending against us. These actions are generally for amountshave damage claims that are greatly in excess of the payments, if any, that maywe would be required to be made. See Note 19 ofpay if we lost or settled the Notes to the Consolidated Financial Statements for a description of certain matters, which is incorporated herein by reference.cases. Although the Company cannot predict the outcome of these matters, it is possible that an unfavorable outcome in one or more matters could be material to the Company’s consolidated results of operations or cash flows for an individual reporting period. However, based on currently available information, management does not believe that the ultimate resolution of these matters, individually or in the aggregate, is likely to have a material effect on the Company’s financial position.
|
| |
| ITEM 4. MINE SAFETY DISCLOSURES |
Not applicable.
P. 1624 – THE NEW YORK TIMES COMPANY
EXECUTIVE OFFICERS OF THE REGISTRANT
| | | | | | | | | | | | | | | | | | | | |
| Name | | Age | | Employed By
Registrant Since | |
Recent Position(s) Held as of February 23, 2022 |
| A.G. Sulzberger | | 41 | | 2009 | | Chairman (since January 2021) and Publisher of The Times (since 2018); Deputy Publisher (2016 to 2017); Associate Editor (2015 to 2016); Assistant Editor (2012 to 2015) |
| Meredith Kopit Levien | | 50 | | 2013 | | President and Chief Executive Officer (since 2020); Executive Vice President and Chief Operating Officer (2017 to 2020); Executive Vice President and Chief Revenue Officer (2015 to 2017); Executive Vice President, Advertising (2013 to 2015); Chief Revenue Officer, Forbes Media LLC (2011 to 2013) |
| R. Anthony Benten | | 58 | | 1989 | | Senior Vice President, Treasurer (since 2016) and Chief Accounting Officer (since 2019); Corporate Controller (2007 to 2019); Senior Vice President, Finance (2008 to 2016) |
| Diane Brayton | | 53 | | 2004 | | Executive Vice President, General Counsel (since 2017) and Secretary (since 2011); Interim Executive Vice President, Talent & Inclusion (August 2020 to January 2021); Deputy General Counsel (2016); Assistant Secretary (2009 to 2011) and Assistant General Counsel (2009 to 2016) |
| Roland A. Caputo | | 61 | | 1986 | | Executive Vice President and Chief Financial Officer (since 2018); Executive Vice President, Print Products and Services Group (2013 to 2018); Senior Vice President and Chief Financial Officer, The New York Times Media Group (2008 to 2013) |
| Jacqueline Welch | | 52 | | 2021 | | Executive Vice President and Chief Human Resources Officer (since January 2021); Senior Vice President, Chief Human Resources Officer and Chief Diversity Officer, Freddie Mac (2016 to 2020); independent consultant (2014 to 2016); Senior Vice President, Human Resources – International (2010 to 2013) and Senior Vice President, Talent Management and Diversity (2008 to 2010), Turner Broadcasting |
|
| | | | | | |
| Name | | Age | | Employed By Registrant Since | |
Recent Position(s) Held as of February 26, 2019 |
| Mark Thompson | | 61 | | 2012 | | President and Chief Executive Officer (since 2012); Director-General, British Broadcasting Corporation (2004 to 2012) |
| A.G. Sulzberger | | 38 | | 2009 | | Publisher of The Times (since 2018); Deputy Publisher (2016 to 2017); Associate Editor (2015-2016); Assistant Editor (2012-2015) |
| R. Anthony Benten | | 55 | | 1989 | | Senior Vice President, Treasurer (since December 2016) and Corporate Controller (since 2007); Senior Vice President, Finance (2008 to 2016) |
| Diane Brayton | | 50 | | 2004 | | Executive Vice President, General Counsel (since January 2017) and Secretary (since 2011); Deputy General Counsel (2016); Assistant Secretary (2009 to 2011) and Assistant General Counsel (2009 to 2016) |
| Roland A. Caputo | | 58 | | 1986 | | Executive Vice President and Chief Financial Officer (since 2018); Executive Vice President, Print Products and Services Group (2013 to 2018); Senior Vice President and Chief Financial Officer, The New York Times Media Group (2008 to 2013) |
| Meredith Kopit Levien | | 47 | | 2013 | | Executive Vice President (since 2013) and Chief Operating Officer (since 2017); Chief Revenue Officer (2015 to 2017); Executive Vice President, Advertising (2013 to 2015); Chief Revenue Officer, Forbes Media LLC (2011 to 2013) |
THE NEW YORK TIMES COMPANY – P. 1725
|
| |
| ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
MARKET INFORMATION
The Class A Common Stock is listed on the New York Stock Exchange under the trading symbol “NYT”.“NYT.” The Class B Common Stock is unlisted and is not actively traded.
The number of security holders of record as of February 21, 2019,17, 2022, was as follows: Class A Common Stock: 5,394;4,752; Class B Common Stock: 25.
We have paid quarterly dividends of $0.04 per share on the Class A and Class B Common Stock since late 2013. In February 2019,2022, the Board of Directors approved a quarterly dividend of $0.05$0.09 per share.share, an increase of $0.02 per share from the previous quarter. We currently expect to continue to pay comparable cash dividends in the future, although changes in our dividend program may be considered by our Board of Directors in light of our earnings, capital requirements, financial condition and other factors considered relevant. In addition, our Board of Directors will consider restrictions in any future indebtedness.
ISSUER PURCHASES OF EQUITY SECURITIES(1)
|
| | | | | | | | | | | | | | |
| Period | | Total number of shares of Class A Common Stock purchased (a) | | Average price paid per share of Class A Common Stock (b) | | Total number of shares of Class A Common Stock purchased as part of publicly announced plans or programs (c) | | Maximum number (or approximate dollar value) of shares of Class A Common Stock that may yet be purchased under the plans or programs (d) |
| October 1, 2018 - November 4, 2018 | | — |
| | $ | — |
| | — |
| | $ | 16,236,612 |
|
| November 5, 2018 - December 2, 2018 | | — |
| | $ | — |
| | — |
| | $ | 16,236,612 |
|
| December 3, 2018 - December 30, 2018 | | — |
| | $ | — |
| | — |
| | $ | 16,236,612 |
|
| Total for the fourth quarter of 2018 | | — |
| | $ | — |
| | — |
| | $ | 16,236,612 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
(1)
Period | On January 13, 2015, the Board
| Total number of Directors approved an authorization of $101.1 million to repurchase
shares of the Company’s Class A
Common Stock. AsStock
purchased
(a) | | Average
price paid
per share ofDecember 30, 2018, repurchases
Class A
Common Stock
(b) | | Total number of
shares of Class A
Common Stock
purchased
as part of
publicly
announced plans
or programs
(c) | | Maximum
number (or
approximate
dollar value)
of shares of
Class A
Common
Stock that may
yet be
purchased
under this authorization totaled $84.9 million (excluding commissions), and $16.2 million remained under this authorization. All purchases were made pursuant to our publicly announced share repurchase program. Our Boardthe plans
or programs
(d) |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Total for the fourth quarter of Directors has authorized us to purchase shares from time to time, subject to market conditions and other factors. There is no expiration date with respect to this authorization.2021 | | — | | | $ | — | | | — | | | $ | 16,236,612 | |
(1)In February 2022, the Board of Directors approved a $150 million Class A stock repurchase program that replaced the previous program, which was approved in 2015. The new authorization provides that Class A shares may be purchased from time to time as market conditions warrant, through open market purchases, privately negotiated transactions or other means, including Rule 10b5-1 trading plans. We expect to repurchase shares primarily to offset the impact of dilution from our equity compensation program, but subject to market conditions and other factors, we may also make opportunistic repurchases to reduce share count. There is no expiration date with respect to this authorization.
As of December 26, 2021, repurchases under the previous program totaled $84.9 million (excluding commissions). There were no repurchases under that program between February 2016 and February 2022, when the program was replaced.
P. 1826 – THE NEW YORK TIMES COMPANY
PERFORMANCE PRESENTATION
The following graph shows the annual cumulative total stockholder return for the five fiscal years ended December 30, 2018,26, 2021, on an assumed investment of $100 on December 29, 2013,25, 2016, in the Company, the Standard & Poor’s S&P 400 MidCap Stock Index and the Standard & Poor’s S&P 1500 Publishing and Printing Index. Stockholder return is measured by dividing (a) the sum of (i) the cumulative amount of dividends declared for the measurement period, assuming reinvestment of dividends, and (ii) the difference between the issuer’s share price at the end and the beginning of the measurement period, by (b) the share price at the beginning of the measurement period. As a result, stockholder return includes both dividends and stock appreciation.
Stock Performance Comparison Between the S&P 400 Midcap Index, S&P 1500 Publishing & Printing Index and The New York Times Company’s Class A Common Stock
THE NEW YORK TIMES COMPANY – P. 1927
|
|
ITEM 6. SELECTED FINANCIAL DATA |
The Selected Financial Data should be read in conjunction with “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and the related Notes in Item 8. The results of operations for the New England Media Group, which was sold in 2013, have been presented as discontinued operations for all periods presented (see Note 14 of the Notes to the Consolidated Financial Statements). The pages following the table show certain items included in Selected Financial Data. All per share amounts on those pages are on a diluted basis. Fiscal year 2017 comprised 53 weeks and all other fiscal years presented in the table below comprised 52 weeks.
|
| | | | | | | | | | | | | | | | | | | | |
| | | As of and for the Years Ended |
| (In thousands) | | December 30,
2018 |
| | December 31,
2017 |
| | December 25,
2016 |
| | December 27,
2015 |
| | December 28,
2014 |
|
| | | (52 Weeks) | | (53 Weeks) | | (52 Weeks) | | (52 Weeks) | | (52 Weeks) |
| Statement of Operations Data | | | | | | |
| Revenues | | $ | 1,748,598 |
| | $ | 1,675,639 |
| | $ | 1,555,342 |
| | $ | 1,579,215 |
| | $ | 1,588,528 |
|
Operating costs (1) | | 1,558,778 |
| | 1,493,278 |
| | 1,419,416 |
| | 1,385,840 |
| | 1,470,234 |
|
| Headquarters redesign and consolidation | | 4,504 |
| | 10,090 |
| | — |
| | — |
| | — |
|
| Restructuring charge | | — |
| | — |
| | 16,518 |
| | — |
| | — |
|
Multiemployer pension and other contractual (gain)/loss (1) | | (4,851 | ) | | (4,320 | ) | | 6,730 |
| | 9,055 |
| | — |
|
| Early termination charge and other expenses | | — |
| | — |
| | — |
| | — |
| | 2,550 |
|
Operating profit (1) | | 190,167 |
| | 176,591 |
| | 112,678 |
| | 184,320 |
| | 115,744 |
|
Other components of net periodic benefit costs (1) | | 8,274 |
| | 64,225 |
| | 11,074 |
| | 47,735 |
| | 23,796 |
|
| Gain/(loss) from joint ventures | | 10,764 |
| | 18,641 |
| | (36,273 | ) | | (783 | ) | | (8,368 | ) |
| Interest expense and other, net | | 16,566 |
| | 19,783 |
| | 34,805 |
| | 39,050 |
| | 53,730 |
|
| Income from continuing operations before income taxes | | 176,091 |
| | 111,224 |
| | 30,526 |
| | 96,752 |
| | 29,850 |
|
| Income from continuing operations | | 127,460 |
| | 7,268 |
| | 26,105 |
| | 62,842 |
| | 33,391 |
|
| Loss from discontinued operations, net of income taxes | | — |
| | (431 | ) | | (2,273 | ) | | — |
| | (1,086 | ) |
| Net income attributable to The New York Times Company common stockholders | | 125,684 |
| | 4,296 |
| | 29,068 |
| | 63,246 |
| | 33,307 |
|
| Balance Sheet Data | | | | | | | | |
| Cash, cash equivalents and marketable securities | | $ | 826,363 |
| | $ | 732,911 |
| | $ | 737,526 |
| | $ | 904,551 |
| | $ | 981,170 |
|
| Property, plant and equipment, net | | 638,846 |
| | 640,939 |
| | 596,743 |
| | 632,439 |
| | 665,758 |
|
| Total assets | | 2,197,123 |
| | 2,099,780 |
| | 2,185,395 |
| | 2,417,690 |
| | 2,566,474 |
|
| Total debt and capital lease obligations | | 253,630 |
| | 250,209 |
| | 246,978 |
| | 431,228 |
| | 650,120 |
|
| Total New York Times Company stockholders’ equity | | 1,040,781 |
| | 897,279 |
| | 847,815 |
| | 826,751 |
| | 726,328 |
|
| |
(1)
| As a result of the adoption of the ASU 2017-07 during the first quarter of 2018, the service cost component of net periodic benefit costs/(income) from our pension and other postretirement benefits plans will continue to be presented within operating costs, while the other components of net periodic benefits costs/(income) such as interest cost, amortization of prior service credit and gains or losses from our pension and other postretirement benefits plans will be separately presented outside of “Operating costs” in the new line item “Other components of net periodic benefits costs/(income)”. The Company has recast the Consolidated Statement of Operations for the respective prior periods presented to conform with the current period presentation. Costs associated with multiemployer pension plans were not addressed in ASU 2017-07, and continue to be included in operating costs, except as separately disclosed. |
P. 20 – THE NEW YORK TIMES COMPANY
|
| | | | | | | | | | | | | | | | | | | | |
| | | As of and for the Years Ended |
(In thousands, except ratios, per share
and employee data) | | December 30,
2018 |
| | December 31,
2017 |
| | December 25,
2016 |
| | December 27,
2015 |
| | December 28,
2014 |
|
| | (52 Weeks) | | (53 Weeks) | | (52 Weeks) | | (52 Weeks) | | (52 Weeks) |
| Per Share of Common Stock | | | | | | | | | |
| Basic earnings/(loss) per share attributable to The New York Times Company common stockholders: |
| Income from continuing operations | | $ | 0.76 |
| | $ | 0.03 |
| | $ | 0.19 |
| | $ | 0.38 |
| | $ | 0.23 |
|
| Loss from discontinued operations, net of income taxes | | — |
| | — |
| | (0.01 | ) | | — |
| | (0.01 | ) |
| Net income | | $ | 0.76 |
| | $ | 0.03 |
| | $ | 0.18 |
| | $ | 0.38 |
| | $ | 0.22 |
|
| Diluted earnings/(loss) per share attributable to The New York Times Company common stockholders: |
| Income from continuing operations | | $ | 0.75 |
| | $ | 0.03 |
| | $ | 0.19 |
| | $ | 0.38 |
| | $ | 0.21 |
|
| Loss from discontinued operations, net of income taxes | | — |
| | — |
| | (0.01 | ) | | — |
| | (0.01 | ) |
| Net income | | $ | 0.75 |
| | $ | 0.03 |
| | $ | 0.18 |
| | $ | 0.38 |
| | $ | 0.20 |
|
| Dividends declared per share | | $ | 0.16 |
| | $ | 0.16 |
| | $ | 0.16 |
| | $ | 0.16 |
| | $ | 0.16 |
|
| New York Times Company stockholders’ equity per share | | $ | 6.23 |
| | $ | 5.46 |
| | $ | 5.21 |
| | $ | 4.97 |
| | $ | 4.50 |
|
| Average basic shares outstanding | | 164,845 |
| | 161,926 |
| | 161,128 |
| | 164,390 |
| | 150,673 |
|
| Average diluted shares outstanding | | 166,939 |
| | 164,263 |
| | 162,817 |
| | 166,423 |
| | 161,323 |
|
| Key Ratios | | | | | | | | | | |
| Operating profit to revenues | | 10.9 | % | | 10.5 | % | | 7.2 | % | | 11.7 | % | | 7.3 | % |
| Return on average common stockholders’ equity | | 13.0 | % | | 0.5 | % | | 3.5 | % | | 8.1 | % | | 4.2 | % |
| Return on average total assets | | 5.8 | % | | 0.2 | % | | 1.3 | % | | 2.5 | % | | 1.3 | % |
| Total debt and capital lease obligations to total capitalization | | 19.6 | % | | 21.8 | % | | 22.6 | % | | 34.3 | % | | 47.2 | % |
| Current assets to current liabilities | | 1.33 |
| | 1.80 |
| | 2.00 |
| | 1.53 |
| | 1.91 |
|
| Full-Time Equivalent Employees | | 4,320 |
| | 3,789 |
| | 3,710 |
| | 3,560 |
| | 3,588 |
|
The items below are included in the Selected Financial Data. As a result of the adoption of ASU 2017-07 during the first quarter of 2018, the Company has recast the respective prior periods to conform with the current period presentation.
2018
The items below had a net unfavorable effect on our Income from continuing operations of $7.3 million, or $.05 per share:
$15.3 million of pre-tax expenses ($11.2 million after tax, or $.07 per share) for non-operating retirement costs;
an $11.3 million pre-tax gain ($8.5 million after tax or $.05 per share) reflecting our proportionate share of a distribution from the sale of assets by Madison Paper Industries (“Madison”), a partnership that previously operated a paper mill, in which the Company has an investment through a subsidiary. See Note 6 of the Notes to the Consolidated Financial Statements for more information on this item;
a $6.7 million pre-tax charge ($4.9 million after tax, or $.03 per share) for severance costs;
a $4.9 million pre-tax gain ($3.6 million after tax or $.02 per share) from a multiemployer pension plan liability adjustment. See Note 10 of the Notes to the Consolidated Financial Statements for more information on this item; and
THE NEW YORK TIMES COMPANY – P. 21
a $4.5 million pre-tax charge ($3.3 million after tax or $.02 per share) in connection with the redesign and consolidation of space in our headquarters building. See Note 8 of the Notes to the Consolidated Financial Statements for more information on this item.
2017 (53-week fiscal year)
The items below had a net unfavorable effect on our Income from continuing operations of $119.9 million, or $.73 per share:
$102.1 million of pre-tax pension settlement charges ($61.5 million after tax, or $.37 per share) in connection with the transfer of certain pension benefit obligations to insurers (in connection with the adoption of ASU 2017-07 this amount was reclassified to “Other components of net periodic benefit costs” below “Operating profit”);
a $68.7 million charge ($.42 per share) primarily attributable to the remeasurement of our net deferred tax assets required as a result of tax legislation;
a $37.1 million pre-tax gain ($22.3 million after tax, or $.14 per share) primarily in connection with the settlement of contractual funding obligations for a postretirement plan (in connection with the adoption of ASU 2017-07, $32.7 million relating to the postretirement plan was reclassified to “Other components of net periodic benefit costs” below “Operating profit” while the contractual gain of $4.3 million remains in “Multiemployer pension and other contractual gains” within “Operating profit”);
a $23.9 million pre-tax charge ($14.4 million after tax, or $.09 per share) for severance costs;
a $15.3 million net pre-tax gain ($9.4 million after tax, or $.06 per share) from joint ventures consisting of (i) a $30.1 million gain related to the sale of the remaining assets of Madison, (ii) an $8.4 million loss reflecting our proportionate share of Madison’s settlement of pension obligations, and (iii) a $6.4 million loss from the sale of our 49% equity interest in Donahue Malbaie Inc. (“Malbaie”), a Canadian newsprint company;
a $10.1 million pre-tax charge ($6.1 million after tax, or $.04 per share) in connection with the redesign and consolidation of space in our headquarters building; and
$1.5 million of pre-tax expenses ($0.9 million after tax, or $.01 per share) for non-operating retirement costs;
2016
The items below had a net unfavorable effect on our Income from continuing operations of $60.2 million, or $.37 per share:
a $37.5 million pre-tax loss ($22.8 million after tax, or $.14 per share) from joint ventures related to the announced closure of the paper mill operated by Madison;
a $21.3 million pre-tax pension settlement charge ($12.8 million after tax, or $.08 per share) in connection with lump-sum payments made under an immediate pension benefits offer to certain former employees (in connection with the adoption of ASU 2017-07 this amount was reclassified to “Other components of net periodic benefit costs” below “Operating profit”);
an $18.8 million pre-tax charge ($11.3 million after tax, or $.07 per share) for severance costs;
a $16.5 million pre-tax charge ($9.8 million after tax, or $.06 per share) in connection with the streamlining of the Company’s international print operations (primarily consisting of severance costs), (in connection with the adoption of ASU 2017-07, $1.7 million related to a gain from the pension curtailment previously included with this special item was reclassified to “Other components of net periodic benefit costs” below “Operating profit”);
a $6.7 million pre-tax charge ($4.0 million after tax or $.02 per share) for a partial withdrawal obligation under a multiemployer pension plan following an unfavorable arbitration decision;
a $5.5 million of pre-tax expenses ($3.3 million after tax, or $.02 per share) for non-operating retirement costs; and
a $3.8 million income tax benefit ($.02 per share) primarily due to a reduction in the Company’s reserve for uncertain tax positions.
P. 22 – THE NEW YORK TIMES COMPANY
2015
The items below had a net unfavorable effect on our Income from continuing operations of $47.3 million, or $.28 per share:
a $40.3 million pre-tax pension settlement charge ($24.0 million after tax, or $.14 per share) in connection with lump-sum payments made under an immediate pension benefits offer to certain former employees;
$22.9 million of pre-tax expenses ($13.7 million after tax, or $.08 per share) for non-operating retirement costs;
a $9.1 million pre-tax charge ($5.4 million after tax, or $.03 per share) for partial withdrawal obligations under multiemployer pension plans; and
a $7.0 million pre-tax charge ($4.2 million after tax, or $.03 per share) for severance costs.
2014
The items below had a net unfavorable effect on our Income from continuing operations of $29.7 million, or $.19 per share:
$27.5 million of pre-tax expenses ($16.3 million after tax, or $.10 per share) for non-operating retirement costs;
a $36.1 million pre-tax charge ($21.4 million after tax, or $.13 per share) for severance costs;
a $21.1 million income tax benefit ($.13 per share) primarily due to reductions in the Company’s reserve for uncertain tax positions;
a $9.5 million pre-tax pension settlement charge ($5.7 million after tax, or $.04 per share) in connection with lump-sum payments made under an immediate pension benefits offer to certain former employees;
a $9.2 million pre-tax charge ($5.9 million after tax or $.04 per share) for an impairment related to the Company’s investment in a joint venture; and
a $2.6 million pre-tax charge ($1.5 million after tax, or $.01 per share) for the early termination of a distribution agreement.
The following table reconciles other components of net periodic benefit costs, to the comparable non-GAAP metric, non-operating retirement costs:
|
| | | | | | | | | | | | | | | |
| | | Years Ended |
| (In thousands) | | December 30,
2018 |
| | December 31,
2017 |
| | December 25,
2016 |
| | December 27,
2015 |
| | December 28,
2014 |
|
| | (52 Weeks) | | (53 Weeks) | | (52 Weeks) | | (52 Weeks) | | (52 Weeks) |
| Other components of net periodic benefit costs: | | 8,274 |
| | 64,225 |
| | 11,074 |
| | 47,735 |
| | 23,796 |
|
| Add: Multiemployer pension plan withdrawal costs | | 7,002 |
| | 6,599 |
| | 14,001 |
| | 15,537 |
| | 13,282 |
|
| Less: Special Items | | | | | | | | | | |
| Pension settlement expense | | — |
| | 102,109 |
| | 21,294 |
| | 40,329 |
| | 9,525 |
|
| Postretirement benefit plan settlement gain | | — |
| | (32,737 | ) | | — |
| | — |
| | — |
|
| Pension curtailment gain | | — |
| | — |
| | (1,683 | ) | | — |
| | — |
|
| Non-operating retirement costs | | 15,276 |
| | 1,452 |
| | 5,464 |
| | 22,943 |
| | 27,553 |
|
THE NEW YORK TIMES COMPANY – P. 23
|
|
| ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our consolidated financial condition as of December 30, 2018,26, 2021, and results of operations for the three years ended December 30, 2018. This26, 2021. Please read this item should be read in conjunctiontogether with our Consolidated Financial Statements and the related Notes included in this Annual Report.Given the impact of the Covid-19 pandemic on our business in 2020, we believe that certain comparisons of our operating results in 2021 to 2019 provide useful context for our 2021 results. We have included supplemental disclosures and discussion comparing the operating results in 2021 to the 2019 results. We have omitted discussion of 2019 results where it would be redundant to the discussion previously included in Part II, Item 7, of our 2020 Annual Report on Form 10-K, filed with the SEC on February 25, 2021, which is incorporated herein by reference.
Significant components of the management’s discussion and analysis of results of operations and financial condition section include: | | | | | | | | | | | | | | |
| | | | PAGE |
| The executive overview section provides a summary of The New York Times Company and our business. | |
| The results of operations section provides an analysis of our results on a consolidated basis. | |
| The non-operating items section provides a comparison of our non-GAAP financial measures to the most directly comparable GAAP measures for the two years ended December 26, 2021. | |
| The liquidity and capital resources section provides a discussion of our cash flows for the three years ended December 26, 2021, and restricted cash, capital expenditures and outstanding debt, commitments and contingencies existing as of December 26, 2021. | |
| The critical accounting policies and estimates section provides detail with respect to accounting policies that are considered by management to require significant judgment and use of estimates and that could have a significant impact on our financial statements. | |
| The pensions and other postretirement benefits section provides a discussion of our benefit plans. | |
| | |
EXECUTIVE OVERVIEW
We are a global media organization that includes newspapers,our digital and print and digital products and related businesses. We have one reportable segment with businesses that includeOn February 1, 2022, subsequent to our newspaper, websites and mobile applications.fiscal year end, we completed the acquisition of The Athletic for an all-cash purchase price of $550 million, subject to customary closing adjustments. The purchase price was financed from cash on hand. See Note 19 of the Notes to the Consolidated Financial Statements for additional information related to this acquisition.
We generate revenues principally from subscriptions and advertising. Subscription revenues consist of revenues from subscriptions to our digital and print products (which include our news product, as well as our Games, Cooking, Audm and Wirecutter products) and single-copy and bulk sales of our print products. Advertising revenue is derived from the sale of our advertising products and services. Other revenues primarily consist of revenues from licensing, Wirecutter affiliate referrals, building rental revenue, commercial printing, NYT Live (ourthe leasing of floors in the Company Headquarters, retail commerce, television and film, our student subscription sponsorship program and our live events business) and retail commerce. business.
Our main operating costs are employee-related costs.
In the accompanying analysis of financial information, we present certain information derived from our consolidated financial information but not presented in our financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). We are presenting in this report supplemental non-GAAP financial performance measures that exclude depreciation, amortization, severance, non-operatingnon-
P. 28 – THE NEW YORK TIMES COMPANY
operating retirement costs and certain identified special items, as applicable. These non-GAAP financial measures should not be considered in isolation from or as a substitute for the related GAAP measures and should be read in conjunction with financial information presented on a GAAP basis. For further information and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures, see “— Results of Operations — Non-GAAP Financial Measures.”
AsWe believe that a resultnumber of the adoption of the ASU 2017-07 during the first quarter of 2018, the Company has recast the Consolidated Statement of Operations for periods priorfactors and industry trends have presented, and will continue to, 2018present risks and challenges to conform with the current period presentation.
Fiscal year 2017 comprised 53 weeks, while all other fiscal years presented in this Item 7 comprised 52 weeks. This report includesour business. For a detailed discussion of the estimated impactcertain factors that could affect our business, results of this additional week in 2017 on our year-over-year comparison of revenues where meaningful. Management believes that estimating the impact of the additional week on the Company’s operating costsoperations and operating profit presents challenges and, therefore, no such estimate is made with respect to these items. For further detail on the impact of the additional week on our results,financial condition, see the discussion below and “— Results of Operations-Non-GAAP Financial Measures.“Item 1A — Risk Factors.”
20182021 Financial Highlights
•In 2018,2021, diluted earnings per share from continuing operations were $0.75,$1.31, compared with $0.03$0.60 for 2017.2020. Diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and special items discussed below (or “adjusted diluted earnings per share from continuing operations,” a non-GAAP measure) were $0.81$1.28 for 2018,2021, compared with $0.76$0.97 for 2017.2020.
•Operating profit increased 52.1% to $268.0 million in 2018 was $190.22021 from $176.3 million compared with $176.6 million for 2017. The increase was mainly driven by higher digital subscription revenues, other revenues and digital advertising revenues, partially offset by lower print advertising revenues and higher operating costs.in 2020. Operating profit before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items discussed below (or “adjusted operating profit,” a non-GAAP measure) was $262.6increased 33.8% to $335.4 million and $274.8in 2021 from $250.6 million for 2018 and 2017, respectively.in 2020.
•Total revenues increased 4.4%16.3% to $1.75$2.07 billion in 20182021 from $1.68$1.78 billion in 2017 primarily driven by an increase in digital subscription revenue as well as increases in other revenues and digital advertising revenue, partially offset by a decrease in print advertising revenue and print subscription revenue. Total digital revenues increased to approximately $709 million in 2018 compared with $620 million in 2017. Excluding the impact of the additional week in 2017, estimated total revenues increased 6.2%, driven by the same factors identified above.2020.
Subscription revenues increased 3.4% to $1.04 billion in 2018 compared with $1.01 billion in 2017, primarily due to growth in the number of subscriptions to the Company’s digital-only products. Revenue from the Company’s digital-only subscription products (which include our news product, as well as our Crossword and Cooking products) increased 17.7% compared with 2017, to $400.6 million. Excluding the impact of the additional week in
P. 24 – THE NEW YORK TIMES COMPANY
2017, estimated subscription revenues and digital-only•Total subscription revenues increased 5.3% and 20.2%, respectively, driven by the same factors identified above.
13.9% to $1.36 billion in 2021 from $1.20 billion in 2020. Paid digital-only subscriptions totaled approximately 3,360,000 as of December 30, 2018, a 27.1% increase compared with year-end 2017. News product subscriptions totaled approximately 2,713,0008,005,000 at the end of 2018,2021, a 21.6%net increase of 1,273,000 compared with 2017. Other product subscriptions, which include subscriptions to our Crossword product and Cooking product, totaled approximately 647,000 at the end of 2018,2020. Of the 1,273,000 total net additions, 735,000 came from the Company’s digital news product, while 538,000 came from the Company’s Cooking, Games, Audm and Wirecutter (to which a 56.7% increase compared with 2017.subscription option was launched during the third quarter of 2021) products (“other digital-only products”). Subscribers totaled approximately 7.6 million.
•Total advertising revenues remained flat at $558.3increased 26.8% to $497.5 million in 2018 compared with 2017, reflecting a 6.5% decrease2021 from $392.4 million in print advertising revenues, offset by2020, due to an 8.6% increase in digital advertising revenues. The decrease in print advertising revenues resulted from a continued decline in display advertising, primarily in the luxury and entertainment categories. The increaseof 35.0% in digital advertising revenues primarily reflected increasesand an increase of 15.3% in revenue from both direct-soldprint advertising and creative services, partially offset by a decrease in revenue from programmatic advertising. Print and digital advertising revenues in 2017 also benefited from an extra week in the fiscal year. Excluding the impact of the additional week in 2017, estimated advertising revenues increased 1.7%, driven by the same factors identified above.revenues.
Other revenues increased 36.0% to $147.8 million in 2018 compared with $108.7 million in 2017, largely due to growth in our commercial printing operations, affiliate referral revenue associated with the product review and recommendation website, Wirecutter, and revenue from the rental of five and a half additional floors in our New York headquarters building. Digital other revenues totaled $49.5 million in 2018, an 18.8% increase compared with 2017, driven primarily by affiliate referral revenue associated with Wirecutter. Excluding the impact of the additional week in 2017, estimated other revenues increased 36.7%, driven by the same factors identified above.
•Operating costs increased in 201812.2% to $1.56 billion from $1.49$1.80 billion in 2017, driven by higher marketingexpenses incurred to promote our brand and products and grow our subscriber base, labor and raw material costs related to our commercial printing operations, and costs related to our advertising business, partially offset by lower print production and distribution costs related to our newspaper.2021 from $1.61 billion in 2020. Operating costs before depreciation, amortization, severance and multiemployer pension plan withdrawal costs (or “adjusted operating costs,” a non-GAAP measure) increased in 201813.5% to $1.49 billion from $1.40$1.74 billion in 2017.2021 from $1.53 billion in 2020.
Business EnvironmentImpact of Covid-19 Pandemic
We believe that a number of factors and industry trends have had, and will continueThe global Covid-19 pandemic continues to have an adverse effectwidespread, rapidly evolving, and unpredictable impacts on ourglobal society, economies, financial markets and business and prospects. These include the following:
Competition in our industry
We operate in a highly competitive environment. Our print and digital products compete for subscription and advertising revenue with both traditional and other content providers, as well as search engines and social media platforms. Competition among companies offering online content is intense, and new competitors can quickly emerge. Some of our current and potential competitors may have greater resources than we do, which may allow thempractices. The pandemic, efforts to compete more effectively than us.
Our ability to compete effectively depends on, among other things, our ability to continue delivering high-quality journalism and content that is interesting and relevant to our audience; the popularity, ease of use and performance of our products compared to those of our competitors; the engagement of our current users with our products, and our ability to reach new users; our ability to develop, maintain and monetize our products,contain it and the pricing of our products; our marketing and selling efforts; the visibility of our content and products compared with that of our competitors; our ability to provide marketers with a compelling return on their investments; our ability to attract, retain and motivate talented employees, including journalists and product and technology specialists; our ability to manage and growresulting disruptions have impacted our business in a cost-effective manner;various ways, and our reputationthere is substantial uncertainty as to the nature and brand strength compared with thosedegree of our competitors.the continued effects of the pandemic over time.
Evolving subscription model
Subscription revenue is aFor example, during 2020, we experienced significant sourcegrowth in the number of revenue for us and an increasingly important driver as the overall composition of our revenues has shifted in responsesubscriptions to our “subscription-first” strategydigital news and transformationsother products, which we believe was attributable in part to an increase in traffic given the news environment and as a result of the pandemic. The rate of digital subscription growth moderated in 2021, although it was our industry. The largest portionsecond-best year for net subscription additions, and we do not expect the 2020 growth rate to be indicative of our subscription revenue is currentlyresults for future periods. In addition, revenues from the single-copy and bulk sales of our print newspaper where(which include our international edition and collectively represent less than 5% of our total subscription revenues) were adversely affected as a result of continued increased levels of remote working and reductions in travel.
The worldwide economic slowdown caused by the pandemic led to a significant decline in our advertising revenues in 2020 as advertisers reduced their spending. While we have experienced declining circulation volumesignificantly increased demand for advertising in recent years. This2021, particularly with respect to digital advertising as the broader advertising market recovered, there is dueno assurance that this recovery will be sustained, and developments related to the pandemic such as global supply chain disruptions and labor shortages, among other factors, increased competition
others, could adversely impact our advertising revenues in the future if our advertisers were to reduce their advertising spend as a result. In addition, the pandemic and attempts to contain
THE NEW YORK TIMES COMPANY – P. 2529
from digital media formats (which are often free to users), higher print subscription and single-copy prices and a growing preference among some consumers to receive their news from sources other than a print newspaper.
Advances in technologyit have led to an increased number of methods for the delivery and consumption of news and other content. These developments are also driving changesresulted in the preferencespostponement and expectationscancellation of consumers as they seek more control over how they consume content. Our ability to retainlive events, and grow our digital subscriber base depends on, among other things, our ability to evolve our subscription model, address changing consumer demands and developmentswhile this impact moderated in technology and improve our digital product offering while continuing to deliver high-quality journalism and content that is interesting and relevant to readers. Retention and growth of our digital subscriber base also depends on the engagement of users with our products, including the frequency, breadth and depth of their use.
Advertising market dynamics
We derive substantial revenue from the sale of advertising in our products. In determining whether to buy advertising, our advertisers consider the demand for our products, demographics of our reader base, advertising rates, results observed by advertisers, breadth of advertising offerings and alternative advertising options.
During 2018, the Company, along with others in the industry, continued to experience significant pressure on print advertising revenue. Although print advertising revenue represented a majority of our total advertising revenue in 2018, the overall proportion2021, this continues to decline. The increased popularity of digital media among consumers, particularly as a source for newsadversely affect our revenues from live events and other content, has driven a corresponding shiftrelated services.
In 2020 our expenses in demand from print advertising to digital advertising. However, our digital advertising revenue has not replaced, and may not replace in full, print advertising revenue lostcertain areas decreased as a result of the shift.
The digitalpandemic: the costs to promote our subscription business, which we refer to as media expenses, decreased as we reduced marketing spend in response to a heightened news cycle; print production and distribution costs decreased due to lower demand for print newspaper copies; variable advertising market continuescosts were lower; and travel and entertainment costs decreased as a result of the Covid-19 pandemic. In 2021, while print production and distribution costs continued to undergo significant changes. The increasing number of digitalbe lower due to lower demand for print newspaper copies, media options available, including through social media platformsexpenses were higher than both 2020 and news aggregators, has resulted in audience fragmentation2019, as further described below, and variable advertising costs and travel and entertainment costs increased competition for advertising. Competition from digital content providerswhen compared with 2020, although they remained below 2019 levels. We have invested and platforms, some of which charge lower rates than we do or have greater audience reach and targeting capabilities, and the significant increase in inventory of digital advertising space, have affected and will likelyexpect to continue to affectinvest in our ability to attract and retain advertisers and to maintain or increase our advertising rates. In recent years, large digital platforms, such as Facebook, Google and Amazon, which have greater audience reach and targeting capabilities than we do, have commanded an increased share of the digital display advertising market, and we anticipate that this trend will continue. In addition, digital advertising networks and exchanges, real-time biddingCompany Headquarters and other programmatic buying channelsoffices as well as technological improvements as we transition to hybrid work with employees working both from the office and remotely.
At this time, the full impact that allow advertisers to buy audiences at scale are playing a more significant role in the advertising marketplace and may cause further downward pricing pressure.
The character of our digital advertising business also continues to change, as demand for newer forms of advertising, such as branded content and other customized advertising increases. The margin on revenues from some of these advertising forms is generally lower than the margin on revenues we generate from our print advertising and traditional digital display advertising. Consequently, we may experience further downward pressureCovid-19 pandemic will have on our advertising revenue margins as a greater percentage of advertising revenues comes from these newer forms.
In addition, technologies have beenbusiness, operations and financial results is uncertain. The extent to which the pandemic will continue to be developed that enable consumers to block digital advertising on websites and mobile devices. Advertisements blocked by these technologies are treated as not delivered and any revenue we would otherwise receive from the advertiser for that advertisement is lost.
As the digital advertising market continues to evolve, our ability to compete successfully for advertising budgetsimpact us will depend on among other things, our ability to engagenumerous evolving factors and grow our audiencefuture developments, including the extent of variants and proveresurgences; the valueeffect of our advertisingongoing vaccination and mitigation efforts; the impact of the pandemic on economic conditions and the effectivenesscompanies with which we do business, including our advertisers; governmental, business and other actions; the status of our platforms to advertisers.
Economic conditions
Global, nationaltravel restrictions; and local economic conditions affect various aspects of our business. Our subscription revenue is sensitive to discretionary spending available to subscriberschanges in the markets we serve, and to the extent poor economic conditions lead consumers to reduce spending on discretionary activities, our ability to retain current subscribers and obtain new subscribers could be hindered.
In addition, the level of advertising sales in any period may be affected by advertisers’ decisions to increase or decrease their advertising expendituresconsumer behavior in response to anticipated consumer demandthe pandemic, among many other factors. We will continue to actively monitor the situation and general economic conditions. Changes in spending patterns and priorities, including shifts in marketing strategies and/or budget cuts of key advertisers in response to economic conditions could have an effect on our advertising revenues.
P. 26 – THE NEW YORK TIMES COMPANY
Fixed costs
A significant portion of our expenses are fixed costsmay take further actions that neither increase nor decrease proportionately with revenues. We are limited in our ability to make short-term adjustments to manage some of these costs by certain of our collective bargaining agreements. Employee-related costs, depreciation, amortization and raw materials together accounted for nearly half of our total operating costs in 2018.
For a discussion of these and other factors that could affectalter our business results of operations and financial condition,as may be required by federal, state, local or foreign authorities, or that we determine are appropriate. Please see “Item 1A — Risk Factors.”Factors” for more information.
Our Strategy
We continueare in the middle of a decades-long global shift in consumption from traditional media — such as print newspapers — to operate during adigital, as well as what we believe to be an overall growth in consumer demand for quality news and information. We have designed our strategy to take advantage of both the challenges and opportunities presented by this period of transformation in our industry, which has presented both challengesindustry.
In early 2019, we set a goal of reaching 10 million subscriptions by 2025. We ended 2021 with approximately 7.6 million paid subscribers with approximately 8.8 million subscriptions, and with the acquisition of The Athletic in February 2022, we met this target three years early. Even without The Athletic, we believe we would have reached 10 million subscriptions far sooner than we originally anticipated.
Our latest audience research suggests that there are at least 135 million adults worldwide who are willing to pay for one or more subscriptions to English-language news, sports coverage, puzzles, recipes, expert shopping advice or podcasting. Our current aim is to reach 15 million total subscribers by year-end 2027, up from approximately 7.6 million at the end of 2021. Since many people purchase subscriptions to multiple New York Times products, this new goal shifts the emphasis from counting total subscriptions to focusing on the growth and opportunities for the Company. value of individual subscribers.
We believe that focusing on the following priorities will be keyenable us to become an essential subscription for our strategic efforts.addressable market, put us on track to achieve our 15 million subscriber goal and drive long-term, profitable growth for the Company and our shareholders.
ProvidingProducing the best journalism worth paying for
We believe that The Times’s original, independent and high-quality contentreporting, storytelling and journalistic excellence across topics and formats set us apart from otherothers and is at the heart of what makes our journalism worth paying for. We expect to extend our news organizations,lead by focusing on four major areas — providing expert beat reporting on a broad array of important subjects, covering breaking news, producing signature journalism projects and thatexcelling at ideas-based commentary and criticism.
The impact of our readers are willing to pay for trustworthy, insightfuljournalism and differentiated content.
During 2018,its breadth were evident as The Times again brokecontinued to break stories, and producedproduce investigative reports that sparked global conversations on wide-ranging topics.and help our audience understand a wide range of topics, including the Covid-19 pandemic and its many reverberations, the intersection of race and culture in America, and the varied effects of climate change. Our ground-breaking journalismcoverage continues to be recognized, most notablyincluding in the number of132 Pulitzer prizesPrizes The Times has received — more than any other news organization. In addition,
P. 30 – THE NEW YORK TIMES COMPANY
While general interest news is and will remain our primary value proposition, we have continued to make significant investmentsare building leadership positions in our newsroom, adding journalistic talent across a wide rangehandful of areas that occupy a prominent place in global culture alongside general interest news — from our business coverage to our opinion pages —including sports fandom, puzzle gaming, cooking guidance and investing in new forms of visual and multimedia journalism. Our highly popular news podcast, The Daily, which we launched in 2017, was the most downloaded podcast on Apple’s iTunes in 2018. And during the year, we announced the development of a new TV show called The Weekly that will launch in 2019 and provide a new platform through which to deliver our journalism.
We believe that the continued growth over the last year in subscriptions to our products demonstrates the success of our “subscription-first” strategy and the willingness of our readers to pay for high-quality journalism. As of December 30, 2018, we had approximately 4.3 million total subscriptions to our products, more than at any point in our history.expert shopping guidance.
In 2019,2022, we expectplan to continue to makemaking significant investments in our journalism and remain committed to providing high-quality, trustworthya multimedia report of deep breadth, authority, creativity and differentiated content that we believe sets us apart.excellence, produced with a focus on independence and integrity.
Growing engagement with our audience and strengthening engagement to support subscription growthproducts
We will continue to focus on expandingreaching a large non-paying audience while also creating a subscription experience so good at building valuable daily news and information habits that it draws people into lifelong relationships worth paying for. A central part of this approach will be offering a single, high-value New York Times subscription — or bundle — of interconnected products to our digital subscribers. To attract the widest audience, we offer subscriptions to each of our products on a standalone basis. But we believe that by focusing on the bundle, we are providing the most value to our customers, and in-turn, the best opportunity to monetize the full scale of our platform.
Within news, we have invested in bringing readers back to our site and exposing them to more of our offerings. For example, the innovation in our live briefings has kept users aware of the latest developments across important storylines; our growing suite of email newsletters now reaches the inboxes of more than 15 million global users and plays an increasingly central role in engaging potential subscribers; and our newsletters and news website and mobile app help surface the best recipes, games and product recommendations.
We plan to invest more in content and product development across news and in Games and Cooking; to continue exploring new opportunities for Wirecutter as a subscription product; to develop new audio programming and experiment in audio product; to test the concept of an app for children; and to help The Athletic reach more sports fans and strengthening the engagementgrow its subscriber base. We see all of users by makingthese products as a way for The Times an indispensable partto mean even more in people’s lives, and also to make a relationship with our brand more valuable.
Effectively monetizing our products
We ended 2021 with approximately 7.6 million paid subscribers with approximately 8.8 million subscriptions to our news and other products. Our approximately 1.273 million digital subscription net additions in 2021 were our second-highest annual total and 23% higher than 2019. We also reached significant milestones with our non-news subscription products, Games and Cooking, when each crossed one million subscriptions just before year end, the result of their daily lives. And we continuestrong audience demand and product innovations like the addition of the Spelling Bee word puzzle to communicate the value of independent, high-quality journalism and why it matters.
During 2018, we continued to enhanceour Games product. We also gained efficiencies by applying learnings from our core news product, to improve user experienceincluding customer journey enhancements and engagement,promotional pricing, and took further steps to build direct relationships with users to support continued subscription growth. We also invested in brand marketing initiatives to reinforce the importance of deeply-reported independent journalism and the value of The Times brand.
During the year, we also continued to make enhancementsexpanded subscriptions to our lifestyleother non-news products, and services, including our Crossword and Cooking products and Wirecutter. And we continued our effortsby launching paid subscriptions to grow and engage our audience around the world, investing in, among other things, opportunities to reach more readersWirecutter in the United Kingdom and Australia. In addition, we continued to experiment with reaching new readers on third-party platforms, while remaining focused on building direct relationships with readers on our own platforms.
Looking ahead, we will explore additional opportunities to grow and engage our audience, further innovate our products and invest in brand marketing initiatives, while remaining committed to creating high-quality content that sets The Times apart.
THE NEW YORK TIMES COMPANY – P. 27
Growing our long-term profitability
We are focused on becoming a more effective and efficient organization and have taken and continue to take a numberthird quarter of steps to maximize the long-term profitability of the Company.2021.
In addition to growing our digital subscription revenue, we remain committed to growing ourhigh-margin digital advertising revenue by developing innovativeremains an important part of our business. We believe our journalism attracts valuable audiences and compellingthat we provide a safe and trusted platform for advertisers’ brands. In a recovering market, we continued to innovate advertising offerings that integrate well with the user experience, including solutions that use proprietary first-party data — rather than third-party data — to generate predictive insights and provide value to advertisers.help inform our clients’ advertising strategies while leveraging our audiences in privacy-forward ways, as well as our audio advertising offerings. We believe we have a powerful brand that, because of the quality of our journalism, attracts educated, affluent and influential audiences, and provides a safe and trusted platform for advertisers’ brands. Weexpect each will continue to focusplay critical roles in the growth of our digital advertising business.
Looking ahead, we plan to continue to invest in our journalism and digital product experience, with an increasing emphasis on leveraginggrowing total unique subscribers through a single New York Times bundle of interconnected products. At the same time, we believe we can apply disciplined cost-management to fund continued investment in our brandbusiness and support long-term profitable growth. Given that our investments in developingour journalism and refiningdigital product experience have yielded strong organic subscriber growth, we expect that we’ll be able to improve the overall efficiency of our advertising offerings.
marketing spend for our core products. We are also focused on maximizingbelieve we can continue to maximize the efficiency and profitability of our print products and services, which remainsremain a significant part of our business.
In recentMaking technology and data a bigger propellant of our growth
Achieving our ambition will require products and technology that match the quality of our journalism. Over the past five years, we have taken steps to realign our organizational structure to accelerateinvested substantially in our digital transformation,product experience as well as in the back-end
THE NEW YORK TIMES COMPANY – P. 31
technology and underlying capabilities that allow users to seamlessly move among various devices and products. In 2022, we plan to continue investing in these areas, with a focus on strengthening our data management infrastructure, creating platforms that power our multi-product subscription bundle, and advancing machine learning applications across our business. Over time, we believe we will see further benefits from these investments as they help us better engage, habituate, convert and retain more subscribers.
Fostering a culture that enables our mission and people to thrive
We believe our ability to attract, develop and maximize the contributions of world-class talent, and to create the conditions for our people to do their best work, is vital to the continued success of our mission and business and central to our long-term strategy. As we continue to optimize our product, technology and data systems, and enterprise platforms to improvetransform the speed with whichCompany, we are able to achievefocused on building a more diverse, equitable and inclusive workplace; developing and promoting our goals.
Looking ahead, we will continue to focus on optimizingtalent; providing equitable and competitive compensation and benefits; and supporting the health, safety and well-being of our organizational and cost structure to support long-term profitable growth.employees.
Effectively managing our liquidity and our non-operating costs
We haveThroughout 2021 we continued to strengthen our liquidity position and further de-leverage and de-risk our balance sheet. As of December 30, 2018,26, 2021, the Company had cash, and cash equivalents and marketable securities of approximately $826$1.1 billion and was debt-free. On February 1, 2022, we used approximately $550 million which exceededof this cash to fund the acquisition of The Athletic (see Note 19 of the Notes to the Consolidated Financial Statements for additional information related to this acquisition).
We have paid quarterly dividends on the Class A and Class B Common Stock since late 2013. In February 2022, the Board of Directors approved a quarterly dividend of $0.09 per share, an increase of $0.02 per share from the previous quarter. We currently expect to continue to pay comparable cash dividends in the future, although changes in our total debt and capital lease obligations by approximately $573 million. We believe our cash balance and cash provided by operations, in combination with other sources of cash,dividend program will be sufficient to meetconsidered by our financing needs over the next 12 months.Board of Directors in light of our earnings, capital requirements, financial condition and other factors considered relevant.
In March 2009, we entered into an agreementFebruary 2022, the Board of Directors approved a $150.0 million Class A stock repurchase program that replaced the previous program, which was approved in 2015. The new authorization provides that Class A shares may be purchased from time to sell and simultaneously lease back the Condo Interest in our headquarters building. The sale price for the Condo Interest was $225.0 million less transaction costs, for net proceeds of approximately $211 million.time as market conditions warrant, through open market purchases, privately negotiated transactions or other means, including Rule 10b5-1 trading plans. We have an option, exercisable in the fourth quarter of 2019,expect to repurchase shares primarily to offset the Condo Interest for $250.0 million,impact of dilution from our equity compensation program, but subject to market conditions and other factors, we have provided notice of our intentmay also make opportunistic repurchases to exercisereduce share count. There is no expiration date with respect to this option. We believe exercising this option is in the best interest of the Company given that the market value of the Condo Interest exceeds the exercise price.authorization.
In addition, we remain focused on managing our pension plan obligations. Our qualified pension plans were underfunded (meaning the present value of future benefits obligations exceeded the fair value of plan assets) as of December 30, 2018, by approximately $81 million, compared with approximately $69 million as of December 31, 2017. We made contributions of approximately $8 million to certain qualified pension plans in 2018, compared with approximately $128 million, including discretionary contributions of $120 million, in 2017. We expect contributions made in 2019 to satisfy minimum funding requirements to total approximately $9 million.
We have taken steps over the last several years to reduce the size and volatility of our pension obligations, including freezing accruals under all but one of our qualified defined benefit pension plans, which cover both our non-union employees and those covered by certain collective bargaining agreements, and making immediate pension benefits offers in the form of lump-sum payments to certain former employees.employees and transferring certain future benefit obligations and administrative costs to insurers. During 2017,2020, we entered into agreementsan agreement to transfer certain future benefit obligations and administrative costs to insurers,an insurer, which allowed us to reduce our overall qualified pension plan obligations by approximately $263$236 million. See Note 109 of the Notes to the Consolidated Financial Statements for additional information on these actions.
As of December 26, 2021, our qualified pension plans had plan assets that were approximately $74 million above the present value of future benefits obligations, compared with a surplus of approximately $36 million as of December 27, 2020. We made contributions of approximately $9 million and $10 million to certain qualified pension plans in 2021 and 2020, respectively. We expect to make contributions in 2022 to satisfy minimum funding requirements of approximately $10 million. We will continue to look for ways to reduce the size and volatility of our pension obligations.
While we have made significant progress in our liability-driven investment strategy to reduce the funding volatility of our qualified pension plans, the size of our pension plan obligations relative to the size of our current operations will continue to have a significantan impact on our reported financial results. We expect to continue to experience volatility in our retirement-related costs, includingparticularly due to the impact of changing discount rates and mortality assumptions on our unfunded, non-qualified pension multiemployer pensionplans and retiree medical costs.
We may also incur additional withdrawal obligations due to the poor funded status of several of the multiemployer plans in which we participate.
P. 2832 – THE NEW YORK TIMES COMPANY
RESULTS OF OPERATIONS
Overview
Fiscal years 20182021, 2020 and 20162019 each comprised 52weeks and fiscal year 2017 comprised 53 weeks. The following table presents our consolidated financial results:
|
| | | | | | | | | | | | | | | | | | |
| | | Years Ended | | % Change |
| (In thousands) | | December 30,
2018 |
| | December 31,
2017 |
| | December 25,
2016 |
| | 2018 vs. 2017 |
| | 2017 vs. 2016 |
|
| | | (52 weeks) | | (53 weeks) | | (52 weeks) | | | | |
| Revenues | | | | | | | | | | |
| Subscription | | $ | 1,042,571 |
| | $ | 1,008,431 |
| | $ | 880,543 |
| | 3.4 |
| | 14.5 |
|
| Advertising | | 558,253 |
| | 558,513 |
| | 580,732 |
| | * |
| | (3.8 | ) |
| Other | | 147,774 |
| | 108,695 |
| | 94,067 |
| | 36.0 |
| | 15.6 |
|
| Total revenues | | 1,748,598 |
| | 1,675,639 |
| | 1,555,342 |
| | 4.4 |
| | 7.7 |
|
| Operating costs | | | | | | | | | | |
| Production costs: | | | | | | | | | | |
| Wages and benefits | | 380,678 |
| | 363,686 |
| | 364,302 |
| | 4.7 |
| | (0.2 | ) |
| Raw materials | | 76,542 |
| | 66,304 |
| | 72,325 |
| | 15.4 |
| | (8.3 | ) |
| Other production costs | | 196,956 |
| | 186,352 |
| | 192,728 |
| | 5.7 |
| | (3.3 | ) |
| Total production costs | | 654,176 |
| | 616,342 |
| | 629,355 |
| | 6.1 |
| | (2.1 | ) |
| Selling, general and administrative costs | | 845,591 |
| | 815,065 |
| | 728,338 |
| | 3.7 |
| | 11.9 |
|
| Depreciation and amortization | | 59,011 |
| | 61,871 |
| | 61,723 |
| | (4.6 | ) | | 0.2 |
|
Total operating costs (1) | | 1,558,778 |
| | 1,493,278 |
| | 1,419,416 |
| | 4.4 |
| | 5.2 |
|
| Headquarters redesign and consolidation | | 4,504 |
| | 10,090 |
| | — |
| | (55.4 | ) | | * |
|
| Restructuring charge | | — |
| | — |
| | 16,518 |
| | * |
| | * |
|
Multiemployer pension and other contractual (gain)/loss (1) | | (4,851 | ) | | (4,320 | ) | | 6,730 |
| | 12.3 |
| | * |
|
Operating profit (1) | | 190,167 |
| | 176,591 |
| | 112,678 |
| | 7.7 |
| | 56.7 |
|
Other components of net periodic benefit costs (1) | | 8,274 |
| | 64,225 |
| | 11,074 |
| | (87.1 | ) | | * |
|
| Gain/(loss) from joint ventures | | 10,764 |
| | 18,641 |
| | (36,273 | ) | | (42.3 | ) | | * |
|
| Interest expense and other, net | | 16,566 |
| | 19,783 |
| | 34,805 |
| | (16.3 | ) | | (43.2 | ) |
| Income from continuing operations before income taxes | | 176,091 |
| | 111,224 |
| | 30,526 |
| | 58.3 |
| | * |
|
| Income tax expense | | 48,631 |
| | 103,956 |
| | 4,421 |
| | (53.2 | ) | | * |
|
| Income from continuing operations | | 127,460 |
| | 7,268 |
| | 26,105 |
| | * |
| | (72.2 | ) |
| Loss from discontinued operations, net of income taxes | | — |
| | (431 | ) | | (2,273 | ) | | * |
| | (81.0 | ) |
| Net income | | 127,460 |
| | 6,837 |
| | 23,832 |
| | * |
| | (71.3 | ) |
| Net (income)/loss attributable to the noncontrolling interest | | (1,776 | ) | | (2,541 | ) | | 5,236 |
| | (30.1 | ) | | * |
|
| Net income attributable to The New York Times Company common stockholders | | $ | 125,684 |
| | $ | 4,296 |
| | $ | 29,068 |
| | * |
| | (85.2 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Years Ended | | % Change |
| (In thousands) | | December 26,
2021 | | December 27,
2020 | | December 29,
2019 | | 2021 vs. 2020 | | 2021 vs. 2019 |
| Revenues | | | | | | | | | | |
| Digital | | $ | 773,882 | | | $ | 598,280 | | | $ | 460,452 | | | 29.4 | | | 68.1 | |
| Print | | 588,233 | | | 597,088 | | | 623,399 | | | (1.5) | | | (5.6) | |
| Subscription revenues | | 1,362,115 | | | 1,195,368 | | | 1,083,851 | | | 13.9 | | | 25.7 | |
| Digital | | 308,616 | | | 228,594 | | | 260,454 | | | 35.0 | | | 18.5 | |
| Print | | 188,920 | | | 163,826 | | | 270,224 | | | 15.3 | | | (30.1) | |
| Advertising revenues | | 497,536 | | | 392,420 | | | 530,678 | | | 26.8 | | | (6.2) | |
| Other | | 215,226 | | | 195,851 | | | 197,655 | | | 9.9 | | | 8.9 | |
| Total revenues | | 2,074,877 | | | 1,783,639 | | | 1,812,184 | | | 16.3 | | | 14.5 | |
| Operating costs | | | | | | | | | | |
| Cost of revenue (excluding depreciation and amortization) | | 1,039,568 | | | 959,312 | | | 988,159 | | | 8.4 | | | 5.2 | |
| Sales and marketing | | 294,947 | | | 228,993 | | | 272,626 | | | 28.8 | | | 8.2 | |
| Product development | | 160,871 | | | 133,384 | | | 106,415 | | | 20.6 | | | 51.2 | |
| General and administrative | | 250,124 | | | 223,558 | | | 206,778 | | | 11.9 | | | 21.0 | |
| Depreciation and amortization | | 57,502 | | | 62,136 | | | 60,661 | | | (7.5) | | | (5.2) | |
Total operating costs | | 1,803,012 | | | 1,607,383 | | | 1,634,639 | | | 12.2 | | | 10.3 | |
| | | | | | | | | | |
| Lease termination charge | | 3,831 | | | — | | | — | | | * | | * |
| Restructuring charge | | — | | | — | | | 4,008 | | | — | | | * |
| Gain from pension liability adjustment | | — | | | — | | | (2,045) | | | — | | | * |
| | | | | | | | | | |
| | | | | | | | | | |
| Operating profit | | 268,034 | | | 176,256 | | | 175,582 | | | 52.1 | | | 52.7 | |
| Other components of net periodic benefit costs | | 10,478 | | | 89,154 | | | 7,302 | | | (88.2) | | | 43.5 | |
| Gain from joint ventures | | — | | | 5,000 | | | — | | | * | | — | |
| Interest income/(expense) and other, net | | 32,945 | | | 23,330 | | | (3,820) | | | 41.2 | | | * |
| Income from continuing operations before income taxes | | 290,501 | | | 115,432 | | | 164,460 | | | * | | 76.6 | |
| Income tax expense | | 70,530 | | | 14,595 | | | 24,494 | | | * | | * |
| | | | | | | | | | |
| | | | | | | | | | |
| Net income | | 219,971 | | | 100,837 | | | 139,966 | | | * | | 57.2 | |
| Net income attributable to the noncontrolling interest | | — | | | (734) | | | — | | | * | | — | |
| Net income attributable to The New York Times Company common stockholders | | $ | 219,971 | | | $ | 100,103 | | | $ | 139,966 | | | * | | 57.2 | |
* Represents a change equal to or in excess of 100% or one that is not meaningful.
| |
(1)
| As a result of the adoption of ASU 2017-07 during the first quarter of 2018, the service cost component of net periodic benefit costs/(income) from our pension and other postretirement benefits plans will continue to be presented within operating costs, while the other components of net periodic benefits costs/(income) such as interest cost, amortization of prior service credit and gains or losses from our pension and other postretirement benefits plans will be separately presented outside of “Operating costs” in the new line item “Other components of net periodic benefits costs/(income)”. The Company has recast the Consolidated Statement of Operations for the respective prior periods presented to conform with the current period presentation. Costs associated with multiemployer pension plans were not addressed in ASU 2017-07, and continue to be included in operating costs, except as separately disclosed. |
THE NEW YORK TIMES COMPANY – P. 2933
Revenues
Subscription, advertising and other revenues were as follows:
| | | | | Years Ended | | % Change | | Years Ended | | % Change |
| (In thousands) | | December 30,
2018 |
| | December 31,
2017 |
| | December 25,
2016 |
| | 2018 vs. 2017 |
| | 2017 vs. 2016 |
| (In thousands) | | December 26,
2021 | | December 27,
2020 | | December 29,
2019 | | 2021 vs. 2020 | | 2021 vs. 2019 |
| | | (52 weeks) | | (53 weeks) | | (52 weeks) | | | | | |
| Subscription | | $ | 1,042,571 |
| | $ | 1,008,431 |
| | $ | 880,543 |
| | 3.4 |
| | 14.5 |
| Subscription | | $ | 1,362,115 | | | $ | 1,195,368 | | | $ | 1,083,851 | | | 13.9 | | | 25.7 | |
| Advertising | | 558,253 |
| | 558,513 |
| | 580,732 |
| | — |
| | (3.8 | ) | Advertising | | 497,536 | | | 392,420 | | | 530,678 | | | 26.8 | | | (6.2) | |
| Other | | 147,774 |
| | 108,695 |
| | 94,067 |
| | 36.0 |
| | 15.6 |
| Other | | 215,226 | | | 195,851 | | | 197,655 | | | 9.9 | | | 8.9 | |
| Total | | $ | 1,748,598 |
| | $ | 1,675,639 |
| | $ | 1,555,342 |
| | 4.4 |
| | 7.7 |
| Total | | $ | 2,074,877 | | | $ | 1,783,639 | | | $ | 1,812,184 | | | 16.3 | | | 14.5 | |
Subscription Revenues
Subscription revenues consist of revenues from subscriptions to our printdigital and digitalprint products (which include our news product, as well as our Crossword and Cookingother digital-only products), and single-copy and bulk sales of our print products (which represent less than 10%5% of these revenues). Our Cooking product first launched as a paid digital product in the third quarter of 2017. Subscription revenues are based on both the number of copies of the printed newspaper sold and digital-only subscriptions, and the rates charged to the respective customers.
The following table summarizes digital-onlydigital and print subscription revenues for the years ended December 30, 2018,26, 2021, December 31, 2017,27, 2020 and December 25, 2016:29, 2019:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Years Ended | | % Change |
| (In thousands) | | December 26, 2021 | | December 27, 2020 | | December 29, 2019 | | 2021 vs. 2020 | | 2021 vs. 2019 |
| Digital-only subscription revenues: | | | | | | | | | | |
News product subscription revenues(1) | | $ | 693,994 | | | $ | 543,578 | | | $ | 426,125 | | | 27.7 | | | 62.9 | |
Other product subscription revenues(2) | | 79,888 | | | 54,702 | | | 34,327 | | | 46.0 | | | 132.7 | |
| Subtotal digital-only subscriptions | | 773,882 | | | 598,280 | | | 460,452 | | | 29.4 | | | 68.1 | |
| Print subscription revenues | | | | | | | | | | |
Domestic home delivery subscription revenues(3) | | 529,039 | | | 528,970 | | | 524,543 | | | — | | | 0.9 | |
Single-copy, NYT International and other subscription revenues(4) | | 59,194 | | | 68,118 | | | 98,856 | | | (13.1) | | | (40.1) | |
| Subtotal print subscription revenues | | 588,233 | | | 597,088 | | | 623,399 | | | (1.5) | | | (5.6) | |
| Total subscription revenues | | $ | 1,362,115 | | | $ | 1,195,368 | | | $ | 1,083,851 | | | 13.9 | | | 25.7 | |
|
| | | | | | | | | | | | | | | | |
| | | Years Ended | | % Change |
| (In thousands) | | December 30, 2018 |
| | December 31, 2017 |
| | December 25, 2016 |
| | 2018 vs. 2017 | | 2017 vs. 2016 |
| | | (52 weeks) | | (53 weeks) | | (52 weeks) | | | | |
| Digital-only subscription revenues: | | | | | | | |
| |
|
News product subscription revenues(1) | | $ | 378,484 |
| | $ | 325,956 |
| | $ | 223,459 |
| | 16.1 | | 45.9 |
Other product subscription revenues(2) | | 22,136 |
| | 14,387 |
| | 9,369 |
| | 53.9 | | 53.6 |
| Total digital-only subscription revenues | | $ | 400,620 |
| | $ | 340,343 |
| | $ | 232,828 |
| | 17.7 | | 46.2 |
(1) Includes revenues from subscriptions to the Company’s news product. News product subscription packages that include access to the Company’s CrosswordGames, Cooking and CookingWirecutter products are also included in this category.
(2) Includes revenues from standalone subscriptions to the Company’s Crosswordother digital-only products. During the third quarter of 2021, the Company launched a Wirecutter subscription option.
(3) Includes access to digital news, Games, Cooking and CookingWirecutter products.
(4) NYT International is the international edition of our print newspaper.
P. 34 – THE NEW YORK TIMES COMPANY
The following table summarizes digital-onlydigital and print subscriptions as of December 30, 2018, December 31, 2017,26, 2021, and December 25, 2016:27, 2020:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | As of | | % Change |
| (In thousands) | | December 26, 2021 | | December 27, 2020 | | | | 2021 vs. 2020 | | |
| Digital-only subscriptions: | | | | | | | | | | |
News product subscriptions(1)(2) | | 5,867 | | | 5,132 | | | | | 14.3 | | | |
Other product subscriptions(3) | | 2,138 | | | 1,600 | | | | | 33.6 | | | |
| Subtotal digital-only subscriptions | | 8,005 | | | 6,732 | | | | | 18.9 | | | |
| Print subscriptions | | 784 | | | 833 | | | | | (5.9) | | | |
| Total subscriptions | | 8,789 | | | 7,565 | | | | | 16.2 | | | |
|
| | | | | | | | | | | | | |
| | | As of | | % Change |
| (In thousands) | | December 30, 2018 |
| | December 31, 2017 |
| | December 25, 2016 |
| | 2018 vs. 2017 | | 2017 vs. 2016 |
| | | (52 weeks) | | (53 weeks) | | (52 weeks) | | | | |
| Digital-only subscriptions: | | | | | | | | | | |
News product subscriptions(1) | | 2,713 |
| | 2,231 |
| | 1,618 |
| | 21.6 | | 37.9 |
Other product subscriptions(2) | | 647 |
| | 413 |
| | 247 |
| | 56.7 | | 67.2 |
| Total digital-only subscriptions | | 3,360 |
| | 2,644 |
| | 1,865 |
| | 27.1 | | 41.8 |
(1)Includes subscriptions to the Company’s news product. News product subscription packages that include access to the Company’s CrosswordGames, Cooking and CookingWirecutter products are also included in this category.
(2) The number of paid digital-only subscriptions includes estimated group corporate and group education subscriptions (which collectively represent approximately 5% of total paid digital subscriptions to our news products in 2021). We calculate this estimate using the value of the relevant contract and a discounted subscription rate. The actual number of users who have access to our products through group subscriptions is substantially higher. In the fourth quarter of 2021, we updated the discounted subscription rate used in order to bring it in line with our current digital subscription pricing model. For comparison purposes, we recast news product subscriptions in prior periods using the updated methodology, and this resulted in approximately 42,000 additional group corporate and group education subscriptions in the fourth quarter of 2020. There is no impact to subscription revenue as a result of this change.
(3)Includes standalone subscriptions to the Company’s Crosswordother digital-only products.
THE NEW YORK TIMES COMPANY – P. 35
We believe that the significant growth over the last several years in subscriptions to The Times’s products demonstrates the success of our “subscription-first” strategy and Cookingthe willingness of our readers to pay for high-quality journalism. The following charts illustrate the acceleration in net digital-only subscription additions and corresponding subscription revenues, as well as the relative stability of our print domestic home delivery subscription products since the launch of the digital pay model in 2011.
(1) Amounts may not add due to rounding.
(2) Includes access to some of the Company’s digital products.
(3) Print Other includes single-copy, NYT International and other subscription revenues.
Note: Revenues for 2012 and 2017 include the impact of an additional week.
P. 3036 – THE NEW YORK TIMES COMPANY
20182021 Compared with 20172020
Subscription revenues increased 3.4%13.9% in 20182021 compared with 2017.2020. The increase was primarily due to an increase in digital subscription revenue driven by significantyear-over-year growth of 18.9% in the number of subscriptions to the Company’s digital-only products, as well as digital subscriptions graduating to higher prices from introductory promotional pricing. The increase in digital-only subscription revenue was partially offset by a decrease in print subscription revenue attributable to lower single-copy and bulk sales, primarily as a result of increased levels of remote working and reductions in travel due to the Covid-19 pandemic as well as ongoing secular trends. Print domestic home delivery revenues were flat as decreases in the number of subscriptions were offset by price increases.
Paid digital-only subscriptions totaled approximately 8,005,000 at the end of 2021, a net increase of 1,273,000 subscriptions compared with the end of 2020. The year-over-year growth in our digital subscriptions is attributable in part to initiatives we have undertaken to drive subscriptions, including adjustments to our access model.
Digital-only news product subscriptions totaled approximately 5,867,000 at the end of 2021, a net increase of 735,000 subscriptions compared with the end of 2020. Other digital-only product subscriptions totaled approximately 2,138,000 at the end of 2021, a net increase of 538,000 subscriptions compared with the end of 2020.
Print domestic home delivery subscriptions totaled approximately 784,000 at the end of 2021, a net decrease of 49,000 subscriptions compared with the end of 2020. The year-over-year decrease is a result of secular declines.
2021 Compared with 2019
Subscription revenues increased 25.7% in 2021 compared with 2019. The increase was primarily due to growth in the number of subscriptions to the Company’s digital-only subscriptions, which led to digital-only subscription revenue growth of approximately 18%,products. These increases were partially offset by a decline36.8% and 53.7% decrease in print subscription revenue of approximately 4%. Print subscription revenue decreased due to a decline of approximately 6% in home-delivery subscriptions and a decrease of approximately 7% infrom single-copy and bulk sales revenue, partially offset by an increaseand international edition of approximately 6%our newspaper, respectively, as a result of increased levels of remote working and reductions in home-delivery prices for The New York Times newspaper. Excludingtravel due to the impact of the additional week in 2017, estimated subscription revenues and digital-only subscription revenues increased 5.3% and 20.2%, respectively, driven by the same factors identified above.
2017 Compared with 2016
Subscription revenues increased 14.5% in 2017 compared with 2016. The increase was primarily driven by significant growth in the number of digital-only subscriptions, which led to digital-only subscription revenue growth of approximately 46%,Covid-19 pandemic as well as an increase of approximately 7% in home-delivery prices for The New York Times newspaper, which more than offset a decline of approximately 1% in home-delivery subscriptions. Excluding the impact of the additional week in 2017, estimated subscription revenues and digital-only subscription revenues increased 12.4% and 43.1%, respectively, driven by the same factors identified above.secular trends.
Advertising Revenues
Advertising revenues arerevenue is principally from advertisers (such as technology, financial and luxury goods companies) promoting products, services or brands on digital platforms in the form of display ads, audio and video ads, and in print, in the form of column-inch ads.
Advertising revenue is primarily derived from the saleofferings sold directly to marketers by our advertising sales teams. A smaller proportion of our total advertising products and services on our print and digital platforms. Theserevenues is generated through programmatic auctions run by third-party ad exchanges.
Advertising revenues are primarily determined by the volume (e.g., impressions or column inches), rate and mix of advertisements. DisplayDigital advertising includes our core digital advertising business and other digital advertising. Our core digital advertising business includes direct-sold website, mobile application, podcast, email and video advertisements. Direct-sold display advertising, a component of core digital advertising, includes offerings on websites and mobile applications sold directly to marketers by our advertising sales teams. Our digital advertising offerings include solutions that use proprietary first-party data — rather than third-party data — to generate predictive insights and help inform our clients’ advertising strategies while leveraging our audiences in privacy-forward ways. Other digital advertising includes advertising revenues generated by open-market programmatic advertising, creative services fees associated with branded content, advertisements appearing on our Wirecutter product and classified advertising. Print advertising includes revenue is principally from advertisers promoting products, services or brands in print in the form of column-inch ads and on our digital platforms in the form of banners, video, rich media and other interactive ads. Display advertising also includes branded content on The Times’s platforms. Other advertising primarily represents, for our print products, classified advertising, revenue, including line-ads sold in the major categories of real estate, help wanted, automotive and other as well as revenue from preprinted advertising, also known as free-standingfreestanding inserts. Digital other advertising revenue primarily includes creative services fees associated with, among other things, our digital marketing agencies and our branded content studio; advertising revenue from our podcasts; and advertising revenue generated by Wirecutter, our product review and recommendation website.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Years Ended | | | | | | |
| | | December 30, 2018 | | December 31, 2017 | | % Change |
| | | (52 weeks) | | (53 weeks) | | | | | | |
| (In thousands) | | Print | | Digital | | Total | | Print | | Digital | | Total | | Print | | Digital | | Total |
| Display | | $ | 269,160 |
| | $ | 202,038 |
| | $ | 471,198 |
| | $ | 285,679 |
| | $ | 198,658 |
| | $ | 484,337 |
| | (5.8 | )% | | 1.7 | % | | (2.7 | )% |
| Other | | 30,220 |
| | 56,835 |
| | 87,055 |
| | 34,543 |
| | 39,633 |
| | 74,176 |
| | (12.5 | )% | | 43.4 | % | | 17.4 | % |
| Total advertising | | $ | 299,380 |
| | $ | 258,873 |
| | $ | 558,253 |
| | $ | 320,222 |
| | $ | 238,291 |
| | $ | 558,513 |
| | (6.5 | )% | | 8.6 | % | | — | % |
Print advertising revenues, which represented 54% of total advertising revenues in 2018, declined 6.5% to $299.4 million in 2018 compared with $320.2 million in 2017. The decrease was driven by a continued decline in display advertising revenue, primarily in the luxury and entertainment categories, as well as a decline in classified advertising revenue, primarily in the real estate category. Excluding the impact of the additional week in 2017, estimated print advertising revenues declined 5.3%, driven by the same factors identified above.
Digital advertising revenues, which represented 46% of total advertising revenues in 2018, increased 8.6% to $258.9 million in 2018 compared with $238.3 million in 2017. The increase primarily reflected increases in revenue from both direct-sold advertising and creative services, partially offset by a decrease in revenue from programmatic advertising. Excluding the impact of the additional week in 2017, estimated digital advertising revenues increased 11.3%, driven by the same factors identified above.
THE NEW YORK TIMES COMPANY – P. 3137
2017The following table summarizes digital and print advertising revenues for the years ended December 26, 2021, December 27, 2020 and December 29, 2019:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Years Ended | | % Change |
| (In thousands) | | December 26, 2021 | | December 27, 2020 | | December 29, 2019 | | 2021 vs. 2020 | | 2021 vs. 2019 |
| Advertising revenues | | | | | | | | | | |
| Digital | | $ | 308,616 | | | $ | 228,594 | | | $ | 260,454 | | | 35.0 | % | | 18.5 | % |
| Print | | 188,920 | | | 163,826 | | | 270,224 | | | 15.3 | % | | (30.1) | % |
| Total advertising | | $ | 497,536 | | | $ | 392,420 | | | $ | 530,678 | | | 26.8 | % | | (6.2) | % |
2021 Compared with
20162020 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Years Ended | | | | | | |
| | | December 31, 2017 | | December 25, 2016 | | % Change |
| | | (53 weeks) | | (52 weeks) | | | | | | |
| (In thousands) | | Print | | Digital | | Total | | Print | | Digital | | Total | | Print | | Digital | | Total |
| Display | | $ | 285,679 |
| | $ | 198,658 |
| | $ | 484,337 |
| | $ | 335,652 |
| | $ | 181,545 |
| | $ | 517,197 |
| | (14.9 | )% | | 9.4 | % | | (6.4 | )% |
| Other | | 34,543 |
| | 39,633 |
| | 74,176 |
| | 36,328 |
| | 27,207 |
| | 63,535 |
| | (4.9 | )% | | 45.7 | % | | 16.7 | % |
| Total advertising | | $ | 320,222 |
| | $ | 238,291 |
| | $ | 558,513 |
| | $ | 371,980 |
| | $ | 208,752 |
| | $ | 580,732 |
| | (13.9 | )% | | 14.2 | % | | (3.8 | )% |
Print advertising revenues, which represented 57%38.0% of total advertising revenues in 2017, declined 13.9%2021, increased $25.1 million, or 15.3%, to $320.2$188.9 million in 20172021 compared with $372.0$163.8 million in 2016.2020. The decreaseincrease was driven by a continued decline in display advertising revenue, primarily in the luxury travel and real estate categories. Excluding the impact of the additional week in 2017, estimated print advertising revenues declined 15.0%, driven by the same factors identified above.
Digital advertising revenues, which represented 43% of total advertising revenues in 2017, increased 14.2% to $238.3 million in 2017 compared with $208.8 million in 2016. The increase primarily reflected increases in display advertising revenue from mobile advertisingmedia categories, and branded content, as well as an increase in other advertising revenue, primarily associated with growth in creative services fees. This was partially offset by a continued declinedeclines in traditional website display advertising. Excluding the impact of the additional week in 2017, estimated digitalfinancial services category, as well as secular trends.
2021 Compared with 2019
Digital advertising revenues increased 11.5%$48.2 million, or 18.5%, to $308.6 million in 2021 compared with $260.5 million in 2019. The increase was primarily driven by higher direct-sold advertising, including traditional display and podcasts. Core digital advertising revenue increased $71.7 million due to growth in direct-sold display advertising revenue and podcast advertising revenues. Direct-sold display impressions increased 8%, while the same factors identified above.average rate grew 23%. Other digital advertising revenue decreased $23.5 million, primarily due to the closure of our HelloSociety and Fake Love digital marketing agencies.
Print advertising revenues declined $81.3 million, or 30.1%, to $188.9 million in 2021 compared with $270.2 million in 2019. The decline reflected reduced spending on print advertising by businesses negatively impacted by the Covid-19 pandemic as well as continued secular trends.
P. 38 – THE NEW YORK TIMES COMPANY
Other Revenues
Other revenues primarily consist of revenues from licensing, Wirecutter affiliate referrals, building rental revenue, commercial printing, NYT Live (ourthe leasing of floors in the Company Headquarters, retail commerce, television and film, our student subscription sponsorship program and our live events business) and retail commerce.business. Digital other revenues, consistswhich consist primarily of digital archive licensing andWirecutter affiliate referral revenue.revenue, digital licensing revenue, and television and film revenue, totaled $111.4 million, $101.0 million and $79.8 million in 2021, 2020 and 2019, respectively. Building rental revenue consists of revenue from the leaseleasing of floors in our New York headquarters building,Company Headquarters, which totaled $23.3$22.9 million, $16.7$28.5 million and $17.1$30.6 million in 2018, 20172021, 2020 and 2016,2019, respectively.
20182021 Compared with 20172020
Other revenues increased 36.0%9.9% in 20182021 compared with 2017 largely2020, primarily as a result of higher Wirecutter affiliate referral revenues mainly due to growthWirecutter’s presence on our core news website (NYTimes.com) homepage resulting in increased views, higher licensing revenue as well as higher commercial printing revenue resulting from our beginning to print several News Corporation publications in our commercialCollege Point, N.Y., printing operations, affiliate referral revenue associated with our product review and recommendation website, Wirecutter, and higher rental revenuedistribution facility in mid-2021, partially offset by volume declines from the leaseother publications. These increases were partially offset by lower television series revenues as a result of additional spacefewer episodes in our New York headquarters building. Digital other revenues totaled $49.5 million in 2018, an 18.8% increase2021 compared with 2017, driven primarily by affiliate referral revenue associated with Wirecutter. Excluding the impact of the additional week in 2017, estimated other revenues increased 36.7%, driven by the same factors identified above.to 2020.
20172021 Compared with 20162019
Other revenues increased 15.6%8.9% in 20172021 compared with 2016 largely2019, primarily as a result of higher Wirecutter affiliate referral revenues mainly due to affiliate referralWirecutter’s presence on our core news website (NYTimes.com) homepage resulting in increased views and licensing revenue associated with Wirecutter,primarily related to Facebook News, to which the Company acquiredlicenses select content for access by its users, partially offset by lower revenues from our television series as a result of fewer episodes in October 2016. Digital other revenues totaled $41.7 million in 2017, a 83.7% increase2021 compared with 2016, driven primarily by affiliate referral revenue associated with Wirecutter. Excluding the impact of the additional week in 2017, estimated other revenues increased 14.9%, drivento 2019 and live events, which were impacted by the same factor identified above.Covid-19 pandemic.
P. 32 – THE NEW YORK TIMES COMPANY – P. 39
Operating Costs
Operating costs were as follows:
|
| | | | | | | | | | | | | | | | | | |
| | | Years Ended | | % Change |
| (In thousands) | | December 30,
2018 |
| | December 31,
2017 |
| | December 25,
2016 |
| | 2018 vs. 2017 |
| | 2017 vs. 2016 |
|
| | | (52 weeks) | | (53 weeks) | | (52 weeks) | | | | |
| Production costs: | | | | | | | | | | |
| Wages and benefits | | $ | 380,678 |
| | $ | 363,686 |
| | $ | 364,302 |
| | 4.7 |
| | (0.2 | ) |
| Raw materials | | 76,542 |
| | 66,304 |
| | 72,325 |
| | 15.4 |
| | (8.3 | ) |
| Other production costs | | 196,956 |
| | 186,352 |
| | 192,728 |
| | 5.7 |
| | (3.3 | ) |
| Total production costs | | 654,176 |
| | 616,342 |
| | 629,355 |
| | 6.1 |
| | (2.1 | ) |
| Selling, general and administrative costs | | 845,591 |
| | 815,065 |
| | 728,338 |
| | 3.7 |
| | 11.9 |
|
| Depreciation and amortization | | 59,011 |
| | 61,871 |
| | 61,723 |
| | (4.6 | ) | | 0.2 |
|
| Total operating costs | | $ | 1,558,778 |
| | $ | 1,493,278 |
| | $ | 1,419,416 |
| | 4.4 |
| | 5.2 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Years Ended | | % Change |
| (In thousands) | | December 26,
2021 | | December 27,
2020 | | December 29,
2019 | | 2021 vs. 2020 | | 2021 vs. 2019 |
| Operating costs: | | | | | | | | | | |
| Cost of revenue (excluding depreciation and amortization) | | $ | 1,039,568 | | | $ | 959,312 | | | $ | 988,159 | | | 8.4 | | | 5.2 | |
| Sales and marketing | | 294,947 | | | 228,993 | | | 272,626 | | | 28.8 | | | 8.2 | |
| Product development | | 160,871 | | | 133,384 | | | 106,415 | | | 20.6 | | | 51.2 | |
| General and administrative | | 250,124 | | | 223,558 | | | 206,778 | | | 11.9 | | | 21.0 | |
| Depreciation and amortization | | 57,502 | | | 62,136 | | | 60,661 | | | (7.5) | | | (5.2) | |
| Total operating costs | | $ | 1,803,012 | | | $ | 1,607,383 | | | $ | 1,634,639 | | | 12.2 | | | 10.3 | |
The components of operating costs as a percentage of total operating costs were as follows:
| | | | | Years Ended | | | | | | | | | | | | | | | | | |
| | | December 30,
2018 |
| | December 31,
2017 |
| | December 25,
2016 |
| | Years Ended |
| | | (52 weeks) | | (53 weeks) | | (52 weeks) | | | December 26,
2021 | | December 27,
2020 | | December 29,
2019 |
| Components of operating costs as a percentage of total operating costs | | | | | | | Components of operating costs as a percentage of total operating costs | |
| Wages and benefits | | 44 | % | | 46 | % | | 45 | % | |
| Raw materials | | 5 | % | | 4 | % | | 5 | % | |
| Other operating costs | | 47 | % | | 46 | % | | 46 | % | |
| Cost of revenue (excluding depreciation and amortization) | | Cost of revenue (excluding depreciation and amortization) | | 58 | % | | 60 | % | | 60 | % |
| Sales and marketing | | Sales and marketing | | 16 | % | | 14 | % | | 17 | % |
| Product development | | Product development | | 9 | % | | 8 | % | | 7 | % |
| General and administrative | | General and administrative | | 14 | % | | 14 | % | | 13 | % |
| Depreciation and amortization | | 4 | % | | 4 | % | | 4 | % | Depreciation and amortization | | 3 | % | | 4 | % | | 3 | % |
| Total | | 100 | % | | 100 | % | | 100 | % | Total | | 100 | % | | 100 | % | | 100 | % |
The components of operating costs as a percentage of total revenues were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | Years Ended |
| | December 26,
2021 | | December 27,
2020 | | December 29,
2019 |
| | | | | | |
| Components of operating costs as a percentage of total revenues | | | | | | |
| Cost of revenue (excluding depreciation and amortization) | | 50 | % | | 54 | % | | 55 | % |
| Sales and marketing | | 14 | % | | 13 | % | | 15 | % |
| Product development | | 8 | % | | 7 | % | | 6 | % |
| General and administrative | | 12 | % | | 13 | % | | 11 | % |
| Depreciation and amortization | | 3 | % | | 3 | % | | 3 | % |
| Total | | 87 | % | | 90 | % | | 90 | % |
P. 40 – THE NEW YORK TIMES COMPANY
|
| | | | | | | | | |
| | | Years Ended |
| | | December 30,
2018 |
| | December 31,
2017 |
| | December 25,
2016 |
|
| | | (52 weeks) | | (53 weeks) | | (52 weeks) |
| Components of operating costs as a percentage of total revenues | | | | | | |
| Wages and benefits | | 40 | % | | 40 | % | | 41 | % |
| Raw materials | | 4 | % | | 4 | % | | 5 | % |
| Other operating costs | | 42 | % | | 41 | % | | 41 | % |
| Depreciation and amortization | | 3 | % | | 4 | % | | 4 | % |
| Total | | 89 | % | | 89 | % | | 91 | % |
Cost of revenue includes all costs related to content creation, subscriber and advertiser servicing, and print production and distribution as well as infrastructure costs related to delivering digital content, which include all cloud and cloud-related costs as well as compensation for employees that enhance and maintain that infrastructure.
2021 Compared with 2020
Cost of revenue increased in 2021 by $80.3 million, or 8.4%, compared with 2020, largely due to higher journalism costs of $58.3 million, higher subscriber servicing costs of $15.6 million, higher advertising servicing costs of $9.5 million, and higher digital content delivery costs of $4.5 million, partially offset by a $7.6 million decrease in print production and distribution costs. The increase in journalism costs was largely driven by growth in the number of employees who work in the newsroom and on our Games, Cooking and audio products, a higher incentive compensation accrual and costs in connection with the production of audio content. The increase in subscriber servicing costs was primarily due to higher credit card processing fees and third-party commissions due to increased subscriptions. Advertising servicing costs increased as a result of costs to produce higher creative services revenues. Digital content delivery costs increased due to higher cloud storage costs and a higher incentive compensation accrual. The decrease in print production and distribution costs was largely due to lower distribution costs and outside printing costs.
2021 Compared with 2019
Cost of revenue increased in 2021 by $51.4 million, or 5.2%, compared with 2019, largely due to higher journalism costs of $83.0 million, higher subscriber servicing costs of $27.4 million, and higher digital content delivery costs of $20.7 million. The increases were partially offset by lower print production and distribution costs of $61.0 million and lower advertising servicing costs of $18.7 million. The increase in journalism costs was largely driven by growth in the number of employees who work in the newsroom and on our Games, Cooking and audio products, and a higher incentive compensation accrual. The increase in subscriber servicing costs was primarily due to higher credit card processing fees and third-party commissions due to increased subscriptions. Digital content delivery costs increased due to higher cloud storage costs and growth in the number of employees. The decrease in print production and distribution costs was largely due to lower newsprint consumption and pricing, as well as lower distribution costs, primarily due to copy declines, and outside printing costs. Advertising servicing costs decreased primarily as a result of the closure of our HelloSociety and Fake Love digital marketing agencies as well as fewer live events.
Sales and Marketing
Sales and marketing includes costs related to the Company’s marketing efforts as well as advertising sales costs.
2021 Compared with 2020
Sales and marketing costs increased in 2021 by $66.0 million, or 28.8%, compared with 2020, primarily due to higher media expenses.
Media expenses, a component of sales and marketing costs that represents the cost to promote our subscription business, increased to $187.3 million in 2021 from $129.6 million in 2020. The increase is primarily from subscription-related media expenses as we were able to profitably scale media spend as a result of strong demand for news and success in converting readers to subscribers, as well as higher brand marketing expenses. The Company had reduced its marketing expense in 2020 during the earlier stages of the Covid-19 pandemic.
2021 Compared with 2019
Sales and marketing costs increased in 2021 by $22.3 million, or 8.2%, compared with 2019, primarily a result of higher media expenses and the growth in the number of marketing employees, partially offset by the closure of our HelloSociety and Fake Love digital marketing agencies, as well as lower travel costs due to the ongoing pandemic.
Media expenses increased to $187.3 million in 2021 from $156.9 million in 2019. The increase is primarily from subscription-related media expenses as we were able to profitably scale media spend as a result of strong demand for news and success in converting readers to subscribers, as well as higher brand marketing expenses.
Product Development
Product development includes costs associated with the Company’s investment into developing and enhancing new and existing product technology, including engineering, product development and data insights.
THE NEW YORK TIMES COMPANY – P. 3341
Production Costs2021 Compared with 2020
ProductionProduct development costs include items such as labor costs, raw materials and machinery and equipment expenses relatedincreased in 2021 by $27.5 million, or 20.6%, compared with 2020, largely due to news gathering and production activity,growth in the number of digital product development employees in connection with digital subscription strategic initiatives as well as costs related to producing branded content.a higher incentive compensation accrual.
20182021 Compared with 20172019
ProductionProduct development costs increased in 20182021 by $54.5 million, or 51.2%, compared with 2017, primarily driven by increases2019, largely due to growth in wages and benefits (approximately $17 million), raw materials expense (approximately $10 million) and outside services costs (approximately $10 million). Wages and benefits increased primarilythe number of digital product development employees to support our digital subscription strategic initiatives as well as a result of increased hiring to support the Company’s initiatives. Raw materials expense increased due to increased commercial printing activity and higher newsprint prices. Outside services costs increased primarily due to higher costs associated with the generation of content in our newsroom.incentive compensation accrual.
2017 Compared with 2016
Production costs decreased in 2017 compared with 2016, primarily driven by a decrease in other production costs (approximately $6 million) and raw materials expense (approximately $6 million). Other production costs decreased primarily as a result of lower outside printing expenses (approximately $5 million). Raw materials expense decreased primarily due to lower newsprint consumption (approximately $6 million).
Selling, General and Administrative Costs
Selling, generalGeneral and administrative costs include general management, corporate enterprise technology, building operations, unallocated overhead costs, associated with the selling, marketingseverance and distribution of products as well as administrative expenses.multiemployer pension plan withdrawal costs.
20182021 Compared with 20172020
Selling, generalGeneral and administrative costs increased in 20182021 by $26.6 million, or 11.9%, compared with 2017, primarily due to an increase in promotion and marketing costs (approximately $46 million), partially offset by a decrease in outside services (approximately $7 million) and distribution costs (approximately $6 million). Promotion and marketing costs increased due to increased spending to promote our subscription business and brand. Outside services decreased primarily due to lower consulting fees, and distribution costs decreased as a result of fewer print copies produced.
2017 Compared with 2016
Selling, general and administrative costs increased in 2017 compared with 2016, primarily due to an increase in compensation costs (approximately $47 million), promotion and marketing costs (approximately $26 million) and severance costs (approximately $5 million). Compensation costs increased2020, primarily as a result of higher incentive compensation increased hiring to supportaccrual, growth initiativesin the number of employees and higher benefitconsulting costs. Promotion
2021 Compared with 2019
General and marketingadministrative costs increased in 2021 by $43.3 million, or 21.0%, compared with 2019, primarily due to increased spending related to promotion of our subscription business and brand. Severance costs increased due to a workforce reduction announcedhigher incentive compensation accrual, growth in the second quarternumber of 2017 primarily affectingemployees, mainly in the newsroom.enterprise technology and human resources departments in support of employee growth in other areas, and higher consulting costs.
Depreciation and Amortization
20182021 Compared with 20172020
Depreciation and amortization costs decreased $4.6 million, or 7.5%, in 20182021 compared with 20172020, primarily due to disposalslower depreciation of fixed assets in connection with our headquarters redesign and consolidation project.software assets.
20172021 Compared with 20162019
Depreciation and amortization costs were flatdecreased $3.2 million, or 5.2%, in 20172021 compared with 2016.2019 due to lower depreciation of software assets, partially offset by equipment and building projects that were placed in service.
Other Items
See Note 87 of the Notes to the Consolidated Financial Statements for more information regarding other items.
P. 34 – THE NEW YORK TIMES COMPANY
NON-OPERATING ITEMS
Investments in Joint Ventures
See Note 6 of the Notes to the Consolidated Financial Statements for information regarding our joint venture investments.
Interest ExpenseIncome/(Expense) and Other, Net
See Note 7 of the Notes to the Consolidated Financial Statements for information regarding interest expense and other.
Income Taxes
See Note 1312 of the Notes to the Consolidated Financial Statements for information regarding income taxes.
Discontinued Operations
See Note 14 of the Notes to the Consolidated Financial Statements for information regarding discontinued operations.
Other Components of Net Periodic Benefit Costs
See NoteNotes 9 and 10 and 11 of the Notes to the Consolidated Financial Statements for information regarding other components of net periodic benefit costs.
P. 42 – THE NEW YORK TIMES COMPANY
Non-GAAP Financial Measures
We have included in this report certain supplemental financial information derived from consolidated financial information but not presented in our financial statements prepared in accordance with GAAP. Specifically, we have referred to the following non-GAAP financial measures in this report:
•diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and the impact of special items (or adjusted diluted earnings per share from continuing operations);
•operating profit before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit)profit, and as a percentage of revenues, adjusted operating profit margin); and
•operating costs before depreciation, amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs).
The special items in 20182021 consisted of:
an $11.3•a $27.2 million pre-tax gain ($7.119.8 million after tax or $0.12 per share) related to a non-marketable equity investment transaction. The gain consists of a $15.2 million realized gain due to the partial sale of the investment and an $11.9 million unrealized gain due to the mark to market of the remaining investment, and is included in Interest income and other, net in our Condensed Consolidated Statements of Operations; and
•a $3.8 million charge ($2.8 million or $.04$0.02 per share after tax) resulting from the termination of a tenant’s lease in the Company Headquarters.
The special items in 2020 consisted of:
•a $10.1 million gain ($7.4 million after tax or $0.04 per share) related to a non-marketable equity investment transaction. The gain consists of $2.5 million realized gain due to the partial sale of the investment and a $7.6 million unrealized gain due to the mark to market of the remaining investment, and is included in Interest income/(expense) and other, net in our Consolidated Statements of Operations;
•A $5 million gain ($3.1 million or $0.02 per share after tax and net of noncontrolling interest) reflecting our proportionate share of a distribution from the salepending liquidation of assets by Madison Paper Industries (“Madison”), in which the Company has an investment through a subsidiary; and
a $4.9•$80.6 million pre-tax gainin pension settlement charges ($3.659.1 million after tax or $.02 per share) from a multiemployer pension plan liability adjustment; and
a $4.5 million pre-tax charge ($3.3 million after tax or $.02 per share) in connection with the redesign and consolidation of space in our headquarters building.
The special items in 2017 consisted of:
$102.1 million of pre-tax pension settlement charges ($61.5 million after tax, or $.37$0.35 per share) in connection with the transfer of certain pension benefit obligations to insurers (in connection with the adoption of ASU 2017-07 this amount was reclassified to “Other components of net periodic benefit costs” below “Operating profit”);
a $68.7 million charge ($.42 per share) primarily attributable to the remeasurement of our net deferred tax assets required as a result of recent tax legislation;
a $37.1 million pre-tax gain ($22.3 million after tax, or $.14 per share) primarily in connection with the settlement of contractual funding obligations for a postretirement plan (in connection with the adoption of ASU 2017-07, $32.7 million relating to the postretirement plan was reclassified to “Other components of net
THE NEW YORK TIMES COMPANY – P. 35
periodic benefit costs” below Operating profit while the contractual gain of $4.3 million remains in “Multiemployer pension and other contractual gains” within “Operating profit”);
a $15.3 million pre-tax net gain ($7.8 million after tax and net of noncontrolling interest, or $.05 per share) from joint ventures consisting of (i) a $30.1 million gain related to the sale of the remaining assets of Madison, (ii) an $8.4 million loss reflecting our proportionate share of Madison’s settlement of pension obligations, and (iii) a $6.4 million loss from the sale of our 49% equity interest in Malbaie; and
a $10.1 million pre-tax charge ($6.1 million after tax, or $.04 per share) in connection with the redesign and consolidation of space in our headquarters building.insurer.
The special items in 20162019 consisted of:
•a $37.5$4.0 million pre-tax loss ($17.7 million after tax and net of noncontrolling interest, or $.11 per share) from joint ventures related to the announced closure of the paper mill operated by Madison;
a $21.3 million pre-tax pension settlement charge ($12.83.0 million after tax or $.08$0.02 per share) in connection with lump-sum payments made under an immediate pension benefits offerrelated to certain former employees (in connection withrestructuring charges, including impairment and severance charges related to the adoptionclosure of ASU 2017-07 this amount was reclassified to “Other components of net periodic benefit costs” below “Operating profit”);our digital marketing agency, HelloSociety, LLC; and
•a $16.5$2.0 million pre-tax chargegain ($9.81.5 million after tax or $.06$0.01 per share) in connection with the streamlining of the Company’s international print operations (primarily consisting of severance costs); (in connection with the adoption of ASU 2017-07, $1.7 million related to a gain from the pension curtailment previously included in this special item was reclassified to “Other components of net periodic benefit costs” below “Operating profit”);
a $6.7 million pre-tax charge ($4.0 million after tax, or $.02 per share) for a partial withdrawal obligation under a multiemployer pension plan following an unfavorable arbitration decision; andliability adjustment.
a $3.8 million income tax benefit ($.02 per share) primarily due to a reduction in the Company’s reserve for uncertain tax positions.
We have included these non-GAAP financial measures because management reviews them on a regular basis and uses them to evaluate and manage the performance of our operations. We believe that, for the reasons outlined below, these non-GAAP financial measures provide useful information to investors as a supplement to reported diluted earnings/(loss) per share from continuing operations, operating profit/(loss) and operating costs. However, these measures should be evaluated only in conjunction with the comparable GAAP financial measures and should not be viewed as alternative or superior measures of GAAP results.
In connection with the adoption of ASU 2017-07 in the first quarter of 2018, the Company modified its definitions of adjusted operating profit, adjusted operating costs and non-operating retirement costs in response to changes in the GAAP presentation of single employer pension and postretirement benefit costs. For comparability purposes, the Company has also presented each of its non-GAAP financial measures for the years ended 2017 and 2016, reflecting the recast of its financial statements for such periods to account for the adoption of ASU 2017-07 and the revised definitions of the non-GAAP financial measures for more details.
As a result of the adoption of ASU 2017-07 during the first quarter of 2018, all single employer pension and other postretirement benefit expenses with the exception of service cost were reclassified from operating costs to “Other components of net periodic benefit costs/(income).” See Note 2 of the Notes to the Consolidated Financial Statements for more information. In connection with the adoption of ASU 2017-07, the Company made the following changes to its non-GAAP financial measures in order to align them with the new GAAP presentation:
revised the components of non-operating retirement costs to include amortization of prior service credit of single employer pension and other postretirement benefit expenses; and
revised the definition of adjusted operating costs to exclude only multiemployer pension plan withdrawal costs (which historically have been and continue to be a component of non-operating retirement costs), rather than all non-operating retirement costs. As a result of the adoption of ASU 2017-07, non-operating retirement costs other than multiemployer pension plan withdrawal costs are now separately presented outside of operating costs and accordingly have no impact on operating profit and cost under GAAP, or adjusted
P. 36 – THE NEW YORK TIMES COMPANY
operating profit or adjusted operating costs. Multiemployer pension plan withdrawal costs remain in GAAP operating costs and therefore continue to be an adjustment to these non-GAAP measures.
Non-operating retirement costs include:
interest cost, expected return on plan assets and amortization of actuarial gains and loss components and amortization of prior service credits of single employer pension expense;
interest cost and amortization of actuarial gains and loss components and amortization of prior service credits of retirement medical expense; and
all multiemployer pension plan withdrawal costs.
These non-operating retirement costs are primarily tied to financial market performance and changes in market interest rates and investment performance. Management considers non-operating retirement costs to be outside the performance of the business and believes that presenting adjustedAdjusted diluted earnings per share from continuing operations excluding non-operating retirement costs and presenting adjusted operating results excluding multiemployer pension plan withdrawal costs, in addition to the Company’s GAAP diluted earnings per share from continuing operations and GAAP operating results, provide increased transparency and a better understanding of the underlying trends in the Company’s operating business performance.
Adjusted diluted earnings per share provides useful information in evaluating the Company’s period-to-period performance because it eliminates items that the Company does not consider to be indicative of earnings from ongoing operating activities. Adjusted operating profit (and adjusted operating profit margin) is useful in evaluating the ongoing performance of the Company’s business as it excludes the significant non-cash impact of depreciation and amortization, as well as items not indicative of ongoing operating activities. Total operating costs include depreciation, amortization, severance and multiemployer pension plan withdrawal costs.
THE NEW YORK TIMES COMPANY – P. 43
Total operating costs excluding these items provide investors with helpful supplemental information on the Company’s underlying operating costs that is used by management in its financial and operational decision-making.
Management considers special items, which may include impairment charges, pension settlement charges and other items that arise from time to time, to be outside the ordinary course of our operations. Management believes that excluding these items provides a better understanding of the underlying trends in the Company’s operating performance and allows more accurate comparisons of the Company’s operating results to historical performance. In addition, management excludes severance costs, which may fluctuate significantly from quarter to quarter, because it believes these costs do not necessarily reflect expected future operating costs and do not contribute to a meaningful comparison of the Company’s operating results to historical performance.
Included in our non-GAAP financial measures are non-operating retirement costs which are primarily tied to financial market performance and changes in market interest rates and investment performance. Management considers non-operating retirement costs to be outside the performance of the business and believes that presenting adjusted diluted earnings per share from continuing operations excluding non-operating retirement costs and presenting adjusted operating results excluding multiemployer pension plan withdrawal costs, in addition to the Company’s GAAP diluted earnings per share from continuing operations and GAAP operating results, provide increased transparency and a better understanding of the underlying trends in the Company’s operating business performance.
Reconciliations of non-GAAP financial measures from, respectively, diluted earnings per share from continuing operations, operating profit and operating costs, the most directly comparable GAAP items, as well as details on the components of non-operating retirement costs, are set out in the tables below.
THE NEW YORK TIMES COMPANY – P. 37
|
| | | | | | | | | | | | | | | | | | |
| Reconciliation of diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and special items (or adjusted diluted earnings per share from continuing operations) |
| | | Years Ended | % Change |
| | | December 30,
2018 |
| | December 31,
2017 |
| (1) | December 25,
2016 |
| (1) | 2018 vs. 2017 |
| | 2017 vs. 2016 |
|
| | | (52 weeks) | | (53 weeks) | | (52 weeks) | | | | |
| Diluted earnings per share from continuing operations | | $ | 0.75 |
| | $ | 0.03 |
| | $ | 0.19 |
| | * |
| | (84.2 | %) |
| Add: | | | | | | | |
|
| |
|
|
| Severance | | 0.04 |
| | 0.15 |
| | 0.12 |
| | (73.3 | %) | | 25.0 | % |
| Non-operating retirement costs | | 0.09 |
| | 0.01 |
| | 0.03 |
| | * |
| | (66.7 | %) |
| Special items: | | | | | | | |
|
| |
|
|
| Headquarters redesign and consolidation | | 0.03 |
| | 0.06 |
| | — |
| | (50.0 | %) | | * |
|
| Restructuring charge | | — |
| | — |
| | 0.10 |
| | * |
| | * |
|
| Pension settlement charge | | — |
| | 0.62 |
| | 0.13 |
| | * |
| | * |
|
| Postretirement benefit plan settlement gain, multiemployer and other contractual (gain)/loss | | (0.03 | ) | | (0.23 | ) | | 0.04 |
| | (87.0 | )% | | * |
|
| (Gain)/loss in joint ventures, net of noncontrolling interest | | (0.06 | ) | | (0.08 | ) | | 0.18 |
| | (25.0 | %) | | * |
|
| Income tax expense of adjustments | | (0.02 | ) | | (0.22 | ) | | (0.24 | ) | | (90.9 | )% | | (8.3 | )% |
| Reduction in reserve for uncertain tax positions | | — |
| | — |
| | (0.02 | ) | | * |
| | * |
|
| Deferred tax asset remeasurement adjustment | | — |
| | 0.42 |
| | — |
| | * |
| | * |
|
| Adjusted diluted earnings per share from continuing operations | | $ | 0.81 |
| | $ | 0.76 |
| | $ | 0.53 |
| | 6.6 | % | | 43.4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Reconciliation of diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and special items (or adjusted diluted earnings per share from continuing operations) | | |
| | Years Ended | % Change |
| | December 26,
2021 | | December 27,
2020 | | | | 2021 vs. 2020 | | |
| Diluted earnings per share from continuing operations | | $ | 1.31 | | | $ | 0.60 | | | | | * | | |
| Add: | | | | | | | | | | |
| Severance | | 0.01 | | | 0.04 | | | | | (75.0) | % | | |
| Non-operating retirement costs: | | | | | | | | | | |
| Multiemployer pension plan withdrawal costs | | 0.03 | | | 0.03 | | | | | — | | | |
| Other components of net periodic benefit costs | | 0.06 | | | 0.05 | | | | | 20.0 | % | | |
| Special items: | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Gain from non-marketable equity security | | (0.16) | | | (0.06) | | | | | * | | |
| Lease termination charge | | 0.02 | | | — | | | | | * | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Gain from joint venture, net of noncontrolling interest | | — | | | (0.03) | | | | | * | | |
| Pension settlement charge | | — | | | 0.48 | | | | | * | | |
| Income tax expense/(benefit) of adjustments | | 0.01 | | | (0.14) | | | | | * | | |
| | | | | | | | | | |
| | | | | | | | | | |
Adjusted diluted earnings per share from continuing operations (1) | | $ | 1.28 | | | $ | 0.97 | | | | | 32.0 | % | | |
* Represents a change equal to or in excess of 100% or one that is not meaningful.
(1) Revised to reflect recast of GAAP results to conform with current period presentation and the revised definition of non-operating retirement costs. See “—Impact of Modification of Non-GAAP Measures” for more detail.
(2) Amounts may not add due to rounding.
P. 3844 – THE NEW YORK TIMES COMPANY
| | | Reconciliation of operating profit before depreciation & amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit) | |
| Reconciliation of operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit) and of adjusted operating profit margin | | Reconciliation of operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit) and of adjusted operating profit margin |
| | | Years Ended | | % Change | | Years Ended | | % Change |
| (In thousands) | | December 30,
2018 |
| | December 31,
2017 |
| (1) | December 25,
2016 |
| (1) | 2018 vs. 2017 |
| | 2017 vs. 2016 |
| (In thousands) | | December 26,
2021 | | December 27,
2020 | | December 29,
2019 | | 2021 vs. 2020 | | 2021 vs. 2019 |
| | | (52 weeks) | | (53 weeks) | | (52 weeks) | | | | | |
| Operating profit | | $ | 190,167 |
| | 176,591 |
| | 112,678 |
| | 7.7 | % | | 56.7 | % | Operating profit | | $ | 268,034 | | | $ | 176,256 | | | $ | 175,582 | | | 52.1 | % | | 52.7 | % |
| Add: | | | | | | | | | | | Add: | |
| Depreciation & amortization | | 59,011 |
| | 61,871 |
| | 61,723 |
| | (4.6 | %) | | 0.2 | % | |
| Depreciation and amortization | | Depreciation and amortization | | 57,502 | | | 62,136 | | | 60,661 | | | (7.5) | % | | (5.2) | % |
| Severance | | 6,736 |
| | 23,949 |
| | 18,829 |
| | (71.9 | %) | | 27.2 | % | Severance | | 882 | | | 6,675 | | | 3,979 | | | (86.8) | % | | (77.8) | % |
| Multiemployer pension plan withdrawal costs | | 7,002 |
| | 6,599 |
| | 14,001 |
| | 6.1 | % | | (52.9 | )% | Multiemployer pension plan withdrawal costs | | 5,150 | | | 5,550 | | | 6,183 | | | (7.2) | % | | (16.7) | % |
| Special items: | | | | | | | | | | | Special items: | |
| Headquarters redesign and consolidation | | 4,504 |
| | 10,090 |
| | — |
| | (55.4 | )% | | * |
| |
| Lease termination charge | | Lease termination charge | | 3,831 | | | — | | | — | | | * | | * |
| Restructuring charge | | — |
| | — |
| | 16,518 |
| | * |
| | * |
| Restructuring charge | | — | | | — | | | 4,008 | | | — | | | * |
| Multiemployer pension and other contractual (gain)/loss | | (4,851 | ) | | (4,320 | ) | | 6,730 |
| | 12.3 | % | | * |
| |
| Gain from pension liability adjustment | | Gain from pension liability adjustment | | — | | | — | | | (2,045) | | | — | | | * |
| | Adjusted operating profit | | $ | 262,569 |
| | $ | 274,780 |
| | $ | 230,479 |
|
| (4.4 | )% | | 19.2 | % | Adjusted operating profit | | $ | 335,399 | | | $ | 250,617 | | | $ | 248,368 | | | 33.8 | % | | 35.0 | % |
| Divided by: | | Divided by: | | |
| Revenue | | Revenue | | 2,074,877 | | | 1,783,639 | | | 1,812,184 | | | 16.3 | % | | 14.5 | % |
| Adjusted operating profit margin | | Adjusted operating profit margin | | 16.2 | % | | 14.1 | % | | 13.7 | % | | 210 bps | | 250 bps |
* Represents a change equal to or in excess of 100% or one that is not meaningful.
(1) Revised to reflect recast of GAAP results to conform with current period presentation and the revised definition of non-operating retirement costs. See “—Impact of Modification of Non-GAAP Measures” for more detail. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Reconciliation of operating costs before depreciation and amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs) |
| | Years Ended | | % Change |
| (In thousands) | | December 26,
2021 | | December 27,
2020 | | December 29,
2019 | | 2021 vs. 2020 | | 2021 vs. 2019 |
| Operating costs | | $ | 1,803,012 | | | $ | 1,607,383 | | | $ | 1,634,639 | | | 12.2 | % | | 10.3 | % |
| Less: | | | | | | | | | | |
| Depreciation and amortization | | 57,502 | | | 62,136 | | | 60,661 | | | (7.5) | % | | (5.2) | % |
| Severance | | 882 | | | 6,675 | | | 3,979 | | | (86.8) | % | | (77.8) | % |
| Multiemployer pension plan withdrawal costs | | 5,150 | | | 5,550 | | | 6,183 | | | (7.2) | % | | (16.7) | % |
| Adjusted operating costs | | $ | 1,739,478 | | | $ | 1,533,022 | | $ | 1,563,816 | | | 13.5 | % | | 11.2 | % |
|
| | | | | | | | | | | | | | | | | | |
| Reconciliation of operating costs before depreciation & amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs) |
| | | Years Ended | | % Change |
| (In thousands) | | December 30,
2018 |
| | December 31,
2017 |
| (1) | December 25,
2016 |
| (1) | 2018 vs. 2017 |
| | 2017 vs. 2016 |
|
| | | (52 weeks) | | (53 weeks) | | (52 weeks) | | | | |
| Operating costs | | $ | 1,558,778 |
| | $ | 1,493,278 |
| | $ | 1,419,416 |
| | 4.4 | % | | 5.2 | % |
| Less: | | | | | | | |
|
| |
|
|
| Depreciation & amortization | | 59,011 |
| | 61,871 |
| | 61,723 |
| | (4.6 | %) | | 0.2 | % |
| Severance | | 6,736 |
| | 23,949 |
| | 18,829 |
| | (71.9 | %) | | 27.2 | % |
| Multiemployer pension plan withdrawal costs | | 7,002 |
| | 6,599 |
| | 14,001 |
| | 6.1 | % | | (52.9 | )% |
| Adjusted operating costs | | $ | 1,486,029 |
| | $ | 1,400,859 |
| | $ | 1,324,863 |
| | 6.1 | % | | 5.7 | % |
* Represents a change equal to or in excess of 100% or one that is not meaningful.
(1) Revised to reflect recast of GAAP results to conform with current period presentation and the revised definition of non-operating retirement costs. See “—Impact of Modification of Non-GAAP Measures” for more detail.
THE NEW YORK TIMES COMPANY – P. 3945
|
| | | | | | | | | | | | | | | | | | | |
| Reconciliation of revenues excluding the estimated impact of the additional week (in thousands) |
| | | |
| | | Twelve Months |
| | | 2018 | | 2017 As Reported | | Additional Week | | 2017 Adjusted | | % Change |
| | | (52 weeks) | | (53 weeks) | | | | (52 weeks) | | |
| Subscription | | $ | 1,042,571 |
| | $ | 1,008,431 |
| | $ | (18,453 | ) | | $ | 989,978 |
| | 5.3 | % |
| Advertising | | 558,253 |
| | 558,513 |
| | (9,821 | ) | | 548,692 |
| | 1.7 | % |
| Other | | 147,774 |
| | 108,695 |
| | (598 | ) | | 108,097 |
| | 36.7 | % |
| Total revenues | | $ | 1,748,598 |
| | $ | 1,675,639 |
| | $ | (28,872 | ) | | $ | 1,646,767 |
| | 6.2 | % |
| | | | | | | | | | | |
| | | Twelve Months |
| | | 2017
As Reported | | Additional Week | | 2017 Adjusted | | 2016 | | % Change |
| | | (53 weeks) | | | | (52 weeks) | | (52 weeks) | | |
| Subscription | | $ | 1,008,431 |
| | $ | (18,453 | ) | | $ | 989,978 |
| | $ | 880,543 |
| | 12.4 | % |
| Advertising | | 558,513 |
| | (9,821 | ) | | 548,692 |
| | 580,732 |
| | (5.5 | )% |
| Other | | 108,695 |
| | (598 | ) | | 108,097 |
| | 94,067 |
| | 14.9 | % |
| Total revenues | | $ | 1,675,639 |
| | $ | (28,872 | ) | | $ | 1,646,767 |
| | $ | 1,555,342 |
| | 5.9 | % |
| | | | | | | | | | | |
| | | Twelve Months |
| | | 2018 | | 2017
As Reported | | Additional Week | | 2017 Adjusted | | % Change |
| | | (52 weeks) | | (53 weeks) | | | | (52 weeks) | | |
| Print advertising revenue | | $ | 299,380 |
| | $ | 320,222 |
| | $ | (4,222 | ) | | $ | 316,000 |
| | (5.3 | )% |
| Digital advertising revenue | | 258,873 |
| | 238,291 |
| | (5,599 | ) | | 232,692 |
| | 11.3 | % |
| Total advertising revenue | | $ | 558,253 |
| | $ | 558,513 |
| | $ | (9,821 | ) | | $ | 548,692 |
| | 1.7 | % |
| | | | | | | | | | | |
| | | Twelve Months |
| | | 2017
As Reported | | Additional Week | | 2017 Adjusted | | 2016 | | % Change |
| | | (53 weeks) | | | | (52 weeks) | | (52 weeks) | | |
| Print advertising revenue | | $ | 320,222 |
| | $ | (4,222 | ) | | $ | 316,000 |
| | $ | 371,980 |
| | (15.0 | )% |
| Digital advertising revenue | | 238,291 |
| | (5,599 | ) | | 232,692 |
| | 208,752 |
| | 11.5 | % |
| Total advertising revenue | | $ | 558,513 |
| | $ | (9,821 | ) | | $ | 548,692 |
| | $ | 580,732 |
| | (5.5 | )% |
|
| | | | | | | | | | | | | | | | | | | |
| | | |
| | | Twelve Months |
| | | 2018 | | 2017
As Reported | | Additional Week | | 2017 Adjusted | | % Change |
| | | (52 weeks) | | (53 weeks) | | | | (52 weeks) | | |
| Total digital-only subscription revenues | | $ | 400,620 |
| | $ | 340,343 |
| | $ | (7,056 | ) | | $ | 333,287 |
| | 20.2 | % |
| | | | | | | | | | | |
| | | Twelve Months |
| | | 2017
As Reported | | Additional Week | | 2017 Adjusted | | 2016 | | % Change |
| | | (53 weeks) | | | | (52 weeks) | | (52 weeks) | | |
| Total digital-only subscription revenues | | $ | 340,343 |
| | $ | (7,056 | ) | | $ | 333,287 |
| | $ | 232,828 |
| | 43.1 | % |
| | | | | | | | | | | |
P. 40 – THE NEW YORK TIMES COMPANY
Impact of Modification of Non-GAAP Measures
In connection with the adoption of ASU 2017-07 in the first quarter of 2018, the Company modified its definitions of adjusted operating profit, adjusted operating costs and non-operating retirement costs in response to changes in the GAAP presentation of single employer pension and postretirement benefit costs. For comparability purposes, the Company has presented its non-GAAP financial measures for the first twelve months of 2017 and 2016, reflecting the recast of its financial statements for such periods to account for the adoption of ASU 2017-07 and the revised definitions of the non-GAAP financial measures. The following tables show the adjustments to the previously presented metrics.
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| Adjustments made to the reconciliation of diluted earnings per share from continuing operations to adjusted diluted earnings per share from continuing operations |
| | | | | | | | | |
| | | Twelve Months | | Twelve Months |
| | | 2017 Previously Reported | | Adjustment | | 2017 Recast | | 2016
Previously Reported | | Adjustment | | 2016
Recast |
| Diluted earnings per share from continuing operations | | $ | 0.03 |
| | $ | — |
| | $ | 0.03 |
| | $ | 0.19 |
| | $ | — |
| | 0.19 |
|
| Add: | | | | | | | | | | | | |
| Severance | | 0.15 |
| | — |
| | 0.15 |
| | 0.12 |
| | — |
| | 0.12 |
|
| Non-operating retirement costs | | 0.07 |
| | (0.06 | ) | (1) | 0.01 |
| | 0.10 |
| | (0.07 | ) | (1) | 0.03 |
|
| Special items: | | | | | | | | | | | | |
| Headquarters redesign and consolidation | | 0.06 |
| | — |
| | 0.06 |
| | — |
| | — |
| | — |
|
| Restructuring charge | | — |
| | — |
| | — |
| | 0.09 |
| | 0.01 |
| | 0.10 |
|
| Pension settlement expense | | 0.62 |
| | — |
| | 0.62 |
| | 0.13 |
| | — |
| | 0.13 |
|
| Postretirement benefit plan settlement gain, multiemployer and other contractual (gain)/loss | | (0.23 | ) | | — |
| | (0.23 | ) | | 0.04 |
| | — |
| | 0.04 |
|
| (Gain)/loss in joint ventures, net of noncontrolling interest | | (0.08 | ) | | — |
| | (0.08 | ) | | 0.18 |
| | — |
| | 0.18 |
|
| Income tax expense of adjustments | | (0.24 | ) | | 0.02 |
| | (0.22 | ) | | (0.26 | ) | | 0.02 |
| | (0.24 | ) |
| Reduction in uncertain tax positions | | — |
| | — |
| | — |
| | (0.02 | ) | | — |
| | (0.02 | ) |
| Deferred tax asset remeasurement adjustment | | 0.42 |
| | — |
| | 0.42 |
| | — |
| | — |
| | — |
|
Adjusted diluted earnings per share from continuing operations(2) | | $ | 0.80 |
| | $ | (0.04 | ) | | $ | 0.76 |
| | $ | 0.57 |
| | $ | (0.04 | ) | | 0.53 |
|
(1) Reflects the inclusion of amortization of prior service credits in the definition of non-operating retirement costs. |
(2) Amounts may not add due to rounding. |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
THE NEW YORK TIMES COMPANY – P. 41
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| Adjustments made to the reconciliation of operating profit to adjusted operating profit |
| | | | | | | | | |
| | | Twelve Months | | Twelve Months |
| (In thousands) | | 2017 Previously Reported | | Adjustment | | 2017 Recast | | 2016
Previously Reported | | Adjustment | | 2016
Recast |
| Operating profit | | $ | 112,366 |
| | $ | 64,225 |
| (1) | $ | 176,591 |
| | $ | 101,604 |
| | $ | 11,074 |
| (1) | $ | 112,678 |
|
| Add: | | | | | | | | | | | | |
| Depreciation & amortization | | 61,871 |
| | — |
| | 61,871 |
| | 61,723 |
| | — |
| | 61,723 |
|
| Severance | | 23,949 |
| | — |
| | 23,949 |
| | 18,829 |
| | — |
| | 18,829 |
|
| Non-operating retirement costs | | 11,152 |
| | (11,152 | ) | (2) | — |
| | 15,880 |
| | (15,880 | ) | (2) | — |
|
| Multiemployer pension plan withdrawal costs (excluding special items) | | — |
| | 6,599 |
| (2) | 6,599 |
| | — |
| | 14,001 |
| (2) | 14,001 |
|
| Special items: | | | | | | | | | | | | |
| Headquarters redesign and consolidation | | 10,090 |
| | — |
| | 10,090 |
| | — |
| | — |
| | — |
|
| Restructuring charge | | — |
| | — |
| | * |
| | 14,804 |
| | 1,714 |
| | 16,518 |
|
| Multiemployer pension and other contractual (gain)/loss | | (37,057 | ) | | 32,737 |
| (1) | (4,320 | ) | | 6,730 |
| | — |
| | 6,730 |
|
| Pension settlement expense | | 102,109 |
| | (102,109 | ) | (1) | — |
| | 21,294 |
| | (21,294 | ) | (1) | — |
|
| Adjusted operating profit | | $ | 284,480 |
| | $ | (9,700 | ) | (3) | $ | 274,780 |
| | $ | 240,864 |
| | $ | (10,385 | ) | (3) | $ | 230,479 |
|
(1) Recast as a result of the adoption of ASU 2017-07. See Note 2 of the Notes to the Consolidated Financial Statements for more information. |
(2) As a result of the change in definition of adjusted operating profit, only multiemployer pension plan withdrawal costs, rather than all non-operating retirement costs, are excluded from adjusted operating profit. |
(3) Represents amortization of prior service credits, which historically were a component of operating profit but not an adjustment to adjusted operating profit. As a result of the adoption of ASU 2017-07, amortization of prior service credits are now a component of other components of net periodic benefit costs/(income) rather than operating profit. For the twelve months ended 2017 and 2016, $(9.7) million and $(10.4) million, respectively, of amortization of prior service credits have been reclassified out of operating profit, thereby reducing operating profit and adjusted operating profit. |
| | | | | | | | | | | | | |
| Adjustments made to the reconciliation of operating costs to adjusted operating costs |
| | | | | | | | | |
| | | Twelve Months | | Twelve Months |
| (In thousands) | | 2017 Previously Reported | | Adjustment | | 2017 Recast | | 2016
Previously Reported | | Adjustment | | 2016
Recast |
| Operating costs | | $ | 1,488,131 |
| | $ | 5,147 |
| (1) | $ | 1,493,278 |
| | $ | 1,410,910 |
| | $ | 8,506 |
| (1) | $ | 1,419,416 |
|
| Less: | | | | | | | | | | | | |
| Depreciation & amortization | | 61,871 |
| | — |
| | 61,871 |
| | 61,723 |
| | — |
| | 61,723 |
|
| Severance | | 23,949 |
| | — |
| | 23,949 |
| | 18,829 |
| | — |
| | 18,829 |
|
| Non-operating retirement costs | | 11,152 |
| | (11,152 | ) | (2) | — |
| | 15,880 |
| | (15,880 | ) | (2) | — |
|
| Multiemployer pension plan withdrawal costs | | — |
| | 6,599 |
| (2) | 6,599 |
| | — |
| | 14,001 |
| (2) | 14,001 |
|
| Adjusted operating costs | | $ | 1,391,159 |
| | $ | 9,700 |
| (3) | $ | 1,400,859 |
| | $ | 1,314,478 |
| | $ | 10,385 |
| (3) | $ | 1,324,863 |
|
(1) Recast as a result of the adoption of ASU 2017-07. See Note 2 of the Notes to the Consolidated Financial Statements for more information. |
(2) As a result of the change in definition of adjusted operating costs, only multiemployer pension plan withdrawal costs, rather than all non-operating retirement costs, are excluded from adjusted operating costs. |
(3) Represents amortization of prior service credits, which historically were a component of operating costs but not an adjustment to adjusted operating costs. As a result of the adoption of ASU 2017-07, amortization of prior service credits are now a component of other components of net periodic benefit costs/(income) rather than operating costs. For the twelve months ended of 2017 and 2016, $(9.7) million and $(10.4) million, respectively, of amortization of prior service credits have been reclassified out of operating costs, thereby increasing operating costs and adjusted operating costs. |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
P. 42 – THE NEW YORK TIMES COMPANY
|
| | | | | | | | |
| The following table reconciles other components of net periodic benefit costs/(income), excluding special items, to the comparable non-GAAP metric, non-operating retirement costs. |
| | | | | |
| (In thousands) | | Twelve Months of 2017 | | Twelve Months of 2016 |
| Pension: | | | | |
| Interest cost | | $ | 68,582 |
| | $ | 74,465 |
|
| Expected return on plan assets | | (102,900 | ) | | (111,159 | ) |
| Amortization and other costs | | 33,369 |
| | 32,458 |
|
Amortization of prior service credit (1) | | (1,945 | ) | | (1,945 | ) |
| Non-operating pension income | | (2,894 | ) | | (6,181 | ) |
| Other postretirement benefits: | | | | |
| Interest cost | | 1,881 |
| | 1,979 |
|
| Amortization and other costs | | 3,621 |
| | 4,105 |
|
Amortization of prior service credit (1) | | (7,755 | ) | | (8,440 | ) |
| Non-operating other postretirement benefits income | | (2,253 | ) | | (2,356 | ) |
| Other components of net periodic benefit income | | (5,147 | ) | | (8,537 | ) |
| Multiemployer pension plan withdrawal costs | | 6,599 |
| | 14,001 |
|
| Total non-operating retirement costs | | $ | 1,452 |
| | $ | 5,464 |
|
| | | | | |
(1) The total amortization of prior service credit was $(9.7) million and $(10.4) million for the twelve months ended of 2017 and 2016, respectively. |
THE NEW YORK TIMES COMPANY – P. 43
LIQUIDITY AND CAPITAL RESOURCES
Overview
The following table presents information about our financial position.position:
Financial Position Summary
| | | | | | | | | | | | | | | | | | | | |
| | | | | | % Change |
| (In thousands, except ratios) | | December 26,
2021 | | December 27,
2020 | | 2021 vs. 2020 |
| Cash and cash equivalents | | $ | 319,973 | | | $ | 286,079 | | | 11.8 | |
| Marketable securities | | 754,455 | | | 595,911 | | | 26.6 | |
Total cash and cash equivalents and marketable securities (1) | | 1,074,428 | | | 881,990 | | | 21.8 | |
| Total New York Times Company stockholders’ equity | | 1,538,720 | | | 1,325,517 | | | 16.1 | |
| Ratios: | | | | | | |
| | | | | | |
| Current assets to current liabilities | | 1.70 | | | 1.72 | | | |
|
| | | | | | | | | | |
| | | | | | | % Change |
| (In thousands, except ratios) | | December 30,
2018 |
| | December 31,
2017 |
| | 2018 vs. 2017 |
| Cash and cash equivalents | | $ | 241,504 |
| | $ | 182,911 |
| | 32.0 |
| Marketable securities | | 584,859 |
| | 550,000 |
| | 6.3 |
| Total debt and capital lease obligations | | 253,630 |
| | 250,209 |
| | 1.4 |
| Total New York Times Company stockholders’ equity | | 1,040,781 |
| | 897,279 |
| | 16.0 |
| Ratios: | | | | | | |
| Total debt and capital lease obligations to total capitalization | | 19.6 | % | | 21.8 | % | | |
| Current assets to current liabilities | | 1.33 |
| | 1.80 |
| | |
Our primary sources of cash inflows from operations were revenues from subscription and advertising sales. Subscription and advertising revenues provided about 60%66% and 32%24%, respectively, of total revenues in 2018.2021. The remaining cash inflows were primarily from other revenue sources such aslicensing, Wirecutter affiliate referrals, commercial printing, the leasing of floors in the Company Headquarters, retail commerce, television and film, our headquarters building, commercial printing, NYT Live (ourstudent subscription sponsorship program and our live events business) and retail commerce.business.
Our primary sourcesuses of cash outflows were for employee compensation and benefits and other operating expenses. We believe our cash and cash equivalents, marketable securities balance and cash provided by operations, in combination with other sources of cash, will be sufficient to meet our financing needs over the next 12 months.months and beyond.
We have continued to strengthen our liquidity position and our debt profile. As of December 30, 2018,26, 2021, we had cash and cash equivalents and marketable securities of $826.4$1.07 billion, and approximately $250 million in available borrowings and total debtno amounts outstanding under the Credit Facility. Our cash and capital lease obligations of $253.6 million. Accordingly, our cash, cash equivalents and marketable securities exceeded total debtbalances increased in 2021, primarily due to cash proceeds from operating activities and proceeds from the sale of non-marketable equity securities, partially offset by cash used for dividend payments, capital lease obligations by $572.8 million. Included withinexpenditures, and taxes paid on behalf of employees resulting from share-based compensation tax withholding. Approximately $550.0 million of cash and marketable securities is $54.2 millionwere used in February 2022 to fund the purchase price of securities required as collateral for letters of credit issued by the Company in connection with the leasing of floors in our headquarters building. SeeThe Athletic (see Note 19 of the Notes to the Consolidated Financial Statements for moreadditional information regarding these letters of credit. Our cash, cash equivalents and marketable securities balances increased in 2018 primarily duerelated to cash proceeds from operating activities and stock option exercises, and lower contributions to certain qualified pension plans, partially offset by capital expenditures of approximately $77 million.this acquisition).
We have paid quarterly dividends of $0.04 per share on the Class A and Class B Common Stock since late 2013. In February 2019,2022, the Board of Directors approved a quarterly dividend of $0.09 per share, an increase inof $0.02 per share from the quarterly dividendprevious quarter (see Note 19 of the Notes to $0.05 per share.the Consolidated Financial Statements for additional information). We currently expect to continue to pay comparable cash dividends in the future, although changes in our dividend program will be considered by our Board of Directors in light of our earnings, capital requirements, financial condition and other factors considered relevant.
In March 2009, we entered into an agreement to sell and simultaneously lease back the Condo Interest in our headquarters building. The sale price for the Condo Interest was $225.0 million less transaction costs, for net proceeds of approximately $211 million. We have an option, exercisable in the fourth quarter of 2019, to repurchase the Condo Interest for $250.0 million, and we have provided notice of our intent to exercise this option. We believe that exercising this option is in the best interest of the Company given that the market value of the Condo Interest exceeds the exercise price, and we plan to use existing cash and marketable securities for this repurchase.
During 2018,2021, we made contributions of approximately $8$9.2 million to certain qualified pension plans funded by cash on hand. As of December 30, 2018, the underfunded balance of26, 2021, our qualified pension plans was approximately $81had plan assets that were $74.3 million above the present value of future benefits obligations, an increaseimprovement of approximately $12$38.1 million from the surplus of $36.2 million as of December 31, 2017.27, 2020. We expect contributions made to satisfy minimum funding requirements to total approximately $9$10 million in 2019.
2022. In October 2020, we entered into an agreement with an insurance company to transfer the future benefit obligations and annuity administration for certain retirees (or their beneficiaries) in The New York Times Companies Pension Plan (the ”Pension Plan”). This transfer of plan assets and obligations reduced the Company’s qualified pension plan obligations by $236.3 million.
P. 4446 – THE NEW YORK TIMES COMPANY
As part of our continued effort to reduce the size and volatility of our pension obligations, in 2017, the Company entered into arrangements with insurers to transfer certain future benefit obligations and administrative costs for certain qualified pension plans. These transactions allowed us to reduce our overall qualified pension plan obligations by approximately $263 million. In addition, in 2017 we made discretionary contributions totaling $120 million to certain qualified plans. See Note 10 of the Notes to the Consolidated Financial Statements for more information.
In 2018, we received a cash distribution of $12.5 million related to the wind-down of our Madison investment. See Note 6 of the Notes to the Consolidated Financial Statements for more information on the Company’s investment in Madison. We expect to receive an additional cash distribution in 2019 in the range of $5 million to $8 million related to the wind-down of our Madison investment.
In early 2015,February 2022, the Board of Directors authorized up to $101.1approved a $150.0 million of repurchases of shares of the Company’s Class A common stock. As of December 30, 2018, repurchases under thisstock repurchase program that replaced the previous program, which was approved in 2015. The new authorization totaled $84.9 million (excluding commissions) and $16.2 million remained under this authorization. Our Board of Directors has authorized us to purchaseprovides that Class A shares may be purchased from time to time as market conditions warrant, through open market purchases, privately negotiated transactions or other means, including Rule 10b5-1 trading plans. We expect to repurchase shares primarily to offset the impact of dilution from our equity compensation program, but subject to market conditions and other factors.factors, we may also make opportunistic repurchases to reduce share count. There is no expiration date with respect to this authorization. As of February 22, 2022, we repurchased 550,000 shares for approximately $23 million under the new authorization.
Capital Resources
Sources and Uses of Cash
Cash flows provided by/(used in) by category were as follows:
|
| | | | | | | | | | | | | | | | | |
| | | Years Ended | | % Change |
| (In thousands) | | December 30,
2018 |
| | December 31,
2017 |
| | December 25,
2016 |
| | 2018 vs. 2017 | | 2017 vs. 2016 |
|
| Operating activities | | $ | 157,117 |
| | $ | 86,712 |
| | $ | 103,876 |
| | 81.2 | | (16.5 | ) |
| Investing activities | | $ | (101,095 | ) | | $ | 14,100 |
| | $ | 124,468 |
| | * | | (88.7 | ) |
| Financing activities | | $ | 3,824 |
| | $ | (26,019 | ) | | $ | (237,024 | ) | | * | | (89.0 | ) |
* Represents an increase or decrease in excess of 100%. | | | | | | | | | | | | | | | | | | | | | | | | |
| | Years Ended | | % Change |
| (In thousands) | | December 26,
2021 | | December 27,
2020 | | | | 2021 vs. 2020 | | |
| Operating activities | | $ | 269,098 | | | $ | 297,933 | | | | | (9.7) | | | |
| Investing activities | | $ | (180,807) | | | $ | (199,080) | | | | | (9.2) | | | |
| Financing activities | | $ | (54,947) | | | $ | (44,973) | | | | | 22.2 | | | |
Operating Activities
Cash from operating activities is generated by cash receipts from subscriptions, advertising sales and other revenue. Operating cash outflows include payments for employee compensation, pensionretirement and other benefits, raw materials, marketing expenses, interest and income taxes.
Net cash provided by operating activities increaseddecreased in 20182021 compared with 20172020 due to lower contributions to certain qualified pension plans, partially offset by lower cash collections from advertising receivables.
Netaccounts receivable and lower cash provided by operating activities decreased in 2017 compared with 2016 due to contributions totaling approximately $128 million to certain qualified pension plans,payments received from prepaid subscriptions, partially offset by higher revenuesnet income adjusted for non-cash items and lower tax payments.cash payments made to settle accounts payable, accrued payroll and other liabilities.
Investing Activities
Cash from investing activities generally includes proceeds from marketable securities that have matured and the sale of assets, investments or a business. Cash used in investing activities generally includes purchases of marketable securities, payments for capital projects, acquisitions of new businesses and investments.
Net cash used in investing activities in 20182021 was primarily related to capital expenditures of $77.5 million and $36.5$170.0 million in net purchases of marketable securities.
Netsecurities and $34.6 million in capital expenditures payments, partially offset by $20.1 million in cash provided by investing activities in 2017 was primarilyproceeds related to maturities and disposals of marketable securities of $548.5 million and proceeds from the sale of our 49% share in Malbaie of $15.6 million, offset by purchases of marketable securities of $466.5 million and capital expenditures of $84.8 million.
Net cash provided by investing activities in 2016 was primarily due to maturities of marketable securities, offset by purchases of marketable securities and a cash distribution of $38.0 million from the liquidation of certain
THE NEW YORK TIMES COMPANY – P. 45
investments related to our corporate-owned life insurance, consideration paid for acquisitions of $40.4 million and payments for capital expenditures of $30.1 million.
Payments for capital expenditures were approximately $77 million, $85 million and $30 million in 2018, 2017 and 2016, respectively.non-marketable equity investment.
Financing Activities
Cash from financing activities generally includes borrowings under third-party financing arrangements, the issuance of long-term debt and funds from stock option exercises. Cash used in financing activities generally includes the repayment of amounts outstanding under third-party financing arrangements, the payment of dividends, the payment of long-term debt and capital lease obligations, and stock-based compensation tax withholding.
Net cash provided by financing activities in 2018 was primarily related to stock issuances in connection with option exercises of $41.3 million, partially offset by dividend payments of $26.4 million and stock-based compensation tax withholding of $10.5 million.
Net cash used in financing activities in 20172021 was primarily related to dividend payments ($26.0 million).
Net cash used in financing activities in 2016 was primarily related to the repayment, at maturity, of the $189.2$45.3 million remaining principal amount under our 6.625% senior notes in December 2016, dividendand share-based compensation tax withholding payments of $25.9 million and share repurchases of $15.7$11.2 million.
See “— Third-Party Financing” below and our Consolidated Statements of Cash Flows for additional information on our sources and uses of cash.
Restricted Cash
We were required to maintain $18.3$14.3 million of restricted cash as of December 30, 201826, 2021, and $18.0$15.9 million as of December 31, 2017,27, 2020, substantially all of which is set aside to collateralize workers’ compensation obligations.
THE NEW YORK TIMES COMPANY – P. 47
Capital Expenditures
Capital expenditures totaled approximately $57 million, $104$35 million and $26$30 million in 2018, 20172021 and 2016,2020, respectively. The increase incapital expenditures was primarily driven by improvements at our Company Headquarters and newsroom bureaus, partially offset by lower expenditures related to improvements at our College Point, N.Y, printing and distribution facility. The improvements in our Company Headquarters are intended to address growth in the number of employees and to enhance technologies that support our transition to hybrid work with employees working both from the office and remotely. The cash payments related to the capital expenditures totaled approximately $77 million, $85$35 million and $30$34 million in 2018, 20172021 and 2016, respectively.2020, respectively, due to the timing of the payments. In 2022, we expect capital expenditures of approximately $50 million, which will be funded from cash on hand. The increasedcapital expenditures for 2017will be primarily driven by improvements in our Company Headquarters, investments in technology to support our strategic initiatives and expenditures related to the redesign and consolidation of space in our headquarters building and certain improvements at ourCollege Point, N.Y., printing and distribution facilityfacility.
Acquisition of The Athletic Media Company
On February 1, 2022, we completed the acquisition of The Athletic Media Company, a global digital subscription-based sports media business that provides national and local coverage of more than 200 clubs and teams in College Point, New York.the U.S. and around the world, for an all-cash purchase price of $550 million, subject to customary closing adjustments (see Note 19 of the Notes to the Consolidated Financial Statements for additional information related to this acquisition). The purchase price was funded from cash on hand.
Third-Party Financing
As of December 30, 2018, our current indebtedness consisted of26, 2021, there were no outstanding borrowings under the repurchase option related to a sale-leaseback of a portion of our New York headquarters.Credit Facility and the Company was in compliance with the financial covenants contained in the Credit Facility. See Note 7 for information regarding our total debt and capital lease obligations. See Note 9 for information regarding the fair value of our long-term debt.
Credit Facility.
P. 4648 – THE NEW YORK TIMES COMPANY
Contractual Obligations
The information provided is based on management’s best estimate and assumptions of our contractual obligations as of December 30, 2018.26, 2021. Actual payments in future periods may vary from those reflected in the table. |
| | | | | | | | | | | | | | | | | | | | |
| | | Payment due in |
| (In thousands) | | Total | | 2019 | | 2020-2021 | | 2022-2023 | | Later Years |
Debt(1) | | $ | 275,558 |
| | $ | 275,558 |
| | $ | — |
| | $ | — |
| | $ | — |
|
Capital leases(2) | | 7,245 |
| | 7,245 |
| | — |
| | — |
| | — |
|
Operating leases(2) | | 49,992 |
| | 7,650 |
| | 12,935 |
| | 11,297 |
| | 18,110 |
|
Benefit plans(3) | | 419,105 |
| | 59,581 |
| | 93,586 |
| | 80,076 |
| | 185,862 |
|
| Total | | $ | 751,900 |
| | $ | 350,034 |
| | $ | 106,521 |
| | $ | 91,373 |
| | $ | 203,972 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Payment due in |
| (In thousands) | | Total | | 2022 | | 2023-2024 | | 2025-2026 | | Later Years |
Operating leases(1) | | 85,943 | | | 11,170 | | | 19,705 | | | 16,395 | | | 38,673 | |
Benefit plans(2) | | 353,040 | | | 50,352 | | | 88,632 | | | 79,043 | | | 135,013 | |
| Total | | $ | 438,983 | | | $ | 61,522 | | | $ | 108,337 | | | $ | 95,438 | | | $ | 173,686 | |
| |
(1)
| Includes estimated interest payments on long-term debt. See Note 7 of the Notes to the Consolidated Financial Statements for additional information related to our debt. |
| |
(2)
| See Note 19 of the Notes to the Consolidated Financial Statements for additional information related to our capital and operating leases. |
| |
(3)
| The Company's general funding policy with respect to qualified pension plans is to contribute amounts at least sufficient to satisfy the minimum amount required by applicable law and regulations. Contributions for our qualified pension plans and future benefit payments for our unfunded pension and other postretirement benefit payments have been estimated over a 10-year period; therefore, the amounts included in the “Later Years” column only include payments for the period of 2024-2028. For our funded qualified pension plans, estimating funding depends on several variables, including the performance of the plans' investments, assumptions for discount rates, expected long-term rates of return on assets, rates of compensation increases (applicable only for the Guild-Times Adjustable Pension Plan that has not been frozen) and other factors. Thus, our actual contributions could vary substantially from these estimates. While benefit payments under these plans are expected to continue beyond 2028, we have included in this table only those benefit payments estimated over the next 10 years. Benefit plans in the table above also include estimated payments for multiemployer pension plan withdrawal liabilities. See Notes 10 and 11 of the Notes to the Consolidated Financial Statements for additional information related to our pension and other postretirement benefits plans. |
“(1)See Note 17 of the Notes to the Consolidated Financial Statements for additional information related to our operating leases.
(2)The Company's general funding policy with respect to qualified pension plans is to contribute amounts at least sufficient to satisfy the minimum amount required by applicable law and regulations and Guild contracts. Contributions for our qualified pension plans and future benefit payments for our unfunded pension and other postretirement benefit payments have been estimated over a 10-year period; therefore, the amounts included in the “Later Years” column only include payments for the period of 2027-2031. For our funded qualified pension plans, estimating funding depends on several variables, including the performance of the plans' investments, assumptions for discount rates, expected long-term rates of return on assets, rates of compensation increases (applicable only for the Guild-Times Adjustable Pension Plan that has not been frozen) and other factors. Thus, our actual contributions could vary substantially from these estimates. While benefit payments under these plans are expected to continue beyond 2031, we have included in this table only those benefit payments estimated over the next 10 years. Benefit plans in the table above also include estimated payments for multiemployer pension plan withdrawal liabilities. See Notes 9 and 10 of the Notes to the Consolidated Financial Statements for additional information related to our pension and other postretirement benefits plans.
Other Liabilities — Other”Other in our Consolidated Balance Sheets include liabilities related to (1) deferred compensation, primarily related to our deferred executive compensation plan (the “DEC”) and (2) various other liabilities, including our contingent tax liability for uncertain tax positions.positions and contingent consideration. These liabilities are not included in the table above primarily because the timing of the future payments areis not determinable. See Note 1211 of the Notes to the Consolidated Financial Statements for additional information.
The DEC previously enabled certain eligible executives to elect to defer a portion of their compensation on a pre-tax basis. The deferred amounts are invested at the executives’ option in various mutual funds. The fair value of deferred compensation is based on the mutual fund investments elected by the executives and on quoted prices in active markets for identical assets. The fair value of deferred compensation was $23.2$21.1 million as of December 30, 2018.26, 2021. The DEC was frozen effective December 31, 2015, and no new contributions may be made into the plan. See Note 1211 of the Notes to the Consolidated Financial Statements for additional information on “OtherOther Liabilities — Other.”Other.
Our liability for uncertain tax positions was approximately $14.8$7 million, including approximately $3.2$1 million of accrued interest as of December 30, 2018.26, 2021. Until formal resolutions are reached between us and the taxtaxing authorities, determining the timing and amount of a possible audit settlement forsettlements relating to uncertain tax benefitspositions is not practicable. Therefore, we do not include this obligation in the table of contractual obligations. See Note 1312 of the Notes to the Consolidated Financial Statements for additional information regarding income taxes.
The contingent consideration represents contingent payments in connection with the acquisition of substantially all the assets and certain liabilities of Serial Productions, LLC. The Company estimated the fair value of the contingent consideration liability using a probability-weighted discounted cash flow model. The estimate of the fair value of contingent consideration requires subjective assumptions to be made regarding probabilities assigned to operational targets and the discount rate. The contingent consideration balance of $7.5 million as of December 26, 2021, is included in Accrued expenses and other, for the current portion of the liability, and Other non-current liabilities, for the long-term portion of the liability, in our Consolidated Balance Sheets. See Note 8 for more information.
We have a contract through the end of 2022 with Resolute FP US Inc., a subsidiary of Resolute Forest Products Inc., a major paper supplier, to purchase newsprint. The contract requires us to purchase annually the lesser of a fixed number of tons or a percentage of our total newsprint requirement at market rate in an arm’s length transaction. Since the quantities of newsprint purchased annually under this contract are based on our total newsprint requirement, the amount of the related payments for these purchases is excluded from the table above.
Off-Balance Sheet Arrangements
We did not have any material off-balance sheet arrangements as of December 30, 2018.
THE NEW YORK TIMES COMPANY – P. 4749
CRITICAL ACCOUNTING POLICIESESTIMATES
Our Consolidated Financial Statements are prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements for the periods presented.
We continually evaluate the policies and estimates we use to prepare our Consolidated Financial Statements. In general, management’s estimates are based on historical experience, information from third-party professionals and various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results may differ from those estimates made by management.
Our critical accounting policiesestimates include our accounting for goodwill and intangibles, retirement benefits and income taxes.revenue recognition. Specific risks related to our critical accounting policiesestimates are discussed below. For a description of our related accounting policies, refer to Note 2 of the Notes to the Consolidated Financial Statements.
Goodwill and Intangibles
We evaluate whether there has been an impairment of goodwill or intangible assets not amortized on an annual basis or in an interim period if certain circumstances indicate that a possible impairment may exist. For a description of our related accounting policies, refer to Note 2 of the Notes to the Consolidated Financial Statements.
| | | | | | | | | | | | | | |
| (In thousands) | | December 26,
2021 | | December 27,
2020 |
| Goodwill | | $ | 166,360 | | | $ | 171,657 | |
| Intangibles | | $ | 14,246 | | | $ | 16,298 | |
| Total assets | | $ | 2,564,108 | | | $ | 2,307,689 | |
| Percentage of goodwill and intangibles to total assets | | 7 | % | | 8 | % |
|
| | | | | | | | |
| (In thousands) | | December 30,
2018 |
| | December 31,
2017 |
|
| Goodwill | | $ | 140,282 |
| | $ | 143,549 |
|
| Intangibles | | $ | 6,225 |
| | $ | 8,161 |
|
| Total assets | | $ | 2,197,123 |
| | $ | 2,099,780 |
|
| Percentage of goodwill and intangibles to total assets | | 7 | % | | 7 | % |
The impairment analysis is considered critical because of the significance of goodwill and intangibles to our Consolidated Balance Sheets.
We test goodwill for goodwill impairment at a reporting unit level. We first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.
If we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we compare the fair value of a reporting unit with its carrying amount, including goodwill. Fair value is calculated by a combination of a discounted cash flow model and a market approach model.
We test intangible assets that are not amortized (i.e., trade names) for impairment at the asset level. We first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the asset is less than its carrying value. If we determine that it is more likely than not that the intangible asset is impaired, we perform a quantitative assessment by comparing the fair value of the asset with its carrying amount. If the fair value, which is based on future cash flows, exceeds the carrying value, the asset is not considered impaired. If the carrying amount exceeds the fair value, an impairment loss would be recognized in an amount equal to the excess of the carrying amount of the asset over the fair value of the asset. We recognized a de minimis impairment in 2020 and 2019 related to the closure of HelloSociety and Fake Love digital marketing agencies.
Intangible assets that are amortized (i.e., customer lists, non-competes, etc.) are tested for impairment at the asset level associated with the lowest level of cash flows. An impairment exists if the carrying value of the asset (1) is not recoverable (the carrying value of the asset is greater than the sum of undiscounted cash flows) and (2) is greater than its fair value.
The discounted cash flow analysis requires us to make various judgments, estimates and assumptions, many of which are interdependent, about future revenues, operating margins, growth rates, capital expenditures, working capital, discount rates and royalty rates. The starting point for the assumptions used in our discounted cash flow analysis is the annual long-range financial forecast. The annual planning process that we undertake to prepare the long-range financial forecast takes into consideration a multitude of factors, including historical growth rates and operating performance, related industry trends, macroeconomic conditions, and marketplace data, among others. Assumptions are also made for perpetual growth rates for periods beyond the long-range financial forecast period.
P. 50 – THE NEW YORK TIMES COMPANY
Our estimates of fair value are sensitive to changes in all of these variables, certain of which relate to broader macroeconomic conditions outside our control.
The market approach analysis includes applying a multiple, based on comparable market transactions, to certain operating metrics of a reporting unit.
The significant estimates and assumptions used by management in assessing the recoverability of goodwill and intangibles are estimated future cash flows, discount rates, growth rates, as well as other factors. Any changes in these estimates or assumptions could result in an impairment charge. The estimates, based on reasonable and supportable assumptions and projections, require management’s subjective judgment. Depending on the assumptions and estimates used, the estimated results of the impairment tests can vary within a range of outcomes.
P. 48 – THE NEW YORK TIMES COMPANY
For the 2021 annual impairment testing, based on our qualitative assessment, we concluded that goodwill and intangible assets are not impaired.
Retirement Benefits
Our single-employer pension and other postretirement benefit costs and obligations are accounted for using actuarial valuations. We recognize the funded status of these plans – measured as the difference between plan assets, if funded, and the benefit obligation – on the balance sheet and recognize changes in the funded status that arise during the period but are not recognized as components of net periodic pension cost, within other comprehensive income/(loss), net of tax. The assets related to our funded pension plans are measured at fair value.
We also recognize the present value of liabilities associated with the withdrawal from multiemployer pension plans.
We consider accounting for retirement plans critical to our operations because management is required to make significant subjective judgments about a number of actuarial assumptions, which include discount rates, long-term return on plan assets and mortality rates. These assumptions may have an effect on the amount and timing of future contributions. Depending on the assumptions and estimates used, the impact from our pension and other postretirement benefits could vary within a range of outcomes and could have a material effect on our Consolidated Financial Statements.
See “— Pensions and Other Postretirement Benefits” below for more information on our retirement benefits.
Revenue Recognition
Our contracts with customers sometimes include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. We use an observable price to determine the standalone selling price for separate performance obligations if available or, when not available, an estimate that maximizes the use of observable inputs and faithfully depicts the selling price of the promised goods or services if we sold those goods or services separately to a similar customer in similar circumstances.
Income Taxes
We consider accounting for income taxes critical to our operating results because management is required to make significant subjective judgments in developing our provision for income taxes, including the determination of deferred tax assets and liabilities, and any valuation allowances that may be required against deferred tax assets.
Income taxes are recognized for the following: (1) the amount of taxes payable for the current year and (2) deferred tax assets and liabilities for the future tax consequences of events that have been recognized differently in the financial statements than for tax purposes. Deferred tax assets and liabilities are established using statutory tax rates and are adjusted for tax rate changes in the period of enactment.
We assess whether our deferred tax assets shall be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. Our process includes collecting positive (i.e., sources of taxable income) and negative (i.e., recent historical losses) evidence and assessing, based on the evidence, whether it is more likely than not that the deferred tax assets will not be realized.
We recognize in our financial statements the impact of a tax position if that tax position is more likely than not of being sustained on audit, based on the technical merits of the tax position. This involves the identification of potential uncertain tax positions, the evaluation of tax law and an assessment of whether a liability for uncertain tax positions is necessary. Different conclusions reached in this assessment can have a material impact on the Consolidated Financial Statements.
We operate within multiple taxing jurisdictions and are subject to audit in these jurisdictions. These audits can involve complex issues, which could require an extended period of time to resolve. Until formal resolutions are reached between us and the tax authorities, the timing and amount of a possible audit settlement for uncertain tax benefits is difficult to predict.
THE NEW YORK TIMES COMPANY – P. 4951
PENSIONS AND OTHER POSTRETIREMENT BENEFITS
We sponsor severalmaintain the Pension Plan, a frozen single-employer defined benefit pension plans.plan. The Company and The NewsGuild of New York (the “Guild”) jointly sponsor the Guild-Times Adjustable Pension Plan (the “APP”), which continues to accrue active benefits. Effective January 1, 2018, the Company became the sole sponsor of the frozen Newspaper Guild of New York - The New York Times Pension Plan (the “Guild-Times Plan”). The Guild-Times Plan was previously joint trusteed between the Guild and the Company. Effective December 31, 2018, the Guild-Times Plan and the Retirement Annuity Plan For Craft Employees of The New York Times Companies were merged into The New York Times Companies Pension Plan. Our pension liability also includes our multiemployer pension plan withdrawal obligations. Our liability for postretirement obligations includes our liability to provide health benefits to eligible retired employees.
The table below includes the liability for all of these plans.
| | | (In thousands) | | December 30, 2018 |
| | December 31, 2017 |
| (In thousands) | | December 26, 2021 | | December 27, 2020 |
| Pension and other postretirement liabilities (includes current portion) | | $ | 446,860 |
| | $ | 476,965 |
| Pension and other postretirement liabilities (includes current portion) | | $ | 363,445 | | | $ | 397,918 | |
| Total liabilities | | $ | 1,154,482 |
| | $ | 1,202,417 |
| Total liabilities | | $ | 1,023,383 | | | $ | 979,578 | |
| Percentage of pension and other postretirement liabilities to total liabilities | | 38.7 | % | | 39.7 | % | Percentage of pension and other postretirement liabilities to total liabilities | | 35.5 | % | | 40.6 | % |
Pension Benefits
Our Company-sponsored defined benefit pension plans include qualified plans (funded) as well as non-qualified plans (unfunded). These plans provide participating employees with retirement benefits in accordance with benefit formulas detailed in each plan. All of our non-qualified plans, which provide enhanced retirement benefits to select employees, are frozen, except for a foreign-based pension plan discussed below.
Our joint Company and Guild-sponsored plan is a qualified plan and is included in the table below.
We also have a foreign-based pension plan for certain non-U.S. employees (the “foreign plan”). The information for the foreign plan is combined with the information for U.S. non-qualified plans. The benefit obligation of the foreign plan is immaterial to our total benefit obligation.
The funded status of our qualified and non-qualified pension plans as of December 30, 201826, 2021, is as follows:
| | | | | December 30, 2018 | | | December 26, 2021 |
| (In thousands) | | Qualified Plans | | Non-Qualified Plans | | All Plans | (In thousands) | | Qualified
Plans | | Non-Qualified
Plans | | All Plans |
| Pension obligation | | $ | 1,491,398 |
| | $ | 223,066 |
| | $ | 1,714,464 |
| Pension obligation | | $ | 1,475,764 | | | $ | 239,190 | | | $ | 1,714,954 | |
| Fair value of plan assets | | 1,410,151 |
| | — |
| | 1,410,151 |
| Fair value of plan assets | | 1,550,078 | | | — | | | 1,550,078 | |
| Pension underfunded/unfunded obligation, net | | $ | (81,247 | ) | | $ | (223,066 | ) | | $ | (304,313 | ) | |
| Pension asset/obligation, net | | Pension asset/obligation, net | | $ | 74,314 | | | $ | (239,190) | | | $ | (164,876) | |
We made contributions of approximately $8$9 million to the joint Company and Guild-sponsored planAPP in 2018.2021. We expect contributions made to satisfy minimum funding requirements to total approximately $9$10 million in 2019.2022.
Pension expense is calculated using a number of actuarial assumptions, including an expected long-term rate of return on assets (for qualified plans) and a discount rate. Our methodology in selecting these actuarial assumptions is discussed below.
In determining the expected long-term rate of return on assets, we evaluated input from our investment consultants, actuaries and investment management firms, including our review of asset class return expectations, as well as long-term historical asset class returns. Projected returns by such consultants and economists are based on broad equity and bond indices. Our objective is to select an average rate of earnings expected on existing plan assets and expected contributions to the plan (less plan expenses to be incurred) during the year. The expected long-term rate of return determined on this basis was 5.70%3.75% at the beginning of 2018.2021. Our plan assets had an average rate of return of approximately (4.66%)1.91% in 20182021 and an average annual return of approximately 7.05%13.65% over the three-year
P. 50 – THE NEW YORK TIMES COMPANY
period 2016-2018.2019-2021. We regularly review our actual asset allocation and periodically rebalance our investments to meet our investment strategy.
P. 52 – THE NEW YORK TIMES COMPANY
The market-related value of plan assets is multiplied by the expected long-term rate of return on assets to compute the expected return on plan assets, a component of net periodic pension cost. The market-related value of plan assets is a calculated value that recognizes changes in fair value over three years.
Based on the composition of our assets at the end of the year, we estimated our 20192022 expected long-term rate of return to be 5.70%3.75%. If we had decreased our expected long-term rate of return on our plan assets by 50 basis points in 2018,2021, pension expense would have increased by approximately $7 million for our qualified pension plans. Our funding requirements would not have been materially affected.
We determined our discount rate using a Ryan ALM, Inc. Curve (the “Ryan Curve”). The Ryan Curve provides the bonds included in the curve and allows adjustments for certain outliers (i.e., bonds on “watch”). We believe the Ryan Curve allows us to calculate an appropriate discount rate.
To determine our discount rate, we project a cash flow based on annual accrued benefits. For active participants, the benefits under the respective pension plans are projected to the date of termination. The projected plan cash flow is discounted to the measurement date, which is the last day of our fiscal year, using the annual spot rates provided in the Ryan Curve. A single discount rate is then computed so that the present value of the benefit cash flow equals the present value computed using the Ryan Curve rates.
The weighted-average discount rate determined on this basis was 4.43%2.94% for our qualified plans and 4.35%2.81% for our non-qualified plans as of December 30, 2018.26, 2021.
If we had decreased the expected discount rate by 50 basis points for our qualified plans and our non-qualified plans in 2018,2021, pension expense would have increaseddecreased by approximately $0.5$0.3 million and our pension obligation would have increased by approximately $99$108 million as of December 30, 2018.26, 2021.
We will continue to evaluate all of our actuarial assumptions, generally on an annual basis, and will adjust as necessary. Actual pension expense will depend on future investment performance, changes in future discount rates, the level of contributions we make and various other factors.
We also recognize the present value of pension liabilities associated with the withdrawal from multiemployer pension plans. Our multiemployer pension plan withdrawal liability was approximately $97$70 million as of December 30, 2018.26, 2021. This liability represents the present value of the obligations related to complete and partial withdrawals that have already occurred as well as an estimate of future partial withdrawals that we considered probable and reasonably estimable. For those plans that have yet to provide us with a demand letter, the actual liability will not be known until they complete a final assessment of the withdrawal liability and issue a demand to us. Therefore, the estimate of our multiemployer pension plan liability will be adjusted as more information becomes available that allows us to refine our estimates.
See Note 109 of the Notes to the Consolidated Financial Statements for additional information regarding our pension plans.
Other Postretirement Benefits
We provide health benefits to certain primarily grandfathered retired employeesemployee groups (and their eligible dependents) who meet the definition of an eligible participant and certain age and service requirements, as outlined in the plan document. There is a de minimis liability for retiree health benefits for active employees. While we offer pre-age 65 retiree medical coverage to employees who meet certain retiree medical eligibility requirements, we do not provide post-age 65 retiree medical benefits for employees who retired on or after March 1, 2009. We accrue the costs of postretirement benefits during the employees’ active years of service and our policy is to pay our portion of insurance premiums and claims from general corporate assets.
The annual postretirement expense was calculated using a number of actuarial assumptions, including a health-care cost trend rate and a discount rate. The health-care cost trend rate was 6.90% as of December 30, 2018. A one-percentage point change in the assumed health-care cost trend rate would result in an increase of less than $0.1 million or a decrease of less than $0.1 million in our 2018 service and interest costs, respectively, two factors included in the calculation of postretirement expense. A one-percentage point change in the assumed health-care cost trend rate would result in an increase of approximately $1 million or a decrease of approximately $1 million in our accumulated benefit obligation as of December 30, 2018.
THE NEW YORK TIMES COMPANY – P. 51
See Note 1110 of the Notes to the Consolidated Financial Statements for additional information regarding our other postretirement benefits.
RECENT ACCOUNTING PRONOUNCEMENTS
See Note 2 of the Notes to the Consolidated Financial Statements for information regarding recent accounting pronouncements.
THE NEW YORK TIMES COMPANY – P. 53
|
| |
| ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Our market risk is principally associated with the following:
•Our exposure to changes in interest rates relates primarily to interest earned and market value on our cash and cash equivalents, and marketable securities. Our cash and cash equivalents and marketable securities consist of cash, money market funds, certificates of deposit, U.S. Treasury securities, U.S. government agency securities, commercial paper, and corporate debt securities. Our investment policy and strategy are focused on preservation of capital and supporting our liquidity requirements. Changes in U.S. interest rates affect the interest earned on our cash and cash equivalents and marketable securities, and the market value of those securities. A hypothetical 100 basis point increase in interest rates would have resulted in a decrease of approximately $4$9 million in the market value of our marketable debt securities as of December 30, 2018,26, 2021, and December 31, 2017.27, 2020. Any realized gains or losses resulting from such interest rate changes would only occur if we sold the investments prior to maturity.
Newsprint is a commodity subject to supply and demand market conditions. The cost of raw materials, of which newsprint expense is a major component, represented approximately 5% and 4% of our total operating costs in 2018 and 2017, respectively. Based on the number of newsprint tons consumed in 2018 and 2017, a $10 per ton increase in newsprint prices would have resulted in additional newsprint expense of $0.9 million (pre-tax) in 2018 and 2017.
•The discount rate used to measure the benefit obligations for our qualified pension plans is determined by using the Ryan Curve, which provides rates for the bonds included in the curve and allows adjustments for certain outliers (i.e., bonds on “watch”). Broad equity and bond indices are used in the determination of the expected long-term rate of return on pension plan assets. Therefore, interest rate fluctuations and volatility of the debt and equity markets can have a significant impact on asset values, the funded status of our pension plans and future anticipated contributions. See “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Pensions and Other Postretirement Benefits.”
•A significant portion of our employees are unionized and our results could be adversely affected if future labor negotiations or contracts were to further restrict our ability to maximize the efficiency of our operations, or if a larger percentage of our workforce were to be unionized. In addition, if we are unable to negotiate labor contracts on reasonable terms, or if we were to experience labor unrest or other business interruptions in connection with labor negotiations or otherwise, our ability to produce and deliver our products could be impaired.
See Notes 4, 10, 119 and 1910 of the Notes to the Consolidated Financial Statements.
P. 5254 – THE NEW YORK TIMES COMPANY
|
| |
| ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
THE NEW YORK TIMES COMPANY 20182021 FINANCIAL REPORT
THE NEW YORK TIMES COMPANY – P. 5355
REPORT OF MANAGEMENT
Management’s Responsibility for the Financial Statements
The Company’s consolidated financial statements were prepared by management, who is responsible for their integrity and objectivity. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and, as such, include amounts based on management’s best estimates and judgments.
Management is further responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company follows and continuously monitors its policies and procedures for internal control over financial reporting to ensure that this objective is met (see “Management’s Report on Internal Control Over Financial Reporting” below).
The consolidated financial statements were audited by Ernst & Young LLP, an independent registered public accounting firm, in 2018, 20172021, 2020 and 2016.2019. Its audits were conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and its report is shown on Page 55.57.
The Audit Committee of the Board of Directors, which is composed solely of independent directors, meets regularly with the independent registered public accounting firm, internal auditors and management to discuss specific accounting, financial reporting and internal control matters. Both the independent registered public accounting firm and the internal auditors have full and free access to the Audit Committee. Each year the Audit Committee selects, subject to ratification by the Company’s stockholders, the firm whichthat is to perform audit and other related work for the Company.
Management’s Report on Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company’s internal control over financial reporting includes those policies and procedures that:
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
provide reasonable assurance that transactions are recorded1934, as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.amended.
Our management, with the participation of our principal executive officer and principal financial officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 30, 2018. In making this assessment, management used26, 2021, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control — Integrated Framework (2013 framework). Based on itsthis assessment, management concluded that the Company’s internal control over financial reporting was effective as of December 30, 2018.26, 2021, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.
The effectiveness of the Company’s internal control over financial reporting as of December 26, 2021, has been audited by Ernst & Young LLP, the independent registered public accounting firm Ernst & Young LLP, that also audited the consolidated financial statements of the Company included in this Annual Report on Form 10-K, has issued an attestation10-K. Their report on the Company’s internal control over financial reporting as of December 30, 2018, which is included on Page 5659 in this Annual Report on Form 10-K.
P. 5456 – THE NEW YORK TIMES COMPANY
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of The New York Times Company
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of The New York Times Company (the Company) as of December 30, 201826, 2021 and December 31, 2017,27, 2020, and the related consolidated statements of operations, comprehensive income/(loss), changes in stockholders’ equity, and cash flows for each of the three fiscal years in the period ended December 30, 2018,26, 2021, and the related notes and the financial statement schedule listed at Item 15(A)(2) of The New York Times Company’s 20182021 Annual Report on Form 10-K (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of The New York Times Company at December 30, 201826, 2021 and December 31, 2017,27, 2020, and the consolidated results of its operations and its cash flows for each of the three fiscal years in the period ended December 30, 2018,26, 2021, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), The New York Times Company's internal control over financial reporting as of December 30, 2018,26, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework),and our report dated February 26, 201923, 2022 expressed an unqualified opinion thereon.
Adoption of ASU No. 2017-07
As discussed in Note 2 to the consolidated financial statements, The New York Times Company changed its classification of net periodic pension cost and net periodic postretirement benefit cost in the consolidated statement of operations in all fiscal years presented due to the adoption of ASU No. 2017-07,Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.
Basis for Opinion
These financial statements are the responsibility of The New York Times Company's management. Our responsibility is to express an opinion on The New York Times Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to The New York Times Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the Audit Committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.
THE NEW YORK TIMES COMPANY – P. 57
| | | | | | | | |
| | Valuation of the pension benefit obligation |
| Description of the matter | | At December 26, 2021, the aggregate defined benefit pension obligation was $1,715 million which exceeded the fair value of pension plan assets of $1,550 million, resulting in an unfunded defined benefit pension obligation of $165 million. As discussed in Note 2, the Company makes significant subjective judgments about a number of actuarial assumptions, which include discount rates and long-term return on plan assets. Auditing management’s estimate of the defined benefit pension obligation involves especially challenging and complex judgments because of the highly subjective nature of the actuarial assumptions (e.g., discount rate and expected return on plan assets) used in the measurement of the defined benefit pension obligation and the impact small changes in these assumptions would have on the measurement of the defined benefit pension obligation and expense. |
| How we addressed the matter in our audit | | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls that address the risks of material misstatement relating to the measurement and valuation of the defined benefit pension obligation. Specifically, we tested controls over management’s review of the defined benefit pension obligation, the significant actuarial assumptions including the discount rate and long-term rate of return, and the data inputs provided to the actuary. To test the defined benefit pension obligation, our audit procedures included, among others, evaluating the methodology used, the significant actuarial assumptions discussed above, and testing the underlying data used by the Company. We compared the actuarial assumptions used by management to historical trends and evaluated the change in the components of the defined benefit pension obligation from prior year due to the change in service cost, interest cost, actuarial gains and losses, benefit payments, contributions, and other. In addition, we involved actuarial specialists to assist in evaluating the key assumptions. To evaluate the discount rate, we independently developed yield curves reflecting an independently selected subset of bonds. In addition, we discounted the plans’ projected benefit cash outlays with independently developed yield curves and compared these results to the defined benefit pension obligation. To evaluate the expected return on plan assets, we independently calculated a range of returns for each class of plan investments and based on the investment allocations compared the results to the Company’s selected long-term rate of return. |
/s/ Ernst & Young LLP
We have served as The New York Times Company’s auditor since 2007.
New York, New York
February 26, 201923, 2022
P. 58 – THE NEW YORK TIMES COMPANY – P. 55
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of The New York Times Company
Opinion on Internal Control over Financial Reporting
We have audited The New York Times Company’s internal control over financial reporting as of December 30, 2018,26, 2021, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework)(the COSO criteria). In our opinion, The New York Times Company maintained, in all material respects, effective internal control over financial reporting as of December 30, 2018,26, 2021, based onthe COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the accompanying consolidated balance sheets of The New York Times Company as of December 30, 201826, 2021 and December 31, 2017,27, 2020, and the related consolidated statements of operations, comprehensive income/(loss), changes in stockholders’ equity, and cash flows for each of the three fiscal years in the period ended December 30, 2018,26, 2021, and the related notes and the financial statement schedule listed at Item 15(A)(2) and our report dated February 26, 201923, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
The New York Times Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on The New York Times Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to The New York Times Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
P. 56 – THE NEW YORK TIMES COMPANY – P. 59
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
New York, New York
February 26, 2019
23, 2022
THE NEW YORK TIMES COMPANY – P. 57
CONSOLIDATED BALANCE SHEETS |
| | | | | | | | |
| (In thousands) | | December 30, 2018 |
|
| December 31, 2017 |
|
| Assets | | | | |
| Current assets | | | | |
| Cash and cash equivalents | | $ | 241,504 |
| | $ | 182,911 |
|
| Short-term marketable securities | | 371,301 |
| | 308,589 |
|
| Accounts receivable (net of allowances of $13,249 in 2018 and $14,542 in 2017) | | 222,464 |
| | 184,885 |
|
| Prepaid expenses | | 25,349 |
| | 22,851 |
|
| Other current assets | | 33,328 |
| | 50,463 |
|
| Total current assets | | 893,946 |
| | 749,699 |
|
| Long-term marketable securities | | 213,558 |
| | 241,411 |
|
| Property, plant and equipment: | | | | |
| Equipment | | 484,931 |
| | 528,111 |
|
| Buildings, building equipment and improvements | | 712,439 |
| | 674,056 |
|
| Software | | 225,846 |
| | 232,791 |
|
| Land | | 105,710 |
| | 105,710 |
|
| Assets in progress | | 21,765 |
| | 45,672 |
|
| Total, at cost | | 1,550,691 |
| | 1,586,340 |
|
| Less: accumulated depreciation and amortization | | (911,845 | ) | | (945,401 | ) |
| Property, plant and equipment, net | | 638,846 |
| | 640,939 |
|
| Goodwill | | 140,282 |
| | 143,549 |
|
| Deferred income taxes | | 128,431 |
| | 153,046 |
|
| Miscellaneous assets | | 182,060 |
| | 171,136 |
|
| Total assets | | $ | 2,197,123 |
| | $ | 2,099,780 |
|
See Notes to the Consolidated Financial Statements.
P. 58 – THE NEW YORK TIMES COMPANY
CONSOLIDATED BALANCE SHEETS— continued |
| | | | | | | | |
| (In thousands, except share and per share data) | | December 30, 2018 |
| | December 31, 2017 |
|
| Liabilities and stockholders’ equity | | | | |
| Current liabilities | | | | |
| Accounts payable | | $ | 111,553 |
| | $ | 125,479 |
|
| Accrued payroll and other related liabilities | | 104,543 |
| | 104,614 |
|
| Unexpired subscriptions revenue | | 84,044 |
| | 75,054 |
|
| Short-term debt and capital lease obligations | | 253,630 |
| | — |
|
| Accrued expenses and other | | 119,534 |
| | 110,510 |
|
| Total current liabilities | | 673,304 |
| | 415,657 |
|
| Other liabilities | | | | |
| Long-term debt and capital lease obligations | | — |
| | 250,209 |
|
| Pension benefits obligation | | 362,940 |
| | 405,422 |
|
| Postretirement benefits obligation | | 40,391 |
| | 48,816 |
|
| Other | | 77,847 |
| | 82,313 |
|
| Total other liabilities | | 481,178 |
| | 786,760 |
|
| Stockholders’ equity | | | | |
| Common stock of $.10 par value: | | | | |
| Class A – authorized: 300,000,000 shares; issued: 2018 – 173,158,414; 2017 – 170,276,449 (including treasury shares: 2018 – 8,870,801; 2017 – 8,870,801) | | 17,316 |
| | 17,028 |
|
| Class B – convertible – authorized and issued shares: 2018 – 803,408; 2017 – 803,763 (including treasury shares: 2018 – none; 2017 – none) | | 80 |
| | 80 |
|
| Additional paid-in capital | | 206,316 |
| | 164,275 |
|
| Retained earnings | | 1,506,004 |
| | 1,310,136 |
|
| Common stock held in treasury, at cost | | (171,211 | ) | | (171,211 | ) |
| Accumulated other comprehensive loss, net of income taxes: | | | | |
| Foreign currency translation adjustments | | 4,677 |
| | 6,328 |
|
| Funded status of benefit plans | | (520,308 | ) | | (427,819 | ) |
| Unrealized loss on available-for-sale securities | | (2,093 | ) | | (1,538 | ) |
| Total accumulated other comprehensive loss, net of income taxes | | (517,724 | ) | | (423,029 | ) |
| Total New York Times Company stockholders’ equity | | 1,040,781 |
| | 897,279 |
|
| Noncontrolling interest | | 1,860 |
| | 84 |
|
| Total stockholders’ equity | | 1,042,641 |
| | 897,363 |
|
| Total liabilities and stockholders’ equity | | $ | 2,197,123 |
| | $ | 2,099,780 |
|
See Notes to the Consolidated Financial Statements.
THE NEW YORK TIMES COMPANY – P. 59
CONSOLIDATED STATEMENTS OF OPERATIONS |
| | | | | | | | | | | | |
| | | Years Ended |
| (In thousands) | | December 30, 2018 |
|
| December 31, 2017 |
|
| December 25, 2016 |
|
| | | (52 weeks) | | (53 weeks) | | (52 weeks) |
| Revenues | | | | | | |
| Subscription | | $ | 1,042,571 |
| | $ | 1,008,431 |
| | $ | 880,543 |
|
| Advertising | | 558,253 |
| | 558,513 |
| | 580,732 |
|
| Other | | 147,774 |
| | 108,695 |
| | 94,067 |
|
| Total revenues | | 1,748,598 |
| | 1,675,639 |
| | 1,555,342 |
|
| Operating costs | | | | | | |
| Production costs: | | | | | | |
| Wages and benefits | | 380,678 |
| | 363,686 |
| | 364,302 |
|
| Raw materials | | 76,542 |
| | 66,304 |
| | 72,325 |
|
| Other production costs | | 196,956 |
| | 186,352 |
| | 192,728 |
|
| Total production costs | | 654,176 |
| | 616,342 |
| | 629,355 |
|
| Selling, general and administrative costs | | 845,591 |
| | 815,065 |
| | 728,338 |
|
| Depreciation and amortization | | 59,011 |
| | 61,871 |
| | 61,723 |
|
| Total operating costs | | 1,558,778 |
| | 1,493,278 |
| | 1,419,416 |
|
| Headquarters redesign and consolidation | | 4,504 |
| | 10,090 |
| | — |
|
| Restructuring charge | | — |
| | — |
| | 16,518 |
|
| Multiemployer pension and other contractual (gain)/loss | | (4,851 | ) | | (4,320 | ) | | 6,730 |
|
| Operating profit | | 190,167 |
| | 176,591 |
| | 112,678 |
|
| Other components of net periodic benefit costs | | 8,274 |
| | 64,225 |
| | 11,074 |
|
| Gain/(loss) from joint ventures | | 10,764 |
| | 18,641 |
| | (36,273 | ) |
| Interest expense and other, net | | 16,566 |
| | 19,783 |
| | 34,805 |
|
| Income from continuing operations before income taxes | | 176,091 |
| | 111,224 |
| | 30,526 |
|
| Income tax expense | | 48,631 |
| | 103,956 |
| | 4,421 |
|
| Income from continuing operations | | 127,460 |
| | 7,268 |
| | 26,105 |
|
| Loss from discontinued operations, net of income taxes | | — |
| | (431 | ) | | (2,273 | ) |
| Net income | | 127,460 |
| | 6,837 |
| | 23,832 |
|
| Net (income)/loss attributable to the noncontrolling interest | | (1,776 | ) | | (2,541 | ) | | 5,236 |
|
| Net income attributable to The New York Times Company common stockholders | | $ | 125,684 |
| | $ | 4,296 |
| | $ | 29,068 |
|
| Amounts attributable to The New York Times Company common stockholders: | | | | | | |
| Income from continuing operations | | $ | 125,684 |
| | $ | 4,727 |
| | $ | 31,341 |
|
| Loss from discontinued operations, net of income taxes | | — |
| | (431 | ) | | (2,273 | ) |
| Net income | | $ | 125,684 |
| | $ | 4,296 |
| | $ | 29,068 |
|
See Notes to the Consolidated Financial Statements.
P. 60 – THE NEW YORK TIMES COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS — continuedBALANCE SHEETS
|
| | | | | | | | | | | | |
| | | Years Ended |
| (In thousands, except per share data) | | December 30, 2018 |
| | December 31, 2017 |
| | December 25, 2016 |
|
| | | (52 weeks) | | (53 weeks) | | (52 weeks) |
| Average number of common shares outstanding: | | | | | | |
| Basic | | 164,845 |
| | 161,926 |
| | 161,128 |
|
| Diluted | | 166,939 |
| | 164,263 |
| | 162,817 |
|
| Basic earnings per share attributable to The New York Times Company common stockholders: | | | | | | |
| Income from continuing operations | | $ | 0.76 |
| | $ | 0.03 |
| | $ | 0.19 |
|
| Loss from discontinued operations, net of income taxes | | — |
| | — |
| | (0.01 | ) |
| Net income | | $ | 0.76 |
| | $ | 0.03 |
| | $ | 0.18 |
|
| Diluted earnings per share attributable to The New York Times Company common stockholders: | | | | | | |
| Income from continuing operations | | $ | 0.75 |
| | $ | 0.03 |
| | $ | 0.19 |
|
| Loss from discontinued operations, net of income taxes | | — |
| | — |
| | (0.01 | ) |
| Net income | | $ | 0.75 |
| | $ | 0.03 |
| | $ | 0.18 |
|
| Dividends declared per share | | $ | 0.16 |
| | $ | 0.16 |
| | $ | 0.16 |
|
| | | | | | | | | | | | | | |
| (In thousands) | | December 26, 2021 | | December 27, 2020 |
| Assets | | | | |
| Current assets | | | | |
| Cash and cash equivalents | | $ | 319,973 | | | $ | 286,079 | |
| Short-term marketable securities | | 341,075 | | | 309,080 | |
| Accounts receivable (net of allowances of $12,374 in 2021 and $13,797 in 2020) | | 232,908 | | | 183,692 | |
| Prepaid expenses | | 33,199 | | | 29,487 | |
| Other current assets | | 25,553 | | | 27,497 | |
| Total current assets | | 952,708 | | | 835,835 | |
| Long-term marketable securities | | 413,380 | | | 286,831 | |
| | | | |
| Property, plant and equipment: | | | | |
| Equipment | | 426,912 | | | 470,505 | |
| Buildings, building equipment and improvements | | 723,850 | | | 722,122 | |
| Software | | 72,600 | | | 173,046 | |
| Land | | 106,128 | | | 105,710 | |
| Assets in progress | | 23,099 | | | 9,282 | |
| Total, at cost | | 1,352,589 | | | 1,480,665 | |
| Less: accumulated depreciation and amortization | | (777,637) | | | (886,149) | |
| Property, plant and equipment, net | | 574,952 | | | 594,516 | |
| Goodwill | | 166,360 | | | 171,657 | |
| Deferred income taxes | | 95,800 | | | 99,518 | |
| Miscellaneous assets | | 360,908 | | | 319,332 | |
| Total assets | | $ | 2,564,108 | | | $ | 2,307,689 | |
See Notes to the Consolidated Financial Statements.
THE NEW YORK TIMES COMPANY – P. 61
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
|
| | | | | | | | | | | | |
| | | Years Ended |
| (In thousands) | | December 30, 2018 |
| | December 31, 2017 |
| | December 25, 2016 |
|
| | | (52 weeks) | | (53 weeks) | | (52 weeks) |
| Net income | | $ | 127,460 |
| | $ | 6,837 |
| | $ | 23,832 |
|
| Other comprehensive income/(loss), before tax: | | | | | | |
| Foreign currency translation adjustments-income/(loss) | | (4,368 | ) | | 12,110 |
| | (3,070 | ) |
| Pension and postretirement benefits obligation | | 3,910 |
| | 89,881 |
| | 51,405 |
|
| Net unrealized loss on available-for-sale securities | | (300 | ) | | (2,545 | ) | | — |
|
| Other comprehensive income, before tax | | (758 | ) | | 99,446 |
| | 48,335 |
|
| Income tax expense | | (198 | ) | | 41,545 |
| | 19,096 |
|
| Other comprehensive (loss)/income, net of tax | | (560 | ) | | 57,901 |
| | 29,239 |
|
| Comprehensive income | | 126,900 |
| | 64,738 |
| | 53,071 |
|
| Comprehensive (income)/loss attributable to the noncontrolling interest | | (1,776 | ) | | (3,655 | ) | | 5,275 |
|
| Comprehensive income attributable to The New York Times Company common stockholders | | $ | 125,124 |
| | $ | 61,083 |
| | $ | 58,346 |
|
| | | | | | | | | | | | | | |
| (In thousands, except share and per share data) | | December 26, 2021 | | December 27, 2020 |
| Liabilities and stockholders’ equity | | | | |
| Current liabilities | | | | |
| Accounts payable | | $ | 127,073 | | | $ | 123,157 | |
| Accrued payroll and other related liabilities | | 166,464 | | | 121,159 | |
| Unexpired subscriptions revenue | | 119,296 | | | 105,346 | |
| | | | |
| Accrued expenses and other | | 146,319 | | | 137,086 | |
| Total current liabilities | | 559,152 | | | 486,748 | |
| Other liabilities | | | | |
| | | | |
| Pension benefits obligation | | 295,104 | | | 326,555 | |
| Postretirement benefits obligation | | 36,086 | | | 38,690 | |
| Other | | 133,041 | | | 127,585 | |
| Total other liabilities | | 464,231 | | | 492,830 | |
| Stockholders’ equity | | | | |
| Common stock of $.10 par value: | | | | |
| Class A – authorized: 300,000,000 shares; issued: 2021 – 175,971,801; 2020 – 175,308,672 (including treasury shares: 2021 – 8,870,801; 2020 – 8,870,801) | | 17,597 | | | 17,531 | |
| Class B – convertible – authorized and issued shares: 2021 – 781,724; 2020 – 781,724 (including treasury shares: 2021 – none; 2020 – none) | | 78 | | | 78 | |
| Additional paid-in capital | | 230,115 | | | 216,714 | |
| Retained earnings | | 1,845,343 | | | 1,672,586 | |
| Common stock held in treasury, at cost | | (171,211) | | | (171,211) | |
| Accumulated other comprehensive loss, net of income taxes: | | | | |
| Foreign currency translation adjustments | | 3,754 | | | 8,386 | |
| Funded status of benefit plans | | (385,680) | | | (421,698) | |
| Unrealized (loss)/gain on available-for-sale securities | | (1,276) | | | 3,131 | |
| Total accumulated other comprehensive loss, net of income taxes | | (383,202) | | | (410,181) | |
| Total New York Times Company stockholders’ equity | | 1,538,720 | | | 1,325,517 | |
| Noncontrolling interest | | 2,005 | | | 2,594 | |
| Total stockholders’ equity | | 1,540,725 | | | 1,328,111 | |
| Total liabilities and stockholders’ equity | | $ | 2,564,108 | | | $ | 2,307,689 | |
See Notes to the Consolidated Financial Statements.
P. 62 – THE NEW YORK TIMES COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITYOPERATIONS |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | (In thousands, except share and per share data) | Capital Stock Class A and Class B Common | Additional Paid-in Capital | Retained Earnings | Common Stock Held in Treasury, at Cost | Accumulated Other Comprehensive Loss, Net of Income Taxes | Total New York Times Company Stockholders’ Equity | Non- controlling Interest | Total Stock- holders’ Equity |
| |
| | Balance, December 27, 2015 | $ | 16,908 |
| $ | 146,348 |
| $ | 1,328,744 |
| $ | (156,155 | ) | $ | (509,094 | ) | $ | 826,751 |
| $ | 1,704 |
| $ | 828,455 |
|
| | Net income/(loss) | — |
| — |
| 29,068 |
| — |
| — |
| 29,068 |
| (5,236 | ) | 23,832 |
|
| | Dividends | — |
| — |
| (25,901 | ) | — |
| — |
| (25,901 | ) | — |
| (25,901 | ) |
| | Other comprehensive income/(loss) | — |
| — |
| — |
| — |
| 29,278 |
| 29,278 |
| (39 | ) | 29,239 |
|
| | Issuance of shares: | | | | | | | | |
| | Stock options – 114,652 Class A shares | 12 |
| 750 |
| — |
| — |
| — |
| 762 |
| — |
| 762 |
|
| | Restricted stock units vested – 304,171 Class A shares | 30 |
| (2,769 | ) | — |
| — |
| — |
| (2,739 | ) | — |
| (2,739 | ) |
| | Performance-based awards – 524,520 Class A shares | 53 |
| (6,941 | ) | — |
| — |
| — |
| (6,888 | ) | — |
| (6,888 | ) |
| | Share repurchases - 1,179,672 Class A shares | — |
| — |
| — |
| (15,056 | ) | — |
| (15,056 | ) | — |
| (15,056 | ) |
| | Stock-based compensation | — |
| 12,622 |
| — |
| — |
| — |
| 12,622 |
| — |
| 12,622 |
|
| | Income tax shortfall related to share-based payments | — |
| (82 | ) | — |
| — |
| — |
| (82 | ) | — |
| (82 | ) |
| | Balance, December 25, 2016 | 17,003 |
| 149,928 |
| 1,331,911 |
| (171,211 | ) | (479,816 | ) | 847,815 |
| (3,571 | ) | 844,244 |
|
| | Net income | — |
| — |
| 4,296 |
| — |
| — |
| 4,296 |
| 2,541 |
| 6,837 |
|
| | Dividends | — |
| — |
| (26,071 | ) | — |
| — |
| (26,071 | ) | — |
| (26,071 | ) |
| | Other comprehensive income | — |
| — |
| — |
| — |
| 56,787 |
| 56,787 |
| 1,114 |
| 57,901 |
|
| | Issuance of shares: | | | | | | | | |
| | Stock options – 657,704 Class A shares | 66 |
| 4,535 |
| — |
| — |
| — |
| 4,601 |
| — |
| 4,601 |
|
| | Restricted stock units vested – 283,116 Class A shares | 28 |
| (2,743 | ) | — |
| — |
| — |
| (2,715 | ) | — |
| (2,715 | ) |
| | Performance-based awards – 115,881 Class A shares | 11 |
| (1,360 | ) | — |
| — |
| — |
| (1,349 | ) | — |
| (1,349 | ) |
| | Stock-based compensation | — |
| 13,915 |
| — |
| — |
| — |
| 13,915 |
| — |
| 13,915 |
|
| | Balance, December 31, 2017 | 17,108 |
| 164,275 |
| 1,310,136 |
| (171,211 | ) | (423,029 | ) | 897,279 |
| 84 |
| 897,363 |
|
| | Impact of adopting new accounting guidance | — |
| — |
| 96,707 |
| — |
| (94,135 | ) | 2,572 |
| — |
| 2,572 |
|
| | Net income | — |
| — |
| 125,684 |
| — |
| — |
| 125,684 |
| 1,776 |
| 127,460 |
|
| | Dividends | — |
| — |
| (26,523 | ) | — |
| — |
| (26,523 | ) | — |
| (26,523 | ) |
| | Other comprehensive loss | — |
| — |
| — |
| — |
| (560 | ) | (560 | ) | — |
| (560 | ) |
| | Issuance of shares: | | | | | | | | |
| | Stock options – 2,327,046 Class A shares | 233 |
| 41,055 |
| — |
| — |
| — |
| 41,288 |
| — |
| 41,288 |
|
| | Restricted stock units vested – 282,723 Class A shares | 28 |
| (4,619 | ) | — |
| — |
| — |
| (4,591 | ) | — |
| (4,591 | ) |
| | Performance-based awards – 271,841 Class A shares | 27 |
| (5,930 | ) | — |
| — |
| — |
| (5,903 | ) | — |
| (5,903 | ) |
| | Stock-based compensation | — |
| 11,535 |
| — |
| — |
| — |
| 11,535 |
| — |
| 11,535 |
|
| | Balance, December 30, 2018 | $ | 17,396 |
| $ | 206,316 |
| $ | 1,506,004 |
| $ | (171,211 | ) | $ | (517,724 | ) | $ | 1,040,781 |
| $ | 1,860 |
| $ | 1,042,641 |
|
| | | | | | | | | | | | | | | | | | | | |
| | | Years Ended |
| (In thousands) | | December 26, 2021 | | December 27, 2020 | | December 29, 2019 |
| | | | | | |
| Revenues | | | | | | |
| Subscription | | $ | 1,362,115 | | | $ | 1,195,368 | | | $ | 1,083,851 | |
| Advertising | | 497,536 | | | 392,420 | | | 530,678 | |
| Other | | 215,226 | | | 195,851 | | | 197,655 | |
| Total revenues | | 2,074,877 | | | 1,783,639 | | | 1,812,184 | |
| Operating costs | | | | | | |
| Cost of revenue (excluding depreciation and amortization) | | 1,039,568 | | | 959,312 | | | 988,159 | |
| Sales and marketing | | 294,947 | | | 228,993 | | | 272,626 | |
| Product development | | 160,871 | | | 133,384 | | | 106,415 | |
| General and administrative | | 250,124 | | | 223,558 | | | 206,778 | |
| Depreciation and amortization | | 57,502 | | | 62,136 | | | 60,661 | |
| Total operating costs | | 1,803,012 | | | 1,607,383 | | | 1,634,639 | |
| | | | | | |
| Restructuring charge | | — | | | — | | | 4,008 | |
| Gain from pension liability adjustment | | — | | | — | | | (2,045) | |
| Lease termination charge | | 3,831 | | | — | | | — | |
| | | | | | |
| Operating profit | | 268,034 | | | 176,256 | | | 175,582 | |
| Other components of net periodic benefit costs | | 10,478 | | | 89,154 | | | 7,302 | |
| Gain from joint ventures | | — | | | 5,000 | | | — | |
| Interest income/(expense) and other, net | | 32,945 | | | 23,330 | | | (3,820) | |
| Income from continuing operations before income taxes | | 290,501 | | | 115,432 | | | 164,460 | |
| Income tax expense | | 70,530 | | | 14,595 | | | 24,494 | |
| | | | | | |
| | | | | | |
| Net income | | 219,971 | | | 100,837 | | | 139,966 | |
| Net income attributable to the noncontrolling interest | | — | | | (734) | | | — | |
| Net income attributable to The New York Times Company common stockholders | | $ | 219,971 | | | $ | 100,103 | | | $ | 139,966 | |
| Amounts attributable to The New York Times Company common stockholders: | | | | | | |
| Income from continuing operations | | $ | 219,971 | | | $ | 100,103 | | | $ | 139,966 | |
| | | | | | |
| Net income | | $ | 219,971 | | | $ | 100,103 | | | $ | 139,966 | |
See Notes to the Consolidated Financial Statements.
THE NEW YORK TIMES COMPANY – P. 63
CONSOLIDATED STATEMENTS OF OPERATIONS — continued
| | | | | | | | | | | | | | | | | | | | |
| | | Years Ended |
| (In thousands, except per share data) | | December 26, 2021 | | December 27, 2020 | | December 29, 2019 |
| | | | | | |
| Average number of common shares outstanding: | | | | | | |
| Basic | | 167,929 | | | 166,973 | | | 166,042 | |
| Diluted | | 168,533 | | | 168,038 | | | 167,545 | |
| Basic earnings per share attributable to The New York Times Company common stockholders: | | | | | | |
| Income from continuing operations | | $ | 1.31 | | | $ | 0.60 | | | $ | 0.84 | |
| | | | | | |
| Net income | | $ | 1.31 | | | $ | 0.60 | | | $ | 0.84 | |
| Diluted earnings per share attributable to The New York Times Company common stockholders: | | | | | | |
| Income from continuing operations | | $ | 1.31 | | | $ | 0.60 | | | $ | 0.83 | |
| | | | | | |
| Net income | | $ | 1.31 | | | $ | 0.60 | | | $ | 0.83 | |
| Dividends declared per share | | $ | 0.28 | | | $ | 0.24 | | | $ | 0.20 | |
See Notes to the Consolidated Financial Statements.
P. 64 – THE NEW YORK TIMES COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
| | | | | | | | | | | | | | | | | | | | |
| | | Years Ended |
| (In thousands) | | December 26, 2021 | | December 27, 2020 | | December 29, 2019 |
| | | | | | |
| Net income | | $ | 219,971 | | | $ | 100,837 | | | $ | 139,966 | |
| Other comprehensive income/(loss), before tax: | | | | | | |
| Foreign currency translation adjustments-(loss)/income | | (6,328) | | | 6,763 | | | (1,684) | |
| Pension and postretirement benefits obligation | | 49,250 | | | 105,660 | | | 28,987 | |
| Net unrealized (loss)/gain on available-for-sale securities | | (6,025) | | | 3,497 | | | 3,624 | |
| Other comprehensive income, before tax | | 36,897 | | | 115,920 | | | 30,927 | |
| Income tax expense | | 9,918 | | | 31,125 | | | 8,179 | |
| Other comprehensive income, net of tax | | 26,979 | | | 84,795 | | | 22,748 | |
| Comprehensive income | | 246,950 | | | 185,632 | | | 162,714 | |
| Comprehensive income attributable to the noncontrolling interest | | — | | | (734) | | | — | |
| Comprehensive income attributable to The New York Times Company common stockholders | | $ | 246,950 | | | $ | 184,898 | | | $ | 162,714 | |
See Notes to the Consolidated Financial Statements.
THE NEW YORK TIMES COMPANY – P. 65
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
| | | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands,
except share and
per share data) | Capital Stock
Class A
and
Class B Common | Additional
Paid-in
Capital | Retained
Earnings | Common
Stock
Held in
Treasury,
at Cost | Accumulated
Other
Comprehensive
Loss, Net of
Income
Taxes | Total
New York
Times
Company
Stockholders’
Equity | Non-
controlling
Interest | Total
Stock-
holders’
Equity |
|
| Balance, December 30, 2018 | $ | 17,396 | | $ | 206,316 | | $ | 1,506,004 | | $ | (171,211) | | $ | (517,724) | | $ | 1,040,781 | | $ | 1,860 | | $ | 1,042,641 | |
| | | | | | | | |
| Net income | — | | — | | 139,966 | | — | | — | | 139,966 | | — | | 139,966 | |
| Dividends | — | | — | | (33,312) | | — | | — | | (33,312) | | — | | (33,312) | |
| Other comprehensive income | — | | — | | — | | — | | 22,748 | | 22,748 | | — | | 22,748 | |
| Issuance of shares: | | | | | | | | |
| Stock options – 419,160 Class A shares | 42 | | 4,478 | | — | | — | | — | | 4,520 | | — | | 4,520 | |
| Restricted stock units vested – 246,599 Class A shares | 24 | | (3,750) | | — | | — | | — | | (3,726) | | — | | (3,726) | |
| Performance-based awards – 418.491 Class A shares | 42 | | (11,964) | | — | | — | | — | | (11,922) | | — | | (11,922) | |
| | | | | | | | |
| | | | | | | | |
| Stock-based compensation | — | | 12,948 | | — | | — | | — | | 12,948 | | — | | 12,948 | |
| | | | | | | | |
| Balance, December 29, 2019 | 17,504 | | 208,028 | | 1,612,658 | | (171,211) | | (494,976) | | 1,172,003 | | 1,860 | | 1,173,863 | |
| | | | | | | | |
| Net income | — | | — | | 100,103 | | — | | — | | 100,103 | | 734 | | 100,837 | |
| Dividends | — | | — | | (40,175) | | — | | — | | (40,175) | | — | | (40,175) | |
| Other comprehensive income | — | | — | | — | | — | | 84,795 | | 84,795 | | — | | 84,795 | |
| Issuance of shares: | | | | | | | | |
| Stock options – 644,268 Class A shares | 65 | | 6,006 | | — | | — | | — | | 6,071 | | — | | 6,071 | |
| Restricted stock units vested – 142,958 Class A shares | 14 | | (3,933) | | — | | — | | — | | (3,919) | | — | | (3,919) | |
| Performance-based awards – 257,098 Class A shares | 26 | | (7,852) | | — | | — | | — | | (7,826) | | — | | (7,826) | |
| | | | | | | | |
| Stock-based compensation | — | | 14,465 | | — | | — | | — | | 14,465 | | — | | 14,465 | |
| | | | | | | | |
| Balance, December 27, 2020 | 17,609 | | 216,714 | | 1,672,586 | | (171,211) | | (410,181) | | 1,325,517 | | 2,594 | | 1,328,111 | |
| | | | | | | | |
| Net income | — | | — | | 219,971 | | — | | — | | 219,971 | | — | | 219,971 | |
| Dividends | — | | — | | (47,214) | | — | | — | | (47,214) | | — | | (47,214) | |
| Other comprehensive income | — | | — | | — | | — | | 26,979 | | 26,979 | | — | | 26,979 | |
| Issuance of shares: | | | | | | | | |
| Stock options – 324,460 Class A shares | 33 | | 2,421 | | — | | — | | — | | 2,454 | | — | | 2,454 | |
| Restricted stock units vested – 196,416 Class A shares | 19 | | (5,288) | | — | | — | | — | | (5,269) | | — | | (5,269) | |
| Performance-based awards – 142,253 Class A shares | 14 | | (5,947) | | — | | — | | — | | (5,933) | | — | | (5,933) | |
| Stock-based compensation | — | | 22,215 | | — | | — | | — | | 22,215 | | — | | 22,215 | |
| Distributions | — | | — | | — | | — | | — | | — | | (589) | | (589) | |
| Balance, December 26, 2021 | $ | 17,675 | | $ | 230,115 | | $ | 1,845,343 | | $ | (171,211) | | $ | (383,202) | | $ | 1,538,720 | | $ | 2,005 | | $ | 1,540,725 | |
See Notes to the Consolidated Financial Statements.
P. 66 – THE NEW YORK TIMES COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | | | Years Ended | | Years Ended |
| (In thousands) | | December 30, 2018 |
| | December 31, 2017 |
| | December 25, 2016 |
| (In thousands) | | December 26, 2021 | | December 27, 2020 | | December 29, 2019 |
| Cash flows from operating activities | | | | | | | Cash flows from operating activities | |
| Net income | | $ | 127,460 |
| | $ | 6,837 |
| | $ | 23,832 |
| Net income | | $ | 219,971 | | | $ | 100,837 | | | $ | 139,966 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | Adjustments to reconcile net income to net cash provided by operating activities: | |
| Restructuring charge | | — |
| | — |
| | 16,518 |
| |
| | Pension settlement expense | | — |
| | 102,109 |
| | 21,294 |
| Pension settlement expense | | — | | | 80,641 | | | — | |
| Multiemployer pension plan charges | | — |
| | — |
| | 11,701 |
| |
| | Depreciation and amortization | | 59,011 |
| | 61,871 |
| | 61,723 |
| Depreciation and amortization | | 57,502 | | | 62,136 | | | 60,661 | |
| Lease termination charge | | Lease termination charge | | 3,831 | | | — | | | — | |
| Amortization of right of use asset | | Amortization of right of use asset | | 9,488 | | | 8,568 | | | 7,384 | |
| Stock-based compensation expense | | 12,959 |
| | 14,809 |
| | 12,430 |
| Stock-based compensation expense | | 22,215 | | | 14,437 | | | 12,948 | |
| (Gain)/loss from joint ventures | | (10,764 | ) | | (18,641 | ) | | 36,273 |
| |
| Gain from joint ventures | | Gain from joint ventures | | — | | | (5,000) | | | — | |
| Deferred income taxes | | 4,047 |
| | 105,174 |
| | (13,128 | ) | Deferred income taxes | | (6,358) | | | (16,043) | | | 4,242 | |
| Long-term retirement benefit obligations | | (46,877 | ) | | (184,418 | ) | | (56,942 | ) | |
| Gain on non-marketable equity investment | | Gain on non-marketable equity investment | | (27,156) | | | (10,074) | | | (1,886) | |
| Change in long-term retirement benefit obligations | | Change in long-term retirement benefit obligations | | (19,222) | | | (17,166) | | | (22,914) | |
| Fair market value adjustment on life insurance products | | Fair market value adjustment on life insurance products | | 118 | | | (578) | | | (3,461) | |
| Uncertain tax positions | | Uncertain tax positions | | — | | | (644) | | | (4,627) | |
| Other – net | | 1,139 |
| | (1,352 | ) | | 4,525 |
| Other – net | | 3,210 | | | 706 | | | 700 | |
| Changes in operating assets and liabilities: | | | | | | | Changes in operating assets and liabilities: | |
| Accounts receivable – net | | (37,579 | ) | | 12,470 |
| | 9,825 |
| Accounts receivable – net | | (49,216) | | | 29,710 | | | 9,062 | |
| Other current assets | | 18,241 |
| | (30,527 | ) | | 1,599 |
| Other current assets | | (5,289) | | | 8,960 | | | (3,355) | |
| Accounts payable, accrued payroll and other liabilities | | 20,490 |
| | 10,012 |
| | (32,276 | ) | Accounts payable, accrued payroll and other liabilities | | 46,054 | | | 24,516 | | | (13,197) | |
| Unexpired subscriptions | | 8,990 |
| | 8,368 |
| | 6,502 |
| Unexpired subscriptions | | 13,950 | | | 16,927 | | | 4,375 | |
| Net cash provided by operating activities | | 157,117 |
| | 86,712 |
| | 103,876 |
| Net cash provided by operating activities | | 269,098 | | | 297,933 | | | 189,898 | |
| Cash flows from investing activities | | | | | | | Cash flows from investing activities | |
| Purchases of marketable securities | | (470,493 | ) | | (466,522 | ) | | (566,846 | ) | Purchases of marketable securities | | (763,425) | | | (632,364) | | | (572,337) | |
| Maturities/disposals of marketable securities | | 434,012 |
| | 548,461 |
| | 725,365 |
| Maturities/disposals of marketable securities | | 593,465 | | | 491,128 | | | 707,632 | |
| Cash distribution from corporate-owned life insurance | | — |
| | — |
| | 38,000 |
| |
| | Business acquisitions | | — |
| | — |
| | (40,410 | ) | Business acquisitions | | — | | | (33,085) | | | — | |
| Proceeds/(purchases) of investments | | 12,447 |
| | 15,591 |
| | (1,955 | ) | |
| Proceeds from investments | | Proceeds from investments | | 20,074 | | | 6,841 | | | 85 | |
| Capital expenditures | | (77,487 | ) | | (84,753 | ) | | (30,095 | ) | Capital expenditures | | (34,637) | | | (34,451) | | | (45,441) | |
| | Other - net | | 426 |
| | 1,323 |
| | 409 |
| Other - net | | 3,716 | | | 2,851 | | | 3,273 | |
| | Net cash (used) in/provided by investing activities | | (101,095 | ) | | 14,100 |
| | 124,468 |
| Net cash (used) in/provided by investing activities | | (180,807) | | | (199,080) | | | 93,212 | |
| Cash flows from financing activities | | | | | | | Cash flows from financing activities | |
| Long-term obligations: | | | | | | | Long-term obligations: | |
| Repayment of debt and capital lease obligations | | (552 | ) | | (552 | ) | | (189,768 | ) | Repayment of debt and capital lease obligations | | — | | | — | | | (252,559) | |
| Dividends paid | | (26,418 | ) | | (26,004 | ) | | (25,897 | ) | Dividends paid | | (45,337) | | | (38,437) | | | (31,604) | |
| Payment of contingent consideration | | Payment of contingent consideration | | (862) | | | (862) | | | — | |
| Capital shares: | | | | | | | Capital shares: | |
| Stock issuances | | 41,288 |
| | 4,601 |
| | 761 |
| Stock issuances | | 2,454 | | | 6,071 | | | 4,520 | |
| Repurchases | | — |
| | — |
| | (15,684 | ) | |
| Windfall tax benefit related to stock-based payments | | — |
| | — |
| | 3,193 |
| |
| | Share-based compensation tax withholding | | (10,494 | ) | | (4,064 | ) | | (9,629 | ) | Share-based compensation tax withholding | | (11,202) | | | (11,745) | | | (15,648) | |
| Net cash provided by/(used) in financing activities | | 3,824 |
| | (26,019 | ) | | (237,024 | ) | |
| Net cash used in financing activities | | Net cash used in financing activities | | (54,947) | | | (44,973) | | | (295,291) | |
| Net increase/(decrease) in cash, cash equivalents and restricted cash | | 59,846 |
| | 74,793 |
| | (8,680 | ) | Net increase/(decrease) in cash, cash equivalents and restricted cash | | 33,344 | | | 53,880 | | | (12,181) | |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | | (983 | ) | | 593 |
| | (237 | ) | Effect of exchange rate changes on cash, cash equivalents and restricted cash | | (1,002) | | | 566 | | | (100) | |
| Cash, cash equivalents and restricted cash at the beginning of the year | | 200,936 |
| | 125,550 |
| | 134,467 |
| Cash, cash equivalents and restricted cash at the beginning of the year | | 301,964 | | | 247,518 | | | 259,799 | |
| Cash, cash equivalents and restricted cash at the end of the year | | $ | 259,799 |
| | $ | 200,936 |
| | $ | 125,550 |
| Cash, cash equivalents and restricted cash at the end of the year | | $ | 334,306 | | | $ | 301,964 | | | $ | 247,518 | |
See Notes to the Consolidated Financial Statements.
P. 64 – THE NEW YORK TIMES COMPANY – P. 67
SUPPLEMENTAL DISCLOSURES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | | | Years Ended | | | Years Ended |
| (In thousands) | | December 30, 2018 |
| | December 31, 2017 |
| | December 25, 2016 |
| (In thousands) | | December 26, 2021 | | December 27, 2020 | | December 29, 2019 |
| Cash payments | | | | | | | Cash payments | |
| Interest, net of capitalized interest | | $ | 28,133 |
| | $ | 27,732 |
| | $ | 39,487 |
| Interest, net of capitalized interest | | $ | 546 | | | $ | 508 | | | $ | 28,049 | |
| Income tax (refunds)/payments – net | | $ | (1,070 | ) | | $ | 21,552 |
| | $ | 44,896 |
| |
| Income tax payments – net | | Income tax payments – net | | $ | 66,443 | | | $ | 24,382 | | | $ | 30,407 | |
See Notes to the Consolidated Financial Statements.
P. 68 – THE NEW YORK TIMES COMPANY – P. 65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
Nature of Operations
The New York Times Company is a global media organization that includes newspapers,our newspaper, digital and print and digital products and related businesses. The New York Times Company and its consolidated subsidiaries are referred to collectively as the “Company,” “we,” “our” and “us.” Our major sources of revenue are subscriptions and advertising.
Principles of Consolidation
The accompanying Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and include the accounts of our Company and our wholly and majority-owned subsidiaries after elimination of all significant intercompany transactions.
The portion of the net income or loss and equity of a subsidiary attributable to the owners of a subsidiary other than the Company (a noncontrolling interest) is included as a component of consolidated stockholders‘ equity in our Consolidated Balance Sheets, within net income or loss in our Consolidated Statements of Operations, within comprehensive income or loss in our Consolidated Statements of Comprehensive Income/(Loss) and as a component of consolidated stockholders’ equity in our Consolidated Statements of Changes in Stockholders’ Equity.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our Consolidated Financial Statements. Actual results could differ from these estimates.
Fiscal Year
Our fiscal year end is the last Sunday in December. Fiscal years 20182021, 2020 and 20162019 each comprised 52weeks, and fiscal year 2017 comprised 53 weeks. Our fiscal years ended as of December 30, 2018,26, 2021, December 27, 2020, and December 29, 2019, respectively.
In December 2021, the Board of Directors approved a resolution to change the Company’s fiscal year from a 52/53 week fiscal year ending the last Sunday of December to a calendar year. Accordingly, the Company’s 2022 fiscal year, which commenced December 27, 2021, will be extended from December 25, 2022, to December 31,2022, and subsequent fiscal years will begin on January 1 and end on December 31 2017, and December 25, 2016, respectively.of each year.
2. Summary of Significant Accounting Policies
Cash and Cash Equivalents
We consider all highly liquid debt instruments with original maturities of three months or less to be cash equivalents.
Marketable Securities
We have investments in marketable debt securities. We determine the appropriate classification of our investments at the date of purchase and reevaluate the classifications at the balance sheet date. Marketable debt securities with maturities of 12 months or less are classified as short-term. Marketable debt securities with maturities greater than 12 months are classified as long-term.long-term, unless we identified specific securities we intend to sell within the next 12 months. The Company’s marketable securities are accounted for as available for sale (“AFS”).
AFS securities are reported at fair value. Unrealized gains and losses, after applicable income taxes, are reported in accumulated other comprehensive income/(loss).
We conduct an other-than-temporary impairment (“OTTI”) analysisassess AFS securities on a quarterly basis or more often if a potential loss-triggering event occurs. We consider factors such as the duration, severity and the reason for the declineFor AFS securities in value, the potential recovery period andan unrealized loss position, we first assess whether we intend to sell. For AFS securities, we also consider whether (i)sell, or if it is more likely than not that we will be required to sell the debt securitiessecurity before recovery of theirits amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For AFS securities that do not meet the aforementioned criteria, we evaluate whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, we consider the extent to which fair value is less than amortized cost, creditworthiness of the security, and (ii)adverse conditions specifically related to the security. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security is compared to the amortized cost basis cannotof the security. If the present value of cash flows expected to be recovered ascollected is less than the amortized cost basis, a result of credit losses.
loss
P. 66 – THE NEW YORK TIMES COMPANY – P. 69
exists and an allowance for credit losses is recorded, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.
Concentration of Risk
Financial instruments, which potentially subject us to concentration of risk, are cash and cash equivalents and marketable securities. Cash is placed with major financial institutions. As of December 30, 2018,26, 2021, we had cash balances at financial institutions in excess of federal insurance limits. We periodically evaluate the credit standing of these financial institutions as part of our ongoing investment strategy.
Our marketable securities portfolio consists of investment-grade securities diversified among security types, issuers and industries. Our cash equivalents and marketable securities are primarily managed by third-party investment managers who are required to adhere to investment policies approved by our Board of Directors designed to mitigate risk. Included within marketable securities is approximately $54 million of securities used as collateral for letters of credit issued by the Company in connection with the leasing of floors in our headquarters building.
Accounts Receivable
Credit is extended to our advertisers and our subscribers based upon an evaluation of the customer’s financial condition, and collateral is not required from such customers. Allowances for estimated credit losses, rebates, returns, rate adjustments and discounts are generally established based on historical experience.
Inventories
Inventories are included within Otherexperience and include consideration of relevant significant current assets of the Consolidated Balance Sheets. Inventories are stated at the lower of cost or net realizable value. Inventory cost is generally based on the last-in, first-out (“LIFO”) methodevents, reasonable and supportable forecasts and their implications for newsprint and other paper grades and the first-in, first-out (“FIFO”) method for other inventories.expected credit losses.
Investments
Investments in which we have at least a 20%, but not more than a 50%, interest are generally accounted for under the equity method. We elected the fair value measurement alternative for our investment interests below 20% and account for these investments at cost less impairments, adjusted by observable price changes in orderly transactions for the identical or similar investments of the same issuer given our equity instruments are without readily determinable fair values. Prior to 2018 and the adoption of ASU 2016-01 (see Note 6 for more information), investment interests below 20% were generally accounted for under the cost method, except if we could exercise significant influence, the investment would be accounted for under the equity method.
We evaluate whether there has been an impairment of our investments annually or in an interim period if circumstances indicate that a possible impairment may exist.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is computed by the straight-line method over the shorter of estimated asset service lives or lease terms as follows: buildings, building equipment and improvements – 10 to 40 years; equipment – 3 to 30 years; and software – 23 to 5 years. We capitalize interest costs and certain staffing costs as part of the cost of major projects.
We evaluate whether there has been an impairment of long-lived assets, primarily property, plant and equipment, if certain circumstances indicate that a possible impairment may exist. These assets are tested for impairment at the asset group level associated with the lowest level of cash flows. An impairment exists if the carrying value of the asset (i) is not recoverable (the carrying value of the asset is greater than the sum of undiscounted cash flows) and (ii) is greater than its fair value.
Leases
Lessee activities
We enter into operating leases for office space and equipment. We determine if an arrangement is a lease at inception. Certain office space leases provide for rent adjustments relating to changes in real estate taxes and other operating costs. Options to extend the term of operating leases are not recognized as part of the right-of-use asset until we are reasonably certain that the option will be exercised. We may terminate our leases with the notice required under the lease and upon the payment of a termination fee, if required. Our leases do not include substantial variable payments based on index or rate.
Our leases do not provide a readily determinable implicit discount rate. Therefore, we estimate our incremental borrowing rate to discount the lease payments based on the information available at lease commencement.
We recognize a single lease cost on a straight-line basis over the term of the lease and we classify all cash
P. 70 – THE NEW YORK TIMES COMPANY
payments within operating activities in the statement of cash flows. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
We evaluate right-of-use assets for impairment consistent with our property, plant and equipment policy. There were 0 impairments of right-of-use assets in 2021.
Lessor activities
Our leases to third parties predominantly relate to office space in our leasehold condominium interest in our New York headquarters building located at 620 Eighth Avenue, New York, New York (the “Company Headquarters”). We determine if an arrangement is a lease at inception. Office space leases are operating leases and generally include options to extend the term of the lease. Our leases do not include variable payments based on index or rate. We do not separate the lease and non-lease components in a contract. The non-lease components predominantly include charges for utilities usage and other operating expenses estimated based on the proportionate share of the rental space of each lease.
For our office space operating leases, we recognize rental revenue on a straight-line basis over the term of the lease and we classify all cash payments within operating activities in the statement of cash flows.
Residual value risk is not a primary risk resulting from our office space operating leases because of the long-lived nature of the underlying real estate assets, which generally hold their value or appreciate in the long term.
We evaluate assets leased to third parties for impairment consistent with our property, plant and equipment policy. There were no impairments of assets leased to third parties in 2021.
Goodwill and Intangibles
Goodwill is the excess of cost over the fair value of tangible and intangible net assets acquired. Goodwill is not amortized but tested for impairment annually or in an interim period if certain circumstances indicate a possible impairment may exist. Our annual impairment testing date is the first day of our fiscal fourth quarter.
We identify a business as an operating segment if: (1) it engages in business activities from which it may earn revenues and incur expenses; (2) its operating results are regularly reviewed by the Chief Operating Decision Maker (who is the Company’s President and Chief Executive Officer) to make decisions about resources to be allocated to the segment and assess its performance; and (3) it has available discrete financial information. We have determined that we have one reportable segment. Therefore, all required segment information can be found in the Consolidated Financial Statements.
THE NEW YORK TIMES COMPANY – P. 67
We test goodwill for impairment at a reporting unit level. During the fourth quarter of 2018, we adopted accounting guidance that simplifies our goodwill impairment testing by eliminating the requirement to calculate the implied fair value of goodwill (formerly “Step 2”) in the event that an impairment is identified.
We first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. The qualitative assessment includes, but is not limited to, the results of our most recent quantitative impairment test, consideration of industry, market and macroeconomic conditions, cost factors, cash flows, changes in key management personnel and our share price. The result of this assessment determines whether it is necessary to perform the goodwill impairment test (formerly “Step 1”). For the 20182021 annual impairment testing, based on our qualitative assessment, we concluded that goodwill is not impaired.
If we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we compare the fair value of a reporting unit with its carrying amount, including goodwill. Fair value is calculated by a combination of a discounted cash flow model and a market approach model. In calculating fair value for a reporting unit, we generally weigh the results of the discounted cash flow model more heavily than the market approach because the discounted cash flow model is specific to our business and long-term projections. If the fair value of a reporting unit exceeds its carrying amount, goodwill of that reporting unit is not considered impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss would be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.
IntangibleWe test intangible assets that are not amortized (i.e., trade names) are tested for impairment at the asset levellevel. We first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the asset is less than its carrying value. If we determine that it is more likely than not that the intangible asset is impaired, we perform a quantitative assessment by comparing the fair value of the asset with its carrying amount. If the fair value, which is based on future cash flows, exceeds the carrying value, the asset is not considered impaired. If the carrying amount exceeds the fair value, an impairment loss would be recognized in an amount equal to the excess of the carrying amount of the asset over the fair value of the asset. We recognized a de minimis impairment in 2020 and 2019 related to the closure of HelloSociety and Fake Love digital marketing agencies.
Intangible assets that are amortized (i.e., customer lists, non-competes, etc.) are tested for impairment at the asset level associated with the lowest level of cash flows. An impairment exists if the carrying value of the asset (1) is not recoverable (the carrying value of the asset is greater than the sum of undiscounted cash flows) and (2) is greater than its fair value.
THE NEW YORK TIMES COMPANY – P. 71
The discounted cash flow analysis requires us to make various judgments, estimates and assumptions, many of which are interdependent, about future revenues, operating margins, growth rates, capital expenditures, working capital, discount rates and royalty rates. The starting point for the assumptions used in our discounted cash flow analysis is the annual long-range financial forecast. The annual planning process that we undertake to prepare the long-range financial forecast takes into consideration a multitude of factors, including historical growth rates and operating performance, related industry trends, macroeconomic conditions, and marketplace data, among others. Assumptions are also made for perpetual growth rates for periods beyond the long-range financial forecast period. Our estimates of fair value are sensitive to changes in all of these variables, certain of which relate to broader macroeconomic conditions outside our control.
The market approach analysis includes applying a multiple, based on comparable market transactions, to certain operating metrics of a reporting unit.
The significant estimates and assumptions used by management in assessing the recoverability of goodwill acquired and intangibles are estimated future cash flows, discount rates, growth rates, as well as other factors. Any changes in these estimates or assumptions could result in an impairment charge. The estimates, based on reasonable and supportable assumptions and projections, require management’s subjective judgment. Depending on the assumptions and estimates used, the estimated results of the impairment tests can vary within a range of outcomes.
In addition to annual testing, management uses certain indicators to evaluate whether the carrying value of a reporting unit or intangibles may not be recoverable and an interim impairment test may be required. These indicators include: (1) current-period operating results or cash flow declines combined with a history of operating results or cash flow declines or a projection/forecast that demonstrates continuing declines in the cash flow or the inability to improve our operations to forecasted levels,levels; (2) a significant adverse change in the business climate, whether structural or technological,technological; (3) significant impairmentsimpairments; and (4) a decline in our stock price and market capitalization.
Management has applied what it believes to be the most appropriate valuation methodology for its impairment testing. See Note 5.
P. 68 – THE NEW YORK TIMES COMPANY
Self-Insurance
We self-insure for workers’ compensation costs, automobile and general liability claims, up to certain deductible limits, as well as for certain employee medical and disability benefits. Employee medical costs above a certain threshold are insured by a third party. The recorded liabilities for self-insured risks are primarily calculated using actuarial methods. The liabilities include amounts for actual claims, claim growth and claims incurred but not yet reported. The recorded liabilities for self-insured risks were approximately $35$24 million and $38$23 million as of December 30, 201826, 2021, and December 31, 2017,27, 2020, respectively.
Pension and Other Postretirement Benefits
Our single-employer pension and other postretirement benefit costs are accounted for using actuarial valuations. We recognize the funded status of these plans – measured as the difference between plan assets, if funded, and the benefit obligation – on the balance sheet and recognize changes in the funded status that arise during the period but are not recognized as components of net periodic pension cost, within other comprehensive income/(loss), net of income taxes. The service cost component of net periodic pension cost is recognized in Total operating costs while the other components are recognized within Other components of net periodic benefit costs in our Consolidated Statements of Operations below Operating profit.
The assets related to our funded pension plans are measured at fair value.
We make significant subjective judgments about a number of actuarial assumptions, which include discount rates, health-care cost trend rates, long-term return on plan assets and mortality rates. Depending on the assumptions and estimates used, the impact from our pension and other postretirement benefits could vary within a range of outcomes and could have a material effect on our Consolidated Financial Statements.
We have elected the practical expedient to use the month-end that is closest to our fiscal year-end for measuring the single-employer pension plan assets and obligations, as well as other postretirement benefit plan assets and obligations.
P. 72 – THE NEW YORK TIMES COMPANY
We also recognize the present value of pension liabilities associated with the withdrawal from multiemployer pension plans. We record liabilities for obligations related to complete, partial and estimated withdrawals from multiemployer pension plans. The actual liability for estimated withdrawals is not known until each plan completes a final assessment of the withdrawal liability and issues a demand to us. Therefore, we adjust the estimate of our multiemployer pension plan liability as more information becomes available that allows us to refine our estimates.
See Notes 109 and 1110 for additional information regarding pension and other postretirement benefits.
Revenue Recognition
We generate revenues principally from subscriptions and advertising. Subscription revenues consist of revenues from subscriptions to our print and digital products (which include our news product, as well as our Crossword and Cooking products) and single-copy and bulk sales of our print products. Subscription revenues are based on both the number of copies of the printed newspaper sold and digital-only subscriptions, and the rates charged to the respective customers.
Advertising revenues are derived from the sale of our advertising products and services, primarily on our print and digital platforms. These revenues are primarily determined by the volume, rate and mix of advertisements.
Other revenues primarily consist of revenues from licensing, affiliate referrals (revenue generated by offering direct links to merchants in exchange for a portion of the sale price), building rental revenue, commercial printing, NYT Live (our live events business) and retail commerce.
Revenue is recognized when a performance obligation is satisfied by transferring a promised good or service to a customer. A good or service is considered transferred when the customer obtains control, which is when the customer has the ability to direct the use of and/or obtain substantially all of the benefits of an asset.
Proceeds from subscription revenues are deferred at the time of sale and are recognized on a pro rata basis over the terms of the subscriptions. Payment is typically due upfront and the revenue is recognized ratably over the subscription period. The deferred proceeds are recorded within “Unexpired subscription revenue”Unexpired subscriptions revenue in the Consolidated Balance Sheet. Single-copy revenueRevenue from single-copy sales of our print products is recognized based on date of publication, net of provisions for related returns. Payment for single-copy sales is typically due upon complete satisfaction of our performance obligations. The Company does not have significant financing components or significant payment terms as we only offer industry standard payment terms to our customers.
THE NEW YORK TIMES COMPANY – P. 69
When our subscriptions are sold through third parties, we are a principal in the transaction and, therefore, revenues and related costs to third parties for these sales are reported on a gross basis. We are considered a principal if we control a promised good or service before transferring that good or service to the customer. The Company considers several factors to determine if it controls the good and therefore is the principal. These factors include: (1) if we have primary responsibility for fulfilling the promise,promise; (2) if we have inventory risk before the goods or services are transferred to the customer or after the transfer of control to the customercustomer; and (3) if we have discretion in establishing price for the specified good or service.
Advertising revenues are recognized when advertisements are published in newspapers or placed on digital platforms or, with respect to certain digital advertising, each time a user clicks on certain advertisements, net of provisions for estimated rebates and rate adjustments. Creative services fees, including those associated with our branded content studio, are recognized as revenue based on the nature of the services provided.
We recognize a rebate obligation as a reduction of revenues, based on the amount of estimated rebates that will be earned, , related to the underlying revenue transactions during the period. Measurement of the rebate obligation is estimated based on the historical experience of the number of customers that ultimately earn and use the rebate. We recognize an obligation for rate adjustments as a reduction of revenues, based on the amount of estimated post-billing adjustments that will be claimed. Measurement of the rate adjustment reserve is estimated based on historical experience of credits actually issued.
Payment for advertising is due upon complete satisfaction of our performance obligations. The Company has a formal credit checking policy, procedures and controls in place that evaluate collectability prior to ad publication. Our advertising contracts do not include a significant financing component.
Other revenues are recognized when the delivery occurs, services are rendered or purchases are made.
Performance Obligations
Our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on its relative standalone selling price.
In the case of our digital archive licensing contracts, the transaction price wasis allocated among the performance obligations, which consist of (i) the archival content and (ii) the updated content, based on the Company’s estimate of the standalone selling price of each of the performance obligations, as they are currently not sold separately.
In the case of our advertising contracts, we may have performance obligations for future services that have not been recognized in our financial statements. The performance obligations are satisfied over time with revenue recognized ratably over the contract term as the advertising services are provided to the customer.
THE NEW YORK TIMES COMPANY – P. 73
Contract Assets
We record revenue from performance obligations when performance obligations are satisfied. For our digital archiving licensing revenue, we record revenue related to the portion of performance obligation (i) satisfied at the commencement of the contract when the customer obtains control of the archival content or (ii) when the updated content is transferred. We receive payments from customers based upon contractual billing schedules. As the transfer of control represents a right to the contract consideration, we record a contract asset in “OtherOther current assets”assets for short-term contract assets and “Miscellaneous assets”Miscellaneous assets for long-term contract assets on the Consolidated Balance Sheet for any amounts not yet invoiced to the customer. The contract asset is reclassified to “Accounts receivable”Accounts receivable when the customer is invoiced based on the contractual billing schedule.
Significant Judgments
Our contracts with customers sometimes include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. We use an observable price to determine the standalone selling price for separate performance obligations if available or, when not available, an estimate that maximizes the use of observable inputs and faithfully depicts the selling price of the promised goods or services if we sold those goods or services separately to a similar customer in similar circumstances.
Practical Expedients and Exemptions
We expense the cost to obtain or fulfill a contract as incurred because the amortization period of the asset that the entity otherwise would have recognized is one year or less. We also apply the practical expedient for the significant financing component when the difference between the payment and the transfer of the products and services is a year or less.
P. 70 – THE NEW YORK TIMES COMPANY
Income Taxes
Income taxes are recognized for the following: (1) the amount of taxes payable for the current yearyear; and (2) deferred tax assets and liabilities for the future tax consequences of events that have been recognized differently in the financial statements than for tax purposes. Deferred tax assets and liabilities are established using statutory tax rates and are adjusted for tax rate changes in the period of enactment.
We assess whether our deferred tax assets should be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. Our process includes collecting positive (i.e., sources of taxable income) and negative (i.e., recent historical losses) evidence and assessing, based on the evidence, whether it is more likely than not that the deferred tax assets will not be realized.
We release tax effects from accumulated other comprehensive income/(loss) for pension and other postretirement benefits on a plan by plan approach.
We recognize in our financial statements the impact of a tax position if that tax position is more likely than not of being sustained on audit, based on the technical merits of the tax position. This involves the identification of potential uncertain tax positions, the evaluation of tax law and an assessment of whether a liability for uncertain tax positions is necessary. Different conclusions reached in this assessment can have a material impact on our Consolidated Financial Statements.
We operate within multiple taxing jurisdictions and are subject to audit in these jurisdictions. These audits can involve complex issues, which could require an extended period of time to resolve. Until formal resolutions are reached between us and the taxtaxing authorities, determining the timing and amount of a possible audit settlement forsettlements relating to uncertain tax benefitspositions is difficult to predict.
On December 22, 2017, federal tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”) was signed into law making significant changes to the Internal Revenue Code. Changes included, but were not limited to, a federal corporate tax rate decrease from 35% to 21% for tax years beginning after December 31, 2017, a one-time transition tax on the mandatory deemed repatriation of foreign earnings and numerous domestic and international-related provisions effective in 2018.practicable.
On December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. In accordance with SAB 118, we determined that the $68.7 million of additional income tax expense recorded in the fourth quarter of 2017 in connection with the remeasurement of certain deferred tax assets and liabilities, the one-time transition tax on the mandatory deemed repatriation of foreign earnings, and deferred tax assets related to executive compensation deductions was a provisional amount and a reasonable estimate at December 31, 2017. Provisional estimates were also made with regard to the Company’s deductions under the Tax Act’s new expensing provisions and state and local income taxes related to foreign earnings subject to the one-time transition tax. The ultimate impact of the Tax Act was expected to differ from the provisional amount recognized due to, among other things, changes in estimates resulting from the receipt or calculation of final data, changes in interpretations of the Tax Act, and additional regulatory guidance that would be issued. In the fourth quarter of 2018, in accordance with SAB 118, we completed the accounting for the impact of the Tax Act and recognized a $1.9 million tax benefit related to 2017, primarily attributable to the remeasurement of certain deferred tax assets and liabilities and the repatriation of foreign earnings.
Stock-Based Compensation
We establish fair value based on market data for our stock-based awards to determine our cost and recognize the related expense over the appropriate vesting period. We recognize stock-based compensation expense for outstanding stock-settled long-term performance awards and restricted stock units, and stock appreciation rights, net of estimated forfeitures. See Note 1614 for additional information related to stock-based compensation expense.
P. 74 – THE NEW YORK TIMES COMPANY
Earnings/(Loss) Per Share
As the Company has participating securities, GAAP requires to usewe compute earnings per share based upon the lower of the two-class method of computing earnings per share.or the treasury stock method. The two-class method is an earnings allocation method for computing earnings/(loss) per share when a company’s capital structure includes either two or more classes of common stock or common stock and participating securities. This method determines earnings/(loss) per share based on dividends declared on common stock and participating securities (i.e., distributed earnings), as well as participation rights of participating securities in any undistributed earnings.
THE NEW YORK TIMES COMPANY – P. 71
Basic earnings/(loss) per share is calculated by dividing net earnings/(loss) available to common stockholders by the weighted-average common stock outstanding. Diluted earnings/(loss) per share is calculated similarly, except that it includes the dilutive effect of the assumed exercise of securities and the effect of shares issuable under our Company’s stock-based incentive plans if such effect is dilutive.
Foreign Currency Translation
The assets and liabilities of foreign companies are translated at period-end exchange rates. Results of operations are translated at average rates of exchange in effect during the year. The resulting translation adjustment is included as a separate component in the Stockholders’ Equity section of our Consolidated Balance Sheets, in the caption “AccumulatedAccumulated other comprehensive loss, net of income taxes.”taxes.
P. 72 – THE NEW YORK TIMES COMPANY
Recently Adopted Accounting Pronouncements |
| | | | | | | | | | |
| Accounting Standard Update(s) | Topic | Effective Period | Summary |
2018-052019-12 | Simplifying the Accounting for Income Taxes (Topic 740) | Upon issuance | The Financial Accounting Standards Board (“FASB”) issued authoritative guidance that amends Accounting Standards Codification (“ASC”) Topic 740 “Income Taxes” to conform with SEC Staff Accounting Bulletin 118, issued in December 2017, which allowed SEC registrants to record provisional amounts for the year ended December 31, 2017, due to the complexities involved in accounting for the enactment of the 2017 Tax Cuts and Jobs Act (the “Tax Act”). In the fourth quarter of 2018, we completed our accounting for the impact of the Tax Act and recognized a $1.9 million tax benefit. |
2018-02 | Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income | Fiscal years, beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. | The FASB issued authoritative guidance providing financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income (“AOCI”) to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate related to the Tax Act is recorded.
The Company elected to adopt this guidance to reclassify the stranded tax effects from AOCI to retained earnings in the first quarter of 2018. Our current accounting policy related to releasing tax effects from AOCI for pension and other postretirement benefits is a plan by plan approach. Accordingly, the Company recorded a $94.1 million cumulative effect adjustment for stranded tax effects, such as pension and other postretirement benefits, to “Retained earnings” on January 1, 2018. See Note 17 for more information.
|
2017-07 | Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost | Fiscal years, beginning after December 15, 2017, and interim periods within those fiscal years.2020. Early adoption is permitted. | The FASB issued authoritative guidance that requiresSimplifies the service cost component of net periodic benefit costsaccounting for income taxes by eliminating certain exceptions to be presented separately from the other components of net periodic benefit costs. Service cost will be presented with other employee compensation cost within “Operating costs.” The other components of net periodic benefit costs, such as interest cost, amortization of prior service cost and gains or losses, are required to be presented outside of operations. The guidance should be applied retrospectively for the presentation of the service cost component in the income statement and allows a practical expedient for the estimation basis for applying the retrospective presentation requirements. Since Accounting Standards Update (“ASU”) 2017-07 only requires change to the Consolidated Statements of Operations classification of the components of net periodic benefit cost, there are no changes to income from continuing operations or net income. As a result of the adoption of the ASU during 2018, the service cost component of net periodic benefit costs continues to be recognized in total operating costs and the other components of net periodic benefit costs have been reclassified to “Other components of net periodic benefit costs/(income)” in the Consolidated Statements of Operations below “Operating profit” on a retrospective basis. The Company reclassified $0.9 million and $4.2 million of credits from “Production costs” and “Selling and general and administrative costs,” respectively, to “Other components of net periodic benefit costs/(income)” in 2017. Additionally, in 2017, the Company recorded a gain of $32.7 million in connection with the settlement of contractual funding obligations primarily from a postretirement plan, as well as a pension settlement charges of $102.1 million in connection with the transfer of certain pension benefit obligations to insurers that were reclassified from “Postretirement benefit plan withdrawl expense” and “Pension settlement expense”, respectively, to “Other components of net periodic benefit costs”. This recast increased the full year 2017 “Operating costs” by $5.1 million while “Operating profit” increased $64.2. The Company reclassified $1.3 million and $7.2 million of credits from “Production costs” and “Selling and general and administrative costs,” respectively, to “Other components of net periodic benefit costs/(income)” during 2016. Additionally, in 2016 the Company reclassified $1.7 million of pension credits out of “Restructuring charge” and $21.3 million of pension settlement charges out of “Pension settlement expense” into “Other components of net periodic benefit costs”. This recast increased the full year 2016 “Operating costs” by $8.5 million while “Operating profit” increased $11.1 million. There was no impact to net income for 2017 or 2016. See Note 10 for the components of net periodic benefit costs/(income) for our pension and other postretirement benefits plans.
|
THE NEW YORK TIMES COMPANY – P. 73
|
| | | |
Accounting Standard Update(s) | Topic | Effective Period | Summary |
2016-18 | Statement of Cash Flow: Restricted Cash | Fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted.
| The FASB issued authoritative guidance that amends the guidance in ASC 230 onAccounting Standards Codification 740 related to the classificationapproach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and presentationthe recognition of restricted cashdeferred tax liabilities for outside basis differences. The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the statementtax basis of cash flows.goodwill. The key requirements of the ASU are: (1) all entities should include in their cash and cash-equivalent balances in the statements of cash flows those amounts that are deemed to be restricted cash or restricted cash equivalents, (2) a reconciliation between the statement of financial position and the statement of cash flows must be disclosed when the statement of financial position includes more than one line item for cash, cash equivalents and restricted cash, (3) changes in restricted cash that result from transfers between cash, cash equivalents and restricted cash should not be presented as cash flow activities in the statement of cash flows and (4) an entity with a material balance of amounts generally described as restricted cash must disclose information about the nature of the restrictions.
As a result of theCompany adopted this guidance on December 28, 2020. The adoption of ASU 2016-18 in 2018, the Company included the restricted cash balance with the cash and cash equivalents balances in the Consolidated Statements of Cash Flows on a retrospective basis. The reclassification did not have a material impact to the Consolidated Statement of Cash Flows for 2017 and 2016. The Company has added a reconciliation from the Consolidated Balance Sheets to the Consolidated Statement of Cash Flows. See Note 8 for more information.
|
2016-01
2018-03
| Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities | Fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. | The FASB issued authoritative guidance that addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including requirements to measure most equity investments at fair value with changes in fair value recognized in net income, to perform a qualitative assessment of equity investments without readily determinable fair values, and to separately present financial assets and liabilities by measurement category and by type of financial asset on the balance sheet or the accompanying notes to theCompany’s consolidated financial statements.
We adopted ASU 2016-01 in the first quarter of 2018 and elected the measurement alternative, defined as cost, less impairments, adjusted by observable price changes, given our equity instruments are without readily determinable fair values. This guidance did not impact our AFS securities because we only hold debt securities. We also early adopted ASU 2018-03 in the first quarter of 2018. The adoptions of ASU 2016-01 and ASU 2018-03 did not have a material effect on our Consolidated Financial Statements. See Note 6 for more information.
|
| | | |
P. 74 – THE NEW YORK TIMES COMPANY
|
| | | |
Accounting Standard Update(s) | Topic | Effective Period | Summary |
2014-09
2016-08
2016-10
2016-12
| Revenue from Contracts with Customers (Topic 606) | Fiscal years beginning after December 31, 2017 | The FASB issued authoritative guidance that prescribes a single comprehensive model for entities to use in the accounting of revenue arising from contracts with customers. The new guidance supersedes virtually all existing revenue guidance under GAAP. There are two transition options available to entities: the full retrospective approach or the modified retrospective approach.
On January 1, 2018, the Company adopted Topic 606. The Company has elected the modified retrospective approach, which allows for the new revenue standard to be applied to all existing contracts as of the effective date and a cumulative catch-up adjustment to be recorded to “Retained earnings.” The Company recognizes revenue under the core principle to depict the transfer of control to the Company’s customers in an amount reflecting the consideration to which the Company expects to be entitled. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when a performance obligation is satisfied.
The most significant change to the Company’s accounting practices related to accounting for certain licensing arrangements in the other revenue category for which archival and updated content is included. Under the former revenue guidance, licensing revenue was generally recognized over the term of the contract based on the annual minimum guarantee amount specified in the contractual agreement with the licensee. Based on the guidance of Topic 606, the Company has determined that the archival content and updated content included in these licensing arrangements represent two separate performance obligations. As such, a portion of the total contract consideration related to the archival content was recognized at the commencement of the contract when control of the archival content is transferred. The remaining contractual consideration will be recognized proportionately over the term of the contract when updated content is transferred to the licensee, in line with when the control of the new content is transferred.
The net impact of these changes accelerated the revenue of contracts not completed as of January 1, 2018. In connection with the adoption of the standard the Company recorded a net increase to opening retained earnings of $2.6 million ($3.5 million before tax) and a contract asset of $3.5 million, with $1.3 million categorized as a current asset and $2.2 million categorized as a long term asset as of January 1, 2018. The impact to “Other revenues” as a result of applying Topic 606 was a decrease of $1.3 million for the twelve months ended December 30, 2018.
Our subscription and advertising revenues were not affected by the new guidance. See Note 3 for more information on our revenues and the application of Topic 606.
|
THE NEW YORK TIMES COMPANY – P. 75
Contract Assets
We record revenue from performance obligations when performance obligations are satisfied. For our digital archiving licensing revenue, we record revenue related to the portion of performance obligation (i) satisfied at the commencement of the contract when the customer obtains control of the archival content or (ii) when the updated content is transferred. We receive payments from customers based upon contractual billing schedules. As the transfer of control represents a right to the contract consideration, we record a contract asset in Other current assets for short-term contract assets and Miscellaneous assets for long-term contract assets on the Consolidated Balance Sheet for any amounts not yet invoiced to the customer. The contract asset is reclassified to Accounts receivable when the customer is invoiced based on the contractual billing schedule.
Significant Judgments
Our contracts with customers sometimes include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. We use an observable price to determine the standalone selling price for separate performance obligations if available or, when not available, an estimate that maximizes the use of observable inputs and faithfully depicts the selling price of the promised goods or services if we sold those goods or services separately to a similar customer in similar circumstances.
Practical Expedients and Exemptions
We expense the cost to obtain or fulfill a contract as incurred because the amortization period of the asset that the entity otherwise would have recognized is one year or less. We also apply the practical expedient for the significant financing component when the difference between the payment and the transfer of the products and services is a year or less.
Income Taxes
Income taxes are recognized for the following: (1) the amount of taxes payable for the current year; and (2) deferred tax assets and liabilities for the future tax consequences of events that have been recognized differently in the financial statements than for tax purposes. Deferred tax assets and liabilities are established using statutory tax rates and are adjusted for tax rate changes in the period of enactment.
We assess whether our deferred tax assets should be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. Our process includes collecting positive (i.e., sources of taxable income) and negative (i.e., recent historical losses) evidence and assessing, based on the evidence, whether it is more likely than not that the deferred tax assets will not be realized.
We release tax effects from accumulated other comprehensive income/(loss) for pension and other postretirement benefits on a plan by plan approach.
We recognize in our financial statements the impact of a tax position if that tax position is more likely than not of being sustained on audit, based on the technical merits of the tax position. This involves the identification of potential uncertain tax positions, the evaluation of tax law and an assessment of whether a liability for uncertain tax positions is necessary. Different conclusions reached in this assessment can have a material impact on our Consolidated Financial Statements.
We operate within multiple taxing jurisdictions and are subject to audit in these jurisdictions. These audits can involve complex issues, which could require an extended period of time to resolve. Until formal resolutions are reached between us and the taxing authorities, determining the timing and amount of possible audit settlements relating to uncertain tax positions is not practicable.
Stock-Based Compensation
We establish fair value based on market data for our stock-based awards to determine our cost and recognize the related expense over the appropriate vesting period. We recognize stock-based compensation expense for outstanding stock-settled long-term performance awards and restricted stock units, net of estimated forfeitures. See Note 14 for additional information related to stock-based compensation expense.
P. 74 – THE NEW YORK TIMES COMPANY
Earnings/(Loss) Per Share
As the Company has participating securities, we compute earnings per share based upon the lower of the two-class method or the treasury stock method. The two-class method is an earnings allocation method for computing earnings/(loss) per share when a company’s capital structure includes either two or more classes of common stock or common stock and participating securities. This method determines earnings/(loss) per share based on dividends declared on common stock and participating securities (i.e., distributed earnings), as well as participation rights of participating securities in any undistributed earnings.
Basic earnings/(loss) per share is calculated by dividing net earnings/(loss) available to common stockholders by the weighted-average common stock outstanding. Diluted earnings/(loss) per share is calculated similarly, except that it includes the dilutive effect of the assumed exercise of securities and the effect of shares issuable under our Company’s stock-based incentive plans if such effect is dilutive.
Foreign Currency Translation
The assets and liabilities of foreign companies are translated at period-end exchange rates. Results of operations are translated at average rates of exchange in effect during the year. The resulting translation adjustment is included as a separate component in the Stockholders’ Equity section of our Consolidated Balance Sheets, in the caption Accumulated other comprehensive loss, net of income taxes.
Recently IssuedAdopted Accounting Pronouncements
|
| | | | | | | | | | |
| Accounting Standard Update(s) | Topic | Effective Period | Summary |
2018-152019-12 | Intangibles—Goodwill and Other—Internal-Use SoftwareSimplifying the Accounting for Income Taxes (Topic 740) | Fiscal years, beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. | The FASB issued authoritative guidance that clarifies the accounting for implementation costs in cloud computing arrangements. The standard provides that implementation costs be evaluated for capitalization using the same criteria as that used for internal-use software development costs, with amortization expense being recorded in the same income statement expense line as the hosted service costs and over the expected term of the hosting arrangement. We are currently in the process of evaluating the impact of this guidance on our consolidated financial statements. |
2018-14 | Compensation—Retirement Benefits—Defined Benefit Plans—General | Fiscal years ending after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. | The FASB issued authoritative guidance that modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement benefit plans. The guidance removes disclosures, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant. We are currently in the process of evaluating the impact of this guidance on our consolidated financial statements. |
2016-13
2018-19
| Financial Instruments—Credit Losses | Fiscal years, beginning after December 15, 2019, and interim periods within those fiscal years.2020. Early adoption is permittedpermitted. | Simplifies the accounting for fiscal years beginning after December 15, 2018,income taxes by eliminating certain exceptions to the guidance in Accounting Standards Codification 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and interim periods within those fiscal years. | the recognition of deferred tax liabilities for outside basis differences. The FASB issued authoritative guidancestandard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that amends guidance on reporting credit losses for assets, including trade receivables, available-for-sale marketable securities and any other financial assets not excluded from the scope that have the contractual right to receive cash. For trade receivables, ASU 2016-13 eliminates the probable initial recognition threshold in current generally accepted accounting standards, and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the gross trade receivables balance to present the net amount expected to be collected. For available-for-sale marketable securities, credit losses should be measuredresult in a manner similar to current generally accepted accounting standards; however, ASU 2016-13 will require that credit losses be presented as an allowance rather than as a write-down. We are currentlystep-up in the processtax basis of evaluating the impact ofgoodwill. The Company adopted this guidance on our consolidated financial statements. |
2016-02
2018-10
2018-11
2018-20
| Leases | Fiscal years beginning after December 30, 2018. Early adoption is permitted. | The FASB issued authoritative guidance that provides guidance on accounting for leases and disclosure of key information about leasing arrangements. The guidance issued in 2016 was subsequently amended in the 2018 ASU updates (collectively, “Topic 842”). Topic 842 requires lessees to recognize the following for all operating and finance leases at the commencement date: (1) a lease liability, which is the obligation to make lease payments arising from a lease, measured on a discounted basis, and (2) a right-of-use asset representing the lessee’s right to use, or control the use of, the underlying asset for the lease term. A lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities for short-term leases with a term of 12 months or less. The guidance does not fundamentally change lessor accounting; however, some changes have been made to align that guidance with the lessee guidance and other areas within GAAP. It requires that reimbursable expenses from a lessee be reported gross on the Consolidated Statement of Operations.
The Company expects to adopt this guidance in the first quarter of 2019 utilizing the alternative transition method. Upon adoption, the Company expects to elect the transition package of practical expedients permitted within the new standard, which, among other things, allows the carryforward of the historical lease classification and allows the Company to recognize a cumulative effect adjustment to the opening balance of retained earnings. The Company continues to evaluate which other, if any, practical expedients will be elected.
28, 2020. The adoption of the standards will require us to add right-of-use assets and lease liabilities onto our balance sheet. Based on our lease portfolio at December 30, 2018, the right-of-use asset and lease liability would have been in the range of $35 million to $40 million on our Consolidated Balance Sheets based on the remaining lease payments. We dodid not expect the lessee guidance to have a material impact to our Consolidated Statement of Operations or liquidity.
on the Company’s consolidated financial statements. |
The Company considers the applicability and impact of all recently issued accounting pronouncements. Recent accounting pronouncements not specifically identified in our disclosures are either not applicable to the Company or are not expected to have a material effect on our financial condition or results of operations.
P. 76 – THE NEW YORK TIMES COMPANY
3. Revenue
We generate revenues principally from subscriptions and advertising. Subscription revenues consist of revenues from subscriptions to our print and digital products (which include our news product, as well as our Crossword and Cooking products) and single-copy and bulk sales of our print products. Subscription revenues are based on both the number of copies of the printed newspaper sold and digital-only subscriptions, and the rates charged to the respective customers.
Advertising revenues are derived from the sale of our advertising products and services on our print and digital platforms. These revenues are primarily determined by the volume, rate and mix of advertisements.
Other revenues primarily consist of revenues from licensing, affiliate referrals (revenue generated by offering direct links to merchants in exchange for a portion of the sale price), building rental revenue, commercial printing, NYT Live (our live events business) and retail commerce.
Subscription, advertising and other revenues were as follows:
|
| | | | | | | | | | | | |
| | | Years Ended |
| (In thousands) | | December 30, 2018 |
| | December 31, 2017 |
| | December 25, 2016 |
|
| | | (52 weeks) | | (53 weeks) | | (52 weeks) |
| Subscription | | $ | 1,042,571 |
| | $ | 1,008,431 |
| | $ | 880,543 |
|
| Advertising | | 558,253 |
| | 558,513 |
| | 580,732 |
|
Other (1) | | 147,774 |
| | 108,695 |
| | 94,067 |
|
| Total | | $ | 1,748,598 |
| | $ | 1,675,639 |
| | $ | 1,555,342 |
|
(1) Other revenue includes building rental revenue, which is not under the scope of Topic 606. Building rental revenue was approximately $23 million for the year ended December 30, 2018and approximately$17 million for the years ended December 31, 2017 and December 25, 2016.
The following table summarizes digital-only subscription revenues, which are a component of subscription revenues above, for the years ended December 30, 2018, December 31, 2017 and December 25, 2016:
|
| | | | | | | | | | | |
| | | Years Ended |
| (In thousands) | | December 30, 2018 |
| | December 31, 2017 |
| | December 25, 2016 |
|
| | | (52 weeks) | | (53 weeks) | | (52 weeks) |
| Digital-only subscription revenues: | | | | | | |
News product subscription revenues(1) | | $ | 378,484 |
| | $ | 325,956 |
| | 223,459 |
|
Other product subscription revenues(2) | | 22,136 |
| | 14,387 |
| | 9,369 |
|
| Total digital-only subscription revenues | | $ | 400,620 |
| | $ | 340,343 |
| | 232,828 |
|
(1) Includes revenues from subscriptions to the Company’s news product. News product subscription packages that include access to the Company’s Crossword and Cooking products are also included in this category. |
(2) Includes revenues from standalone subscriptions to the Company’s Crossword and Cooking products. |
Advertising revenues (print and digital) by category were as follows:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Years Ended |
| | | December 30, 2018 | | December 31, 2017 | | December 25, 2016 |
| | | (52 weeks) | | (53 weeks) | | (52 weeks) |
| (In thousands) | | Print | | Digital | | Total | | Print | | Digital | | Total | | Print | | Digital | | Total |
| Display | | $ | 269,160 |
| | $ | 202,038 |
| | $ | 471,198 |
| | $ | 285,679 |
| | $ | 198,658 |
| | $ | 484,337 |
| | $ | 335,652 |
| | $ | 181,545 |
| | $ | 517,197 |
|
| Other | | 30,220 |
| | 56,835 |
| | 87,055 |
| | 34,543 |
| | 39,633 |
| | 74,176 |
| | 36,328 |
| | 27,207 |
| | 63,535 |
|
| Total advertising | | $ | 299,380 |
| | $ | 258,873 |
| | $ | 558,253 |
| | $ | 320,222 |
| | $ | 238,291 |
| | $ | 558,513 |
| | $ | 371,980 |
| | $ | 208,752 |
| | $ | 580,732 |
|
THE NEW YORK TIMES COMPANY – P. 77
Performance Obligations
Revenue is recognized when a performance obligation is satisfied by transferring a promised good or service to a customer. In the case of our digital archive licensing contracts, the transaction price was allocated among the performance obligations, (i) the archival content and (ii) the updated content, based on the Company’s estimate of the standalone selling price of each of the performance obligations, as they are currently not sold separately.
As of December 30, 2018, the aggregate amount of the transaction price allocated to the remaining performance obligations was approximately $27 million. The Company will recognize this revenue as control of the performance obligation is transferred to the customer. We expect that approximately $12 million, $12 million, $2 million and $1 million will be recognized in 2019, 2020, 2021 and 2022, respectively.
Contract Assets
We record revenue from performance obligations when performance obligations are satisfied. For our digital archiving licensing revenue, we record revenue related to the portion of performance obligation (i) satisfied at the commencement of the contract when the customer obtains control of the archival content or (ii) when the updated content is transferred. We receive payments from customers based upon contractual billing schedules. As the transfer of December 30, 2018,control represents a right to the Company had $2.5 millioncontract consideration, we record a contract asset inOther current assets for short-term contract assets recorded inand Miscellaneous assets for long-term contract assets on the Consolidated Balance Sheet relatedfor any amounts not yet invoiced to digital archiving licensing revenue.the customer. The contract asset is reclassified to “Accounts receivable”Accounts receivable when the customer is invoiced based on the contractual billing schedule. The increase in the contract assets balance for the year ended December 30, 2018, is primarily driven by the cumulative catch-up adjustment recorded by the Company on January 1, 2018, of $3.5 million as a result of adoption of Topic 606, offset by $1.0 million of consideration that was reclassified to “Accounts receivable” when invoiced based on the contractual billing schedules for the period ended December 30, 2018.
Significant Judgments
Our contracts with customers sometimes include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. We use an observable price to determine the standalone selling price for separate performance obligations if available or, when not available, an estimate that maximizes the use of observable inputs and faithfully depicts the selling price of the promised goods or services if we sold those goods or services separately to a similar customer in similar circumstances.
Practical Expedients and Exemptions
We expense the cost to obtain or fulfill a contract as incurred because the amortization period of the asset that the entity otherwise would have recognized is one year or less. We also apply the practical expedient for the significant financing component when the difference between the payment and the transfer of the products and services is a year or less.
Income Taxes
Income taxes are recognized for the following: (1) the amount of taxes payable for the current year; and (2) deferred tax assets and liabilities for the future tax consequences of events that have been recognized differently in the financial statements than for tax purposes. Deferred tax assets and liabilities are established using statutory tax rates and are adjusted for tax rate changes in the period of enactment.
We assess whether our deferred tax assets should be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. Our process includes collecting positive (i.e., sources of taxable income) and negative (i.e., recent historical losses) evidence and assessing, based on the evidence, whether it is more likely than not that the deferred tax assets will not be realized.
We release tax effects from accumulated other comprehensive income/(loss) for pension and other postretirement benefits on a plan by plan approach.
We recognize in our financial statements the impact of a tax position if that tax position is more likely than not of being sustained on audit, based on the technical merits of the tax position. This involves the identification of potential uncertain tax positions, the evaluation of tax law and an assessment of whether a liability for uncertain tax positions is necessary. Different conclusions reached in this assessment can have a material impact on our Consolidated Financial Statements.
We operate within multiple taxing jurisdictions and are subject to audit in these jurisdictions. These audits can involve complex issues, which could require an extended period of time to resolve. Until formal resolutions are reached between us and the taxing authorities, determining the timing and amount of possible audit settlements relating to uncertain tax positions is not practicable.
Stock-Based Compensation
We establish fair value based on market data for our stock-based awards to determine our cost and recognize the related expense over the appropriate vesting period. We recognize stock-based compensation expense for outstanding stock-settled long-term performance awards and restricted stock units, net of estimated forfeitures. See Note 14 for additional information related to stock-based compensation expense.
P. 74 – THE NEW YORK TIMES COMPANY
Earnings/(Loss) Per Share
As the Company has participating securities, we compute earnings per share based upon the lower of the two-class method or the treasury stock method. The two-class method is an earnings allocation method for computing earnings/(loss) per share when a company’s capital structure includes either two or more classes of common stock or common stock and participating securities. This method determines earnings/(loss) per share based on dividends declared on common stock and participating securities (i.e., distributed earnings), as well as participation rights of participating securities in any undistributed earnings.
Basic earnings/(loss) per share is calculated by dividing net earnings/(loss) available to common stockholders by the weighted-average common stock outstanding. Diluted earnings/(loss) per share is calculated similarly, except that it includes the dilutive effect of the assumed exercise of securities and the effect of shares issuable under our Company’s stock-based incentive plans if such effect is dilutive.
Foreign Currency Translation
The assets and liabilities of foreign companies are translated at period-end exchange rates. Results of operations are translated at average rates of exchange in effect during the year. The resulting translation adjustment is included as a separate component in the Stockholders’ Equity section of our Consolidated Balance Sheets, in the caption Accumulated other comprehensive loss, net of income taxes.
Recently Adopted Accounting Pronouncements
| | | | | | | | | | | |
| Accounting Standard Update(s) | Topic | Effective Period | Summary |
| 2019-12 | Simplifying the Accounting for Income Taxes (Topic 740) | Fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. | Simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in Accounting Standards Codification 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The Company adopted this guidance on December 28, 2020. The adoption did not have a material impact on the Company’s consolidated financial statements. |
Recently Issued Accounting Pronouncements
The Financial Accounting Standards Board (the “FASB”) issued authoritative guidance on the following topics:
| | | | | | | | | | | |
| Accounting Standard Update(s) | Topic | Effective Period | Summary |
| 2021-08 | Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers | Fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption is permitted. | Requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 2014-09, Revenue from Contracts with Customers (Topic 606). The update will generally result in an entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. We are currently in the process of evaluating the impact of this guidance on the Company’s consolidated financial statements. |
The Company considers the applicability and impact of all recently issued accounting pronouncements. Recent accounting pronouncements not specifically identified in our disclosures are either not applicable to the Company or are not expected to have a material effect on our financial condition or results of operations.
THE NEW YORK TIMES COMPANY – P. 7875
3. Revenue
We generate revenues principally from subscriptions and advertising.
Subscription revenues consist of revenues from subscriptions to our digital and print products (which include our news product, as well as our Games, Cooking, Audm and Wirecutter (to which a subscription option was launched during the third quarter of 2021) products (“other digital-only products”)) and single-copy and bulk sales of our print products. Subscription revenues are based on both the number of copies of the printed newspaper sold and digital-only subscriptions, and the rates charged to the respective customers.
Advertising revenue is principally from advertisers (such as technology, financial and luxury goods companies) promoting products, services or brands on digital platforms in the form of display ads, audio and video, and in print, in the form of column-inch ads, and it is primarily derived from offerings sold directly to marketers by our advertising sales teams. A smaller proportion of our total advertising revenues is generated through programmatic auctions run by third-party ad exchanges. Advertising revenues are primarily determined by the volume (e.g., impressions), rate and mix of advertisements. Digital advertising includes our core digital advertising business and other digital advertising. Our core digital advertising business includes direct-sold website, mobile application, podcast, email and video advertisements. Direct-sold display advertising, a component of core digital advertising, includes offerings on websites and mobile applications sold directly to marketers by our advertising sales teams. Our digital advertising offerings include solutions that use proprietary first-party data — rather than third-party data — to generate predictive insights and help inform our clients’ advertising strategies while leveraging our audiences in privacy-forward ways. Other digital advertising includes advertising revenues generated by open-market programmatic advertising, creative services fees associated with branded content, advertisements appearing on our Wirecutter product and classified advertising. Print advertising includes revenue from column-inch ads and classified advertising, including line-ads as well as preprinted advertising, also known as freestanding inserts.
Other revenues primarily consist of revenues from licensing, Wirecutter affiliate referrals, commercial printing, the leasing of floors in the Company Headquarters, retail commerce, television and film, our student subscription sponsorship program and our live events business.
Subscription, advertising and other revenues were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Years Ended |
| (In thousands) | | December 26, 2021 | | As %
of total | | December 27, 2020 | | As %
of total | | December 29, 2019 | | As %
of total |
| | | | | | | | | | | | |
| Subscription | | $ | 1,362,115 | | | 65.6 | % | | $ | 1,195,368 | | | 67.0 | % | | $ | 1,083,851 | | | 59.8 | % |
| Advertising | | 497,536 | | | 24.0 | % | | 392,420 | | | 22.0 | % | | 530,678 | | | 29.3 | % |
Other (1) | | 215,226 | | | 10.3 | % | | 195,851 | | | 11.0 | % | | 197,655 | | | 10.9 | % |
| Total | | $ | 2,074,877 | | | 100.0 | % | | $ | 1,783,639 | | | 100.0 | % | | $ | 1,812,184 | | | 100.0 | % |
(1) Other revenue includes building rental revenue, which is not under the scope of Topic 606. Building rental revenue was approximately $27 million, $29 million and $31 million for the years ended December 26, 2021, December 27, 2020, and December 29, 2019, respectively.
P. 76 – THE NEW YORK TIMES COMPANY
The following table summarizes digital and print subscription revenues, which are components of subscription revenues above, for the years ended December 26, 2021, December 27, 2020, and December 29, 2019:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Years Ended |
| (In thousands) | | December 26, 2021 | | As %
of total | | December 27, 2020 | | As %
of total | | December 29, 2019 | | As %
of total |
| | | | | | | | | | | | |
| Digital-only subscription revenues: | | | | | | | | | | | | |
News product subscription revenues(1) | | $ | 693,994 | | | 50.9 | % | | $ | 543,578 | | | 45.5 | % | | $ | 426,125 | | | 39.3 | % |
Other product subscription revenues(2) | | 79,888 | | | 5.9 | % | | 54,702 | | | 4.6 | % | | 34,327 | | | 3.2 | % |
| Subtotal digital-only subscriptions | | 773,882 | | | 56.8 | % | | 598,280 | | | 50.0 | % | | 460,452 | | | 42.5 | % |
| Print subscription revenues | | | | | | | | | | | | |
Domestic home delivery subscription revenues(3) | | 529,039 | | | 38.8 | % | | 528,970 | | | 44.3 | % | | 524,543 | | | 48.4 | % |
Single-copy, NYT International and other subscription revenues(4) | | 59,194 | | | 4.4 | % | | 68,118 | | | 5.7 | % | | 98,856 | | | 9.1 | % |
| Subtotal print subscription revenues | | 588,233 | | | 43.2 | % | | 597,088 | | | 50.0 | % | | 623,399 | | | 57.5 | % |
| Total subscription revenues | | $ | 1,362,115 | | | 100.0 | % | | 1,195,368 | | | 100.0 | % | | $ | 1,083,851 | | | 100.0 | % |
(1) Includes revenues from subscriptions to the Company’s news product. News product subscription packages that include access to the Company’s Games, Cooking and Wirecutter products are also included in this category. |
(2) Includes revenues from standalone subscriptions to the Company’s other digital-only products. During the third quarter of 2021, the Company launched a Wirecutter subscription option. |
(3) Includes access to the Company’s digital news, Games, Cooking and Wirecutter products. |
(4) NYT International is the international edition of our print newspaper. |
The following table summarizes digital and print advertising revenues for the years ended December 26, 2021, December 27, 2020, and December 29, 2019:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Years Ended |
| (In thousands) | | December 26, 2021 | | As %
of total | | December 27, 2020 | | As %
of total | | December 29, 2019 | | As %
of total |
| | | | | | | | | | | | |
| Advertising revenues | | | | | | | | | | | | |
| Digital | | $ | 308,616 | | | 62.0 | % | | $ | 228,594 | | | 58.3 | % | | $ | 260,454 | | | 49.1 | % |
| Print | | 188,920 | | | 38.0 | % | | 163,826 | | | 41.7 | % | | 270,224 | | | 50.9 | % |
| Total advertising | | $ | 497,536 | | | 100.0 | % | | $ | 392,420 | | | 100.0 | % | | $ | 530,678 | | | 100.0 | % |
Performance Obligations
We have remaining performance obligations related to digital archive and other licensing and certain advertising contracts. As of December 26, 2021, the aggregate amount of the transaction price allocated to the remaining performance obligations for contracts with a duration greater than one year was approximately $123 million. The Company will recognize this revenue as performance obligations are satisfied. We expect that approximately $42 million, $20 million, and $61 million will be recognized in 2022, 2023 and thereafter through 2029, respectively.
Contract Assets
As of December 26, 2021, and December 27, 2020, the Company had $3.4 million and $1.8 million, respectively, in contract assets recorded in the Consolidated Balance Sheet related to digital archiving licensing revenue. The contract asset is reclassified to Accounts receivable when the customer is invoiced based on the contractual billing schedule.
THE NEW YORK TIMES COMPANY – P. 77
4. Marketable Securities
The Company accounts for its marketable securities as AFS. The Company recorded $2.8$1.7 million and $2.5$4.3 million of net unrealized losslosses and gains, respectively, in AOCIAccumulated Other Comprehensive Income (“AOCI”) as of December 30, 2018,26, 2021, and December 31, 2017,27, 2020, respectively.
The following tables present the amortized cost, gross unrealized gains and losses, and fair market value of our AFS securities as of December 30, 2018,26, 2021, and December 31, 2017:27, 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 26, 2021 |
| (In thousands) | | Amortized Cost | | Gross unrealized gains | | Gross unrealized losses | | Fair Value |
| Short-term AFS securities | | | | | | | | |
| U.S. Treasury securities | | $ | 148,899 | | | $ | 692 | | | $ | (43) | | | $ | 149,548 | |
| Corporate debt securities | | 107,158 | | | 245 | | | (69) | | | 107,334 | |
| Certificates of deposit | | 55,551 | | | — | | | — | | | 55,551 | |
| Commercial paper | | 21,145 | | | — | | | — | | | 21,145 | |
| Municipal securities | | 3,999 | | | — | | | (2) | | | 3,997 | |
| U.S. governmental agency securities | | 3,500 | | | — | | | — | | | 3,500 | |
| Total short-term AFS securities | | $ | 340,252 | | | $ | 937 | | | $ | (114) | | | $ | 341,075 | |
| Long-term AFS securities | | | | | | | | |
| Corporate debt securities | | $ | 242,764 | | | $ | 149 | | | $ | (1,858) | | | $ | 241,055 | |
| U.S. Treasury securities | | 119,695 | | | — | | | (549) | | | 119,146 | |
| U.S. governmental agency securities | | 39,498 | | | — | | | (252) | | | 39,246 | |
| Municipal securities | | 13,994 | | | — | | | (61) | | | 13,933 | |
| Total long-term AFS securities | | $ | 415,951 | | | $ | 149 | | | $ | (2,720) | | | $ | 413,380 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 27, 2020 |
| (In thousands) | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value |
| | | | | | | | |
| Short-term AFS securities | | | | | | | | |
| U.S. Treasury securities | | $ | 79,467 | | | $ | 39 | | | $ | (3) | | | $ | 79,503 | |
| Corporate debt securities | | 129,805 | | | 504 | | | (8) | | | 130,301 | |
| | | | | | | | |
| Certificates of deposit | | 36,525 | | | — | | | — | | | 36,525 | |
| Commercial paper | | 37,580 | | | — | | | — | | | 37,580 | |
| U.S. governmental agency securities | | 25,113 | | | 61 | | | (3) | | | 25,171 | |
| Total short-term AFS securities | | $ | 308,490 | | | $ | 604 | | | $ | (14) | | | $ | 309,080 | |
| Long-term AFS securities | | | | | | | | |
| Corporate debt securities | | $ | 134,296 | | | $ | 1,643 | | | $ | (5) | | | $ | 135,934 | |
| U.S. Treasury securities | | 95,511 | | | 2,054 | | | — | | | 97,565 | |
| U.S. governmental agency securities | | 48,342 | | | 19 | | | (13) | | | 48,348 | |
| Municipal securities | | 4,994 | | | — | | | (10) | | | 4,984 | |
| Total long-term AFS securities | | $ | 283,143 | | | $ | 3,716 | | | $ | (28) | | | $ | 286,831 | |
|
| | | | | | | | | | | | | | | | |
| | | December 30, 2018 |
| (In thousands) | | Amortized Cost | | Gross unrealized gains | | Gross unrealized losses | | Fair Value |
| Short-term AFS securities | | | | | | | | |
| Corporate debt securities | | $ | 140,631 |
| | $ | 1 |
| | $ | (464 | ) | | $ | 140,168 |
|
| U.S. Treasury securities | | 107,717 |
| | — |
| | (232 | ) | | 107,485 |
|
| U.S. governmental agency securities | | 92,628 |
| | — |
| | (654 | ) | | 91,974 |
|
| Certificates of deposit | | 23,497 |
| | — |
| | — |
| | 23,497 |
|
| Commercial paper | | 8,177 |
| | — |
| | — |
| | 8,177 |
|
| Total short-term AFS securities | | $ | 372,650 |
| | $ | 1 |
| | $ | (1,350 | ) | | $ | 371,301 |
|
| Long-term AFS securities | | | | | | | | |
| Corporate debt securities | | $ | 130,612 |
| | $ | 44 |
| | $ | (1,032 | ) | | $ | 129,624 |
|
| U.S. Treasury securities | | 47,079 |
| | 5 |
| | (347 | ) | | 46,737 |
|
| U.S. governmental agency securities | | 37,362 |
| | 3 |
| | (168 | ) | | 37,197 |
|
| Total long-term AFS securities | | $ | 215,053 |
| | $ | 52 |
| | $ | (1,547 | ) | | $ | 213,558 |
|
|
| | | | | | | | | | | | | | | | |
| | | December 31, 2017 |
| (In thousands) | | Amortized Cost | | Gross unrealized gains | | Gross unrealized losses | | Fair Value |
| Short-term AFS securities | | | | | | | | |
| Corporate debt securities | | $ | 150,334 |
| | $ | — |
| | $ | (227 | ) | | $ | 150,107 |
|
| U.S. Treasury securities | | 70,985 |
| | — |
| | (34 | ) | | 70,951 |
|
| U.S. governmental agency securities | | 45,819 |
| | — |
| | (179 | ) | | 45,640 |
|
| Certificates of deposit | | 9,300 |
| | — |
| | — |
| | 9,300 |
|
| Commercial paper | | 32,591 |
| | — |
| | — |
| | 32,591 |
|
| Total short-term AFS securities | | $ | 309,029 |
| | $ | — |
| | $ | (440 | ) | | $ | 308,589 |
|
| Long-term AFS securities | | | | | | | | |
| Corporate debt securities | | $ | 92,687 |
| | $ | — |
| | $ | (683 | ) | | 92,004 |
|
| U.S. Treasury securities | | 53,031 |
| | — |
| | (403 | ) | | 52,628 |
|
| U.S. governmental agency securities | | 97,798 |
| | — |
| | (1,019 | ) | | 96,779 |
|
| Total long-term AFS securities | | $ | 243,516 |
| | $ | — |
| | $ | (2,105 | ) | | $ | 241,411 |
|
P. 78 – THE NEW YORK TIMES COMPANY – P. 79
The following tables present the AFS securities as of December 30, 2018,26, 2021, and December 31, 201727, 2020, that were in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by investment category and the length of time that individual securities have been in a continuous loss position:
| | | | | December 30, 2018 | | December 26, 2021 |
| | | Less than 12 Months | | 12 Months or Greater | | Total | | Less than 12 Months | | 12 Months or Greater | | Total |
| (In thousands) | | Fair Value | | Gross unrealized losses | | Fair Value | | Gross unrealized losses | | Fair Value | | Gross unrealized losses | (In thousands) | | Fair Value | | Gross unrealized losses | | Fair Value | | Gross unrealized losses | | Fair Value | | Gross unrealized losses |
| | Short-term AFS securities | | | | | | | | | | | | | Short-term AFS securities | |
| U.S. Treasury securities | | U.S. Treasury securities | | $ | 61,018 | | | $ | (43) | | | $ | — | | | $ | — | | | $ | 61,018 | | | $ | (43) | |
| Corporate debt securities | | $ | 76,886 |
| | $ | (115 | ) | | $ | 61,459 |
| | $ | (349 | ) | | $ | 138,345 |
| | $ | (464 | ) | Corporate debt securities | | 53,148 | | | (69) | | | — | | | — | | | 53,148 | | | (69) | |
| U.S. Treasury securities | | 70,830 |
| | (31 | ) | | 28,207 |
| | (201 | ) | | 99,037 |
| | (232 | ) | |
| U.S. governmental agency securities | | 11,664 |
| | (4 | ) | | 80,311 |
| | (650 | ) | | 91,975 |
| | (654 | ) | |
| Certificates of deposit | | $ | 1,599 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 1,599 |
| | $ | — |
| |
| | Municipal securities | | Municipal securities | | 1,998 | | | (2) | | | — | | | — | | | 1,998 | | | (2) | |
| | Total short-term AFS securities | | $ | 160,979 |
| | $ | (150 | ) | | $ | 169,977 |
| | $ | (1,200 | ) | | $ | 330,956 |
| | $ | (1,350 | ) | Total short-term AFS securities | | $ | 116,164 | | | $ | (114) | | | $ | — | | | $ | — | | | $ | 116,164 | | | $ | (114) | |
| Long-term AFS securities | | | | | | | | | | | | | Long-term AFS securities | |
| Corporate debt securities | | $ | 81,655 |
| | $ | (570 | ) | | $ | 27,265 |
| | $ | (462 | ) | | $ | 108,920 |
| | $ | (1,032 | ) | Corporate debt securities | | $ | 224,022 | | | $ | (1,858) | | | $ | — | | | $ | — | | | $ | 224,022 | | | $ | (1,858) | |
| U.S. Treasury securities | | 20,479 |
| | (29 | ) | | 23,762 |
| | (318 | ) | | 44,241 |
| | (347 | ) | U.S. Treasury securities | | 119,146 | | | (549) | | | — | | | — | | | 119,146 | | | (549) | |
| U.S. governmental agency securities | | 21,579 |
| | (36 | ) | | 11,868 |
| | (132 | ) | | 33,447 |
| | (168 | ) | U.S. governmental agency securities | | 39,246 | | | (252) | | | — | | | — | | | 39,246 | | | (252) | |
| Municipal securities | | Municipal securities | | 13,933 | | | (61) | | | — | | | — | | | 13,933 | | | (61) | |
| Total long-term AFS securities | | $ | 123,713 |
| | $ | (635 | ) | | $ | 62,895 |
| | $ | (912 | ) | | $ | 186,608 |
| | $ | (1,547 | ) | Total long-term AFS securities | | $ | 396,347 | | | $ | (2,720) | | | $ | — | | | $ | — | | | $ | 396,347 | | | $ | (2,720) | |
| | | | | December 31, 2017 | | December 27, 2020 |
| | | Less than 12 Months | | 12 Months or Greater | | Total | | Less than 12 Months | | 12 Months or Greater | | Total |
| (In thousands) | | Fair Value | | Gross unrealized losses | | Fair Value | | Gross unrealized losses | | Fair Value | | Gross unrealized losses | (In thousands) | | Fair Value | | Gross unrealized losses | | Fair Value | | Gross unrealized losses | | Fair Value | | Gross unrealized losses |
| | Short-term AFS securities | | | | | | | | | | | | | Short-term AFS securities | |
| U.S. Treasury securities | | U.S. Treasury securities | | $ | 20,133 | | | $ | (3) | | | $ | — | | | $ | — | | | $ | 20,133 | | | $ | (3) | |
| Corporate debt securities | | $ | 140,111 |
| | $ | (199 | ) | | $ | 9,996 |
| | $ | (28 | ) | | $ | 150,107 |
| | $ | (227 | ) | Corporate debt securities | | 33,735 | | | (8) | | | — | | | — | | | 33,735 | | | (8) | |
| U.S. Treasury securities | | 70,951 |
| | (34 | ) | | — |
| | — |
| | 70,951 |
| | (34 | ) | |
| U.S. governmental agency securities | | 19,770 |
| | (50 | ) | | 25,870 |
| | (129 | ) | | 45,640 |
| | (179 | ) | U.S. governmental agency securities | | 4,999 | | | (2) | | | 8,749 | | | (1) | | | 13,748 | | | (3) | |
| Total short-term AFS securities | | $ | 230,832 |
| | $ | (283 | ) | | $ | 35,866 |
| | $ | (157 | ) | | $ | 266,698 |
| | $ | (440 | ) | Total short-term AFS securities | | $ | 58,867 | | | $ | (13) | | | $ | 8,749 | | | $ | (1) | | | $ | 67,616 | | | $ | (14) | |
| Long-term AFS securities | | | | | | | | | | | | | Long-term AFS securities | |
| Corporate debt securities | | $ | 81,118 |
| | $ | (579 | ) | | $ | 10,886 |
| | $ | (104 | ) | | $ | 92,004 |
| | $ | (683 | ) | Corporate debt securities | | $ | 6,717 | | | $ | (5) | | | $ | — | | | $ | — | | | $ | 6,717 | | | $ | (5) | |
| U.S. Treasury securities | | 52,628 |
| | (403 | ) | | — |
| | — |
| | 52,628 |
| | (403 | ) | |
| | U.S. governmental agency securities | | 23,998 |
| | (125 | ) | | 72,781 |
| | (894 | ) | | 96,779 |
| | (1,019 | ) | U.S. governmental agency securities | | 26,236 | | | (13) | | | — | | | — | | | 26,236 | | | (13) | |
| Municipal securities | | Municipal securities | | 4,984 | | | (10) | | | — | | | — | | | 4,984 | | | (10) | |
| Total long-term AFS securities | | $ | 157,744 |
| | $ | (1,107 | ) | | $ | 83,667 |
| | $ | (998 | ) | | $ | 241,411 |
| | $ | (2,105 | ) | Total long-term AFS securities | | $ | 37,937 | | | $ | (28) | | | $ | — | | | $ | — | | | $ | 37,937 | | | $ | (28) | |
We periodically review ourassess AFS securities for OTTI.on a quarterly basis or more often if a potential loss-triggering event occurs. See Note 2 for factors we consider when assessing AFS securities for OTTI. recognition of losses or allowance for credit losses.
As of December 30, 2018,26, 2021, and December 31, 2017,27, 2020, we did not intend to sell and it was not likely that we would be required to sell these investments before recovery of their amortized cost basis, which may be at maturity. Unrealized losses related to these investments are primarily due to interest rate fluctuations as opposed to changes in credit quality. Therefore, as of December 30, 201826, 2021, and December 31, 2017,27, 2020, we have recognized no OTTI loss.realized losses or allowance for credit losses related to AFS securities.
P. 80 – THE NEW YORK TIMES COMPANY
Marketable debt securities
As of December 30, 2018, and December 31, 2017,26, 2021, our short-term and long-term marketable securities had remaining maturities of less than 1 month to 12 months and 13 months to 3435 months, respectively. See Note 98 for additional information regarding the fair value hierarchy of our marketable securities.
Letters of creditTHE NEW YORK TIMES COMPANY – P. 79
We issued letters of credit totaling $48.8 million as of December 30, 2018, to secure commitments under certain sub-lease agreements associated with the rental of floors in our headquarters building. The letters of credit will expire by 2020, and are collateralized by marketable securities, with a fair value of $54.2 million, held in our investment portfolios. No amounts were outstanding on these letters of credit as of December 30, 2018. See Note 19 for additional information regarding the securities commitment.
5. Goodwill and Intangibles
In 2016,During the first quarter of 2020, the Company acquired two digital marketing agencies, HelloSociety, LLC and Fake Love, LLC for an aggregate of $15.4 million,Listen In Audio, Inc., a company that transforms journalism articles into audio that is made available in separate all-cash transactions. Also in 2016, the Company acquired Submarine Leisure Club, Inc., which owned thea subscription-based product review and recommendation website,Wirecutter,named “Audm,” in an all-cash transaction. We paid $25.0$8.6 million including(consisting of an $8.0 million cash payment and a payment made for a non-compete agreement, and also$0.6 million note receivable previously issued by the Company, which was canceled at the close of the transaction) and entered into a consulting agreement and retention agreements that will likely require retention payments over the three years following the acquisition.
The Company allocated the purchase pricesprice for these acquisitionsthis acquisition based on the final valuation of assets acquired and liabilities assumed, resulting in allocations primarily to goodwill of $5.8 million and intangibles property, plant and equipment and other miscellaneous assets.
of $2.7 million in the second quarter of 2020. The aggregate carrying amount of the intangible assets of $6.2 millionasset related to these acquisitionsthis acquisition has been included in “Miscellaneous Assets”Miscellaneous assets in our Consolidated Balance Sheets. The estimated useful liveslife for these assets range from 3 to 7this asset is 8 years and areit is amortized on a straight-line basis.
During the third quarter of 2020, the Company acquired substantially all the assets and certain liabilities of Serial Productions, LLC (“Serial”). The purchase price includes approximately $25.0 million in cash that was paid at closing on July 29, 2020, and $9.3 million of contingent consideration. The contingent consideration is related to contingent payments based on the achievement of certain operational targets, as defined in the acquisition agreement, over the five years following the acquisition. The Company estimated the fair value of the contingent consideration liability using a probability-weighted discounted cash flow model. The fair value is based on significant unobservable inputs and therefore represents a Level 3 measurement as defined in Note 8.
The Company allocated the purchase price for this acquisition based on the valuation of assets acquired and liabilities assumed, resulting in allocations primarily to goodwill of $21.5 million and intangibles of $12.9 million as of the date of acquisition. The carrying amount of the intangible assets related to this acquisition has been included in Miscellaneous assets in our Consolidated Balance Sheets and include an indefinite-lived intangible of $9.0 million. The estimated useful life for the finite asset is 6 years and it is amortized on a straight-line basis.
The changes in the carrying amount of goodwill as of December 30, 2018,26, 2021, and since December 25, 2016,29, 2019, were as follows:
| | | | | | | | |
| (In thousands) | | Total Company |
| Balance as of December 29, 2019 | | $ | 138,674 | |
| Business acquisitions | | 27,269 | |
Measurement period adjustment(1) | | (400) | |
| Foreign currency translation | | 6,114 | |
| Balance as of December 27, 2020 | | 171,657 | |
| Foreign currency translation | | (5,297) | |
| Balance as of December 26, 2021 | | $ | 166,360 | |
|
| | | | |
| (In thousands) | | Total Company |
| Balance as of December 25, 2016 | | $ | 134,517 |
|
Measurement Period Adjustment(1) | | (198 | ) |
| Foreign currency translation | | 9,230 |
|
| Balance as of December 31, 2017 | | 143,549 |
|
| Foreign currency translation | | (3,267 | ) |
| Balance as of December 30, 2018 | | $ | 140,282 |
|
(1) Includes measurement period adjustment related to deferred tax asset in connection with the Submarine Leisure Club,Listen In Audio, Inc. acquisition.
The foreign currency translation line item in AOCI reflects changes in goodwill resulting from fluctuating exchange rates related to the consolidation of certain international subsidiaries.
As of December 26, 2021, the aggregate carrying amount of intangible assets of $14.2 million, which includes an indefinite-lived intangible of $9.0 million, is recorded in Miscellaneous assets in our Consolidated Balance Sheets. Finite intangible assets have the estimated useful lives from 5 to 8 years and are amortized on a straight-line basis.
P. 80 – THE NEW YORK TIMES COMPANY
6. Investments
Investments in Joint Ventures
As of December 30, 2018,26, 2021, and December 27, 2020, the value of our investments in joint ventures was zero. As of December 31, 2017, our investment in joint ventures totaled $1.7 million and consisted of a 40% equity ownership interest in Madison Paper Industries (“Madison”), a partnership that previously operated a supercalendered paper mill in Maine. In the fourth quarter of 2017, we sold our 49% equity interest in Donohue Malbaie Inc. (“Malbaie”), a Canadian newsprint company, for $20 million Canadian dollars ($15.6 million USD).
THE NEW YORK TIMES COMPANY – P. 81
These investments are accounted for under the equity method, and are recorded in “Miscellaneous assets” in our Consolidated Balance Sheets. Our proportionate shares of the operating results of our investments are recorded in “Gain/(loss)Gain from joint ventures”ventures in our Consolidated Statements of Operations.
In 2018, we had a gain from joint ventures of $10.8 million. The gain was primarily due to a distribution received from the pending liquidation of Madison, offset, in part, by our share of operating expenses of the partnership.
In 2017, we had a gain from joint ventures of $18.6 million. The gain was primarily due to the sale of assets of the paper mill previously operated by Madison, partially offset by our proportionate share of the loss recognized by Madison resulting from Madison’s settlement of pension obligations, as well as the sale of our investment in Malbaie.
In 2016, we had a loss from joint ventures of $36.3 million. The loss was primarily due to the shutdown of the Madison paper mill, as described below, partially offset by increased income from our investment in Malbaie, which benefited from higher newsprint prices and the impact of a significantly weakened Canadian dollar.
Madison
The Company and UPM-Kymmene Corporation (“UPM”), a Finnish paper manufacturing company, are partners through subsidiary companies in Madison. The Company’s 40% ownership of Madison is through an 80%-owned consolidated subsidiary that owns 50% of Madison. UPM owns 60% of Madison, including a 10% interest through a 20% noncontrolling interest in the consolidated subsidiary of the Company. In 2016, the paper mill closed and the Company’s joint venture in Madison is currently being liquidated.
In connection with the 2016 closure of the paper mill2020, we recognized $41.4 million in losseshad a gain from joint ventures. In the fourth quarterventures of 2016, Madison sold certain assets at the mill site and we recognized a gain of $3.9$5.0 million, related to the sale. In 2017 we recognized a gain of $20.8 million,which was primarily related to the sale of the remaining assets (which consisted of primarily hydro power assets), partially offset by the loss relateddue to our proportionate share of Madison’s settlement of certain pension obligations. In 2018, we recorded a gain of $11.3 million due to a distribution received from the pending liquidation of Madison.
The following table presents summarized unaudited balance sheet information for Madison, which follows a calendar year:
|
| | | | | | | | |
| (In thousands) | | December 31, 2018 |
| | December 31, 2017 |
|
| Current assets | | $ | 18,374 |
| | $ | 35,764 |
|
| Noncurrent assets | | — |
| | 9,640 |
|
| Total assets | | 18,374 |
| | 45,404 |
|
| Current liabilities | | 3,336 |
| | 137 |
|
| Noncurrent liabilities | | — |
| | 4,070 |
|
| Total liabilities | | 3,336 |
| | 4,207 |
|
| Total equity | | $ | 15,038 |
| | $ | 41,197 |
|
P. 82 – THE NEW YORK TIMES COMPANY
The following table presents summarized unaudited income statement information for Madison, which follows a calendar year:
|
| | | | | | | | | | | | |
| | | For the Twelve Months Ended |
| (In thousands) | | December 31, 2018 |
| | December 31, 2017 |
| | December 31, 2016 |
|
| Revenues | | $ | — |
| | $ | — |
| | $ | 40,523 |
|
| Income/(Expenses): | | | | | | |
Cost of sales(1) | | — |
| | (13,396 | ) | | (63,439 | ) |
General and administrative income/(expense) and other(2) | | (1,280 | ) | | 55,058 |
| | (62,759 | ) |
| Total income/(expense) | | (1,280 | ) | | 41,662 |
| | (126,198 | ) |
| Operating income/(loss) | | (1,280 | ) | | 41,662 |
| | (85,675 | ) |
| Other income/(expense) | | 122 |
| | 18 |
| | 2 |
|
| Net income/(loss) | | $ | (1,158 | ) | | $ | 41,680 |
| | $ | (85,673 | ) |
(1) Primarily represents Madison’s settlement of its pension obligations in 2017.
(2) Primarily represents gains/(losses) from the sale of assets In 2021 and closure of Madison in 2017 and 2016.
During 2018,2019, we received a $12.5 million cash distribution in connection with the pending liquidation of Madison. We receivedhad no gain/(loss) or distributions from Madison in 2017 or 2016.joint ventures.
Malbaie
We had a 49% equity interest in Malbaie, which we sold during the fourth quarter of 2017 for $20 million Canadian dollars ($15.6 million USD). We recognized a loss of $6.4 million before tax as a result of the sale. The other 51% equity interest was owned by Resolute FP Canada Inc., a subsidiary of Resolute Forest Products Inc. (“Resolute”), a Delaware corporation. Resolute is a large global manufacturer of paper, market pulp and wood products.
Other than from the sale of our equity interest in 2017, we received no distributions from Malbaie in 2018, 2017 or 2016.
Other
We purchased newsprint from Malbaie, and previously purchased supercalendered paper from Madison, at competitive prices. These purchases totaled approximately $11 million in 2017 and $14 million in 2016.
Non-Marketable Equity Securities
Our non-marketable equity securities are investments in privately held companies/funds without readily determinable market values. Realized gainsGains and losses on non-marketable securities sold or impaired are recognized in “Interest expenseInterest income/(expense) and other, net.”net.
As of December 30, 2018,26, 2021, and December 31, 2017,27, 2020, non-marketable equity securities included in “Miscellaneous assets’’ Miscellaneous assets in our Consolidated Balance Sheets had a carrying value of $13.7$27.9 million and $13.6$20.9 million, respectively. The carrying value includes $15.3 million of unrealized gains as of December 26, 2021.
In 2021 and 2020, we recorded gains of $27.2 million and $10.1 million, respectively, related to non-marketable equity investment transactions. These gains consist of (i) $15.2 million and $2.5 million realized gains in 2021 and 2020, respectively, due to the partial sale of the investment and (ii) $12.0 million and $7.6 million unrealized gains in 2021 and 2020, respectively, due to the mark to market of the remaining investment. These realized and unrealized gains are included in Interest income/(expense) and other, net in our Consolidated Statements of Operations.
We did not have any material fair value adjustments in 2018 and 2017.2019.
THE NEW YORK TIMES COMPANY – P. 83
7. Debt Obligations
Our indebtedness primarily consisted of the repurchase option related to a sale-leaseback of a portion of our New York headquarters. Our total debt and capital lease obligations consisted of the following:
|
| | | | | | | | |
| (In thousands) | | December 30, 2018 |
| | December 31, 2017 |
|
| Option to repurchase ownership interest in headquarters building in 2019: | | | | |
| Principal amount | | $ | 250,000 |
| | $ | 250,000 |
|
| Less unamortized discount based on imputed interest rate of 13.0% | | 3,202 |
| | 6,596 |
|
| Net option to repurchase ownership interest in headquarters building in 2019 | | 246,798 |
| | 243,404 |
|
| Capital lease obligations | | 6,832 |
| | 6,805 |
|
| Total debt and capital lease obligations | | 253,630 |
| | 250,209 |
|
| Less current portion | | 253,630 |
| | — |
|
| Total long-term debt and capital lease obligations | | $ | — |
| | $ | 250,209 |
|
See Note 9 for more information regarding the fair value of our debt.
The aggregate face amount of maturities of debt over the next five years and thereafter is as follows:
|
| | | | |
| (In thousands) | | Amount |
| 2019 | | $ | 250,000 |
|
| 2020 | | — |
|
| 2021 | | — |
|
| 2022 | | — |
|
| 2023 | | — |
|
| Thereafter | | — |
|
| Total face amount of maturities | | 250,000 |
|
| Less: Unamortized debt costs and discount | | (3,202 | ) |
| Carrying value of debt (excludes capital leases) | | $ | 246,798 |
|
“Interest expense and other, net,” as shown in the accompanying Consolidated Statements of Operations was as follows:
|
| | | | | | | | | | | | |
| (In thousands) | | December 30,
2018 |
| | December 31,
2017 |
| | December 25,
2016 |
|
| Interest expense | | $ | 28,134 |
| | $ | 27,732 |
| | $ | 39,487 |
|
| Amortization of debt costs and discount on debt | | 3,394 |
| | 3,205 |
| | 4,897 |
|
| Capitalized interest | | (452 | ) | | (1,257 | ) | | (559 | ) |
| Interest income and other expense, net | | (14,510 | ) | | (9,897 | ) | | (9,020 | ) |
| Total interest expense and other, net | | $ | 16,566 |
| | $ | 19,783 |
| | $ | 34,805 |
|
P. 84 – THE NEW YORK TIMES COMPANY
Sale-Leaseback Financing
In March 2009, we entered into an agreement to sell and simultaneously lease back a portion of our leasehold condominium interest in our Company’s headquarters building located at 620 Eighth Avenue in New York City (the “Condo Interest”). The sale price for the Condo Interest was $225.0 million less transaction costs, for net proceeds of approximately $211 million. We have an option, exercisable in the fourth quarter of 2019, to repurchase the Condo Interest for $250.0 million, and we have delivered notice of our intent to exercise this option.
The transaction is accounted for as a financing transaction. As such, we have continued to depreciate the Condo Interest and account for the rental payments as interest expense. The difference between the purchase option price of $250.0 million and the net sale proceeds of approximately $211 million, or approximately $39 million, is being amortized over a 10-year period through interest expense. The effective interest rate on this transaction was approximately 13%.
8. Other
Capitalized Computer Software Costs
Amortization of capitalized computer software costs included in “DepreciationDepreciation and amortization”amortization in our Consolidated Statements of Operations was $15.7$9.1 million, $12.8$14.7 million and $11.5$17.0 million for the fiscal years ended December 30, 2018,26, 2021, December 31, 201727, 2020, and December 25, 2016,29, 2019, respectively. The unamortized computer software costs were $29.5$13.6 million and $28.1$18.9 million as of December 30, 2018,26, 2021, and December 31, 2017,27, 2020, respectively.
Headquarters Redesign and Consolidation
In December 2016, we announced plans to redesign our headquarters building, consolidate our space within a smaller number of floors and lease the additional floors to third parties. We incurred $4.5 million and $10.1 million of total costs related to these measures for the fiscal year ended December 30, 2018, and December 31, 2017, respectively. We capitalized approximately $15 million and $62 million for the fiscal year ended December 30, 2018, and December 31, 2017, respectively. This project is substantially complete as of December 30, 2018.
Marketing Expenses
Marketing expense, the cost to promote our brand and our products, and grow our subscriber base (which we formerly referred to as advertising expense) was $156.3$199.7 million, $118.6$135.9 million and $89.8$167.9 million for the fiscal years ended December 30, 2018,26, 2021, December 31, 201727, 2020, and December 25, 2016,29, 2019, respectively. Media expense, the primary component of marketing expense, which represents the cost to promote our subscription business was $187.3 million, $129.6 million and $156.9 million for the fiscal years ended December 26, 2021, December 27, 2020, and December 29, 2019, respectively. We expense our marketingthese costs as incurred.
StatementTHE NEW YORK TIMES COMPANY – P. 81
Interest income/(expense) and other, net
Interest income/(expense) and other, net, as shown in the accompanying Consolidated Statements of Cash FlowOperations was as follows:
| | | | | | | | | | | | | | | | | | | | |
| (In thousands) | | December 26,
2021 | | December 27,
2020 | | December 29,
2019 |
| Interest income and other expense, net | | $ | 6,558 | | | $ | 13,983 | | | $ | 19,694 | |
Gain on non-marketable equity investment (1) | | 27,156 | | | 10,074 | | | 1,886 | |
| Interest expense | | (780) | | | (757) | | | (26,928) | |
| Amortization of debt costs and discount on debt | | — | | | — | | | 1,459 | |
| Capitalized interest | | 11 | | | 30 | | | 69 | |
| | | | | | |
Total interest income/(expense) and other, net (2) | | $ | 32,945 | | | $ | 23,330 | | | $ | (3,820) | |
(1) Represents gains related to a non-marketable equity investment transactions.
(2) The twelve months ended December 29, 2019, includes the amortization of debt costs and discount on debt relating to the Company’s leasehold condominium interest in the Company’s headquarters building, which was repurchased as of December 29, 2019.
Restricted Cash
A reconciliation of cash, cash equivalents and restricted cash as of December 30, 201826, 2021, and December 31, 201727, 2020, from the Consolidated Balance Sheets to the Consolidated Statements of Cash Flows is as follows: | | | (In thousands) | | December 30, 2018 |
| | December 31, 2017 |
| (In thousands) | | December 26, 2021 | | December 27, 2020 |
| | | | | | |
| Reconciliation of cash, cash equivalents and restricted cash | | | | | Reconciliation of cash, cash equivalents and restricted cash | |
| Cash and cash equivalents | | $ | 241,504 |
| | $ | 182,911 |
| Cash and cash equivalents | | $ | 319,973 | | | $ | 286,079 | |
| Restricted cash included within other current assets | | 642 |
| | 375 |
| Restricted cash included within other current assets | | — | | | 686 | |
| Restricted cash included within miscellaneous assets | | 17,653 |
| | 17,650 |
| Restricted cash included within miscellaneous assets | | 14,333 | | | 15,199 | |
| Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows | | $ | 259,799 |
| | $ | 200,936 |
| Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows | | $ | 334,306 | | | $ | 301,964 | |
Substantially all of the amount included in restricted cash is set aside to collateralize workers’ compensation obligations.
Tax Shortfall and/or Windfall for Stock-based PaymentsRestructuring Charge
In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, “Compensation-Stock Compensation,” which provides guidance on accounting for stock-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities,
THE NEW YORK TIMES COMPANY – P. 85
and classification on the statement of cash flows. This guidance became effective for the Company for fiscal years beginning after December 25, 2016.
As a result of the adoption of ASU 2016-09 in the first quarter of 2017, we recognized excess tax windfalls in income tax expense rather than additional paid-in capital. Excess tax shortfalls and/or windfalls for stock-based payments are now included in net cash from operating activities rather than net cash from financing activities. The changes have been applied prospectively in accordance with the ASU and prior periods have not been adjusted.
Severance Costs
We recognized severance costsa restructuring charge of $6.7$4.0 million for the fiscal year ended December 30, 2018. On May 31, 2017, we announced certain measures designed to streamline our editing process29, 2019, which included impairment and allow us to make further investments in the newsroom. These measures resulted in a workforce reduction primarily affecting our newsroom. We recognized severance costs of $23.9 million in 2017, substantially all of which werecharges related to this workforce reduction. We recognized severance coststhe closure of $18.8 million in 2016.our digital marketing agency, HelloSociety, LLC. These costs are recorded in “Selling, general and administrative costs”Restructuring charge in our Consolidated Statements of Operations.
Additionally, duringRevolving Credit Facility
In September 2019, the second quarterCompany entered into a $250.0 million five-year unsecured revolving credit facility (the “Credit Facility”). Certain of 2016, we announced certain measuresthe Company’s domestic subsidiaries have guaranteed the Company’s obligations under the Credit Facility. Borrowings under the Credit Facility bear interest at specified rates based on our utilization and consolidated leverage ratio. The Credit Facility contains various customary affirmative and negative covenants. In addition, the Company is obligated to streamline our international print operations and support future growth efforts. These measures includedpay a redesignquarterly unused commitment fee of our international print newspaper0.20%.
As of December 26, 2021, there were no outstanding borrowings under the Credit Facility and the relocationCompany was in compliance with the financial covenants contained in the Credit Facility.
P. 82 – THE NEW YORK TIMES COMPANY
Severance Costs
We recognized severance costs of certain editing and production operations conducted in Paris to our locations in Hong Kong and New York. During 2016, we incurred $2.9$0.9 million, $6.6 million and $11.9$4.0 million respectively, of totalfor the fiscal years ended December 26, 2021, December 27, 2020, and December 29, 2019, respectively. Severance costs recognized were largely related to the measures,workforce reductions primarily related to relocation and severance charges.affecting our advertising department. These costs wereare recorded in “Restructuring charge”General and administrative costs in our Consolidated Statements of Operations. In connection with the adoption of ASU 2017-07, $1.7 million related to a gain from the pension curtailment previously included within “Restructuring charge” was reclassified to “Other components of net periodic benefit costs”.
We had a severance liability of $8.4$2.1 million and $18.8$5.0 million included in “AccruedAccrued expenses and other”other in our Consolidated Balance Sheets as of December 30, 201826, 2021, and December 31, 2017,27, 2020, respectively. We anticipate most of the 2021 payments will be made within the next twelve months.
Property, Plant and Equipment Retirement
During the years ended December 26, 2021, and December 27, 2020, as part of its annual assets review, the Company retired assets that were no longer in use with a cost of approximately $161.0 million and $123.0 million, respectively. The retirements in 2021 were comprised mostly of software of $103.9 million and equipment of $45.4 million. The retirements in 2020 were comprised mostly of software of $69.5 million and equipment of $49.9 million. As a result of the retirements, the Company recorded de minimis write-offs, which are reflected in General and administrative costsin our Consolidated Statements of Operations.
P. 86 – THE NEW YORK TIMES COMPANY
9.8. Fair Value Measurements
Fair value is the price that would be received upon the sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. The transaction would be in the principal or most advantageous market for the asset or liability, based on assumptions that a market participant would use in pricing the asset or liability. The fair value hierarchy consists of three levels:
Level 1–quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date;
Level 2–inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
Level 3–unobservable inputs for the asset or liability.
Assets/Liabilities Measured and Recorded at Fair Value on a Recurring Basis
As of December 30, 201826, 2021, and December 31, 2017,27, 2020, we had assets related to our qualified pension plans measured at fair value. The required disclosures regarding such assets are presented in Note 10.9.
THE NEW YORK TIMES COMPANY – P. 83
The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of December 30, 201826, 2021, and December 31, 2017:27, 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In thousands) | | December 26, 2021 | | December 27, 2020 |
| Total | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 |
| Assets: | | | | | | | | | | | | | | | | |
Short-term AFS securities(1) | | | | | | | | | | | | | | | | |
| U.S Treasury securities | | $ | 149,548 | | | $ | — | | | $ | 149,548 | | | $ | — | | | $ | 79,503 | | | $ | — | | | $ | 79,503 | | | $ | — | |
| Corporate debt securities | | 107,334 | | | — | | | 107,334 | | | — | | | 130,301 | | | — | | | 130,301 | | | — | |
| Certificates of deposit | | 55,551 | | | — | | | 55,551 | | | — | | | 36,525 | | | — | | | 36,525 | | | — | |
| Commercial paper | | 21,145 | | | — | | | 21,145 | | | — | | | 37,580 | | | — | | | 37,580 | | | — | |
| Municipal securities | | 3,997 | | | — | | | 3,997 | | | — | | | — | | | — | | | — | | | — | |
| U.S. governmental agency securities | | 3,500 | | | — | | | 3,500 | | | — | | | 25,171 | | | — | | | 25,171 | | | — | |
| Total short-term AFS securities | | $ | 341,075 | | | $ | — | | | $ | 341,075 | | | $ | — | | | $ | 309,080 | | | $ | — | | | $ | 309,080 | | | $ | — | |
Long-term AFS securities(1) | | | | | | | | | | | | | | | | |
| Corporate debt securities | | $ | 241,055 | | | $ | — | | | $ | 241,055 | | | $ | — | | | $ | 135,934 | | | $ | — | | | $ | 135,934 | | | $ | — | |
| U.S Treasury securities | | 119,146 | | | — | | | 119,146 | | | — | | | 97,565 | | | — | | | 97,565 | | | — | |
| U.S. governmental agency securities | | 39,246 | | | — | | | 39,246 | | | — | | | 48,348 | | | — | | | 48,348 | | | — | |
| Municipal securities | | 13,933 | | | — | | | 13,933 | | | — | | | 4,984 | | | — | | | 4,984 | | | — | |
| Total long-term AFS securities | | $ | 413,380 | | | $ | — | | | $ | 413,380 | | | $ | — | | | $ | 286,831 | | | $ | — | | | $ | 286,831 | | | $ | — | |
| Liabilities: | | | | | | | | | | | | | | | | |
Deferred compensation(2)(3) | | $ | 21,101 | | | $ | 21,101 | | | $ | — | | | $ | — | | | $ | 22,245 | | | $ | 22,245 | | | $ | — | | | $ | — | |
| Contingent consideration | | $ | 7,450 | | | $ | — | | | $ | — | | | $ | 7,450 | | | $ | 8,431 | | | $ | — | | | $ | — | | | $ | 8,431 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In thousands) | | December 30, 2018 | | December 31, 2017 |
| | Total | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 |
| Assets: | | | | | | | | | | | | | | | | |
Short-term AFS securities(1) | | | | | | | | | | | | | | | | |
| Corporate debt securities | | $ | 140,168 |
| | $ | — |
| | $ | 140,168 |
| | $ | — |
| | $ | 150,107 |
| | $ | — |
| | $ | 150,107 |
| | $ | — |
|
| U.S Treasury securities | | 107,485 |
| | — |
| | 107,485 |
| | — |
| | 70,951 |
| | — |
| | 70,951 |
| | — |
|
| U.S. governmental agency securities | | 91,974 |
| | — |
| | 91,974 |
| | — |
| | 45,640 |
| | — |
| | 45,640 |
| | — |
|
| Certificates of deposit | | 23,497 |
| | — |
| | 23,497 |
| | — |
| | 9,300 |
| | — |
| | 9,300 |
| | — |
|
| Commercial paper | | 8,177 |
| | — |
| | 8,177 |
| | — |
| | 32,591 |
| | — |
| | 32,591 |
| | — |
|
| Total short-term AFS securities | | $ | 371,301 |
| | $ | — |
| | $ | 371,301 |
| | $ | — |
| | $ | 308,589 |
| | $ | — |
| | $ | 308,589 |
| | $ | — |
|
Long-term AFS securities(1) | | | | | | | | | | | | | | | | |
| Corporate debt securities | | $ | 129,624 |
| | $ | — |
| | $ | 129,624 |
| | $ | — |
| | $ | 92,004 |
| | $ | — |
| | $ | 92,004 |
| | $ | — |
|
| U.S Treasury securities | | 46,737 |
| | — |
| | 46,737 |
| | — |
| | 52,628 |
| | — |
| | 52,628 |
| | — |
|
| U.S. governmental agency securities | | 37,197 |
| | — |
| | 37,197 |
| | — |
| | 96,779 |
| | — |
| | 96,779 |
| | — |
|
| Total long-term AFS securities | | $ | 213,558 |
| | $ | — |
| | $ | 213,558 |
| | $ | — |
| | $ | 241,411 |
| | $ | — |
| | $ | 241,411 |
| | $ | — |
|
| Liabilities: | | | | | | | | | | | | | | | | |
Deferred compensation(2)(3) | | $ | 23,211 |
| | $ | 23,211 |
| | $ | — |
| | $ | — |
| | $ | 29,526 |
| | $ | 29,526 |
| | $ | — |
| | $ | — |
|
(1)We classified these investments as Level 2 since the fair value is based on market observable inputs for investments with similar terms and maturities.
(2)The deferred compensation liability, included in “OtherOther liabilities—Other”Other in our Consolidated Balance Sheets, consists of deferrals under The New York Times Company Deferred Executive Compensation Plan (the “DEC”), a frozen plan which enabled certain eligible executives to elect to defer a portion of their compensation on a pre-tax basis. The deferred amounts are invested at the executives’ option in various mutual funds. The fair value of deferred compensation is based on the mutual fund investments elected by the executives and on quoted prices in active markets for identical assets. Participation in the DEC was frozen effective December 31, 2015. Refer to Note 12 for detail.
(3) The Company invests the deferred compensation balance in life insurance products. Our investments in life insurance products are included in “Miscellaneous assets”Miscellaneous assets in our Consolidated Balance Sheets, and were $38.1$52.5 million as of December 30, 2018,26, 2021, and $40.3$49.2 million as of December 31, 2017.27, 2020. The fair value of these assets is measured using the net asset value (“NAV”) per share (or its equivalent) and has not been classified in the fair value hierarchy.
Level 3 Liabilities
The contingent consideration liability is related to the 2020 acquisition of substantially all the assets and certain liabilities of Serial and represents contingent payments based on the achievement of certain operational targets, as defined in the acquisition agreement, over the five years following the acquisition. The Company estimated the fair value using a probability-weighted discounted cash flow model. The estimate of the fair value of contingent consideration requires subjective assumptions to be made regarding probabilities assigned to operational targets and the discount rate. As the fair value is based on significant unobservable inputs, this is a Level 3 liability.
P. 84 – THE NEW YORK TIMES COMPANY – P. 87
Financial Instruments Disclosed, But Not Reported, at Fair Value
The carryingfollowing table presents the changes in the balance of the contingent consideration during the year ended December 26, 2021, and December 27, 2020:
| | | | | | | | | | | | | | |
| (In thousands) | | December 26, 2021 | | December 27, 2020 |
| Balance at the beginning of the period | | $ | 8,431 | | | $ | 9,293 | |
| Payments | | (862) | | | (862) | |
Fair value adjustments (1) | | (119) | | | — | |
| Contingent consideration at the end of the period | | $ | 7,450 | | | $ | 8,431 | |
(1)Fair value adjustments are included in General and administrative expenses in our Condensed Consolidated Statements of our debt was approximately $247 millionOperations.
The remaining contingent consideration balances as of December 30, 2018,26, 2021, and approximately $243 million asDecember 27, 2020, of December 31, 2017. The fair value of our debt was approximately $260$7.5 million and $279$8.4 million, asrespectively, are included in Accrued expenses and other, for the current portion of December 30, 2018,the liability, and December 31, 2017, respectively. We estimateOther non-current liabilities, for the fair valuelong-term portion of the liability, in our debt utilizing market quotations for debt that have quoted prices in active markets. Since our debt does not trade in an active market, the fair value estimates are based on market observable inputs based on borrowing rates currently available for debt with similar terms and average maturities (Level 2).Consolidated Balance Sheets.
Assets Measured and Recorded at Fair Value on a Non-Recurring Basis
Certain non-financial assets, such as goodwill, intangible assets, property, plant and equipment and certain investments are only recordedrecognized at fair value on a non-recurring basis. These assets are measured at fair value if an impairment charge is recognized. Goodwill and intangible assets are initially recorded at fair value in purchase accounting. We classified all of these measurements as Level 3, as we used unobservable inputs within the valuation methodologies that were significant to the fair value measurements, and the valuations required management‘s judgment due to the absence of quoted market prices. We recognized a de minimis impairment of intangibles assets in 2020 and 2019 related to the closure of our digital marketing agencies. There was no impairment recognized in 2018, 2017 and 2016.2021.
10.9. Pension Benefits
Single-Employer Plans
We sponsor several frozen single-employer defined benefit pension plans. The Company and The NewsGuild of New York jointly sponsor the Guild-Times Adjustable Pension Plan which continues to accrue active benefits. Effective January 1, 2018, the Company became the sole sponsor of the frozen Newspaper Guild of New York - The New York Times Pension Plan (the “Guild-Times Plan”). The Guild-Times Plan was previously joint trusteed between the Guild and the Company. Effective December 31, 2018, the Guild-Times Plan and the Retirement Annuity Plan For Craft Employees of The New York Times Companies (the “RAP”) were merged intomaintain The New York Times Companies Pension Plan.Plan (the ”Pension Plan”), a frozen single-employer defined benefit pension plan. The Company also jointly sponsors a defined benefit plan with The NewsGuild of New York known as the Guild-Times Adjustable Pension Plan (the “APP”) that continues to accrue active benefits.
We also have a foreign-based pension plan for certain employees (the “foreign plan”). The information for the foreign plan is combined with the information for U.S. non-qualified plans. The benefit obligation of the foreign plan is immaterial to our total benefit obligation.
Net Periodic Pension CostCost/(Income)
The components of net periodic pension costcost/(income) were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December 26, 2021 | | December 27, 2020 | | December 29, 2019 |
| (In thousands) | | Qualified
Plans | Non-
Qualified
Plans | All
Plans | | Qualified
Plans | Non-
Qualified
Plans | All
Plans | | Qualified
Plans | Non-
Qualified
Plans | All
Plans |
| | | | | | | | |
| Service cost | | $ | 9,105 | | $ | 95 | | $ | 9,200 | | | $ | 10,429 | | $ | 119 | | $ | 10,548 | | | $ | 5,113 | | $ | 118 | | $ | 5,231 | |
| Interest cost | | 30,517 | | 4,352 | | 34,869 | | | 43,710 | | 6,601 | | 50,311 | | | 58,835 | | 8,420 | | 67,255 | |
| Expected return on plan assets | | (50,711) | | — | | (50,711) | | | (67,146) | | — | | (67,146) | | | (80,877) | | — | | (80,877) | |
| Amortization and other costs | | 20,225 | | 7,275 | | 27,500 | | | 21,887 | | 6,072 | | 27,959 | | | 18,639 | | 4,381 | | 23,020 | |
| Amortization of prior service (credit)/cost | | (1,945) | | 55 | | (1,890) | | | (1,945) | | 51 | | (1,894) | | | (1,945) | | 13 | | (1,932) | |
| Effect of settlement/curtailment | | — | | (163) | | (163) | | | 80,641 | | (562) | | 80,079 | | | — | | (373) | | (373) | |
| Net periodic pension cost/(income) | | $ | 7,191 | | $ | 11,614 | | $ | 18,805 | | | $ | 87,576 | | $ | 12,281 | | $ | 99,857 | | | $ | (235) | | $ | 12,559 | | $ | 12,324 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December 30, 2018 | | December 31, 2017 | | December 25, 2016 |
| (In thousands) | | Qualified Plans | Non- Qualified Plans | All Plans | | Qualified Plans | Non- Qualified Plans | All Plans | | Qualified Plans | Non- Qualified Plans | All Plans |
| Service cost | | $ | 9,986 |
| $ | 79 |
| $ | 10,065 |
| | $ | 9,720 |
| $ | 79 |
| $ | 9,799 |
| | $ | 8,991 |
| $ | 143 |
| $ | 9,134 |
|
| Interest cost | | 52,770 |
| 7,383 |
| 60,153 |
| | 60,742 |
| 7,840 |
| 68,582 |
| | 66,293 |
| 8,172 |
| 74,465 |
|
| Expected return on plan assets | | (82,327 | ) | — |
| (82,327 | ) | | (102,900 | ) | — |
| (102,900 | ) | | (111,159 | ) | — |
| (111,159 | ) |
| Amortization and other costs | | 26,802 |
| 5,114 |
| 31,916 |
| | 29,051 |
| 4,318 |
| 33,369 |
| | 28,274 |
| 4,184 |
| 32,458 |
|
| Amortization of prior service credit | | (1,945 | ) | — |
| (1,945 | ) | | (1,945 | ) | — |
| (1,945 | ) | | (1,945 | ) | — |
| (1,945 | ) |
| Effect of settlement/curtailment | | — |
| 221 |
| 221 |
| | 102,109 |
| — |
| 102,109 |
| | 21,294 |
| (1,599 | ) | 19,695 |
|
| Net periodic pension cost | | $ | 5,286 |
| $ | 12,797 |
| $ | 18,083 |
| | $ | 96,777 |
| $ | 12,237 |
| $ | 109,014 |
| | $ | 11,748 |
| $ | 10,900 |
| $ | 22,648 |
|
As a result of the adoption of ASU 2017-07 during the first quarter of 2018, the service cost component of net periodic pension cost continues to be recognized in “Total operating costs” while the other components have been reclassified to “Other components of net periodic benefit costs” in our Consolidated Statements of Operations below “Operating profit” on a retrospective basis.
P. 88 – THE NEW YORK TIMES COMPANY – P. 85
Over the past several years theThe Company has taken steps to reduce the size and volatility of our pension obligations. In the first quarter of 2018, the Company signed an agreement that froze the accrual of benefits under the RAP with respect to all participants covered by a collective bargaining agreement between the Company and The Newspaper and Mail Deliverers’ Union of New York and Vicinity. This group of participants was the last group under the RAP to have their benefit accruals frozen.
In the fourth quarter of 2017,October 2020, the Company entered into agreementsan agreement with twoan insurance companiescompany to transfer the future benefit obligations and annuity administration for certain retirees (or their beneficiaries) in two of the Company’s qualified pension plans.Pension Plan. This transfer of plan assets and obligations reduced the Company’s qualified pension plan obligations by $263.3$236.3 million. As a result of these agreements,this agreement, the Company recorded pension settlement charges of $102.1 million. Additionally, during the fourth quarter of 2017, the Company made discretionary contributions totaling $120 million to certain qualified pension plans.
In the fourth quarter of 2016, we recorded a pension settlement charge of $21.3 million in connection with a lump-sum payment offer made to certain former employees who participated in certain qualified pension plans. These lump-sum payments totaled $49.5 million and were made with cash from the qualified pension plans, not with Company cash. The effect of this lump-sum settlement was to reduce our pension obligations by $52.2$80.6 million. In addition, we recorded a $1.7 million curtailment related to the streamlining of the Company’s international print operations. See Note 8 for more information on the streamlining of the Company’s international print operations.
Other changes in plan assets and benefit obligations recognized in other comprehensive income/lossincome were as follows:
| | | (In thousands) | | December 30,
2018 |
| | December 31,
2017 |
| | December 25,
2016 |
| (In thousands) | | December 26,
2021 | | December 27,
2020 | | December 29,
2019 |
| Net actuarial loss/(gain) | | $ | 29,965 |
| | $ | 22,600 |
| | $ | (4,289 | ) | |
| Net actuarial gain | | Net actuarial gain | | $ | (25,585) | | | $ | (4,172) | | | $ | (10,292) | |
| Prior service cost | | Prior service cost | | — | | | — | | | 706 | |
| Amortization of loss | | (31,916 | ) | | (33,369 | ) | | (32,458 | ) | Amortization of loss | | (27,500) | | | (27,959) | | | (23,020) | |
| Amortization of prior service credit | | 1,945 |
| | 1,945 |
| | 1,945 |
| Amortization of prior service credit | | 1,890 | | | 1,894 | | | 1,932 | |
| | Effect of settlement | | (421 | ) | | (102,109 | ) | | (21,294 | ) | Effect of settlement | | — | | | (80,641) | | | — | |
| Total recognized in other comprehensive (income)/loss | | (427 | ) | | (110,933 | ) | | (56,096 | ) | |
| Total recognized in other comprehensive income | | Total recognized in other comprehensive income | | (51,195) | | | (110,878) | | | (30,674) | |
| Net periodic pension cost | | 18,083 |
| | 109,014 |
| | 22,648 |
| Net periodic pension cost | | 18,805 | | | 99,857 | | | 12,324 | |
| Total recognized in net periodic benefit cost and other comprehensive (income)/loss | | $ | 17,656 |
| | $ | (1,919 | ) | | $ | (33,448 | ) | |
| Total recognized in net periodic pension benefit cost and other comprehensive income | | Total recognized in net periodic pension benefit cost and other comprehensive income | | $ | (32,390) | | | $ | (11,021) | | | $ | (18,350) | |
Actuarial gains and losses are amortized using a corridor approach. The gain or loss corridor is equal to 10% of the greater of the projected benefit obligation and the market-related value of assets. Gains and losses in excess of the corridor are generally amortized over the future working lifetime for the ongoing plans and average life expectancy for the frozen plans.
The estimated actuarial loss and prior service credit that will be amortized from accumulated other comprehensive loss into net periodic pension cost over the next fiscal year is approximately $23 million and $2 million, respectively.
We also contribute to defined contribution benefit plans. The amount of cost recognized for defined contribution benefit plans was approximately $22 million, $23 million and $15$33 million for 2018, 20172021 and 2016,$27 million for 2020 and 2019, respectively.
P. 86 – THE NEW YORK TIMES COMPANY – P. 89
Benefit Obligation and Plan Assets
The changes in the benefit obligation and plan assets and other amounts recognized in other comprehensive loss were as follows: | | | | | December 30, 2018 | | December 31, 2017 | | December 26, 2021 | | December 27, 2020 |
| (In thousands) | | Qualified Plans | | Non- Qualified Plans | | All Plans | | Qualified Plans | | Non- Qualified Plans | | All Plans | (In thousands) | | Qualified
Plans | | Non-
Qualified
Plans | | All Plans | | Qualified
Plans | | Non-
Qualified
Plans | | All Plans |
| Change in benefit obligation | | | | | | | | | | | | | Change in benefit obligation | |
| Benefit obligation at beginning of year | | $ | 1,636,488 |
| | $ | 245,302 |
| | $ | 1,881,790 |
| | $ | 1,798,652 |
| | $ | 240,399 |
| | $ | 2,039,051 |
| Benefit obligation at beginning of year | | $ | 1,549,012 | | | $ | 259,593 | | | $ | 1,808,605 | | | $ | 1,660,287 | | | $ | 247,748 | | | $ | 1,908,035 | |
| Service cost | | 9,986 |
| | 79 |
| | 10,065 |
| | 9,720 |
| | 79 |
| | 9,799 |
| Service cost | | 9,105 | | | 95 | | | 9,200 | | | 10,429 | | | 119 | | | 10,548 | |
| Interest cost | | 52,770 |
| | 7,383 |
| | 60,153 |
| | 60,742 |
| | 7,840 |
| | 68,582 |
| Interest cost | | 30,517 | | | 4,352 | | | 34,869 | | | 43,710 | | | 6,601 | | | 50,311 | |
| Plan participants’ contributions | | 3 |
| | — |
| | 3 |
| | 9 |
| | — |
| | 9 |
| |
| | Actuarial (gain)/loss | | (123,670 | ) | | (10,221 | ) | | (133,891 | ) | | 142,980 |
| | 15,342 |
| | 158,322 |
| Actuarial (gain)/loss | | (42,883) | | | (7,762) | | | (50,645) | | | 153,136 | | | 21,152 | | | 174,288 | |
| Curtailments | | — |
| | (200 | ) | | (200 | ) | | — |
| | — |
| | — |
| Curtailments | | — | | | (163) | | | (163) | | | — | | | (562) | | | (562) | |
| Settlements | | — |
| | — |
| | — |
| | (269,287 | ) | | — |
| | (269,287 | ) | Settlements | | — | | | — | | | — | | | (236,282) | | | — | | | (236,282) | |
| Benefits paid | | (84,179 | ) | | (19,219 | ) | | (103,398 | ) | | (106,328 | ) | | (18,510 | ) | | (124,838 | ) | Benefits paid | | (69,987) | | | (16,818) | | | (86,805) | | | (82,268) | | | (15,609) | | | (97,877) | |
| Effects of change in currency conversion | | — |
| | (58 | ) | | (58 | ) | | — |
| | 152 |
| | 152 |
| Effects of change in currency conversion | | — | | | (107) | | | (107) | | | — | | | 144 | | | 144 | |
| Benefit obligation at end of year | | 1,491,398 |
| | 223,066 |
| | 1,714,464 |
| | 1,636,488 |
| | 245,302 |
| | 1,881,790 |
| Benefit obligation at end of year | | 1,475,764 | | | 239,190 | | | 1,714,954 | | | 1,549,012 | | | 259,593 | | | 1,808,605 | |
| Change in plan assets | | | | | | | | | | | | | Change in plan assets | |
| Fair value of plan assets at beginning of year | | 1,567,411 |
| | — |
| | 1,567,411 |
| | 1,576,760 |
| | — |
| | 1,576,760 |
| Fair value of plan assets at beginning of year | | 1,585,221 | | | — | | | 1,585,221 | | | 1,648,667 | | | — | | | 1,648,667 | |
| Actual return on plan assets | | (81,529 | ) | | — |
| | (81,529 | ) | | 238,622 |
| | — |
| | 238,622 |
| Actual return on plan assets | | 25,651 | | | — | | | 25,651 | | | 245,606 | | | — | | | 245,606 | |
| Employer contributions | | 8,445 |
| | 19,219 |
| | 27,664 |
| | 127,635 |
| | 18,510 |
| | 146,145 |
| Employer contributions | | 9,193 | | | 16,818 | | | 26,011 | | | 9,498 | | | 15,609 | | | 25,107 | |
| Plan participants’ contributions | | 3 |
| | — |
| | 3 |
| | 9 |
| | — |
| | 9 |
| |
| | Settlements | | — |
| | — |
| | — |
| | (269,287 | ) | | — |
| | (269,287 | ) | Settlements | | — | | | — | | | — | | | (236,282) | | | — | | | (236,282) | |
| Benefits paid | | (84,179 | ) | | (19,219 | ) | | (103,398 | ) | | (106,328 | ) | | (18,510 | ) | | (124,838 | ) | Benefits paid | | (69,987) | | | (16,818) | | | (86,805) | | | (82,268) | | | (15,609) | | | (97,877) | |
| Fair value of plan assets at end of year | | 1,410,151 |
| | — |
| | 1,410,151 |
| | 1,567,411 |
| | — |
| | 1,567,411 |
| Fair value of plan assets at end of year | | 1,550,078 | | | — | | | 1,550,078 | | | 1,585,221 | | | — | | | 1,585,221 | |
| Net amount recognized | | $ | (81,247 | ) | | $ | (223,066 | ) | | $ | (304,313 | ) | | $ | (69,077 | ) | | $ | (245,302 | ) | | $ | (314,379 | ) | Net amount recognized | | $ | 74,314 | | | $ | (239,190) | | | $ | (164,876) | | | $ | 36,209 | | | $ | (259,593) | | | $ | (223,384) | |
| Amount recognized in the Consolidated Balance Sheets | Amount recognized in the Consolidated Balance Sheets | | | | | | | | | | | Amount recognized in the Consolidated Balance Sheets | |
| Noncurrent Assets | | Noncurrent Assets | | $ | 87,601 | | | $ | — | | | $ | 87,601 | | | $ | 54,950 | | | $ | — | | | $ | 54,950 | |
| Current liabilities | | $ | — |
| | $ | (17,034 | ) | | $ | (17,034 | ) | | $ | — |
| | $ | (16,901 | ) | | $ | (16,901 | ) | Current liabilities | | — | | | (16,669) | | | (16,669) | | | — | | | (16,990) | | | (16,990) | |
| Noncurrent liabilities | | (81,247 | ) | | (206,032 | ) | | (287,279 | ) | | (69,077 | ) | | (228,401 | ) | | (297,478 | ) | Noncurrent liabilities | | (13,287) | | | (222,521) | | | (235,808) | | | (18,741) | | | (242,603) | | | (261,344) | |
| Net amount recognized | | $ | (81,247 | ) | | $ | (223,066 | ) | | $ | (304,313 | ) | | $ | (69,077 | ) | | $ | (245,302 | ) | | $ | (314,379 | ) | Net amount recognized | | $ | 74,314 | | | $ | (239,190) | | | $ | (164,876) | | | $ | 36,209 | | | $ | (259,593) | | | $ | (223,384) | |
| Amount recognized in accumulated other comprehensive loss | Amount recognized in accumulated other comprehensive loss | | | | | | | | | Amount recognized in accumulated other comprehensive loss | |
| Actuarial loss | | $ | 654,579 |
| | $ | 94,123 |
| | $ | 748,702 |
| | $ | 641,194 |
| | $ | 109,880 |
| | $ | 751,074 |
| Actuarial loss | | $ | 426,874 | | | $ | 122,660 | | | $ | 549,534 | | | $ | 464,922 | | | $ | 137,697 | | | $ | 602,619 | |
| Prior service credit | | (18,786 | ) | | — |
| | (18,786 | ) | | (20,731 | ) | | — |
| | (20,731 | ) | Prior service credit | | (12,952) | | | 587 | | | (12,365) | | | (14,897) | | | 642 | | | (14,255) | |
| Total | | $ | 635,793 |
| | $ | 94,123 |
| | $ | 729,916 |
| | $ | 620,463 |
| | $ | 109,880 |
| | $ | 730,343 |
| Total | | $ | 413,922 | | | $ | 123,247 | | | $ | 537,169 | | | $ | 450,025 | | | $ | 138,339 | | | $ | 588,364 | |
Benefit obligations decreased from $1.8 billion at December 27, 2020, to $1.7 billion at December 26, 2021, primarily due to benefit payments of $86.8 million and actuarial gains of $50.6 million. The actuarial gains were primarily driven by an increase in the discount rate.
Benefit obligations decreased from $1.9 billion at December 29, 2019, to $1.8 billion at December 27, 2020, primarily due to the previously discussed settlement transaction of $236.3 million, partially offset by actuarial losses
P. 90 – THE NEW YORK TIMES COMPANY – P. 87
of $174.3 million. The actuarial losses were primarily driven by a decrease in the discount rate, partially offset by updating the latest mortality improvement scale.
The accumulated benefit obligation for all pension plans was $1.7 billion and $1.8 billion as of December 26, 2021, and December 27, 2020, respectively.
Information for pension plans with an accumulated benefit obligation and projected benefit obligation in excess of plan assets was as follows:
| | | | | | | | | | | | | | |
| (In thousands) | | December 26,
2021 | | December 27,
2020 |
| Projected benefit obligation | | $ | 348,831 | | | $ | 364,272 | |
| Accumulated benefit obligation | | $ | 338,346 | | | $ | 349,429 | |
| Fair value of plan assets | | $ | 96,354 | | | $ | 85,938 | |
|
| | | | | | | | |
| (In thousands) | | December 30,
2018 |
| | December 31,
2017 |
|
| Projected benefit obligation | | $ | 1,714,464 |
| | $ | 1,881,790 |
|
| Accumulated benefit obligation | | $ | 1,712,619 |
| | $ | 1,874,445 |
|
| Fair value of plan assets | | $ | 1,410,151 |
| | $ | 1,567,411 |
|
Assumptions
Weighted-average assumptions used in the actuarial computations to determine benefit obligations for qualified pension plans were as follows:
| | | | | December 30,
2018 |
| | December 31,
2017 |
| | December 26,
2021 | | December 27,
2020 |
| Discount rate | | 4.43 | % | | 3.75 | % | Discount rate | | 2.94 | % | | 2.64 | % |
| Rate of increase in compensation levels | | 3.00 | % | | 2.95 | % | Rate of increase in compensation levels | | 3.00 | % | | 3.00 | % |
The rate of increase in compensation levels is applicable only for the Guild-Times Adjustable Pension PlanAPP that has not been frozen.
Weighted-average assumptions used in the actuarial computations to determine net periodic pension cost for qualified plans were as follows:
| | | | | December 30,
2018 |
| | December 31,
2017 |
| | December 25,
2016 |
| | December 26,
2021 | | December 27,
2020 | | December 29,
2019 |
| Discount rate for determining projected benefit obligation | | 3.75 | % | | 4.31 | % | | 4.60 | % | Discount rate for determining projected benefit obligation | | 2.64 | % | | 3.30 | % | | 4.43 | % |
| Discount rate in effect for determining service cost | | 3.88 | % | | 4.74 | % | | 5.78 | % | Discount rate in effect for determining service cost | | 3.87 | % | | 3.67 | % | | 3.87 | % |
| Discount rate in effect for determining interest cost | | 3.31 | % | | 3.54 | % | | 3.68 | % | Discount rate in effect for determining interest cost | | 2.02 | % | | 2.70 | % | | 4.06 | % |
| Rate of increase in compensation levels | | 2.95 | % | | 2.95 | % | | 2.91 | % | Rate of increase in compensation levels | | 3.00 | % | | 3.00 | % | | 3.00 | % |
| Expected long-term rate of return on assets | | 5.69 | % | | 6.73 | % | | 7.01 | % | Expected long-term rate of return on assets | | 3.74 | % | | 4.59 | % | | 5.68 | % |
Weighted-average assumptions used in the actuarial computations to determine benefit obligations for non-qualified plans were as follows:
| | | | | December 30,
2018 |
| | December 31,
2017 |
| | December 26,
2021 | | December 27,
2020 |
| Discount rate | | 4.35 | % | | 3.67 | % | Discount rate | | 2.81 | % | | 2.39 | % |
| Rate of increase in compensation levels | | 2.50 | % | | 2.50 | % | Rate of increase in compensation levels | | 2.50 | % | | 2.50 | % |
The rate of increase in compensation levels is applicable only for the foreign plan whichthat has not been frozen.
P. 88 – THE NEW YORK TIMES COMPANY – P. 91
Weighted-average assumptions used in the actuarial computations to determine net periodic pension cost for non-qualified plans were as follows:
| | | | | December 30,
2018 |
| | December 31,
2017 |
| | December 25,
2016 |
| | December 26,
2021 | | December 27,
2020 | | December 29,
2019 |
| Discount rate for determining projected benefit obligation | | 3.67 | % | | 4.17 | % | | 4.40 | % | Discount rate for determining projected benefit obligation | | 2.39 | % | | 3.17 | % | | 4.35 | % |
| Discount rate in effect for determining interest cost | | 3.14 | % | | 3.39 | % | | 3.44 | % | Discount rate in effect for determining interest cost | | 1.74 | % | | 2.78 | % | | 3.94 | % |
| Rate of increase in compensation levels | | 2.50 | % | | 2.50 | % | | 2.50 | % | Rate of increase in compensation levels | | 2.50 | % | | 2.50 | % | | 2.50 | % |
We determined our discount rate using a Ryan ALM, Inc. Curve (the “Ryan Curve”). The Ryan Curve provides the bonds included in the curve and allows adjustments for certain outliers (i.e., bonds on “watch”). We believe the Ryan Curve allows us to calculate an appropriate discount rate.
To determine our discount rate, we project a cash flow based on annual accrued benefits. The projected plan cash flow is discounted to the measurement date, which is the last day of our fiscal year, using the annual spot rates provided in the Ryan Curve.
In determining the expected long-term rate of return on assets, we evaluated input from our investment consultants, actuaries and investment management firms, including our review of asset class return expectations, as well as long-term historical asset class returns. Projected returns by such consultants and economists are based on broad equity and bond indices. Our objective is to select an average rate of earnings expected on existing plan assets and expected contributions to the plan during the year, less expense expected to be incurred by the plan during the year.
The market-related value of plan assets is multiplied by the expected long-term rate of return on assets to compute the expected return on plan assets, a component of net periodic pension cost. The market-related value of plan assets is a calculated value that recognizes changes in fair value over three years.
Plan Assets
Company-SponsoredThe Pension PlansPlan
The assets underlying the Company-sponsored qualified pension plansPension Plan are managed by professional investment managers. These investment managers are selected and monitored by the pension investment committee, composed of certain senior executives, who are appointed by the Finance Committee of the Board of Directors of the Company. The Finance Committee is responsible for adopting our investment policy, which includes rules regarding the selection and retention of qualified advisors and investment managers. The pension investment committee is responsible for implementing and monitoring compliance with our investment policy, selecting and monitoring investment managers and communicating the investment guidelines and performance objectives to the investment managers.
Our contributions are made on a basis determined by the actuaries in accordance with the funding requirements and limitations of the Employee Retirement Income Security Act (“ERISA”) and the Internal Revenue Code.
Investment Policy and Strategy
The primary long-term investment objective is to allocate assets in a manner that produces a total rate of return that meets or exceeds the growth of our pension liabilities. An additional investment objective is to transition the asset mix to hedge liabilities and minimize volatility in the funded status of the plans.Pension Plan.
Asset Allocation Guidelines
In accordance with our asset allocation strategy, for substantially all of our Company-sponsored pension plan assets, investments are categorized into long duration fixed income investmentsliability-hedging assets whose value is highly correlated to that of the pension planPension Plan’s obligations (“Long DurationLiability-Hedging Assets”) or other investments, such as equities and high-yield fixed income securities, whose return over time is expected to exceed the rate of growth in our pension planthe Pension Plan’s obligations (“Return-Seeking Assets”).
P. 92 – THE NEW YORK TIMES COMPANY
The proportional allocation of assets between Long DurationLiability-Hedging Assets and Return-Seeking Assets is dependent on the funded status of each pension plan.the Pension Plan. Under our policy, for example, a funded status at 100%102.5% requires an allocation of total assets of 71.5%85.5% to 76.5%90.5% to Long DurationLiability-Hedging Assets and 23.5%9.5% to 28.5%14.5% to Return-Seeking Assets. As a plan's
THE NEW YORK TIMES COMPANY – P. 89
the Pension Plan’s funded status increases, the allocation to Long DurationLiability-Hedging Assets will increase and the allocation to Return-Seeking Assets will decrease.
The following asset allocation guidelines apply to the Return-Seeking Assets:Assets as of December 26, 2021:
| | | Asset Category | Percentage Range | | Actual | Asset Category | Percentage Range | | Actual |
| Public Equity | 70% | - | 100% | | 85 | % | Public Equity | 70% | - | 90% | | 84 | % |
| High-Yield Fixed Income | 0% | - | 15% | | 0 | % | |
| Growth Fixed Income | | Growth Fixed Income | 0% | - | 15% | | 0 | % |
| Alternatives | 0% | - | 15% | | 15 | % | Alternatives | 0% | - | 15% | | 12 | % |
| Cash | 0% | - | 10% | | 0 | % | Cash | 0% | - | 10% | | 4 | % |
The asset allocations by asset category for both Long DurationLiability-Hedging and Return-Seeking Assets, as of December 30, 2018,26, 2021, were as follows:
| | | Asset Category | Percentage Range | | Actual | Asset Category | Percentage Range | | Actual |
| Long Duration Fixed Income | 71.5% | - | 76.5% | | 75 | % | |
| Liability-Hedging | | Liability-Hedging | 85.5% | - | 90.5% | | 87 | % |
| Public Equity | 16.5% | - | 28.5% | | 21 | % | Public Equity | 6.7% | - | 13.1% | | 11 | % |
| High-Yield Fixed Income | 0% | - | 4% | | 0 | % | |
| Growth Fixed Income | | Growth Fixed Income | 0% | - | 2% | | 0 | % |
| Alternatives | 0% | - | 4% | | 3 | % | Alternatives | 0% | - | 2% | | 2 | % |
| Cash | 0% | - | 3% | | 1 | % | Cash | 0% | - | 1% | | 0 | % |
The specified target allocation of assets and ranges set forth above are maintained and reviewed on a periodic basis by the pension investment committee. The pension investment committee may direct the transfer of assets between investment managers in order to rebalance the portfolio in accordance with approved asset allocation ranges to accomplish the investment objectives for the pensionPension Plan’s assets.
The APP
The assets underlying the joint Company and The NewsGuild of New York sponsored plan are managed by professional investment managers. These investment managers are selected and monitored by the APP’s Board of Trustees (the “APP Trustees”). The APP Trustees are responsible for adopting an investment policy, implementing and monitoring compliance with that policy, selecting and monitoring investment managers, and communicating the investment guidelines and performance objectives to the investment managers.
Investment Policy and Strategy
The investment objective is to allocate investment assets in a manner that satisfies the funding objectives of the APP and to maximize the probability of maintaining a 100% funded status.
Asset Allocation Guidelines
In accordance with the asset allocation guidelines, investments are segmented into hedging assets whose value is highly correlated to that of the APP’s obligations (“Hedging Assets”) or other investments, such as equities and high-yield fixed income securities, whose return over time is expected to exceed the rate of growth in the APP’s obligations (“Return-Seeking Assets”).
The asset allocations by asset category as of December 26, 2021, were as follows:
| | | | | | | | | | | | | | | | | |
| Asset Category | Percentage Range | | Actual |
| Hedging Assets | 75% | - | 90% | | 80 | % |
| Return-Seeking Assets | 10% | - | 25% | | 20 | % |
| Cash and Equivalents | 0% | - | 5% | | 0 | % |
The specified target allocation of assets and ranges set forth above are maintained and reviewed on a periodic basis by the APP Trustees. The APP Trustees may direct the transfer of assets between investment managers in order
P. 90 – THE NEW YORK TIMES COMPANY
to rebalance the portfolio in accordance with approved asset allocation ranges to accomplish the investment objectives for the APP’s assets.
Fair Value of Plan Assets
The fair value of the assets underlying the Pension Plan and the joint-sponsored APP by asset category are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2021 |
| (In thousands) | | Quoted Prices
Markets for
Identical Assets | | Significant
Observable
Inputs | | Significant
Unobservable
Inputs | | Investment Measured at Net Asset Value(2) | | |
| Asset Category | | (Level 1) | | (Level 2) | | (Level 3) | | | | Total |
| Equity Securities: | | | | | | | | | | |
| U.S. Equities | | $ | 12,739 | | | $ | — | | | $ | — | | | $ | — | | | $ | 12,739 | |
| International Equities | | 29,453 | | | — | | | — | | | — | | | 29,453 | |
| | | | | | | | | | |
| Registered Investment Companies | | 270,662 | | | — | | | — | | | — | | | 270,662 | |
Common/Collective Funds(1) | | — | | | — | | | — | | | 370,042 | | | 370,042 | |
| Fixed Income Securities: | | | | | | | | | | |
| Corporate Bonds | | — | | | 710,413 | | | — | | | — | | | 710,413 | |
| U.S. Treasury and Other Government Securities | | — | | | 52,520 | | | — | | | — | | | 52,520 | |
| | | | | | | | | | |
| Municipal and Provincial Bonds | | — | | | 37,922 | | | — | | | — | | | 37,922 | |
| | | | | | | | | |
| Other | | — | | | 36,630 | | | — | | | — | | | 36,630 | |
| Cash and Cash Equivalents | | — | | | — | | | — | | | 7,229 | | | 7,229 | |
| Private Equity | | — | | | — | | | — | | | 7,014 | | | 7,014 | |
| Hedge Fund | | — | | | — | | | — | | | 15,454 | | | 15,454 | |
| Assets at Fair Value | | $ | 312,854 | | | $ | 837,485 | | | $ | — | | | $ | 399,739 | | | $ | 1,550,078 | |
| | | | | | | | | | |
| | | | | | | | | | |
(1)The underlying assets of the common/collective funds primarily consist of equity and fixed income securities. The fair value in the above table represents our ownership share of the NAV of the underlying funds.
(2)Certain investments that are measured at fair value using the NAV per share (or its equivalent) have not been classified in the fair value hierarchy.
THE NEW YORK TIMES COMPANY – P. 9391
Fair Value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fair Value Measurement at December 31, 2020 |
| (In thousands) | | Quoted Prices
Markets for
Identical Assets | | Significant
Observable
Inputs | | Significant
Unobservable
Inputs | | Investment Measured at Net Asset Value(2) | | |
| Asset Category | | (Level 1) | | (Level 2) | | (Level 3) | | | | Total |
| Equity Securities: | | | | | | | | | | |
| U.S. Equities | | $ | 28,002 | | | $ | — | | | $ | — | | | $ | — | | | $ | 28,002 | |
| International Equities | | 34,025 | | | — | | | — | | | — | | | 34,025 | |
| Mutual Funds | | 29,011 | | | — | | | — | | | — | | | 29,011 | |
Registered Investment Companies(3) | | 238,737 | | | — | | | — | | | — | | | 238,737 | |
Common/Collective Funds(1) (3) | | — | | | — | | | — | | | 471,629 | | | 471,629 | |
| Fixed Income Securities: | | | | | | | | | | |
| Corporate Bonds | | — | | | 646,330 | | | — | | | — | | | 646,330 | |
| U.S. Treasury and Other Government Securities | | — | | | 42,111 | | | — | | | — | | | 42,111 | |
| | | | | | | | | |
| Municipal and Provincial Bonds | | — | | | 40,150 | | | — | | | — | | | 40,150 | |
| | | | | | | | | |
| Other | | — | | | 10,693 | | | — | | | — | | | 10,693 | |
| Cash and Cash Equivalents | | — | | | — | | | — | | | 5,481 | | | 5,481 | |
| Private Equity | | — | | | — | | | — | | | 9,770 | | | 9,770 | |
| Hedge Fund | | — | | | — | | | — | | | 29,282 | | | 29,282 | |
| Assets at Fair Value | | $ | 329,775 | | | $ | 739,284 | | | $ | — | | | $ | 516,162 | | | $ | 1,585,221 | |
(1)The underlying assets of Plan Assets
the common/collective funds primarily consist of equity and fixed income securities. The fair value in the above table represents our ownership share of the assetsNAV of the underlying our Company-sponsored qualified pension plans andfunds.
(2)Certain investments that are measured at fair value using the joint-sponsored Guild-Times Adjustable Pension Plan by asset category are as follows:NAV per share (or its equivalent) have not been classified in the fair value hierarchy. |
| | | | | | | | | | | | | | | | | | | | |
| | | December 30, 2018 |
| (In thousands) | | Quoted Prices Markets for Identical Assets | | Significant Observable Inputs | | Significant Unobservable Inputs | | Investment Measured at Net Asset Value(3) | | |
| Asset Category | | (Level 1) | | (Level 2) | | (Level 3) | | | | Total |
| Equity Securities: | | | | | | | | | | |
| U.S. Equities | | $ | 25,459 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 25,459 |
|
| International Equities | | 27,805 |
| | — |
| | — |
| | — |
| | 27,805 |
|
| Mutual Funds | | 18,891 |
| | — |
| | — |
| | — |
| | 18,891 |
|
| Registered Investment Companies | | 36,908 |
| | — |
| | — |
| | — |
| | 36,908 |
|
Common/Collective Funds(1) | | — |
| | — |
| | — |
| | 412,815 |
| | 412,815 |
|
| Fixed Income Securities: | | | | | | | |
| | |
| Corporate Bonds | | — |
| | 532,466 |
| | — |
| | — |
| | 532,466 |
|
| U.S. Treasury and Other Government Securities | | — |
| | 155,229 |
| | — |
| | — |
| | 155,229 |
|
| Group Annuity Contract | | — |
| | — |
| | — |
| | 64,559 |
| | 64,559 |
|
| Municipal and Provincial Bonds | | — |
| | 42,170 |
| | — |
| | — |
| | 42,170 |
|
Government Sponsored Enterprises(2) | — |
| | 14,278 |
| | — |
| | — |
| | 14,278 |
|
| Other | | — |
| | 13,754 |
| | — |
| | — |
| | 13,754 |
|
| Cash and Cash Equivalents | | — |
| | — |
| | — |
| | 19,667 |
| | 19,667 |
|
| Private Equity | | — |
| | — |
| | — |
| | 12,752 |
| | 12,752 |
|
| Hedge Fund | | — |
| | — |
| | — |
| | 33,398 |
| | 33,398 |
|
| Assets at Fair Value | | 109,063 |
| | 757,897 |
| | — |
| | 543,191 |
| | 1,410,151 |
|
| Other Assets | |
|
| |
|
| |
|
| |
|
| | — |
|
| Total | | $ | 109,063 |
| | $ | 757,897 |
| | $ | — |
| | $ | 543,191 |
| | $ | 1,410,151 |
|
| |
(1)
| The underlying assets of the common/collective funds are primarily comprised of equity and fixed income securities. The fair value in the above table represents our ownership share of the NAV of the underlying funds. |
| |
(2)
| Represents investments that are not backed by the full faith and credit of the U.S. government. |
| |
(3)
| Certain investments that are measured at fair value using the NAV per share (or its equivalent) have not been classified in the fair value hierarchy. |
P. 94 – THE NEW YORK TIMES COMPANY
|
| | | | | | | | | | | | | | | | | | | | |
| | | Fair Value Measurement at December 31, 2017 |
| (In thousands) | | Quoted Prices Markets for Identical Assets | | Significant Observable Inputs | | Significant Unobservable Inputs | | Investment Measured at Net Asset Value(3) | | |
| Asset Category | | (Level 1) | | (Level 2) | | (Level 3) | | | | Total |
| Equity Securities: | | | | | | | | | | |
| U.S. Equities | | $ | 65,466 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 65,466 |
|
| International Equities | | 62,256 |
| | — |
| | — |
| | — |
| | 62,256 |
|
| Mutual Funds | | 44,173 |
| | — |
| | — |
| | — |
| | 44,173 |
|
| Registered Investment Companies | | 42,868 |
| | — |
| | — |
| | — |
| | 42,868 |
|
Common/Collective Funds(1) | | — |
| | — |
| | — |
| | 601,896 |
| | 601,896 |
|
| Fixed Income Securities: | | | | | | | | | | |
| Corporate Bonds | | — |
| | 416,201 |
| | — |
| | — |
| | 416,201 |
|
| U.S. Treasury and Other Government Securities | | — |
| | 144,085 |
| | — |
| | — |
| | 144,085 |
|
| Group Annuity Contract | — |
| | — |
| | — |
| | 45,005 |
| | 45,005 |
|
| Municipal and Provincial Bonds | | — |
| | 36,674 |
| | — |
| | — |
| | 36,674 |
|
Government Sponsored Enterprises(2) | — |
| | 11,364 |
| | — |
| | — |
| | 11,364 |
|
| Other | | — |
| | 10,883 |
| | — |
| | — |
| | 10,883 |
|
| Cash and Cash Equivalents | | — |
| | — |
| | — |
| | 32,352 |
| | 32,352 |
|
| Private Equity | | — |
| | — |
| | — |
| | 20,289 |
| | 20,289 |
|
| Hedge Fund | | — |
| | — |
| | — |
| | 33,899 |
| | 33,899 |
|
| Assets at Fair Value | | 214,763 |
| | 619,207 |
| | — |
| | 733,441 |
| | 1,567,411 |
|
| Other Assets | |
|
| |
|
| |
|
| |
|
| | — |
|
| Total | $ | 214,763 |
| | $ | 619,207 |
| | $ | — |
| | $ | 733,441 |
| | $ | 1,567,411 |
|
| |
(1)
| The underlying assets of the common/collective funds are primarily comprised of equity and fixed income securities. The fair value in the above table represents our ownership share of the NAV of the underlying funds. |
| |
(2)
| Represents investments that are not backed by the full faith and credit of the U.S. government. |
| |
(3)
| Certain investments that are measured at fair value using the NAV per share (or its equivalent) have not been classified in the fair value hierarchy. |
Level 1 and Level 2 Investments
Where quoted prices are available in an active market for identical assets, such as equity securities traded on an exchange, transactions for the asset occur with such frequency that the pricing information is available on an ongoing/daily basis. We classify these types of investments as Level 1 where the fair value represents the closing/last trade price for these particular securities.
For our investments where pricing data may not be readily available, fair values are estimated by using quoted prices for similar assets, in both active and not active markets, and observable inputs, other than quoted prices, such as interest rates and credit risk. We classify these types of investments as Level 2 because we are able to reasonably estimate the fair value through inputs that are observable, either directly or indirectly. There are no restrictions on our ability to sell any of our Level 1 and Level 2 investments.
THE NEW YORK TIMES COMPANY – P. 95
Cash Flows
In 2018,2021, we made contributions to the Guild-Times Adjustable Pension PlanAPP of $8.4$9.2 million. We expect contributions made to satisfy minimum funding requirements to total approximately $9$10 million in 2019.2022.
P. 92 – THE NEW YORK TIMES COMPANY
The following benefit payments, which reflect future service for plans that have not been frozen, are expected to be paid:
| | | | | | | | | | | | | | | | | | | | |
| | | Plans | | |
| (In thousands) | | Qualified | | Non-
Qualified | | Total |
| 2022 | | $ | 71,255 | | | $ | 16,881 | | | $ | 88,136 | |
| 2023 | | 73,585 | | | 16,686 | | | 90,271 | |
| 2024 | | 75,700 | | | 16,445 | | | 92,145 | |
| 2025 | | 77,792 | | | 16,178 | | | 93,970 | |
| 2026 | | 79,218 | | | 15,992 | | | 95,210 | |
2027-2031(1) | | 412,095 | | | 75,816 | | | 487,911 | |
|
| | | | | | | | | | | | |
| | | Plans | | |
| (In thousands) | | Qualified | | Non- Qualified | | Total |
| 2019 | | $ | 86,901 |
| | $ | 17,368 |
| | $ | 104,269 |
|
| 2020 | | 88,041 |
| | 17,107 |
| | 105,148 |
|
| 2021 | | 89,678 |
| | 16,909 |
| | 106,587 |
|
| 2022 | | 91,557 |
| | 16,726 |
| | 108,283 |
|
| 2023 | | 92,962 |
| | 16,423 |
| | 109,385 |
|
2024-2028(1) | | 480,374 |
| | 77,975 |
| | 558,349 |
|
| |
(1)
| While benefit payments under these plans are expected to continue beyond 2028 we have presented in this table only those benefit payments estimated over the next 10 years. |
Multiemployer Plans
We contribute to a number of multiemployer defined benefit pension plans under the terms of various collective bargaining agreements that cover our union-represented employees. In recent years, certain events, such as amendments to various collective bargaining agreements and the sale of the New England Media Group, resulted in withdrawals from multiemployer pension plans. These actions, along with a reduction in covered employees, have resulted in us estimating withdrawal liabilities to the respective plans for our proportionate share of any unfunded vested benefits. In 2016, we recorded $6.7 millionin charges for partial withdrawal obligations under multiemployer pension plans. There was no such charge in 2017. During the third quarter of 2018, we recorded a gain of $4.9 million from a pension liability adjustment, which was recorded in “Multiemployer pension and other contractual (gain)/loss” in our Consolidated Statements of Operations.
Our multiemployer pension plan withdrawal liability was approximately $97$70 million as of December 30, 201826, 2021, and approximately $108$76 million as of December 31, 2017.27, 2020. This liability represents the present value of the obligations related to complete and partial withdrawals that have already occurred as well as an estimate of future partial withdrawals that we considered probable and reasonably estimable. For those plans that have yet to provide us with a demand letter, the actual liability will not be fully known until they complete a final assessment of the withdrawal liability and issue a demand to us. Therefore, the estimate of our multiemployer pension plan liability will be adjusted as more information becomes available that allows us to refine our estimates.
The risks of participating in multiemployer plans are different from single-employer plans in the following aspects:
•Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.
•If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.
•If we elect to withdraw from these plans or if we trigger a partial withdrawal due to declines in contribution base units or a partial cessation of our obligation to contribute, we may be assessed a withdrawal liability based on a calculated share of the underfunded status of the plan.
•If a multiemployer plan from which we have withdrawn subsequently experiences a mass withdrawal, we may be required to make additional contributions under applicable law.
P. 96 – THE NEW YORK TIMES COMPANY
Our participation in significant plans for the fiscal period ended December 30, 2018,26, 2021, is outlined in the table below. The “EIN/Pension Plan Number” column provides the Employer Identification Number (“EIN”) and the three-digit plan number. The zone status is based on the latest information that we received from the plan and is certified by the plan’s actuary. A plan is generally classified in critical status if a funding deficiency is projected within four years or five years, depending on other criteria. A plan in critical status is classified in critical and declining status if it is projected to become insolvent in the next 15 or 20 years, depending on other criteria.
THE NEW YORK TIMES COMPANY – P. 93
A plan is classified in endangered status if its funded percentage is less than 80% or a funding deficiency is projected within seven years. If the plan satisfies both of these triggers, it is classified in seriously endangered status. A plan not classified in any other status is classified in the green zone. The “FIP/RP Status Pending/Implemented” column indicates plans for which a financialfunding improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented. The “Surcharge Imposed” column includes plans in a red zone status that are required to pay a surcharge in excess of regular contributions. The last column lists the expiration date(s) of the collective bargaining agreement(s) to which the plans are subject.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| EIN/Pension Plan Number | Pension Protection Act Zone Status | FIP/RP Status Pending/Implemented | (In thousands) Contributions of the Company | Surcharge Imposed | Collective Bargaining Agreement Expiration Date |
| Pension Fund | 2021 | 2020 | 2021 | 2020 | 2019 |
| CWA/ITU Negotiated Pension Plan | 13-6212879-001 | Critical and Declining as of 1/01/21 | Critical and Declining as of 1/01/20 | Implemented | $ | 364 | | $ | 384 | | $ | 415 | | No | (1) |
Newspaper and Mail Deliverers’-Publishers’ Pension Fund(2) | 13-6122251-001 | Green as of 6/01/21 | Green as of 6/01/20 | N/A | 912 | | 1,010 | | 1,014 | | No | 3/30/2025 |
| GCIU-Employer Retirement Benefit Plan | 91-6024903-001 | Critical and Declining as of 1/01/21 | Critical and Declining as of 1/01/20 | Implemented | 48 | | 65 | | 58 | | No | 3/30/2026 |
Pressmen’s Publishers’ Pension Fund(3) | 13-6121627-001 | Green as of 4/01/21 | Endangered as of 4/01/20 | Pending | 1,337 | | 1,328 | | 1,213 | | No | 3/30/2026 |
| Paper Handlers’-Publishers’ Pension Fund | 13-6104795-001 | Critical and Declining as of 4/01/21 | Critical and Declining as of 4/01/20 | Implemented | 103 | | 101 | | 100 | | Yes | 3/30/2026 |
| Contributions for individually significant plans | | | $ | 2,764 | | $ | 2,888 | | $ | 2,800 | | | |
| Contributions for a plan not individually significant | | | $ | 33 | | $ | 24 | | $ | — | | | |
| Total Contributions | | | $ | 2,797 | | $ | 2,912 | | $ | 2,800 | | | |
|
| | | | | | | | | | | | | | | |
| | EIN/Pension Plan Number | Pension Protection Act Zone Status | FIP/RP Status Pending/Implemented | (In thousands) Contributions of the Company | Surcharge Imposed | Collective Bargaining Agreement Expiration Date |
| Pension Fund | 2018 | 2017 | 2018 | 2017 | 2016 |
| CWA/ITU Negotiated Pension Plan | 13-6212879-001 | Critical and Declining as of 1/01/18 | Critical and Declining as of 1/01/17 | Implemented | $ | 408 |
| $ | 425 |
| $ | 486 |
| No | (1) |
Newspaper and Mail Deliverers’-Publishers’ Pension Fund(2) | 13-6122251-001 | Green as of 6/01/18 | Green as of 6/01/17 | N/A | 992 |
| 995 |
| 1,040 |
| No | 3/30/2020 |
| GCIU-Employer Retirement Benefit Plan | 91-6024903-001 | Critical and Declining as of 1/01/18 | Critical and Declining as of 1/01/17 | Implemented | 42 |
| 39 |
| 43 |
| Yes | 3/30/2021(3) |
Pressmen’s Publishers’ Pension Fund(4) | 13-6121627-001 | Green as of 4/01/18 | Green as of 4/01/17 | N/A | 1,129 |
| 963 |
| 1,001 |
| No | 3/30/2021 |
Paper-Handlers’-Publishers’ Pension Fund(5) | 13-6104795-001 | Critical and Declining as of 4/01/18 | Critical and Declining as of 4/01/17 | Implemented | 99 |
| 88 |
| 100 |
| Yes | 3/30/2021 |
| Contributions for individually significant plans | | | $ | 2,670 |
| $ | 2,510 |
| $ | 2,670 |
| | |
| Total Contributions | | | $ | 2,670 |
| $ | 2,510 |
| $ | 2,670 |
| | |
| |
(1)(2)Elections under the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010: Extended Amortization of Net Investment Losses (IRS Section 431(b)(8)(A)) and the Expanded Smoothing Period (IRS Section 431(b)(8)(B)). (3)The Plan sponsor elected two provisions of funding relief under the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (PRA 2010) to more slowly absorb the 2008 plan year investment loss, retroactively effective as of April 1, 2009. These included extended amortization under the prospective method and 10-year smoothing of the asset loss for the plan year beginning April 1, 2008. | There are two collective bargaining agreements requiring contributions to this plan: Mailers, which expires March 30, 2019, and Typographers, which expires March 30, 2020.
|
| |
(2)
| Elections under the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010: Extended Amortization of Net Investment Losses (IRS Section 431(b)(8)(A)) and the Expanded Smoothing Period (IRS Section 431(b)(8)(B)). |
| |
(3)
| We previously had two collective bargaining agreements requiring contributions to this plan. As of December 30, 2018, only one collective bargaining agreement remained for the Stereotypers. The method for calculating actuarial value of assets was changed retroactive to January 1, 2009, as elected by the Board of Trustees and as permitted by IRS Notice 2010-83. This election includes smoothing 2008 investment losses over ten years.
|
| |
(4)
| The Plan sponsor elected two provisions of funding relief under the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (PRA 2010) to more slowly absorb the 2008 plan year investment loss, retroactively effective as of April 1, 2009. These included extended amortization under the prospective method and 10-year smoothing of the asset loss for the plan year beginning April 1, 2008.
|
| |
(5)
| Board of Trustees elected funding relief. This election includes smoothing the March 31, 2009 investment losses over 10 years.
|
The rehabilitation plan for the GCIU-Employer Retirement Benefit Plan includes minimum annual contributions no less than the total annual contribution made by us from September 1, 2008 through August 31, 2009.
THE NEW YORK TIMES COMPANY – P. 97
The Company was listed in the plans’ respective Forms 5500 as providing more than 5% of the total contributions for the following plans and plan years:
|
| | | | |
| Pension Fund | Year Contributions to Plan Exceeded More Than 5 Percent of Total Contributions (as of Plan’s Year-End) |
| CWA/ITU Negotiated Pension Plan | 12/31/20172020 & 12/31/2016(1) 2019 |
| Newspaper and Mail Deliverers’-Publishers’ Pension Fund | 5/31/20172020 & 5/31/20162019(1) |
| Pressmen’s Publisher’s Pension Fund | 3/31/20182021 & 3/31/20172020 |
Paper-Handlers’Paper Handlers’-Publishers’ Pension Fund | 3/31/20182021 & 3/31/20172020 |
(1) FormsForm 5500 for the plans’plan year ended 12/31/18 and 5/31/18 were21 was not available as of the date we filed our financial statements.
The Company received a notice and demand for payment of withdrawal liability from the Newspaper and Mail Deliverers’-Publishers’ Pension Fund in September 2013 and December 2014 associated with partial withdrawals. See Note 19 for further information.P. 94 – THE NEW YORK TIMES COMPANY
11.10. Other Postretirement Benefits
We provide health benefits to certain primarily grandfathered retired employeesemployee groups (and their eligible dependents) who meet the definition of an eligible participant and certain age and service requirements, as outlined in the plan document. There is a de minimis liability for retiree health benefits for active employees. While we offer pre-age 65 retiree medical coverage to employees who meet certain retiree medical eligibility requirements, we do not provide post-age 65 retiree medical benefits for employees who retired on or after March 1, 2009. We accrue the costs of postretirement benefits during the employees’ active years of service and our policy is to pay our portion of insurance premiums and claims from general corporate assets.
Net Periodic Other Postretirement Benefit Cost/(Income)
The components of net periodic postretirement benefit cost/(income) were as follows:
| | | | | | | | | | | | | | | | | | | | |
| (In thousands) | | December 26,
2021 | | December 27,
2020 | | December 29,
2019 |
| Service cost | | $ | 53 | | | $ | 29 | | | $ | 27 | |
| Interest cost | | 565 | | | 1,026 | | | 1,602 | |
| Amortization and other costs | | 3,407 | | | 3,051 | | | 3,375 | |
| Amortization of prior service credit | | (3,098) | | | (4,225) | | | (4,766) | |
| | | | | | |
| | | | | | |
| Net periodic postretirement benefit cost/(income) | | $ | 927 | | | $ | (119) | | | $ | 238 | |
|
| | | | | | | | | | | | |
| (In thousands) | | December 30,
2018 |
| | December 31,
2017 |
| | December 25,
2016 |
|
| Service cost | | $ | 21 |
| | $ | 367 |
| | $ | 417 |
|
| Interest cost | | 1,476 |
| | 1,881 |
| | 1,979 |
|
| Amortization and other costs | | 4,735 |
| | 3,621 |
| | 4,105 |
|
| Amortization of prior service credit | | (6,157 | ) | | (7,755 | ) | | (8,440 | ) |
Effect of settlement/curtailment(1) | | — |
| | (32,737 | ) | | — |
|
| Net periodic postretirement benefit cost/(income) | | $ | 75 |
| | $ | (34,623 | ) | | $ | (1,939 | ) |
(1) In the fourth quarter of 2017, the Company recorded a gain in connection with the settlement of a funding obligation related to a postretirement plan.
As a result of the adoption of ASU 2017-07 during the first quarter of 2018, the service cost component of net periodic postretirement benefit cost/(income) continues to be recognized in “Total operating costs” while the other components have been reclassified to “Other components of net periodic benefit costs” in our Consolidated Statements of Operations below “Operating profit” on a retrospective basis.
P. 98 – THE NEW YORK TIMES COMPANY
The changes in the benefit obligations recognized in other comprehensive (income)/loss were as follows:
|
| | | | | | | | | | | | |
| (In thousands) | | December 30,
2018 |
| | December 31,
2017 |
| | December 25,
2016 |
|
| Net actuarial loss/(gain) | | $ | (4,905 | ) | | $ | (6,625 | ) | | $ | 28 |
|
| Amortization of loss | | (4,735 | ) | | (3,621 | ) | | (4,105 | ) |
| Amortization of prior service credit | | 6,157 |
| | 7,755 |
| | 8,440 |
|
| Effect of curtailment | | — |
| | 6,502 |
| | — |
|
| Effect of settlement | | — |
| | 26,235 |
| | — |
|
| Total recognized in other comprehensive (income)/loss | | (3,483 | ) | | 30,246 |
| | 4,363 |
|
| Net periodic postretirement benefit cost/(income) | | 75 |
| | (34,623 | ) | | (1,939 | ) |
| Total recognized in net periodic postretirement benefit cost/(income) and other comprehensive (income)/loss | | $ | (3,408 | ) | | $ | (4,377 | ) | | $ | 2,424 |
|
| | | | | | | | | | | | | | | | | | | | |
| (In thousands) | | December 26,
2021 | | December 27,
2020 | | December 29,
2019 |
| Net actuarial loss | | $ | 2,254 | | | $ | 4,044 | | | $ | 296 | |
| | | | | | |
| Amortization of loss | | (3,407) | | | (3,051) | | | (3,375) | |
| Amortization of prior service credit | | 3,098 | | | 4,225 | | | 4,766 | |
| | | | | | |
| | | | | | |
| Total recognized in other comprehensive loss | | 1,945 | | | 5,218 | | | 1,687 | |
| Net periodic postretirement benefit cost/(income) | | 927 | | | (119) | | | 238 | |
| Total recognized in net periodic postretirement benefit cost/(income) and other comprehensive loss | | $ | 2,872 | | | $ | 5,099 | | | $ | 1,925 | |
Actuarial gains and losses are amortized using a corridor approach. The gain or loss corridor is equal to 10% of the accumulated postretirement benefit obligation. Gains and losses in excess of the corridor are generally amortized over the average remaining service period to expected retirement of active participants.
The estimated actuarial loss and prior service credit that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is approximately $3 million and $5 million, respectively.
In connection with collective bargaining agreements, we contribute to several multiemployer welfare plans. These plans provide medical benefits to active and retired employees covered under the respective collective bargaining agreement. Contributions are made in accordance with the formula in the relevant agreement. Postretirement costs related to these plans are not reflected above and were approximately $16$17 million in 20182021, $1516 million in 20172020, and $15 million in 2016.2019.
THE NEW YORK TIMES COMPANY – P. 9995
The changes in the benefit obligation and plan assets and other amounts recognized in other comprehensive income/loss were as follows:
| | | | | | | | | | | | | | |
| (In thousands) | | December 26,
2021 | | December 27,
2020 |
| Change in benefit obligation | | | | |
| Benefit obligation at beginning of year | | $ | 43,308 | | | $ | 42,803 | |
| Service cost | | 53 | | | 29 | |
| Interest cost | | 565 | | | 1,026 | |
| Plan participants’ contributions | | 2,319 | | | 2,820 | |
| Actuarial loss | | 2,254 | | | 4,044 | |
| | | | |
| Benefits paid | | (7,892) | | | (7,414) | |
| Benefit obligation at the end of year | | 40,607 | | | 43,308 | |
| Change in plan assets | | | | |
| | | | |
| Employer contributions | | 5,573 | | | 4,594 | |
| Plan participants’ contributions | | 2,319 | | | 2,820 | |
| Benefits paid | | (7,892) | | | (7,414) | |
| Fair value of plan assets at end of year | | — | | | — | |
| Net amount recognized | | $ | (40,607) | | | $ | (43,308) | |
| Amount recognized in the Consolidated Balance Sheets | | | | |
| Current liabilities | | $ | (4,521) | | | $ | (4,618) | |
| Noncurrent liabilities | | (36,086) | | | (38,690) | |
| Net amount recognized | | $ | (40,607) | | | $ | (43,308) | |
| Amount recognized in accumulated other comprehensive loss | | | | |
| Actuarial loss | | $ | 25,632 | | | $ | 26,785 | |
| Prior service credit | | (368) | | | (3,466) | |
| Total | | $ | 25,264 | | | $ | 23,319 | |
Benefit obligations decreased from $43.3 million at December 27, 2020, to $40.6 million at December 26, 2021, primarily due to benefit payments net of participation contributions of $5.6 million partially offset by the actuarial loss of $2.3 million, driven by an increase in assumed costs to reflect updated claims experience.
Benefit obligations increased from $42.8 million at December 29, 2019, to $43.3 million at December 27, 2020, primarily due to the actuarial loss of $4.0 million, driven by a decrease in the discount rate.
Information for postretirement plans with accumulated benefit obligations in excess of plan assets was as follows:
| | | | | | | | | | | | | | |
| (In thousands) | | December 26,
2021 | | December 27,
2020 |
| Accumulated benefit obligation | | $ | 40,607 | | | $ | 43,308 | |
| Fair value of plan assets | | $ | — | | | $ | — | |
P. 96 – THE NEW YORK TIMES COMPANY
|
| | | | | | | | |
| (In thousands) | | December 30,
2018 |
| | December 31,
2017 |
|
| Change in benefit obligation | | | | |
| Benefit obligation at beginning of year | | $ | 54,642 |
| | $ | 65,042 |
|
| Service cost | | 21 |
| | 367 |
|
| Interest cost | | 1,476 |
| | 1,881 |
|
| Plan participants’ contributions | | 3,974 |
| | 4,007 |
|
| Actuarial (gain)/loss | | (4,905 | ) | | 3,703 |
|
| Curtailments/settlements | | — |
| | (10,328 | ) |
| Benefits paid | | (9,171 | ) | | (10,030 | ) |
| Benefit obligation at the end of year | | 46,037 |
| | 54,642 |
|
| Change in plan assets | | | | |
| Fair value of plan assets at beginning of year | | — |
| | — |
|
| Employer contributions | | 5,197 |
| | 6,023 |
|
| Plan participants’ contributions | | 3,974 |
| | 4,007 |
|
| Benefits paid | | (9,171 | ) | | (10,030 | ) |
| Fair value of plan assets at end of year | | — |
| | — |
|
| Net amount recognized | | $ | (46,037 | ) | | $ | (54,642 | ) |
| Amount recognized in the Consolidated Balance Sheets | | | | |
| Current liabilities | | $ | (5,645 | ) | | $ | (5,826 | ) |
| Noncurrent liabilities | | (40,392 | ) | | (48,816 | ) |
| Net amount recognized | | $ | (46,037 | ) | | $ | (54,642 | ) |
| Amount recognized in accumulated other comprehensive loss | | | | |
| Actuarial loss | | $ | 28,871 |
| | $ | 38,512 |
|
| Prior service credit | | (12,456 | ) | | (18,613 | ) |
| Total | | $ | 16,415 |
| | $ | 19,899 |
|
Weighted-average assumptions used in the actuarial computations to determine the postretirement benefit obligations were as follows:
|
| | | | | | |
| | | December 30,
2018 |
| | December 31,
2017 |
|
| Discount rate | | 4.18 | % | | 3.46 | % |
| Estimated increase in compensation level | | 3.50 | % | | 3.50 | % |
P. 100 – THE NEW YORK TIMES COMPANY
| | | | | | | | | | | | | | |
| | December 26,
2021 | | December 27,
2020 |
| Discount rate | | 2.55 | % | | 2.01 | % |
| Estimated increase in compensation level | | 3.50 | % | | 3.50 | % |
Weighted-average assumptions used in the actuarial computations to determine net periodic postretirement cost were as follows:
| | | | | December 30,
2018 |
| | December 31,
2017 |
| | December 25,
2016 |
| | December 26,
2021 | | December 27,
2020 | | December 29,
2019 |
| Discount rate for determining projected benefit obligation | | 3.46 | % | | 3.93 | % | | 4.05 | % | Discount rate for determining projected benefit obligation | | 2.01 | % | | 2.94 | % | | 4.18 | % |
| Discount rate in effect for determining service cost | | 3.56 | % | | 4.08 | % | | 4.24 | % | Discount rate in effect for determining service cost | | 2.09 | % | | 3.04 | % | | 4.19 | % |
| Discount rate in effect for determining interest cost | | 3.01 | % | | 3.21 | % | | 2.96 | % | Discount rate in effect for determining interest cost | | 1.38 | % | | 2.55 | % | | 3.71 | % |
| Estimated increase in compensation level | | 3.50 | % | | 3.50 | % | | 3.50 | % | Estimated increase in compensation level | | 3.50 | % | | 3.50 | % | | 3.50 | % |
The assumed health-care cost trend rates were as follows:
| | | | | December 30,
2018 |
| | December 31,
2017 |
| | December 26,
2021 | | December 27,
2020 |
| Health-care cost trend rate | | 6.90 | % | | 7.60 | % | Health-care cost trend rate | | 5.99 | % | | 5.95 | % |
| Rate to which the cost trend rate is assumed to decline (ultimate trend rate) | | 5.00 | % | | 5.00 | % | Rate to which the cost trend rate is assumed to decline (ultimate trend rate) | | 4.92 | % | | 4.92 | % |
| Year that the rate reaches the ultimate trend rate | | 2025 |
| | 2025 |
| Year that the rate reaches the ultimate trend rate | | 2030 | | 2027 |
Because our health-care plans are capped for most participants, the assumed health-care cost trend rates do not have a significant effect on the amounts reported for the health-care plans. A one-percentage point change in assumed health-care cost trend rates would have the following effects:
|
| | | | | | | | |
| | | One-Percentage Point |
| (In thousands) | | Increase |
| | Decrease |
|
| Effect on total service and interest cost for 2018 | | $ | 40 |
| | $ | (36 | ) |
| Effect on accumulated postretirement benefit obligation as of December 30, 2018 | | $ | 1,139 |
| | $ | (1,021 | ) |
The following benefit payments (net of plan participant contributions) under our Company’s postretirement plans, which reflect expected future services, are expected to be paid:
| | | | | |
| (In thousands) | Amount |
| 2022 | $ | 4,620 | |
| 2023 | 4,328 | |
| 2024 | 4,032 | |
| 2025 | 3,778 | |
| 2026 | 3,514 | |
2027-2031(1) | 13,781 | |
|
| | | |
| (In thousands) | Amount |
|
| 2019 | $ | 5,802 |
|
| 2020 | 5,394 |
|
| 2021 | 4,962 |
|
| 2022 | 4,545 |
|
| 2023 | 4,196 |
|
2024-2028(1) | 16,662 |
|
| |
(1)
| While benefit payments under these plans are expected to continue beyond 2028, we have presented in this table only those benefit payments estimated over the next 10 years. |
We accrue the cost of certain benefits provided to former or inactive employees after employment, but before retirement. The cost is recognized only when it is probable and can be estimated. Benefits include life insurance, disability benefits and health-care continuation coverage. The accrued obligation for these benefits was $9.7$8.5 million as of December 30, 2018,26, 2021, and $11.3$8.6 million as of December 31, 2017.
27, 2020.
THE NEW YORK TIMES COMPANY – P. 10197
12.11. Other Liabilities
The components of the “OtherOther Liabilities — Other”Other balance in our Consolidated Balance Sheets were as follows:
| | | | | | | | | | | | | | |
| (In thousands) | | December 26,
2021 | | December 27,
2020 |
| Deferred compensation | | $ | 21,101 | | | $ | 22,245 | |
| Noncurrent operating lease liabilities | | 63,614 | | | 52,695 | |
| Contingent consideration | | 5,360 | | | 4,279 | |
| Other liabilities | | 42,966 | | | 48,366 | |
| Total | | $ | 133,041 | | | $ | 127,585 | |
|
| | | | | | | | |
| (In thousands) | | December 30,
2018 |
| | December 31,
2017 |
|
| Deferred compensation | | $ | 23,211 |
| | $ | 29,526 |
|
| Other liabilities | | 54,636 |
| | 52,787 |
|
| Total | | $ | 77,847 |
| | $ | 82,313 |
|
Deferred compensation consists primarily of deferrals under our DEC. Refer to Note 98 for detail.detail related to deferred compensation.
We invest deferred compensation in life insurance products designedRefer to closely mirror the performance of the investment funds that the participants select. Our investments in life insurance products are included in “Miscellaneous assets” in our Consolidated Balance Sheets, and were $38.1 million as of December 30, 2018, and $40.3 million as of December 31, 2017.Note 17 for detail related to noncurrent operating lease liabilities.
Refer to Note 8 for detail related to contingent consideration.
Other liabilities in the preceding table primarily included our post employmentpost-employment liabilities, our contingent tax liability for uncertain tax positions, and self-insurance liabilities as of December 30, 2018,26, 2021, and December 31, 2017.27, 2020.
P. 98 – THE NEW YORK TIMES COMPANY
13.
12. Income Taxes
Reconciliations between the effective tax rate on income from continuing operations before income taxes and the federal statutory rate are presented below.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December 26, 2021 | | December 27, 2020 | | December 29, 2019 |
| (In thousands) | | Amount | | % of
Pre-tax | | Amount | | % of
Pre-tax | | Amount | | % of
Pre-tax |
| Tax at federal statutory rate | | $ | 61,005 | | | 21.0 | | | $ | 24,241 | | | 21.0 | | | $ | 34,537 | | | 21.0 | |
| State and local taxes, net | | 16,378 | | | 5.6 | | | 3,873 | | | 3.4 | | | 5,303 | | | 3.2 | |
| | | | | | | | | | | | |
| Increase/(decrease) in uncertain tax positions | | 2,782 | | | 1.0 | | | (2,509) | | | (2.2) | | | (2,427) | | | (1.5) | |
| (Gain) on company-owned life insurance | | (712) | | | (0.2) | | | (635) | | | (0.6) | | | (1,662) | | | (1.0) | |
| Nondeductible expense | | 593 | | | 0.2 | | | 800 | | | 0.7 | | | 1,938 | | | 1.2 | |
| Nondeductible executive compensation | | 4,140 | | | 1.4 | | | 1,271 | | | 1.1 | | | (355) | | | (0.2) | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Stock-based awards benefit | | (5,461) | | | (1.9) | | | (7,251) | | | (6.3) | | | (6,184) | | | (3.8) | |
| Deduction for foreign-derived intangible income | | (2,972) | | | (1.0) | | | (686) | | | (0.6) | | | (2,625) | | | (1.6) | |
| Research and experimentation credit | | (5,571) | | | (1.9) | | | (3,892) | | | (3.4) | | | (5,672) | | | (3.4) | |
| Other, net | | 348 | | | 0.1 | | | (617) | | | (0.5) | | | 1,641 | | | 1.0 | |
| Income tax expense | | $ | 70,530 | | | 24.3 | | | $ | 14,595 | | | 12.6 | | | $ | 24,494 | | | 14.9 | |
|
| | | | | | | | | | | | | | | | | | | | | |
| | | December 30, 2018 | | December 31, 2017 | | December 25, 2016 |
| (In thousands) | | Amount | | % of Pre-tax | | Amount | | % of Pre-tax | | Amount | | % of Pre-tax |
| Tax at federal statutory rate | | $ | 36,979 |
| | 21.0 |
| | $ | 38,928 |
| | 35.0 |
| | $ | 10,685 |
| | 35.0 |
|
| State and local taxes, net | | 12,335 |
| | 7.0 |
| | 4,800 |
| | 4.3 |
| | 3,095 |
| | 10.1 |
|
| Effect of enacted changes in tax laws | | (1,872 | ) | | (1.0 | ) | | 68,747 |
| | 61.8 |
| | — |
| | — |
|
| Increase/(decrease) in uncertain tax positions | | 2,288 |
| | 1.3 |
| | (2,277 | ) | | (2.0 | ) | | (4,534 | ) | | (14.9 | ) |
| Loss/(gain) on Company-owned life insurance | | 449 |
| | 0.2 |
| | (1,916 | ) | | (1.7 | ) | | (736 | ) | | (2.4 | ) |
| Nondeductible expense | | 2,399 |
| | 1.3 |
| | 1,021 |
| | 0.9 |
| | 1,115 |
| | 3.7 |
|
| Domestic manufacturing deduction | | — |
| | — |
| | — |
| | — |
| | (1,820 | ) | | (6.0 | ) |
| Foreign Earnings and Dividends | | — |
| | — |
| | 458 |
| | 0.4 |
| | (2,418 | ) | | (7.9 | ) |
| Other, net | | (3,947 | ) | | (2.2 | ) | | (5,805 | ) | | (5.2 | ) | | (966 | ) | | (3.2 | ) |
| Income tax expense | | $ | 48,631 |
| | 27.6 |
| | $ | 103,956 |
| | 93.5 |
| | $ | 4,421 |
| | 14.4 |
|
P. 102 – THE NEW YORK TIMES COMPANY
The components of income tax expense as shown in our Consolidated Statements of Operations were as follows:
| | | (In thousands) | | December 30,
2018 |
| | December 31,
2017 |
| | December 25,
2016 |
| (In thousands) | | December 26,
2021 | | December 27,
2020 | | December 29,
2019 |
| Current tax expense/(benefit) | | | | | | | Current tax expense/(benefit) | |
| Federal | | $ | 31,719 |
| | $ | (252 | ) | | $ | 22,864 |
| Federal | | $ | 55,110 | | | $ | 21,414 | | | $ | 16,283 | |
| Foreign | | 705 |
| | 458 |
| | 312 |
| Foreign | | 1,042 | | | 905 | | | 823 | |
| State and local | | 10,172 |
| | 350 |
| | (3,295 | ) | State and local | | 20,736 | | | 7,453 | | | 3,146 | |
| Total current tax expense | | 42,596 |
| | 556 |
| | 19,881 |
| Total current tax expense | | 76,888 | | | 29,772 | | | 20,252 | |
| Deferred tax expense | | | | | | | |
| Deferred tax expense/(benefit) | | Deferred tax expense/(benefit) | |
| Federal | | 913 |
| | 105,905 |
| | (16,625 | ) | Federal | | (5,651) | | | (9,249) | | | 5,588 | |
| | State and local | | 5,122 |
| | (2,505 | ) | | 1,165 |
| State and local | | (707) | | | (5,928) | | | (1,346) | |
| Total deferred tax expense/(benefit) | | 6,035 |
| | 103,400 |
| | (15,460 | ) | |
| Income tax expense/(benefit) | | $ | 48,631 |
| | $ | 103,956 |
| | $ | 4,421 |
| |
| Total deferred tax expense | | Total deferred tax expense | | (6,358) | | | (15,177) | | | 4,242 | |
| Income tax expense | | Income tax expense | | $ | 70,530 | | | $ | 14,595 | | | $ | 24,494 | |
State tax operating loss carryforwards totaled $2.0$0.8 million as of December 30, 201826, 2021, and $4.7$1.3 million as of December 31, 2017.27, 2020. Such loss carryforwards expire in accordance with provisions of applicable tax laws and have remaining lives up to 1916 years.
On December 22, 2017, the Tax Act was signed into law making significant changes to the Internal Revenue Code. Changes included, but were not limited to, a federal corporate tax rate decrease from 35% to 21% for tax years beginning after December 31, 2017, a one-time transition tax on the mandatory deemed repatriation of foreign earnings and numerous domestic and international-related provisions effective in 2018.
On December 22, 2017, SAB 118 was issued to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. In accordance with SAB 118, we determined that the $68.7 million of additional income tax expense recorded in the fourth quarter of 2017 in connection with the remeasurement of certain deferred tax assets and liabilities, the one-time transition tax on the mandatory deemed repatriation of foreign earnings, and deferred tax assets related to executive compensation deductions was a provisional amount and a reasonable estimate at December 31, 2017. Provisional estimates were also made with regard to the Company’s deductions under the Tax Act’s new expensing provisions and state and local income taxes related to foreign earnings subject to the one-time transition tax. The ultimate impact of the Tax Act was expected to differ from the provisional amount recognized due to, among other things, changes in estimates resulting from the receipt or calculation of final data, changes in interpretations of the Tax Act, and additional regulatory guidance that would be issued. In the fourth quarter of 2018, in accordance with SAB 118, we completed the accounting for the impact of the Tax Act and recognized a $1.9 million tax benefit related to 2017, primarily attributable to the remeasurement of certain deferred tax assets and liabilities and the repatriation of foreign earnings.
THE NEW YORK TIMES COMPANY – P. 10399
The components of the net deferred tax assets and liabilities recognized in our Consolidated Balance Sheets were as follows:
| | | (In thousands) | | December 30,
2018 |
| | December 31,
2017 |
| (In thousands) | | December 26,
2021 | | December 27,
2020 |
| Deferred tax assets | | | | | Deferred tax assets | |
| Retirement, postemployment and deferred compensation plans | | $ | 128,926 |
| | $ | 140,657 |
| Retirement, postemployment and deferred compensation plans | | $ | 86,886 | | | $ | 103,433 | |
| Accruals for other employee benefits, compensation, insurance and other | | 22,722 |
| | 16,883 |
| Accruals for other employee benefits, compensation, insurance and other | | 34,999 | | | 25,899 | |
| | Net operating losses | | 1,598 |
| | 6,228 |
| Net operating losses | | 1,018 | | | 1,510 | |
| Operating lease liabilities | | Operating lease liabilities | | 19,663 | | | 16,648 | |
| Other | | 23,400 |
| | 31,686 |
| Other | | 31,379 | | | 32,664 | |
| Gross deferred tax assets | | $ | 176,646 |
| | $ | 195,454 |
| Gross deferred tax assets | | $ | 173,945 | | | $ | 180,154 | |
| Valuation allowance | | Valuation allowance | | (261) | | | (293) | |
| Net deferred tax assets | | Net deferred tax assets | | $ | 173,684 | | | $ | 179,861 | |
| Deferred tax liabilities | | | | | Deferred tax liabilities | |
| Property, plant and equipment | | $ | 38,268 |
| | $ | 31,043 |
| Property, plant and equipment | | $ | 38,855 | | | $ | 41,832 | |
| Intangible assets | | 7,225 |
| | 7,300 |
| Intangible assets | | 7,738 | | | 7,652 | |
| Operating lease right-of-use assets | | Operating lease right-of-use assets | | 16,960 | | | 14,196 | |
| Other | | 2,722 |
| | 4,065 |
| Other | | 14,331 | | | 16,663 | |
| Gross deferred tax liabilities | | 48,215 |
| | 42,408 |
| Gross deferred tax liabilities | | $ | 77,884 | | | $ | 80,343 | |
| Net deferred tax asset | | $ | 128,431 |
| | $ | 153,046 |
| Net deferred tax asset | | $ | 95,800 | | | $ | 99,518 | |
We assess whether a valuation allowance should be established against deferred tax assets based on the consideration of both positive and negative evidence using a “more likely than not” standard. In making such judgments, significant weight is given to evidence that can be objectively verified. We evaluated our deferred tax assets for recoverability using a consistent approach that considers our three-year historical cumulative income/(loss), including an assessment of the degree to which any such losses were due to items that are unusual in nature (i.e., impairments of nondeductible goodwill and intangible assets).
We had an income tax receivable of $3.7a valuation allowance totaling $0.3 million as of December 30, 2018,26, 2021, and December 27, 2020, for deferred tax assets primarily associated with net operating losses of a U.S. subsidiary, as we determined these assets were not realizable on a more-likely-than-not basis.
We had an income tax payable of $8.2 million as of December 26, 2021, compared with an income tax receivable of $25.4$3.3 million as of December 31, 2017.27, 2020.
Income tax benefits related to the exercise or vesting of equity awards reduced current taxes payable by $4.8$11.5 million, $13.7$13.1 million and $8.6$11.9 million in 2018, 20172021, 2020 and 2016,2019, respectively.
As of December 30, 201826, 2021, and December 31, 2017, “Accumulated27, 2020, Accumulated other comprehensive loss, net of income taxes”taxes in our Consolidated Balance Sheets and for the years then ended in our Consolidated Statements of Changes in Stockholders’ Equity was net of deferred tax assets of approximately $194$150 million and $196$160 million, respectively.
P. 100 – THE NEW YORK TIMES COMPANY
A reconciliation of unrecognized tax benefits is as follows:
| | | (In thousands) | | December 30,
2018 |
| | December 31,
2017 |
| | December 25,
2016 |
| (In thousands) | | December 26,
2021 | | December 27,
2020 | | December 29,
2019 |
| Balance at beginning of year | | $ | 17,086 |
| | $ | 10,028 |
| | $ | 13,941 |
| Balance at beginning of year | | $ | 6,737 | | | $ | 10,309 | | | $ | 11,629 | |
| Gross additions to tax positions taken during the current year | | 680 |
| | 9,009 |
| | 997 |
| Gross additions to tax positions taken during the current year | | 1,389 | | | 1,130 | | | 1,184 | |
| | Gross additions to tax positions taken during the prior year | | 3,019 |
| | 103 |
| | — |
| Gross additions to tax positions taken during the prior year | | 2,458 | | | 133 | | | 711 | |
| Gross reductions to tax positions taken during the prior year | | (8,607 | ) | | (372 | ) | | (3,042 | ) | Gross reductions to tax positions taken during the prior year | | (150) | | | (93) | | | (76) | |
| Reductions from settlements with taxing authorities | | Reductions from settlements with taxing authorities | | (3,534) | | | (3,814) | | | (2,637) | |
| Reductions from lapse of applicable statutes of limitations | | (549 | ) | | (1,682 | ) | | (1,868 | ) | Reductions from lapse of applicable statutes of limitations | | (1,009) | | | (928) | | | (502) | |
| Balance at end of year | | $ | 11,629 |
| | $ | 17,086 |
| | $ | 10,028 |
| Balance at end of year | | $ | 5,891 | | | $ | 6,737 | | | $ | 10,309 | |
The total amount of unrecognized tax benefits that would, if recognized, affect the effective income tax rate was approximately $10$5 million and $7$6 million as of December 30, 2018,26, 2021, and December 31, 2017,27, 2020, respectively.
P. 104 – THE NEW YORK TIMES COMPANY
In 2018 , we recorded $2.3 million of income tax expense due to an increase in the Company’s reserve for uncertain tax positions. In 2017,2021 and 2020, we recorded a $2.3$4.8 million and a $5.4 million income tax benefit, respectively, due to a reduction in the Company’s reserve for uncertain tax positions.
We also recognize accrued interest expense and penalties related to the unrecognized tax benefits within income tax expense or benefit. The total amount of accrued interest and penalties was approximately $3 million and $2$1 million as of both December 30, 2018,26, 2021, and December 31, 2017, respectively.27, 2020. The total amount of accrued interest and penalties was a net chargebenefit of less than $0.1 million in 2021, a net benefit of $0.7 million in 2018, a net benefit of $0.1 million in 20172020 and a net benefit of $0.9$0.6 million in 2016.2019.
With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years prior to 2010.2013. Management believes that our accrual for tax liabilities is adequate for all open audit years. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events.
It is reasonably possible that certain income tax examinations may be concluded, or statutes of limitation may lapse, during the next 12 months, which could result in a decrease in unrecognized tax benefits of $3.0$3.2 million that would, if recognized, impact the effective tax rate.
14. Discontinued Operations
New England Media Group
In the fourth quarter of 2013, we completed the sale of substantially all of the assets and operating liabilities of the New England Media Group — consisting of The Boston Globe, BostonGlobe.com, Boston.com, the T&G, Telegram.com and related properties — and our 49% equity interest in Metro Boston, for approximately $70.0 million in cash, subject to customary adjustments. The net after-tax proceeds from the sale, including a tax benefit, were approximately $74.0 million. In the fourth quarter of 2016, the Company reached a settlement with respect to litigation involving NEMG T&G, Inc., a subsidiary of the Company that was a part of New England Media Group. As a result of the settlement, the Company recorded charges of $0.7 million ($0.4 million after tax) and $3.7 million ($2.3 million after tax) for the fiscal years ended December 31, 2017 and December 25, 2016, respectively. The results of operations of the New England Media Group have been classified as discontinued operations for all periods presented.
15. Earnings/(Loss)13. Earnings Per Share
We compute earnings/(loss)earnings per share using abased upon the lower of the two-class method or the treasury stock method. The two-class method is an earnings allocation method used when a company’s capital structure includes either two or more classes of common stock or common stock and participating securities. This method determines earnings/(loss) per share based on dividends declared on common stock and participating securities (i.e., distributed earnings), as well as participation rights of participating securities in any undistributed earnings.
Earnings/(loss)Earnings per share is computed using both basic shares and diluted shares. The difference between basic and diluted shares is that diluted shares include the dilutive effect of the assumed exercise of outstanding securities. Our stock options, stock-settled long-term performance awards and restricted stock units could haveimpact the most significant impact on diluted shares. The decrease in our basic shares is primarily due to repurchases of the Company’s Class A Common Stock. The difference between basic and diluted shares ofwas approximately 2.10.6 million, 2.31.1 million and 1.71.5 million as of December 30, 2018,26, 2021, December 31, 201727, 2020, and December 25, 2016, respectively,29, 2019, respectively. In 2021, dilution resulted primarily from the dilutive effect of certain performance awards, restricted stock units and stock options. In 2020 and 2019, dilution resulted primarily from the dilutive effect of certain performance awards, stock options and performance awards.restricted stock units.
Securities that could potentially be dilutive are excluded from the computation of diluted earnings per share when a loss from continuing operations exists or when the exercise price exceeds the market value of our Class A Common Stock, because their inclusion would result in an anti-dilutive effect on per share amounts.
There were no anti-dilutive stock options, excluded from the computation of diluted earnings per share in 2018. The number of stock options excluded from the computation of diluted earnings per share because they were anti-dilutive was approximately 2 million in 2017 and 4 million in 2016.
There were no anti-dilutive stock-settled long-term performance awards and restricted stock units excluded from the computation of diluted earnings per share for the yearyears ended 2018, 20172021, 2020 and 2016.
2019.
THE NEW YORK TIMES COMPANY – P. 105101
16.14. Stock-Based Awards
As of December 30, 2018,26, 2021, the Company was authorized to grant stock-based compensation under its 20102020 Incentive Compensation Plan (the “2010“2020 Incentive Plan”), which became effective April 27, 2010, and was amended and restated effective April 30, 2014.22, 2020. The 20102020 Incentive Plan replaced the 1991 Executive Stock2010 Incentive Compensation Plan (the “1991“2010 Incentive Plan”). In addition, through April 30, 2014, the Company maintained its 2004 Non-Employee Directors’ Stock Incentive Plan (the “2004 Directors’ Plan”).
The Company’s long-term incentive compensation program provides executives the opportunity to earn cash and shares of Class A Common Stock at the end of three-year performance cycles based in part on the achievement of financial goals tied to a financial metric and in part on stock price performance relative to companies in the Standard & Poor’s 500 Stock Index, with the majority of the target award to be settled in the Company’s Class A Common Stock. In addition, the Company grants time-vested restricted stock units annually to a number of employees. These are settled in shares of Class A Common Stock.
We have outstanding stock-settled long-term performance awards, restricted stock units and stock options (together, “Stock-Based Awards”). We recognize stock-based compensation expense for outstanding stock-settled long-term performance awards, restricted stock units and stock appreciation rights. Stock-based compensation expense was $13.0 million in 2018, $14.8 million in 2017 and $12.4 million in 2016.
Stock-based compensation expense is recognized over the period from the date of grant to the date when the award is no longer contingent on the employee providing additional service. Awards under the 1991 Incentive Plan and 2010 Incentive Plan generally vest over a stated vesting period or, with respect to awards granted prior to December 28, 2014, upon the retirement of an employee or director, as the case may be.
Each non-employee director of the Company receives an annual grant of restricted stock units under the 20102020 Incentive Plan. Restricted stock units are awarded on the date of the annual meeting of stockholders and vest on the date of the subsequent year’s annual meeting, with the shares to be delivered upon a director’s cessation of membership on the Board of Directors. Each non-employee director is credited with additional restricted stock units with a value equal to the amount of all dividends paid on the Company’s Class A Common Stock. The Company’s directors are considered employees for purposes of stock-based compensation.
We refer to our outstanding stock-settled long-term performance awards, restricted stock units and stock options as “Stock-Based Awards.” We recognize stock-based compensation expense for outstanding stock-settled long-term performance awards and restricted stock units.
Stock-based compensation expense is recognized over the period from the date of grant to the date when the award is no longer contingent on the employee providing additional service. Awards under the 2010 Incentive Plan and 2020 Incentive Plan vest over a stated vesting period.
Total stock-based compensation expense included in the Consolidated Statement of Operations is as follows:
| | | | | | | | | | | | | | | | | | | | |
| (In thousands) | | December 26,
2021 | | December 27,
2020 | | December 29,
2019 |
| Cost of revenue | | $ | 5,218 | | | $ | 4,117 | | | $ | 3,621 | |
| Marketing | | 1,283 | | | 1,520 | | | 683 | |
| Product development | | 3,655 | | | 1,765 | | | 763 | |
| General and administrative | | 12,059 | | | 7,063 | | | 7,881 | |
| Total stock-based compensation expense | | $ | 22,215 | | | $ | 14,465 | | | $ | 12,948 | |
Stock Options
The 19912010 Incentive Plan provided, and the 20102020 Incentive Plan provides, for grants of both incentive and non-qualified stock options at an exercise price equal to the fair market value (as defined in each plan, respectively) of our Class A Common Stock on the date of grant. Stock options were generally granted with a 3-year vesting period and a 10-year term and vest in equal annual installments. Due to a change in the Company’s long-term incentive compensation, noNo grants of stock options have been made since 2012. Stock options were generally granted with a 3-year vesting period and a 10-year term and vest in equal annual installments.
The 2004 Directors’ Plan provided for grants of stock options to non-employee directors at an exercise price equal to the fair market value (as defined in the 2004 Directors’ Plan) of our Class A Common Stock on the date of grant. Prior to 2012, stock options were granted with a 1-year1-year vesting period and a 10-year10-year term. No grants of stock options have been made since 2012. The Company’s directors are considered employees for purposes of stock-based compensation.
P. 106102 – THE NEW YORK TIMES COMPANY
Changes in our Company’s stock options in 20182021 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December 26, 2021 |
| (Shares in thousands) | | Options | | Weighted
Average
Exercise
Price | | Weighted
Average
Remaining
Contractual
Term
(Years) | | Aggregate
Intrinsic
Value
$(000s) |
| Options outstanding at beginning of year | | 325 | | | $ | 8 | | | 1 | | $ | 14,225 | |
| | | | | | | | |
| Exercised | | (324) | | | 8 | | | | | |
| | | | | | | | |
Options outstanding at end of period (1) | | 1 | | | $ | 7 | | | 0 | | $ | 16 | |
| | | | | | | | |
| Options exercisable at end of period | | 1 | | | $ | 7 | | | 0 | | $ | 16 | |
|
| | | | | | | | | | | | | |
| | | December 30, 2018 |
| (Shares in thousands) | | Options | | Weighted Average Exercise Price | | Weighted Average Remaining Contractual Term (Years) | | Aggregate Intrinsic Value $(000s) |
| Options outstanding at beginning of year | | 3,774 |
| | $ | 15 |
| | 2 | | $ | 17,597 |
|
| Exercised | | (2,327 | ) | | 18 |
| | | | |
| Forfeited/Expired | | (59 | ) | | 20 |
| | | | |
Options outstanding at end of period (1) | | 1,388 |
| | $ | 9 |
| | 2 | | $ | 18,052 |
|
| Options exercisable at end of period | | 1,388 |
| | $ | 9 |
| | 2 | | $ | 18,052 |
|
(1) All outstanding options are vested as of December 30, 2018.26, 2021.
The total intrinsic value for stock options exercised was $12.3$13.6 million in 2018, $7.02021, $21.2 million in 20172020 and $0.7$8.6 million in 2016.2019.
Restricted Stock Units
The 2010 Incentive Plan provided, and 2020 Incentive Plan provides, for grants of other stock-based awards, including restricted stock units.
Outstanding stock-settled restricted stock units have been granted with a stated vesting period up to 5 years. Each restricted stock unit represents our obligation to deliver to the holder one share of Class A Common Stock upon vesting. The fair value of stock-settled restricted stock units is the average market price on the grant date. Changes in our Company’s stock-settled restricted stock units in 20182021 were as follows:
| | | | | December 30, 2018 | | | December 26, 2021 |
| (Shares in thousands) | | Restricted Stock Units | | Weighted Average Grant-Date Fair Value | (Shares in thousands) | | Restricted
Stock
Units | | Weighted
Average
Grant-Date
Fair Value |
| Unvested stock-settled restricted stock units at beginning of period | | 886 |
| | $ | 15 |
| Unvested stock-settled restricted stock units at beginning of period | | 513 | | | $ | 33 | |
| Granted | | 319 |
| | 25 |
| Granted | | 583 | | | 50 | |
| Vested | | (510 | ) | | 14 |
| Vested | | (290) | | | 31 | |
| Forfeited | | (72 | ) | | 18 |
| Forfeited | | (69) | | | 46 | |
| Unvested stock-settled restricted stock units at end of period | | 623 |
| | $ | 20 |
| Unvested stock-settled restricted stock units at end of period | | 737 | | | $ | 46 | |
| Unvested stock-settled restricted stock units expected to vest at end of period | | 587 |
| | $ | 20 |
| Unvested stock-settled restricted stock units expected to vest at end of period | | 679 | | | $ | 46 | |
The intrinsic value of stock-settled restricted stock units vested was $12.4$15.1 million in 2018, $7.92021, $9.6 million in 20172020 and $7.3$11.0 million in 2016.2019.
THE NEW YORK TIMES COMPANY – P. 103
Long-Term Incentive Compensation
The 2010 Incentive Plan provided, and 2020 Incentive Plan provides, for grants of cash and stock-settled awards to key executives payable at the end of a multi-year performance period.
Cash-settled awards have been granted with three-year performance periods and are based on the achievement of a specified financial performance measures.measure. Cash-settled awards have been classified as a liability in our Consolidated Balance Sheets. There were payments of approximately $3$1 million in 2018, $3 million in 2017 and2021, $4 million in 2016.2020 and $2 million in 2019.
Stock-settled awards have been granted with three-year performance periods and are based on relative Total Shareholder Return (“TSR”), which is calculated at stock appreciation plus deemed reinvested dividends, and another performance measure. Stock-settled awards are payable in Class A Common Stock and are classified within equity.
THE NEW YORK TIMES COMPANY – P. 107
The fair value of TSR awards is determined at the date of grant using a Monte Carlo simulation model. The fair value of awards under the other performance measure is determined by the average market price on the grant date.
Unrecognized Compensation Expense
As of December 30, 2018,26, 2021, unrecognized compensation expense related to the unvested portion of our Stock-Based Awards was approximately $13$34 million and is expected to be recognized over a weighted-average period of 1.451.53 years.
Reserved Shares
We generally issue shares for the exercise of stock options, and vesting of stock-settled restricted stock units and stock-settled performance awards from unissued reserved shares.
Shares of Class A Common Stock reserved for issuance were as follows:
| | | | | | | | | | | | | | |
| (Shares in thousands) | | December 26,
2021 | | December 27,
2020 |
| Stock options, stock–settled restricted stock units and stock-settled performance awards | | | | |
| Stock options and stock-settled restricted stock units | | 891 | | 1,001 |
Stock-settled performance awards(1) | | 944 | | 1,026 |
| Outstanding | | 1,835 | | 2,027 |
| Available | | 14,720 | | 15,190 |
| | | | |
| | | | |
| | | | |
| | | | |
| Total Outstanding | | 1,835 | | 2,027 |
Total Available(2) | | 14,720 | | 15,190 |
|
| | | | | |
| (Shares in thousands) | | December 30,
2018 |
| | December 31,
2017 |
| Stock options, stock–settled restricted stock units and stock-settled performance awards | | | | |
| Stock options and stock-settled restricted stock units | | 2,165 |
| | 4,772 |
Stock-settled performance awards(1) | | 2,009 |
| | 2,559 |
| Outstanding | | 4,174 |
| | 7,331 |
| Available | | 7,404 |
| | 7,188 |
Employee Stock Purchase Plan(2) | | | | |
| Available | | 6,410 |
| | 6,410 |
401(k) Company stock match(3) | | | | |
| Available | | 3,045 |
| | 3,045 |
| Total Outstanding | | 4,174 |
| | 7,331 |
| Total Available | | 16,859 |
| | 16,643 |
| |
(1)
| The number of shares actually earned at the end of the multi-year performance period will vary, based on actual performance, from 0% to 200% of the target number of performance awards granted. The maximum number of shares that could be issued is included in the table above.
|
| |
(2)
| We have not had an offering under the Employee Stock Purchase Plan since 2010. |
| |
(3)
| Effective 2014, we no longer offer a Company stock match under the Company’s 401(k) plan. |
(2)As of December 26, 2021, the 2020 Incentive Plan had approximately 15 million shares of Class A stock available for issuance upon the grant, exercise or other settlement of stock-based awards. This amount includes shares subject to awards under the 2010 Incentive Plan that were cancelled, forfeited or otherwise terminated, or withheld to satisfy the tax withholding requirements, in accordance with the terms of the 2020 Incentive Plan.
P. 108104 – THE NEW YORK TIMES COMPANY
17.15. Stockholders’ Equity
Shares of our Company’s Class A and Class B Common Stock are entitled to equal participation in the event of liquidation and in dividend declarations. The Class B Common Stock is convertible at the holders’ option on a share-for-share basis into Class A Common Stock. Upon conversion, the previously outstanding shares of Class B Common Stock that were converted are automatically and immediately retired, resulting in a reduction of authorized Class B Common Stock. As provided for in our Company’s Certificate of Incorporation, the Class A Common Stock has limited voting rights, including the right to elect 30% of the Board of Directors, and the Class A and Class B Common Stock have the right to vote together on the reservation of our Company shares for stock options and other stock-based plans, on the ratification of the selection of a registered public accounting firm and, in certain circumstances, on acquisitions of the stock or assets of other companies. Otherwise, except as provided by the laws of the State of New York, all voting power is vested solely and exclusively in the holders of the Class B Common Stock.
There were 803,408 shares asAs of December 30, 2018,26, 2021, and 803,763 as of December 31, 2017,27, 2020, there were 781,724 shares of Class B Common Stock issued and outstanding that may be converted into shares of Class A Common Stock.
The Adolph Ochs family trust holds approximately 90%95% of the Class B Common Stock and, as a result, has the ability to elect 70% of the Board of Directors and to direct the outcome of any matter that does not require a vote of the Class A Common Stock.
In early 2015,February 2022, the Board of Directors authorized up to $101.1approved a $150 million of repurchases of shares of the Company’s Class A common stock. As of December 30, 2018, repurchases under thisstock repurchase program that replaced the previous program, which was approved in 2015. The new authorization totaled $84.9 million (excluding commissions) and $16.2 million remained under this authorization. Our Board of Directors has authorized us to purchaseprovides that Class A shares may be purchased from time to time as market conditions warrant, through open market purchases, privately negotiated transactions or other means, including Rule 10b5-1 trading plans. We expect to repurchase shares primarily to offset the impact of dilution from our equity compensation program, but subject to market conditions and other factors.factors, we may also make opportunistic repurchases to reduce share count. There is no expiration date with respect to this authorization.
As of December 26, 2021, repurchases under the previous program totaled $84.9 million (excluding commissions) and $16.2 million remained. There were no repurchases under that program between February 2016 and February 2022, when the program was replaced.
We may issue preferred stock in one or more series. The Board of Directors is authorized to set the distinguishing characteristics of each series of preferred stock prior to issuance, including the granting of limited or full voting rights; however, the consideration received must be at least $100$100 per share. No shares of preferred stock were issued or outstanding as of December 30, 2018.26, 2021.
The following table summarizes the changes in AOCI by component as of December 30, 2018:26, 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In thousands) | | Foreign Currency Translation Adjustments | | Funded Status of Benefit Plans | | Net unrealized gain on Available-for-sale Securities | | Total Accumulated Other Comprehensive Loss |
| Balance as of December 27, 2020 | | $ | 8,386 | | | $ | (421,698) | | | $ | 3,131 | | | $ | (410,181) | |
| Other comprehensive (loss)/income before reclassifications, before tax | | (6,328) | | | 23,331 | | | (6,025) | | | 10,978 | |
| Amounts reclassified from accumulated other comprehensive loss, before tax | | — | | | 25,919 | | | — | | | 25,919 | |
| Income tax (benefit)/expense | | (1,696) | | | 13,232 | | | (1,618) | | | 9,918 | |
| Net current-period other comprehensive (loss)/income, net of tax | | (4,632) | | | 36,018 | | | (4,407) | | | 26,979 | |
| | | | | | | | |
| Balance as of December 26, 2021 | | $ | 3,754 | | | $ | (385,680) | | | $ | (1,276) | | | $ | (383,202) | |
|
| | | | | | | | | | | | | | | | |
| (In thousands) | | Foreign Currency Translation Adjustments | | Funded Status of Benefit Plans | | Net unrealized loss on available-for-sale Securities | | Total Accumulated Other Comprehensive Loss |
| Balance as of December 31, 2017 | | $ | 6,328 |
| | $ | (427,819 | ) | | $ | (1,538 | ) | | $ | (423,029 | ) |
Other comprehensive (loss) before reclassifications, before tax(1) | | (4,368 | ) | | (25,060 | ) | | (300 | ) | | (29,728 | ) |
Amounts reclassified from accumulated other comprehensive loss, before tax(1) | | — |
| | 28,970 |
| | — |
| | 28,970 |
|
Income tax (benefit)/expense(1) | | (1,141 | ) | | 1,021 |
| | (78 | ) | | (198 | ) |
| Net current-period other comprehensive (loss)/income, net of tax | | (3,227 | ) | | 2,889 |
| | (222 | ) | | (560 | ) |
AOCI reclassification to retained earnings(2) | | 1,576 |
| | (95,378 | ) | | (333 | ) | | (94,135 | ) |
| Balance as of December 30, 2018 | | $ | 4,677 |
| | $ | (520,308 | ) | | $ | (2,093 | ) | | $ | (517,724 | ) |
| |
(1)
| All amounts are shown net of noncontrolling interest. |
| |
(2)
| As a result of adopting ASU 2018-02 in the first quarter of 2018, stranded tax effects of $94.1 million were reclassified from AOCI to “Retained earnings.” See Note 2 for more information.
|
THE NEW YORK TIMES COMPANY – P. 109105
The following table summarizes the reclassifications from AOCI for the period ended December 30, 2018:26, 2021:
|
| | | | | | |
| (In thousands) | | Amounts reclassified from accumulated other comprehensive loss | | Affect line item in the statement where net income is presented |
Detail about accumulated other comprehensive loss components |
| Funded status of benefit plans: | | | | |
Amortization of prior service credit(1) | | $ | (8,102 | ) | | Other components of net periodic benefit costs |
Amortization of actuarial loss(1) | | 36,651 |
| | Other components of net periodic benefit costs |
| Pension settlement charge | | 421 |
| | Other components of net periodic benefit costs |
Total reclassification, before tax(2) | | 28,970 |
| | |
| Income tax expense | | 7,661 |
| | Income tax expense |
| Total reclassification, net of tax | | $ | 21,309 |
| | |
| | | | | | | | | | | | | | |
(1)(In thousands)
| TheseDetail about accumulated other comprehensive incomeloss components are included | | Amounts reclassified from accumulated other comprehensive loss | | Affected line item in the computationstatement where net income is presented |
|
| Funded status of benefit plans: | | | | |
Amortization of prior service credit(1) | | $ | (4,988) | | | Other components of net periodic benefit cost for pension and other retirement benefits. See Notes 10 and 11 for additional information.costs |
Amortization of actuarial loss(1) | | 30,907 | | | Other components of net periodic benefit costs |
| Pension settlement charge | | — | | | Other components of net periodic benefit costs |
| Total reclassification, before tax | | 25,919 | | | |
(2)
Income tax expense | There were no reclassifications relating to noncontrolling interest for the year ended December 30, 2018.
| 6,964 | | | Income tax expense |
| Total reclassification, net of tax | | $ | 18,955 | | | |
18.(1)These accumulated other comprehensive income components are included in the computation of net periodic benefit cost for pension and other retirement benefits. See Notes 9 and 10 for additional information.
16. Segment Information
The Company identifies a business as an operating segment if: i)(i) it engages in business activities from which it may earn revenues and incur expenses; ii)(ii) its operating results are regularly reviewed by the Chief Operating Decision Maker (who is the Company’s President and Chief Executive Officer) to make decisions about resources to be allocated to the segment and assess its performance; and iii)(iii) it has available discrete financial information. The Company has determined that it has one1 reportable segment. Therefore, all required segment information can be found in the Consolidated Financial Statements.
19. Commitments and Contingent Liabilities17. Leases
Lessee activities
Operating Leasesleases
Operating lease commitments are primarilyWe have operating leases for office space and equipment. Certain office spaceFor all leases, provide for rent adjustments relating to changes in real estate taxesa right-of-use asset and other operating costs.
Rental expense was approximately $14 million in 2018, $19 million in 2017, and $16 million in 2016. The decrease in rental expense in 2018 is a result of fewer costs incurred due tolease liability, initially measured at the wind downpresent value of the headquarters redesign and consolidation. The increaselease payments, are recognized in rental expense in 2017 is related to additional costs incurred due to the headquarter redesign and consolidation. The approximate minimum rental commitmentsConsolidated Balance Sheet as of December 30, 2018 were26, 2021, as follows:described below.
|
| | | |
| (In thousands) | Amount |
|
| 2019 | $ | 7,650 |
|
| 2020 | 6,829 |
|
| 2021 | 6,106 |
|
| 2022 | 5,869 |
|
| 2023 | 5,428 |
|
| Later years | 18,110 |
|
| Total minimum lease payments | $ | 49,992 |
|
P. 110106 – THE NEW YORK TIMES COMPANY
Capital LeasesThe table below presents the lease-related assets and liabilities recorded on the balance sheet:
Future minimum | | | | | | | | | | | | | | | | | | | | |
| (In thousands) | | Classification in the Consolidated Balance Sheet | | December 26, 2021 | | December 27, 2020 |
| Operating lease right-of-use assets | | Miscellaneous assets | | $ | 62,567 | | | $ | 52,304 | |
| Current operating lease liabilities | | Accrued expenses and other | | $ | 9,078 | | | $ | 9,056 | |
| Noncurrent operating lease liabilities | | Other | | 63,614 | | | 52,695 | |
| Total operating lease liabilities | | | | $ | 72,692 | | | $ | 61,751 | |
The total lease paymentscost for all capitaloperating leases andincluded in operating costs in our Consolidated Statement of Operations was as follows:
| | | | | | | | | | | | | | | | | | | | |
| | For the Twelve Months Ended |
| (In thousands) | | December 26, 2021 | | December 27, 2020 | | December 29, 2019 |
| Operating lease cost | | $ | 11,926 | | | $ | 11,467 | | | $ | 9,980 | |
| Short term and variable lease cost | | 1,575 | | | 1,776 | | | 1,814 | |
| Total lease cost | | $ | 13,501 | | | $ | 13,243 | | | $ | 11,794 | |
The table below presents additional information regarding operating leases:
| | | | | | | | | | | | | | | | |
| | | | | | |
| (In thousands, except lease term and discount rate) | | | | December 26, 2021 | | December 27, 2020 |
| Cash paid for amounts included in the measurement of operating lease liabilities | | | | $ | 12,254 | | | $ | 11,533 | |
| Right-of-use assets obtained in exchange for operating lease liabilities | | | | $ | 19,457 | | | $ | 9,004 | |
| Weighted-average remaining lease term | | | | 9.4 years | | 8.7 years |
| Weighted-average discount rate | | | | 3.63 | % | | 4.41 | % |
Maturities of lease liabilities on an annual basis for the present value of the minimum lease paymentsCompany’s operating leases as of December 30, 2018,26, 2021, were as follows:
| | | | | | | | |
| (In thousands) | | Amount |
| 2022 | | $ | 11,170 | |
| 2023 | | 10,157 | |
| 2024 | | 9,548 | |
| 2025 | | 8,372 | |
| 2026 | | 8,023 | |
| Later Years | | 38,673 | |
| Total lease payments | | $ | 85,943 | |
| Less: Interest | | (13,251) | |
| Present value of lease liabilities | | $ | 72,692 | |
Finance lease
We had a finance lease in connection with the land at our College Point, N.Y., printing and distribution facility. Interest on the lease liability was recorded in Interest income/(expense) and other, net in our Consolidated Statement of Operations. Repayments of the principal portion of our lease liability are recorded within financing activities section and payments of interest on our lease liability are recorded within operating activities section in the Consolidated Statement of Cash Flows for our finance lease. On August 1, 2019, using existing cash, we purchased the assets under the finance lease for $6.9 million, which resulted in the settlement of our finance lease obligation.
THE NEW YORK TIMES COMPANY – P. 107
|
| | | |
| (In thousands) | Amount |
|
| 2019 | $ | 7,245 |
|
| 2020 | — |
|
| 2021 | — |
|
| 2022 | — |
|
| 2023 | — |
|
| Later years | — |
|
| Total minimum lease payments | 7,245 |
|
| Less: imputed interest | (413 | ) |
| Present value of net minimum lease payments including current maturities | $ | 6,832 |
|
Our leases to third parties predominantly relate to office space in the Company Headquarters.
As of December 26, 2021, and December 27, 2020, the cost and accumulated depreciation related to the Company Headquarters included in Property, plant and equipment in our Consolidated Balance Sheet was approximately $516 million and $240 million and $516 million and $222 million, respectively. Office space leased to third parties represents approximately 36% of gross square feet of the Company Headquarters.
We generate building rental revenue from the floors in the Company Headquarters that we lease to third parties. The building rental revenue was as follows:
| | | | | | | | | | | | | | | | | | | | |
| | For the Twelve Months Ended |
| (In thousands) | | December 26, 2021 | | December 27, 2020 | | December 29, 2019 |
Building rental revenue(1) | | $ | 22,851 | | | $ | 28,516 | | | $ | 30,595 | |
(1) Building rental revenue includes approximately $10.8 million related to subleases for the fiscal year ended December 29, 2019..
Maturities of lease payments to be received on an annual basis for the Company’s office space operating leases as of December 26, 2021, were as follows:
| | | | | | | | |
| (In thousands) | | Amount |
| 2022 | | $ | 30,564 | |
| 2023 | | 29,010 | |
| 2024 | | 29,053 | |
| 2025 | | 29,344 | |
| 2026 | | 29,344 | |
| Later Years | | 101,781 | |
| Total building rental revenue from operating leases | | $ | 249,096 | |
P. 108 – THE NEW YORK TIMES COMPANY
18. Commitments and Contingent Liabilities
Restricted Cash
We were required to maintain $18.3$14.3 million of restricted cash as of December 30, 2018,26, 2021, and $18.0$15.9 million as of December 31, 2017,27, 2020, the majority of which is set aside to collateralize workers’ compensation obligations.
Newspaper and Mail Deliverers – Publishers’ Pension Fund
In September 2013, the Newspaper and Mail Deliverers-Publishers’ Pension Fund (the “NMDU Fund”) assessed a partial withdrawal liability against the Company in the gross amount of approximately $26 million for the plan years ending May 31, 2012, and 2013 (the “Initial Assessment”), an amount that was increased to a gross amount of approximately $34 million in December 2014, when the NMDU Fund issued a revised partial withdrawal liability assessment for the plan year ending May 31, 2013 (the “Revised Assessment”). The NMDU Fund claimed that when City & Suburban Delivery Systems, Inc., a retail and newsstand distribution subsidiary of the Company and the largest contributor to the NMDU Fund, ceased operations in 2009, it triggered a decline of more than 70% in contribution base units in each of these two plan years.
The Company disagreed with both the NMDU Fund’s determination that a partial withdrawal occurred and the methodology by which it calculated the withdrawal liability, and the parties engaged in arbitration proceedings to resolve the matter. In July 2017, the arbitrator issued a final award and opinion that supported the NMDU Fund’s determination that a partial withdrawal had occurred, and concluded that the methodology used to calculate the Initial Assessment was correct. However, the arbitrator also concluded that the NMDU Fund’s calculation of the Revised Assessment was incorrect. Both the Company and NMDU Fund challenged the arbitrator’s final award and opinion in federal district court. In March 2018, the court determined that a partial withdrawal had occurred, but supported the Company’s position that the NMDU Fund’s calculation of the withdrawal liability was improper. The Company has appealed the court’s decision with respect to the determination that a partial withdrawal had occurred, and the NMDU Fund has appealed the court’s decision with respect to the calculation of the withdrawal liability.
Due to requirements of the Employee Retirement Income Security Act of 1974 that sponsors make payments demanded by plans during arbitration and any resultant appeals, the Company had been making payments to the NMDU Fund since September 2013 relating to the Initial Assessment and February 2015 relating to the Revised Assessment based on the NMDU Fund’s demand. As a result, as of December 30, 2018, we have paid $18.9 million relating to the Initial Assessment since the receipt of the initial demand letter. We also paid approximately $5 million related to the Revised Assessment, which was refunded in July 2016 based on the arbitrator’s ruling. The Company recognized $0.3 million and $0.4 million of expense for the fiscal year ended December 30, 2018, and December 31, 2017, respectively. The Company recognized $10.7 million of expense (inclusive of a special item of $6.7 million) for the fiscal year ended December 25, 2016. The Company had a liability of $3.2 million as of December 30, 2018, related
THE NEW YORK TIMES COMPANY – P. 111
to this matter. Management believes it is reasonably possible that the total loss in this matter could exceed the liability established by a range of zero to approximately $11 million.
NEMG T&G, Inc.
The Company was involved in class action litigation brought on behalf of individuals who, from 2006 to 2011, delivered newspapers at NEMG T&G, Inc., a subsidiary of the Company (“T&G”). T&G was a part of the New England Media Group, which the Company sold in 2013. The plaintiffs asserted several claims against T&G, including a challenge to their classification as independent contractors, and sought unspecified damages. In December 2016, the Company reached a settlement with respect to the claims, which was approved by the court in May 2017. As a result of the settlement, the Company recorded charges of $0.7 million ($0.4 million after tax) and $3.7 million ($2.3 million after tax) for the fiscal years ended December 31, 2017 and December 25, 2016, respectively, within discontinued operations.
OtherLegal Proceedings
We are involved in various legal actions incidental to our business that are now pending against us. These actions are generally for amountshave damage claims that are greatly in excess of the payments, if any, that maywe would be required to be made.pay if we lost or settled the cases. Although the Company cannot predict the outcome of these matters, it is possible that an unfavorable outcome in one or more matters could be material to the Company’s consolidated results of operations or cash flows for an individual reporting period. However, based on currently available information, management does not believe that the ultimate resolution of these matters, individually or in the aggregate, is likely to have a material effect on the Company’s financial position.
Letter of Credit Commitments
We have issued letters of credit totaling $48.8 million and $56.0 million as of December 30, 2018, and December 31, 2017, respectively, in connection with the leasing of floors in our headquarters building. The letters of credit will expire by 2020. Approximately $54 million and $63 million of marketable securities were reserved as collateral for the letters of credit, as of December 30, 2018, and December 31, 2017, respectively.
20.19. Subsequent EventEvents
Quarterly Dividend and New Share Repurchase Program
In February 2019,2022, our Board of Directors approved a quarterly dividend of $0.05$0.09 per share on our Class A and Class B common stock.stock, an increase of $0.02 per share from the previous quarter. The dividend is payable on April 18, 2019,21, 2022, to all stockholders of record as of the close of business on April 3, 2019. Our6, 2022.
The Board of Directors will continuealso approved a $150 million Class A stock repurchase program in February 2022. Class A shares may be purchased from time to evaluatetime as market conditions warrant, through open market purchases, privately negotiated transactions or other means, including Rule 10b5-1 trading plans. We expect to repurchase shares primarily to offset the appropriate dividend level on an ongoing basis in lightimpact of dilution from our earnings, capital requirements, financial conditionequity compensation program, but subject to market conditions and other relevant factors.factors, we may also make opportunistic repurchases to reduce share count. There is no expiration date with respect to this authorization. The new authorization replaces the previous authorization under which approximately $16.2 million remained at the time it was replaced.
Acquisition of The Athletic Media Company
On February 1, 2022, we completed the acquisition of The Athletic Media Company, a global digital subscription-based sports media business that provides national and local coverage of more than 200 clubs and teams in the U.S. and around the world, for an all-cash purchase price of $550 million, subject to customary closing adjustments. The purchase price was funded from cash on hand.
P. 112 – THE NEW YORK TIMES COMPANY – P. 109
SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 30, 2018,26, 2021, December 31, 2017,27, 2020, and December 25, 2016:29, 2019:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In thousands) | | Balance at
beginning
of period | | Additions
charged to
operating
costs and other | | Deductions(1) | | Balance at
end of period |
| Accounts receivable allowances: | | | | | | | | |
| Year ended December 26, 2021 | | $ | 13,797 | | | $ | 13,930 | | | $ | 15,353 | | | $ | 12,374 | |
| Year ended December 27, 2020 | | $ | 14,358 | | | $ | 14,783 | | | $ | 15,344 | | | $ | 13,797 | |
| Year ended December 29, 2019 | | $ | 13,249 | | | $ | 14,807 | | | $ | 13,698 | | | $ | 14,358 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
(1)Includes write-offs, net of recoveries.
|
| | | | | | | | | | | | | | | | |
| (In thousands) | | Balance at beginning of period | | Additions charged to operating costs and other | | Deductions(1) | | Balance at end of period |
| Accounts receivable allowances: | | | | | | | | |
| Year ended December 30, 2018 | | $ | 14,542 |
| | $ | 11,830 |
| | $ | 13,123 |
| | $ | 13,249 |
|
| Year ended December 31, 2017 | | $ | 16,815 |
| | $ | 11,747 |
| | $ | 14,020 |
| | $ | 14,542 |
|
| Year ended December 25, 2016 | | $ | 13,485 |
| | $ | 17,154 |
| | $ | 13,824 |
| | $ | 16,815 |
|
| Valuation allowance for deferred tax assets: | | | | | | | | |
| Year ended December 30, 2018 | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| Year ended December 31, 2017 | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| Year ended December 25, 2016 | | $ | 36,204 |
| | $ | — |
| | $ | 36,204 |
| | $ | — |
|
| |
(1)
| Includes write-offs, net of recoveries. |
THE NEW YORK TIMES COMPANY – P. 113
QUARTERLY INFORMATION (UNAUDITED)
Quarterly financial information for each quarter in the years ended December 30, 2018, and December 31, 2017 is included in the following tables. See Note 14 of the Notes to the Consolidated Financial Statements for additional information regarding discontinued operations.
Earnings/(loss) per share amounts for the quarters do not necessarily equal the respective year-end amounts for earnings or loss per share due to the weighted-average number of shares outstanding used in the computations for the respective periods. Earnings/(loss) per share amounts for the respective quarters and years have been computed using the average number of common shares outstanding.
One of our largest sources of revenue is advertising. Our business has historically experienced higher advertising volume in the fourth quarter than the remaining quarters because of holiday advertising.
|
| | | | | | | | | | | | | | | |
| | 2018 Quarters | |
| (In thousands, except per share data) | April 1,
2018 |
| July 1,
2018 |
| September 30,
2018 |
| December 30,
2018 |
| Full Year |
|
| | (13 weeks) |
| (13 weeks) |
| (13 weeks) |
| (13 weeks) |
| (52 weeks) |
|
| Revenues | $ | 413,948 |
| $ | 414,560 |
| $ | 417,346 |
| $ | 502,744 |
| $ | 1,748,598 |
|
| Operating costs | 378,005 |
| 373,306 |
| 380,754 |
| 426,713 |
| 1,558,778 |
|
Headquarters redesign and consolidation(1) | 1,888 |
| 1,252 |
| — |
| 1,364 |
| 4,504 |
|
Multiemployer pension and other contractual gain(2) | — |
| — |
| (4,851 | ) | — |
| (4,851 | ) |
| Operating profit | 34,055 |
| 40,002 |
| 41,443 |
| 74,667 |
| 190,167 |
|
| Other components of net periodic benefit costs | 2,028 |
| 1,863 |
| 2,335 |
| 2,048 |
| 8,274 |
|
| Gain/(loss) from joint ventures | 15 |
| (8 | ) | (16 | ) | 10,773 |
| 10,764 |
|
| Interest expense and other, net | 4,877 |
| 4,536 |
| 4,026 |
| 3,127 |
| 16,566 |
|
| Income from continuing operations before income taxes | 27,165 |
| 33,595 |
| 35,066 |
| 80,265 |
| 176,091 |
|
Income tax expense | 5,251 |
| 9,999 |
| 10,092 |
| 23,289 |
| 48,631 |
|
| Net income | 21,914 |
| 23,596 |
| 24,974 |
| 56,976 |
| 127,460 |
|
| Net (income)/loss attributable to the noncontrolling interest | (2 | ) | 1 |
| 2 |
| (1,777 | ) | (1,776 | ) |
| Net income attributable to The New York Times Company common stockholders | $ | 21,912 |
| $ | 23,597 |
| $ | 24,976 |
| $ | 55,199 |
| $ | 125,684 |
|
| Amounts attributable to The New York Times Company common stockholders: | | | | | |
| Income from continuing operations | $ | 21,912 |
| $ | 23,597 |
| $ | 24,976 |
| $ | 55,199 |
| $ | 125,684 |
|
| Net income | $ | 21,912 |
| $ | 23,597 |
| $ | 24,976 |
| $ | 55,199 |
| $ | 125,684 |
|
| Average number of common shares outstanding: | | | | | |
| Basic | 164,094 |
| 165,027 |
| 165,064 |
| 165,154 |
| 164,845 |
|
| Diluted | 166,237 |
| 166,899 |
| 166,966 |
| 167,249 |
| 166,939 |
|
| Basic earnings per share attributable to The New York Times Company common stockholders: | | | | | |
| Net income | $ | 0.13 |
| $ | 0.14 |
| $ | 0.15 |
| $ | 0.33 |
| $ | 0.76 |
|
| Diluted earnings per share attributable to The New York Times Company common stockholders: | | | | | |
| Net income | $ | 0.13 |
| $ | 0.14 |
| $ | 0.15 |
| $ | 0.33 |
| $ | 0.75 |
|
| Dividends declared per share | $ | 0.04 |
| $ | 0.04 |
| $ | 0.04 |
| $ | 0.04 |
| $ | 0.16 |
|
| |
(1)
| We recognized expenses related to the redesign and consolidation of space in our headquarters building. |
| |
(2)
| In the third quarter of 2018, the Company recorded a $4.9 million gain from a multiemployer pension plan liability adjustment.
|
P. 114110 – THE NEW YORK TIMES COMPANY
|
| | | | | | | | | | | | | | | |
| | 2017 Quarters | |
| (In thousands, except per share data) | March 26,
2017 |
| June 25,
2017 |
| September 24, 2017 |
| December 31, 2017 |
| Full Year |
|
| | (13 weeks) |
| (13 weeks) |
| (13 weeks) |
| (14 weeks) |
| (53 weeks) |
|
| Revenues | $ | 398,804 |
| $ | 407,074 |
| $ | 385,635 |
| $ | 484,126 |
| $ | 1,675,639 |
|
Operating costs(1) | 368,587 |
| 378,613 |
| 351,273 |
| 394,805 |
| 1,493,278 |
|
Headquarters redesign and consolidation(2) | 2,402 |
| 1,985 |
| 2,542 |
| 3,161 |
| 10,090 |
|
Multiemployer pension and other contractual gains(3) | — |
| — |
| — |
| (4,320 | ) | (4,320 | ) |
Operating profit(1) | 27,815 |
| 26,476 |
| 31,820 |
| 90,480 |
| 176,591 |
|
Other components of net periodic benefit (income)/costs(1) | (1,194 | ) | (1,193 | ) | (1,193 | ) | 67,805 |
| 64,225 |
|
| Gain/(loss) from joint ventures | 173 |
| (266 | ) | 31,557 |
| (12,823 | ) | 18,641 |
|
| Interest expense and other, net | 5,325 |
| 5,133 |
| 4,660 |
| 4,665 |
| 19,783 |
|
| Income from continuing operations before income taxes | 23,857 |
| 22,270 |
| 59,910 |
| 5,187 |
| 111,224 |
|
Income tax expense(4) | 10,742 |
| 6,711 |
| 23,420 |
| 63,083 |
| 103,956 |
|
| Income/(loss) from continuing operations | 13,115 |
| 15,559 |
| 36,490 |
| (57,896 | ) | 7,268 |
|
| (Loss)/income from discontinued operations, net of income taxes | — |
| — |
| (488 | ) | 57 |
| (431 | ) |
| Net income/(loss) | 13,115 |
| 15,559 |
| 36,002 |
| (57,839 | ) | 6,837 |
|
| Net income attributable to the noncontrolling interest | 66 |
| 40 |
| (3,673 | ) | 1,026 |
| (2,541 | ) |
| Net income/(loss) attributable to The New York Times Company common stockholders | $ | 13,181 |
| $ | 15,599 |
| $ | 32,329 |
| $ | (56,813 | ) | $ | 4,296 |
|
| Amounts attributable to The New York Times Company common stockholders: | | | | | |
| Income/(loss) from continuing operations | $ | 13,181 |
| $ | 15,599 |
| $ | 32,817 |
| $ | (56,870 | ) | $ | 4,727 |
|
| (Loss)/income from discontinued operations, net of income taxes | — |
| — |
| (488 | ) | 57 |
| (431 | ) |
| Net income/(loss) | $ | 13,181 |
| $ | 15,599 |
| $ | 32,329 |
| $ | (56,813 | ) | $ | 4,296 |
|
| Average number of common shares outstanding: | | | | | |
| Basic | 161,402 |
| 161,787 |
| 162,173 |
| 162,311 |
| 161,926 |
|
| Diluted | 162,592 |
| 163,808 |
| 164,405 |
| 162,311 |
| 164,263 |
|
| Basic earnings/(loss) per share attributable to The New York Times Company common stockholders: | | | | | |
| Income/(loss) from continuing operations | $ | 0.08 |
| $ | 0.10 |
| $ | 0.20 |
| $ | (0.35 | ) | $ | 0.03 |
|
| (Loss)/income from discontinued operations, net of income taxes | — |
| — |
| — |
| — |
| — |
|
| Net income/(loss) | $ | 0.08 |
| $ | 0.10 |
| $ | 0.20 |
| $ | (0.35 | ) | $ | 0.03 |
|
| Diluted earnings/(loss) per share attributable to The New York Times Company common stockholders: | | | | | |
| Income/(loss) from continuing operations | $ | 0.08 |
| $ | 0.09 |
| $ | 0.20 |
| $ | (0.35 | ) | $ | 0.03 |
|
| (Loss)/income from discontinued operations, net of income taxes | — |
| — |
| — |
| — |
| — |
|
| Net income/(loss) | $ | 0.08 |
| $ | 0.09 |
| $ | 0.20 |
| $ | (0.35 | ) | $ | 0.03 |
|
| Dividends declared per share | $ | 0.04 |
| $ | — |
| $ | 0.08 |
| $ | 0.04 |
| $ | 0.16 |
|
| |
(1)
| As a result of the adoption of ASU 2017-07 during the first quarter of 2018, the service cost component of net periodic benefit costs/(income) from our pension and other postretirement benefits plans will continue to be presented within operating costs, while the other components of net periodic benefits costs/(income) such as interest cost, amortization of prior service credit and gains or losses from our pension and other postretirement benefits plans will be separately presented outside of “Operating costs” in the new line item “Other components of net periodic benefits costs/(income)”. The Company has recast the Consolidated Statement of Operations for the first, second, third and fourth quarter of 2017 to conform with the current period presentation. |
| |
(2)
| We recognized expenses related to the redesign and consolidation of space in our headquarters building. |
| |
(3)
| In the fourth quarter of 2017, the Company recorded a gain of $4.3 million in connection with the settlement of contractual funding obligation.
|
| |
(4)
| We recorded a $68.7 million charge in the fourth quarter of 2017 primarily attributable to the remeasurement of our net deferred tax assets required as a result of tax legislation.
|
THE NEW YORK TIMES COMPANY – P. 115
|
| |
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
Not applicable.
|
| |
| ITEM 9A. CONTROLS AND PROCEDURES |
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Our management, with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934)1934, as amended) as of December 30, 2018.26, 2021. Based upon such evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management’s report on internal control over financial reporting and the attestation report of our independent registered public accounting firm on our internal control over financial reporting are set forth in Item 8 of this Annual Report on Form 10-K and are incorporated by reference herein.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal control over financial reporting during the quarter ended December 30, 2018,26, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
|
| |
| ITEM 9B. OTHER INFORMATION |
Not applicable.
| | |
| ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
Not applicable.
P. 116 – THE NEW YORK TIMES COMPANY – P. 111
|
| |
| ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
In addition to the information set forth under the caption “Executive Officers of the Registrant” in Part I of this Annual Report on Form 10-K, the information required by this item is incorporated by reference to the sections titled “Section 16(a) Beneficial Ownership Reporting Compliance,” “Proposal Number 1 — Election of Directors,” “Interests of Related Persons in Certain“Related Person Transactions, of the Company,” “Board of Directors and Corporate Governance,” beginning with the section titled “Independence of Directors,” but only up to and including the section titled “Board Committees and Audit Committee Financial Experts,” “Board Committees” andCommittees,” “Nominating & Governance Committee” and “Delinquent Section 16(a) Reports” of our Proxy Statement for the 20192022 Annual Meeting of Stockholders.
The Board of Directors has adopted a code of ethics that applies not only to the principal executive officer, principal financial officer and principal accounting officer.officer, as required by the SEC, but also to our Chairman. The current version of suchthis code of ethics can be found on the Corporate Governance section of our website at http://investors.nytco.com/nytco.com/investors/corporate-governance. We intend to post any amendments to or waivers from the code of ethics that apply to our principal executive officer, principal financial officer or principal accounting officer on our website.
|
| |
| ITEM 11. EXECUTIVE COMPENSATION |
The information required by this item is incorporated by reference to the sections titled “Compensation Committee,” “Directors’ Compensation,” “Directors’ and Officers’ Liability Insurance” and “Compensation of Executive Officers” of our Proxy Statement for the 20192022 Annual Meeting of Stockholders.
P. 112 – THE NEW YORK TIMES COMPANY
|
| |
| ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
The information required by this item is incorporated by reference to the sections titled “Principal Holders of Common Stock,” “Security Ownership of Management and Directors” and “The 1997Ochs-Sulzberger Trust” of our Proxy Statement for the 20192022 Annual Meeting of Stockholders.
THE NEW YORK TIMES COMPANY – P. 117
Equity Compensation Plan Information
The following table presents information regarding our existing equity compensation plans as of December 30, 2018.26, 2021:
| | | | | | | | | | | | | | | | | | | | | | | |
| | Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights | | Weighted average
exercise price of
outstanding options,
warrants and rights | | Number of securities
remaining
available for future
issuance under equity
compensation plans
(excluding securities
reflected in column (a)) | |
| Plan category | | (a) | | (b) | | (c) | |
| Equity compensation plans approved by security holders | | | | | | | |
| Stock-based awards | | 1,834,649 | | (1) | $ | 7.00 | | (2) | 14,719,884 | | (3) |
| | | | | | | |
| Total | | 1,834,649 | | | | | 14,719,884 | | |
| Equity compensation plans not approved by security holders | | None | | None | | None | |
(1) Includes (i) 400 shares of Class A stock to be issued upon the exercise of outstanding stock options granted under the 2010 Incentive Plan, at a weighted-average exercise price of $7.00 per share, and with a weighted-average remaining term of less than one year; (ii) 737,407 shares of Class A stock issuable upon the vesting of outstanding stock-settled restricted stock units granted under the 2010 Incentive Plan and the 2020 Incentive Plan; (iii) 153,336 shares of Class A stock related to vested stock-settled restricted stock units granted under the 2010 Incentive Plan and 2020 Incentive Plan issuable to non-employee directors upon retirement from the Board; and (iv) 943,506, shares of Class A stock that would be issuable at maximum performance pursuant to outstanding stock-settled performance awards under the 2010 Incentive Plan and the 2020 Incentive Plan. Under the terms of the performance awards, shares of Class A stock are to be issued at the end of three-year performance cycles based on the Company’s achievement against specified performance targets. The shares included in the table represent the maximum number of shares that would be issued under the outstanding performance awards; assuming target performance, the number of shares that would be issued under the outstanding performance awards is 471,753.
(2) Excludes shares of Class A stock issuable upon vesting of stock-settled restricted stock units and shares issuable pursuant to stock-settled performance awards.
(3) Includes shares of Class A stock available for future stock options to be granted under the 2020 Incentive Plan. As of December 26, 2021, the 2020 Incentive Plan had 14,719,884 shares of Class A stock remaining available for issuance upon the grant, exercise or other settlement of stock-based awards. This amount includes shares subject to awards under the 2010 Incentive Plan that were cancelled, forfeited or otherwise terminated, or withheld to satisfy the tax withholding requirements, in accordance with the terms of the 2020 Incentive Plan. Stock options granted under the 2020 Incentive Plan must provide for an exercise price of 100% of the fair market value (as defined in the 2020 Incentive Plan) on the date of grant.
|
| | | | | | | | | | |
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | | Weighted average exercise price of outstanding options, warrants and rights (b) | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) |
| Equity compensation plans approved by security holders | | | | | | |
| Stock-based awards | 4,174,009 |
| (1) | $ | 9.40 |
| (2) | 7,404,447 |
| (3) |
| Employee Stock Purchase Plan | — |
| | — |
| | 6,409,741 |
| (4) |
| Total | 4,174,009 |
| | — |
| | 13,814,188 |
| |
| Equity compensation plans not approved by security holders | None |
| | None |
| | None |
| |
| |
(1)
| Includes (i) 1,388,288 shares of Class A stock to be issued upon the exercise of outstanding stock options granted under the 1991 Incentive Plan, the 2010 Incentive Plan, and the 2004 Non-Employee Directors’ Stock Incentive Plan, at a weighted-average exercise price of $9.40 per share, and with a weighted-average remaining term of 2 years; (ii) 623,051 shares of Class A stock issuable upon the vesting of outstanding stock-settled restricted stock units granted under the 2010 Incentive Plan; (iii) 153,503 shares of Class A stock related to vested stock-settled restricted stock units granted under the 2010 Incentive Plan issuable to non-employee directors upon retirement from the Board; and (iv) 2,009,167, shares of Class A stock that would be issuable at maximum performance pursuant to outstanding stock-settled performance awards under the 2010 Incentive Plan. Under the terms of the performance awards, shares of Class A stock are to be issued at the end of three-year performance cycles based on the Company’s achievement against specified performance targets. The shares included in the table represent the maximum number of shares that would be issued under the outstanding performance awards; assuming target performance, the number of shares that would be issued under the outstanding performance awards is 1,004,584. |
| |
(2)
| Excludes shares of Class A stock issuable upon vesting of stock-settled restricted stock units and shares issuable pursuant to stock-settled performance awards. |
| |
(3)
| Includes shares of Class A stock available for future stock options to be granted under the 2010 Incentive Plan. As of December 30, 2018, the 2010 Incentive Plan had 7,404,447 shares of Class A stock remaining available for issuance upon the grant, exercise or other settlement of stock-based awards. Stock options granted under the 2010 Incentive Plan must provide for an exercise price of 100% of the fair market value (as defined in the 2010 Incentive Plan) on the date of grant. The 2004 Non-Employee Directors’ Stock Incentive Plan terminated on April 30, 2014.
|
| |
(4)
| Includes shares of Class A stock available for future issuance under the Company’s Employee Stock Purchase Plan (“ESPP”). We have not had an offering under the ESPP since 2010. |
|
|
| ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
The information required by this item is incorporated by reference to the sections titled “Interests of Related Persons in Certain“Related Person Transactions, of the Company,” “Board of Directors and Corporate Governance — Independence of Directors” and “Board of Directors and Corporate Governance — Board Committees and Audit Committee Financial Experts” of our Proxy Statement for the 20192022 Annual Meeting of Stockholders.
|
| |
| ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES |
The information required by this item is incorporated by reference to the section titled “Proposal Number 32 — Selection of Auditors,” beginning with the section titled “Audit Committee’s Pre-Approval Policies and Procedures,” but only up to and not including the section titled “Recommendation“Audit and Vote Required”Other Fees” of our Proxy Statement for the 20192022 Annual Meeting of Stockholders.
P. 118 – THE NEW YORK TIMES COMPANY – P. 113
| | |
| ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
(A) DOCUMENTS FILED AS PART OF THIS REPORT
(1) Financial Statements
As listed in the index to financial information in “Item 8 — Financial Statements and Supplementary Data.”
(2) Supplemental Schedules
The following additional consolidated financial information is filed as part of this Annual Report on Form 10-K and should be read in conjunction with the Consolidated Financial Statements set forth in “Item 8 — Financial Statements and Supplementary Data.” Schedules not included with this additional consolidated financial information have been omitted either because they are not applicable or because the required information is shown in the Consolidated Financial Statements.
| | | | | |
| |
| Page |
Consolidated Schedule for the Three Years Ended December 30, 201826, 2021 | |
| II – Valuation and Qualifying Accounts | |
Separate financial statements of associated companies accounted for by the equity method are omitted in accordance with permission granted by the Securities and Exchange Commission pursuant to Rule 3-13 of Regulation S-X.
(3) Exhibits
The exhibits listed in the accompanying index are filed as part of this report.
P. 114 – THE NEW YORK TIMES COMPANY – P. 119
Exhibit numbers 10.1810.15 through 10.2610.25 are management contracts or compensatory plans or arrangements.
|
| | | | | | | |
Exhibit
Number
| | Description of Exhibit |
(3.1)(2.1)* | | |
| (3.1) | | |
| (3.2) | | |
| (4) | | The Company agrees to furnish to the Commission upon request a copy of any instrument with respect to long-term debt of the Company and any subsidiary for which consolidated or unconsolidated financial statements are required to be filed, and for which the amount of securities authorized thereunder does not exceed 10% of the total assets of the Company and its subsidiaries on a consolidated basis. |
| (4.1) | | Description of the Registrant’s Securities Purchase Agreement, dated January 19, 2009, amongRegistered Pursuant to Section 12 of the Company, Inmobiliaria Carso, S.A. de C.V. and Banco Inbursa S.A., Institución de Banca Múltiple, Grupo Financiero Inbursa (including formsSecurities Exchange Act of notes, warrants and registration rights agreement) (filed as an Exhibit to the Company’s Form 8-K dated January 21, 2009, and incorporated by reference herein).1934. |
| (10.1) | | Agreement of Lease, dated as of December 15, 1993, between The City of New York, as landlord, and the Company, as tenant (as successor to New York City Economic Development Corporation (the “EDC”), pursuant to an Assignment and Assumption of Lease With Consent, made as of December 15, 1993, between the EDC, as Assignor, to the Company, as Assignee) (filed as an Exhibit to the Company’s Form 10-K dated March 21, 1994, and incorporated by reference herein). |
(10.2) | | |
(10.3) | | |
(10.4)(10.2) | | Letter Agreement, dated as of April 8, 2004, amending Agreement of Lease, between the 42nd St. Development Project, Inc., as landlord, and The New York Times Building LLC, as tenant (filed as an Exhibit to the Company’s Form 10-Q dated November 3, 2006, and incorporated by reference herein). |
(10.5)(10.3) | | |
(10.6)(10.4) | | |
(10.7)(10.5) | | |
(10.8)(10.6) | | |
(10.9)(10.7) | | |
(10.10)(10.8) | | |
(10.11)(10.9) | | |
(10.12)(10.10) | | |
(10.13)(10.11) | | AgreementAssignment and Assumption of Purchase and Sale,Sublease (NYT-2), dated as of March 6, 2009,July 10, 2020, between NYT Real EstateBuilding Leasing Company LLC, as seller, and 620 Eighth NYT (NY) Limited Partnership, as buyer (filed as an Exhibit to the Company’s Form 8-K dated March 9, 2009, and incorporated by reference herein). |
(10.14) | | Lease Agreement, dated as of March 6, 2009, between 620 Eighth NYT (NY) Limited Partnership, as landlord,assignor, and NYT Real Estate Company LLC, as tenantassignee (filed as an Exhibit to the Company’sCompany’s Form 8-K10-K dated March 9, 2009,February 25, 2021, and incorporated by reference herein). |
P. 120 – THE NEW YORK TIMES COMPANY
|
| | |
Exhibit
Number
| | Description of Exhibit |
(10.15) | | |
(10.16)(10.12)** | | |
(10.17)(10.13)** | | |
THE NEW YORK TIMES COMPANY – P. 115
| | | | | | | | |
Exhibit
Number | | Description of Exhibit |
| (10.14) | | Credit Agreement, dated as of September 10, 2019, among The New York Times Company, as borrower, the financial institutions party thereto, as lenders, Bank of America, N.A., as administrative agent, swing line lender and L/C Issuer, Wells Fargo Securities, LLC and J.P. Morgan Chase Bank, National Association, and BOFA Securities, Inc., as joint lead arrangers and joint book runners (filed as an Exhibit to the Company’s Form 8-K dated September 11, 2019, and incorporated by reference herein). |
(10.18)(10.15) | | |
| (10.16) | | |
(10.19)(10.17) | | |
(10.20)(10.18) | | |
| (10.19) | | |
| (10.20) | | |
| (10.21) | | |
| (10.22) | | |
(10.22)(10.23) | | |
(10.23) | | |
(10.24) | | |
(10.25) | | |
(10.26) | | |
(21)(10.24) | | |
| (10.25) | | |
| (21) | | |
| (23.1) | | |
| (24) | | Power of Attorney (included as part of signature page). |
| (31.1) | | |
| (31.2) | | |
| (32.1) | | |
| (32.2) | | |
| (101.INS) | | XBRL Instance Document.Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| (101.SCH) | | Inline XBRL Taxonomy Extension Schema Document. |
| (101.CAL) | | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| (101.DEF) | | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| (101.LAB) | | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| (101.PRE) | | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| (104) | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
* Certain identified information has been excluded from this exhibit (indicated by an asterisk above) because it is both (i) not material and (ii) is the type of information that the registrant treats as private or confidential. Information that was omitted has been noted in the exhibit with a placeholder identified by the mark “[***]”.
** Portions of this exhibit (indicated by asterisks)two asterisks above) have been omitted and are subject to a confidential treatment order granted by the SEC pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
P. 116 – THE NEW YORK TIMES COMPANY
|
| |
| ITEM 16. FORM 10-K SUMMARY |
None.
THE NEW YORK TIMES COMPANY – P. 121117
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 26, 2019
|
| | | | | | | | | | |
| THE NEW YORK TIMES COMPANY (Registrant) | |
| | | |
| BY: | /s/ Roland A. Caputo | |
| | Roland A. Caputo | |
| | Executive Vice President and Chief Financial Officer | |
We, the undersigned directors and officers of The New York Times Company, hereby severally constitute Diane Brayton and Roland A. Caputo, and each of them singly, our true and lawful attorneys with full power to them and each of them to sign for us, in our names in the capacities indicated below, any and all amendments to this Annual Report on Form 10-K filed with the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
|
| | | | | | | |
| Signature | Title | Date |
/s/ Mark ThompsonA.G. Sulzberger | Chairman, Publisher and Director | February 23, 2022 |
| /s/ Meredith Kopit Levien | Chief Executive Officer, President and Director
(principal executive officer)
| February 26, 201923, 2022 |
| /s/ Roland A. Caputo | Executive Vice President and Chief Financial Officer
(principal financial officer)
| February 26, 201923, 2022 |
| /s/ R. Anthony Benten | Senior Vice President, Treasurer and Corporate Controller Chief Accounting Officer
(principal accounting officer) | February 26, 201923, 2022 |
/s/ A.G. Sulzberger | Publisher and Director | February 26, 2019 |
/s/ Arthur Sulzberger, Jr. | Chairman of the Board | February 26, 2019 |
| /s/ Amanpal S. Bhutani | Director | February 26, 201923, 2022 |
/s/ Robert E. DenhamManuel Bronstein | Director | February 26, 201923, 2022 |
| /s/ Beth Brooke | Director | February 23, 2022 |
| /s/ Rachel Glaser | Director | February 26, 201923, 2022 |
| /s/ Arthur Golden | Director | February 23, 2022 |
| /s/ Hays N. Golden | Director | February 26, 201923, 2022 |
/s/ Steven B. Green | Director | February 26, 2019 |
/s/ Joichi Ito | Director | February 26, 2019 |
/s/ James A. Kohlberg | Director | February 26, 2019 |
| /s/ Brian P. McAndrews | Director | February 26, 201923, 2022 |
| /s/ David Perpich | Director | February 23, 2022 |
| /s/ John W. Rogers, Jr. | Director | February 26, 201923, 2022 |
| /s/ Doreen Toben | Director | February 26, 201923, 2022 |
| /s/ Rebecca Van Dyck | Director | February 26, 201923, 2022 |
P. 118 – THE NEW YORK TIMES COMPANY – P. 122
