UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 26, 2017~~April 1, 2018

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, NEW YORK

(Address of principal executive offices)

10018

(Zip Code)

Registrant’s telephone number, including area code 212-556-1234

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (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. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer x	Accelerated filer o	Non-accelerated filer o
Smaller reporting company o	Emerging growth company o

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Number of shares of each class of the registrant’s common stock outstanding as of April ~~28, 2017~~27, 2018 (exclusive of treasury shares):



Class A Common Stock	~~160,737,693~~164,067,510	shares
Class B Common Stock	~~812,757~~803,763	shares

THE NEW YORK TIMES COMPANY

INDEX


	ITEM NO.			ITEM NO.
PART I		Financial Information	1		Financial Information	1
Item	1	Financial Statements	1	1	Financial Statements	1
		Condensed Consolidated Balance Sheets as March 26, 2017 (unaudited) and December 25, 2016	1		Condensed Consolidated Balance Sheets as April 1, 2018 (unaudited) and December 31, 2017	1
		Condensed Consolidated Statements of Operations (unaudited) for the quarters ended March 26, 2017 and March 27, 2016	3		Condensed Consolidated Statements of Operations (unaudited) for the quarters ended April 1, 2018 and March 26, 2017	3
		Condensed Consolidated Statements of Comprehensive Income (unaudited) for the quarters ended March 26, 2017 and March 27, 2016	4		Condensed Consolidated Statements of Comprehensive Income (unaudited) for the quarters ended April 1, 2018 and March 26, 2017	4
		Condensed Consolidated Statements of Cash Flows (unaudited) for the quarters ended March 26, 2017 and March 27, 2016	5		Condensed Consolidated Statements of Cash Flows (unaudited) for the quarters ended April 1, 2018 and March 26, 2017	5
		Notes to the Condensed Consolidated Financial Statements	6		Notes to the Condensed Consolidated Financial Statements	6
Item	2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16	2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item	3	Quantitative and Qualitative Disclosures about Market Risk	24	3	Quantitative and Qualitative Disclosures about Market Risk	33
Item	4	Controls and Procedures	24	4	Controls and Procedures	34

PART II		Other Information	26		Other Information	35
Item	1	Legal Proceedings	26	1	Legal Proceedings	35
Item	1A	Risk Factors	26	1A	Risk Factors	35
Item	2	Unregistered Sales of Equity Securities and Use of Proceeds	26	2	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item	6	Exhibits	26	6	Exhibits	36

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)


	March 26, 2017		December 25, 2016		April 1, 2018		December 31, 2017
	(Unaudited)				(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	150,964	$	100,692	$	213,814	$	182,911
Short-term marketable securities	392,249		449,535		299,834		308,589
Accounts receivable (net of allowances of $15,910 in 2017 and $16,815 in 2016)	176,913		197,355
Accounts receivable (net of allowances of $13,960 in 2018 and $14,542 in 2017)					151,416		184,885
Prepaid expenses	16,797		15,948		23,387		22,851
Other current assets	31,008		32,648		51,564		50,463
Total current assets	767,931		796,178		740,015		749,699
Other assets
Long-term marketable securities	209,331		187,299		235,641		241,411
Investments in joint ventures	16,492		15,614		1,751		1,736
Property, plant and equipment (less accumulated depreciation and amortization of $917,617 in 2017 and $903,736 in 2016)	588,505		596,743
Property, plant and equipment (less accumulated depreciation and amortization of $956,170 in 2018 and $945,401 in 2017)					645,519		640,939
Goodwill	136,391		134,517		145,612		143,549
Deferred income taxes	298,376		301,342		149,335		153,046
Miscellaneous assets	153,200		153,702		179,221		169,400
Total assets	$	2,170,226	$	2,185,395	$	2,097,094	$	2,099,780

See Notes to Condensed Consolidated Financial Statements.

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS-(Continued)

(In thousands, except share and per share data)


	March 26, 2017			December 25, 2016			April 1, 2018			December 31, 2017
	(Unaudited)						(Unaudited)
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	101,924		$	104,463		$	114,220		$	125,479
Accrued payroll and other related liabilities	61,645			96,463			67,391			104,614
Unexpired subscriptions	82,545			66,686
Unexpired subscriptions revenue							85,361			75,054
Accrued expenses and other	141,731			131,125			103,457			110,510
Total current liabilities	387,845			398,737			370,429			415,657
Other liabilities
Long-term debt and capital lease obligations	247,785			246,978			251,092			250,209
Pension benefits obligation	545,957			558,790			392,937			405,422
Postretirement benefits obligation	57,244			57,999			47,979			48,816
Other	74,432			78,647			76,580			82,313
Total other liabilities	925,418			942,414			768,588			786,760
Stockholders’ equity
Common stock of $.10 par value:
Class A – authorized: 300,000,000 shares; issued: 2017 – 169,580,736; 2016 – 169,206,879 (including treasury shares: 2017 – 8,870,801; 2016 – 8,870,801)	16,958			16,921
Class B – convertible – authorized and issued shares: 2017 – 812,757; 2016 – 816,632 (including treasury shares: 2017 – none; 2016 – none)	81			82
Class A – authorized: 300,000,000 shares; issued: 2018 – 172,917,433; 2017 – 170,276,449 (including treasury shares: 2018 – 8,870,801; 2017 – 8,870,801)							17,292			17,028
Class B – convertible – authorized and issued shares: 2018 – 803,763; 2017 – 803,763 (including treasury shares: 2018 – none; 2017 – none)							80			80
Additional paid-in capital	150,428			149,928			199,029			164,275
Retained earnings	1,338,595			1,331,911			1,422,123			1,310,136
Common stock held in treasury, at cost	(171,211		)	(171,211		)	(171,211		)	(171,211		)
Accumulated other comprehensive loss, net of income taxes:
Foreign currency translation adjustments	(442		)	(1,822		)	9,575			6,328
Funded status of benefit plans	(473,809		)	(477,994		)	(516,017		)	(427,819		)
Net unrealized loss on available-for-sale securities							(2,880		)	(1,538		)
Total accumulated other comprehensive loss, net of income taxes	(474,251		)	(479,816		)	(509,322		)	(423,029		)
Total New York Times Company stockholders’ equity	860,600			847,815			957,991			897,279
Noncontrolling interest	(3,637		)	(3,571		)	86			84
Total stockholders’ equity	856,963			844,244			958,077			897,363
Total liabilities and stockholders’ equity	$	2,170,226		$	2,185,395		$	2,097,094		$	2,099,780

See Notes to Condensed Consolidated Financial Statements.

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)


	For the Quarters Ended					For the Quarters Ended
	March 26, 2017		March 27, 2016			April 1, 2018			March 26, 2017
	(13 weeks)					(13 weeks)
Revenues
Circulation	$	242,375	$	217,994
Subscription						$	260,593		$	242,375
Advertising	130,028		139,680			125,647			130,028
Other	26,401		21,841			27,708			26,401
Total revenues	398,804		379,515			413,948			398,804
Operating costs
Production costs:
Wages and benefits	90,778		92,471			91,993			91,014
Raw materials	16,930		17,875			16,692			16,930
Other	45,528		47,516
Other production costs						45,656			45,353
Total production costs	153,236		157,862			154,341			153,297
Selling, general and administrative costs	198,004		178,246			208,623			199,137
Depreciation and amortization	16,153		15,472			15,041			16,153
Total operating costs	367,393		351,580			378,005			368,587
Headquarters redesign and consolidation	2,402		—			1,888			2,402
Operating profit	29,009		27,935			34,055			27,815
Income/(loss) from joint ventures	173		(41,896		)
Interest expense, net	5,325		8,826
Income/(loss) from continuing operations before income taxes	23,857		(22,787		)
Income tax expense/(benefit)	10,742		(9,201		)
Net income/(loss)	13,115		(13,586		)
Net loss attributable to the noncontrolling interest	66		5,315
Net income/(loss) attributable to The New York Times Company common stockholders	$	13,181	$	(8,271	)
Other components of net periodic benefit costs/(income)						2,028			(1,194		)
Gain from joint ventures						15			173
Interest expense and other, net						4,877			5,325
Income from continuing operations before income taxes						27,165			23,857
Income tax expense						5,251			10,742
Net income						21,914			13,115
Net (income)/loss attributable to the noncontrolling interest						(2		)	66
Net income attributable to The New York Times Company common stockholders						$	21,912		$	13,181
Average number of common shares outstanding:
Basic	161,402		161,003			164,094			161,402
Diluted	162,592		161,003			166,237			162,592
Basic earnings/(loss) per share attributable to The New York Times Company common stockholders	$	0.08	$	(0.05	)
Diluted earnings/(loss) per share attributable to The New York Times Company common stockholders	$	0.08	$	(0.05	)
Basic earnings per share attributable to The New York Times Company common stockholders						$	0.13		$	0.08
Diluted earnings per share attributable to The New York Times Company common stockholders						$	0.13		$	0.08
Dividends declared per share	$	0.04	$	0.04		$	0.04		$	0.04

See Notes to Condensed Consolidated Financial Statements.

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)


	For the Quarters Ended					For the Quarters Ended
	March 26, 2017		March 27, 2016			April 1, 2018			March 26, 2017
	(13 weeks)					(13 weeks)
Net income/(loss)	$	13,115	$	(13,586	)
Net income						$	21,914		$	13,115
Other comprehensive income, before tax:
Income on foreign currency translation adjustments	2,175		1,642			2,273			2,175
Pension and postretirement benefits obligation	6,921		6,552			9,760			6,921
Net unrealized loss on available-for-sale securities						(1,371		)	—
Other comprehensive income, before tax	9,096		8,194			10,662			9,096
Income tax expense	3,531		3,103			2,820			3,531
Other comprehensive income, net of tax	5,565		5,091			7,842			5,565
Comprehensive income/(loss)	18,680		(8,495		)
Comprehensive loss attributable to the noncontrolling interest	66		5,315
Comprehensive income/(loss) attributable to The New York Times Company common stockholders	$	18,746	$	(3,180	)
Comprehensive income						29,756			18,680
Comprehensive (income)/loss attributable to the noncontrolling interest						(2		)	66
Comprehensive income attributable to The New York Times Company common stockholders						$	29,754		$	18,746

See Notes to Condensed Consolidated Financial Statements.

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	For the Quarters Ended						For the Quarters Ended
	March 26, 2017			March 27, 2016			April 1, 2018			March 26, 2017
	(13 weeks)						(13 weeks)
Cash flows from operating activities
Net income/(loss)	$	13,115		$	(13,586	)	$	21,914		$	13,115
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	16,153			15,472			15,041			16,153
Stock-based compensation expense	3,958			2,931			4,263			3,958
Undistributed (income)/loss of joint ventures	(173		)	41,896
Undistributed (gain)/loss of joint ventures							(15		)	(173		)
Long-term retirement benefit obligations	(6,458		)	(6,886		)	(3,406		)	(6,458		)
Uncertain tax positions	80			460
Other-net	1,708			2,882			2,580			1,788
Changes in operating assets and liabilities:
Accounts receivable-net	20,442			37,162			33,469			20,442
Other current assets	442			(1,808		)
Other assets							888			442
Accounts payable, accrued payroll and other liabilities	(34,995		)	(94,399		)	(67,142		)	(34,995		)
Unexpired subscriptions	15,859			3,867			10,307			15,859
Net cash provided by/(used in) operating activities	30,131			(12,009		)
Net cash provided by operating activities							17,899			30,131
Cash flows from investing activities
Purchases of marketable securities	(80,108		)	(34,912		)	(110,346		)	(80,108		)
Maturities of marketable securities	117,465			143,965			122,936			117,465
Cash distribution from corporate-owned life insurance	—			38,000
Business acquisitions	—			(12,250		)
Change in restricted cash	(15		)	(470		)
Purchase of investments – net of proceeds							(484		)	—
Capital expenditures	(8,032		)	(10,542		)	(24,882		)	(8,032		)
Other-net	510			(1,026		)	635			510
Net cash provided by investing activities	29,820			122,765
Net cash (used in)/provided by investing activities							(12,141		)	29,835
Cash flows from financing activities
Long-term obligations:
Repayment of debt and capital lease obligations	(138		)	(138		)	(138		)	(138		)
Dividends paid	(6,473		)	(6,461		)	(6,530		)	(6,473		)
Capital shares:
Stock issuances	445			—
Repurchases	—			(15,684		)
Proceeds from stock option exercises							40,439			445
Share-based compensation tax withholding	(3,726		)	(8,675		)	(8,747		)	(3,726		)
Net cash used in financing activities	(9,892		)	(30,958		)
Net increase in cash and cash equivalents	50,059			79,798
Net cash provided by/(used in) financing activities							25,024			(9,892		)
Net increase in cash, cash equivalents and restricted cash							30,782			50,074
Effect of exchange rate changes on cash	213			119			195			232
Cash and cash equivalents at the beginning of the period	100,692			105,776
Cash and cash equivalents at the end of the period	$	150,964		$	185,693
Cash, cash equivalents and restricted cash at the beginning of the period							200,936			125,550
Cash, cash equivalents and restricted cash at the end of the period							$	231,913		$	175,856

See Notes to Condensed Consolidated Financial Statements.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. BASIS OF PRESENTATION

In the opinion of management of The New York Times Company (the “Company”), the Condensed Consolidated Financial Statements present fairly the financial position of the Company as of ~~March 26, 2017~~April 1, 2018, and December ~~25, 2016,~~31, 2017, and the results of operations and cash flows of the Company for the periods ended April 1, 2018, and March 26, ~~2017 and March 27, 2016.~~2017. The Company and its consolidated subsidiaries are referred to collectively as “we,” “us” or “our.” All adjustments necessary for a fair presentation have been included and are of a normal and recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation. The financial statements were prepared in accordance with the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain notes or other financial information that are normally required by accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted from these interim financial statements. These financial statements, therefore, should be read in conjunction with the Consolidated Financial Statements and related Notes included in our Annual Report on Form 10-K for the year ended December ~~25, 2016.~~31, 2017. Due to the seasonal nature of our business, operating results for the interim periods are not necessarily indicative of a full year’s operations. The fiscal periods included herein comprise 13 weeks for the first quarter.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our Condensed Consolidated Financial Statements. Actual results could differ from these estimates.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Except as described herein, as of ~~March 26, 2017,~~April 1, 2018, our significant accounting policies, which are detailed in our Annual Report on Form 10-K for the year ended December ~~25, 2016,~~31, 2017, have not changed materially.

Recently Adopted Accounting Pronouncements

In March ~~2016,~~2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-05, which amends 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 “Act”). The standard is effective upon issuance. During the three months ended April 1, 2018, we have not recorded any measurement period adjustments to the provisional estimate recorded at December 31, 2017, for the Act. The accounting for the impact of the Act is expected to be completed by the fourth quarter of this year.

In February 2018, the FASB issued Accounting Standards Update (“ASU”) ~~2016-09, “Compensation-Stock Compensation,~~2018-02, “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” The new guidance provides 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 ~~provides guidance on accounting for share-based payment transactions, including~~ the effect of the change in the U.S. federal corporate income tax ~~consequences, classification of awards as either equity or liabilities,~~rate related to the Tax Cuts and ~~classification on the statement of cash flows. This guidance became~~Jobs Act is recorded. The amendments are effective for ~~the Company~~all organizations for fiscal years beginning after December ~~25, 2016.~~

~~Upon~~15, 2018, and interim periods within those fiscal years. Early adoption ~~of ASU 2016-09, we recognized excess~~is permitted. The Company elected to adopt this guidance to reclassify the stranded tax ~~shortfalls~~effects from AOCI to retained earnings in ~~income tax expense rather than additional paid-in capital of $1.5 million for~~ the first quarter of ~~2017. Excess~~2018. Our current accounting policy related to releasing tax ~~shortfalls and/or windfalls~~effects from AOCI for ~~share-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~~pension and other postretirement benefits is a plan by plan approach. Accordingly, the ~~ASU~~Company recorded a $94.1 million cumulative effect adjustment for stranded tax effects, such as pension and ~~prior periods have not been adjusted. Additionally, the presentation of employee taxes paid~~other postretirement benefits, to ~~taxing authorities~~“Retained earnings” on January 1, 2018. See Note 13 for share-based transactions are now included in net cash from financing activities rather than net cash from operating activities. This change was applied retrospectively and as a result, we reclassified $8.7 million for the first quarter of 2016 in our Condensed Statement of Cash Flows from operating activities to financing activities. No other material changes resulted from the adoption of this standard.

~~Recently Issued Accounting Pronouncements~~more information.

In March 2017, the FASB issued ASU 2017-07, ~~“Compensation -~~ “Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” The new guidance requires the service cost component to be presented separately from the other components of net benefit costs. Service cost will be presented with other employee compensation cost within ~~operations.~~“Operating costs”. The other components of net periodic benefit ~~cost,~~costs, such as interest cost, amortization of prior service cost and gains or losses are required to be presented outside of operations. The new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. 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 ASU 2017-07 only requires change to the Condensed 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 the first quarter of 2018, the service cost component of net periodic benefit costs continues to

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 Condensed Consolidated Statements of Operations below “Operating profit” on a retrospective basis. The Company reclassified $0.1 million and $1.1 million of credits from “Production costs” and “Selling and general and administrative costs”, respectively, to “Other components of net periodic benefit costs/(income)” in the first quarter of 2017. See Note 10 for the components of net periodic benefit costs/(income) for our pension and other postretirement benefits plans.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flow: Restricted Cash,” which amends the guidance in Accounting Standards Codification (“ASC”) 230 on the classification and presentation of restricted cash in the statement of cash flows. 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 and 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. This guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted.

As a result of the adoption of ASU 2016-18 in the first quarter of 2018, the Company included the restricted cash balance with the cash and cash equivalents balances in the Condensed Consolidated Statements of Cash Flows on a retrospective basis. The reclassification did not have a material impact to the Condensed Consolidated Statement of Cash Flows for the first quarter of 2017. The Company has added a reconciliation from the Condensed Consolidated Balance Sheets to the Condensed Consolidated Statement of Cash Flows in the first quarter of 2018. See Note 8 for more information.

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities,” which 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 the financial statements. The new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.

Subsequently, in February 2018, the FASB issued ASU 2018-03, “Technical Corrections and Improvements to Financial Instruments, Recognition and Measurement of Financial Assets and Financial Liabilities,” which provided several clarifications and amendments to the standard. These include specifying that for equity instruments without readily determinable fair values for which the measurement alternative is applied: (i) adjustments made when an observable transaction occurs for a similar security are intended to reflect the fair value as of the observable transaction date, not as of current reporting date; (ii) the measurement alternative may be discontinued upon an irrevocable election to change to a fair value measurement approach under fair value guidance, which would apply to all identical and similar investments of the same issuer; and (iii) the prospective transition approach for equity securities without readily determinable fair values is applicable only when the measurement alternative is applied. The new guidance must be adopted by the third quarter of 2018 (an interim period). Early adoption of the new guidance is permitted.

We have 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 available-for-sale (“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 Condensed Consolidated Financial Statements. See Note 6 for more information.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which 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 and is effective for fiscal years beginning after December 31, 2017. There are two transition options available to entities: the full retrospective approach or the modified retrospective approach. Under the full retrospective approach, the Company would restate prior periods in compliance with ASC 250, “Accounting Changes and Error Corrections.” Alternatively, the Company may elect the modified retrospective approach, which allows for the new revenue standard to be applied to existing contracts as of the effective date with a cumulative catch-up adjustment recorded to retained earnings.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” to reduce the cost and complexity of applying the guidance on identifying promised goods or services when identifying a performance obligation and improve the operability and understandability of the licensing implementation guidance. In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients,” to reduce the cost and complexity of applying the guidance to address certain issues on assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications at transition. The clarifying amendments in ASU 2016-08, 2016-10, and 2016-12 do not change the core principle of ASU 2014-09. We refer to ASU 2014-09 and the clarifying amendments collectively as “Topic 606.”

On January 1, 2018, the Company adopted Topic 606, Revenue from Contracts with Customers. 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 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 as a single deliverable. 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, $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 will be a decrease of $1.3 million for the twelve months ended December 30, 2018.

Our subscription and advertising revenues were not impacted by the new guidance. See Note 3 for more information on our revenues and the application of Topic 606.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses.” The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model AFS debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The new guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. We are currently in the process of evaluating the impact of this guidance on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases,” which provides guidance on accounting for leases and disclosure of key information about leasing arrangements. The guidance 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

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

areas within GAAP. This guidance becomes effective for the Company for fiscal years beginning after December 30, 2018. Early application is permitted. This guidance will be applied on a modified retrospective basis for leases existing at, or entered into after, the earliest period presented in the financial statements. We are currently in the process of evaluating the impact of the new leasing guidance and expect that most of our ~~operating~~ lease commitments will be subject to the new standard. The adoption of the standard will require us to add right-of-use assets and lease liabilities onto our balance sheet. Based upon our initial evaluation, we do not expect the adoption of the standard to have a material effect on our results of operations ~~and~~or the Company’s liquidity.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which prescribes a single comprehensive model for entities to use in the accounting for revenue arising from contracts with customers. The new guidance will supersede virtually all existing revenue guidance under GAAP and International Financial Reporting Standards and is effective for fiscal years beginning after December 31, 2017. There are two transition options available to entities: the full retrospective approach or the modified retrospective approach. Under the full retrospective approach, the Company would restate prior periods in compliance with Accounting Standards Codification 250, “Accounting Changes and Error Corrections.” Alternatively, the Company may elect the modified retrospective approach, which allows for the new revenue standard to be applied to existing contracts as of the effective date with a cumulative catch-up adjustment recorded to retained earnings. We currently anticipate adopting the new standard using the modified retrospective method beginning January 1, 2018.

Subsequently, in March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” which clarifies the implementation guidance on principal versus agent considerations in ASU 2014-09. In April 2016, the FASB also issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” to reduce the cost and complexity of applying the guidance on identifying promised goods or services when identifying a performance obligation and improve the operability and understandability of the licensing implementation guidance. In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow Scope Improvements and Practical Expedients,” to reduce the cost and complexity of applying the guidance to address certain issues on assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications at transition. The amendments in ASU 2014-09, 2016-10, and 2016-12 do not change the core principle of ASU 2014-09.

Based upon our initial evaluation, we do not expect the adoption of the standard to have a material effect on our financial condition or results of operations. While we continue to evaluate the impact of the new revenue guidance, we currently believe that the most significant changes will be primarily related to how we account for certain licensing arrangements in the other revenue category. However, preliminary assessments may be subject to change.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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.

NOTE 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 news services/syndication, digital archive licensing, building rental income, affiliate referrals, NYT Live (our live events business) and retail commerce. Other revenue includes approximately $5 million and $6 million of rental income for the three months ended April 1, 2018, and March 26, 2017, respectively, which is not under the scope of Topic 606.

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.

Single-copy revenue is recognized based on date of publication, net of provisions for related returns. 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 ratably over the subscription period, and the deferred proceeds are recorded within “Unexpired subscription revenue” in the Condensed Consolidated Balance Sheet. 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.

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 (i) if we have primary responsibility for fulfilling the promise, (ii) if we have inventory risk before the goods or services are transferred to the customer or after transfer of control to the customer, and (iii) 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.

We recognize a rebate obligation as a reduction of revenues, based on the amount of estimated rebates that will be earned and claimed, 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 obligation 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. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts do not include a significant financing component.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Subscription, advertising and other revenues were as follows:



	For the Quarters Ended
(In thousands)	April 1, 2018		March 26, 2017
Subscription	$	260,593	$	242,375
Advertising	125,647		130,028
Other ⁽¹⁾	27,708		26,401
Total	$	413,948	$	398,804

⁽¹⁾ Other revenue includes approximately $5 million and $6 million of rental income for the quarters ended April 1, 2018, and March 26, 2017, respectively, which is not under the scope of Topic 606.

The following table summarizes digital-only subscription revenues for the first quarters of 2018 and 2017:



	For the Quarters Ended
(In thousands)	April 1, 2018		March 26, 2017
Digital-only subscription revenues:
News product subscription revenues⁽¹⁾	$	90,577	$	72,861
Other product subscription revenues⁽²⁾	4,835		2,956
Total digital-only subscription revenues	$	95,412	$	75,817
⁽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:



	For the Quarters Ended
	April 1, 2018						March 26, 2017
(In thousands)	Print		Digital		Total		Print		Digital		Total
Display	$	70,805	$	38,700	$	109,505	$	71,627	$	42,976	$	114,603
Classified and Other	8,139		8,003		16,142		8,730		6,695		15,425
Total advertising	$	78,944	$	46,703	$	125,647	$	80,357	$	49,671	$	130,028

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 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 the performance obligations as they are currently not sold separately.

As of April 1, 2018, the aggregate amount of the transaction price allocated to the remaining performance obligations is approximately $33 million. The Company will recognize this revenue as control of the performance obligation is transferred to the customer. We expect that approximately $14 million, $10 million and $9 million will be recognized in the remainder of 2018, 2019 and 2020, respectively.

Contract Assets

We record revenue from performance obligations when performance obligations are satisfied. For our 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. As of April 1, 2018, the Company had $3.2 million in contract assets recorded in the Condensed Consolidated Balance Sheet. The contract asset is reclassified to “Accounts

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

receivable” when the customer is invoiced based on the contractual billing schedule. The increase in the contract assets balance for the three months ended April 1, 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 $0.3 million of consideration that was reclassified to “Accounts receivable” when invoiced based on the contractual billing schedules for the period ended April 1, 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 the entity 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.

NOTE 3.4. MARKETABLE SECURITIES

~~Our marketable~~The Company recorded $3.9 million and $2.5 million of net unrealized loss in AOCI as of April 1, 2018, and December 31, 2017, respectively.

The following tables present the amortized cost, gross unrealized gains and losses, and fair market value of our AFS debt securities ~~consisted~~as of ~~the following:~~April 1, 2018, and December 31, 2017:


					April 1, 2018
(In thousands)	March 26, 2017		December 25, 2016		Amortized Cost		Gross unrealized gains		Gross unrealized losses			Fair Value
Short-term marketable securities
Short-term AFS securities
Corporate debt securities					$	147,292	$	—	$	(460	)	$	146,832
U.S Treasury securities	$	123,547	$	150,623	71,460		1		(62		)	71,399
U.S. governmental agency securities					60,240		—		(287		)	59,953
Commercial paper					15,450		—		—			15,450
Certificates of deposit					6,200		—		—			6,200
Total short-term AFS securities					$	300,642	$	1	$	(809	)	$	299,834
Long-term AFS securities
Corporate debt securities	154,255		150,599		$	99,699	$	2	$	(1,326	)	$	98,375
U.S. governmental agency securities	56,079		64,135		86,526		1		(1,113		)	85,414
Commercial paper	58,368		84,178
Total short-term marketable securities	$	392,249	$	449,535
Long-term marketable securities
U.S. governmental agency securities	$	115,690	$	110,732
Corporate debt securities	52,799		61,775
U.S Treasury securities	40,842		14,792		52,522		—		(670		)	51,852
Total long-term marketable securities	$	209,331	$	187,299
Total long-term AFS securities					$	238,747	$	3	$	(3,109	)	$	235,641

711

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



	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
Commercial paper	32,591		—		—			32,591
Certificates of deposit	9,300		—		—			9,300
Total short-term AFS securities	$	309,029	$	—	$	(440	)	$	308,589
Long-term AFS securities
U.S. governmental agency securities	$	97,798	$	—	$	(1,019	)	96,779
Corporate debt securities	92,687		—		(683		)	92,004
U.S Treasury securities	53,031		—		(403		)	52,628
Total long-term AFS securities	$	243,516	$	—	$	(2,105	)	$	241,411

The following tables represent the AFS securities as of April 1, 2018, and December 31, 2017, that were in an unrealized loss position, aggregated by investment category and the length of time that individual securities have been in a continuous loss position:



	April 1, 2018
	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
Short-term AFS securities
Corporate debt securities	$	137,958	$	(373	)	$	8,874	$	(87	)	$	146,832	$	(460	)
U.S Treasury securities	69,009		(62		)	—		—			69,009		(62		)
U.S. governmental agency securities	19,797		(39		)	40,156		(248		)	59,953		(287		)
Total short-term AFS securities	$	226,764	$	(474	)	$	49,030	$	(335	)	$	275,794	$	(809	)
Long-term AFS securities
Corporate debt securities	$	91,661	$	(1,244	)	$	4,943	$	(82	)	$	96,604	$	(1,326	)
U.S Treasury securities	23,910		(244		)	58,404		(869		)	82,314		(1,113		)
U.S. governmental agency securities	51,852		(670		)	—		—			51,852		(670		)
Total long-term AFS securities	$	167,423	$	(2,158	)	$	63,347	$	(951	)	$	230,770	$	(3,109	)

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



	December 31, 2017
	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
Short-term AFS securities
Corporate debt securities	$	140,111	$	(199	)	$	9,996	$	(28	)	$	150,107	$	(227	)
U.S Treasury securities	70,951		(34		)	—		—			70,951		(34		)
U.S. governmental agency securities	19,770		(50		)	25,870		(129		)	45,640		(179		)
Total short-term AFS securities	$	230,832	$	(283	)	$	35,866	$	(157	)	$	266,698	$	(440	)
Long-term AFS securities
Corporate debt securities	$	81,118	$	(579	)	$	10,886	$	(104	)	$	92,004	$	(683	)
U.S Treasury securities	23,998		(125		)	72,781		(894		)	96,779		(1,019		)
U.S. governmental agency securities	52,628		(403		)	—		—			52,628		(403		)
Total long-term AFS securities	$	157,744	$	(1,107	)	$	83,667	$	(998	)	$	241,411	$	(2,105	)

We conduct an other-than-temporary impairment (“OTTI”) analysis 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 decline in value, the potential recovery period and whether we intend to sell. For AFS securities, we also consider whether (i) it is more likely than not that we will be required to sell the debt securities before recovery of their amortized cost basis and (ii) the amortized cost basis cannot be recovered as a result of credit losses.

As of ~~March 26, 2017,~~April 1, 2018, 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 April 1, 2018, we have recognized no OTTI loss.

As of April 1, 2018, our short-term and long-term marketable securities had remaining maturities of less than 1 month to 12 months and 13 months to 3635 months, respectively. See Note 89 for ~~additional~~more information regarding the fair value of our marketable securities.

Letters of credit

We arranged for the issuance of letters of credit totaling $56.0 million as of December 31, 2017, to secure commitments under certain sub-lease agreements associated with the rental of floors in our headquarters building. The letters of credit will expire in 2019, and are collateralized by marketable securities held in our investment portfolios, with a fair value of $63.0 million and $63.1 million, as of April 1, 2018, and December 31, 2017, respectively. No amounts were outstanding on these letters of credit as of April 1, 2018. See Note 15 for more information regarding the letters of credit.

NOTE 4.5. GOODWILL AND INTANGIBLES

~~During the first and third quarters of 2016, the Company acquired two digital marketing agencies, HelloSociety, LLC and Fake Love, LLC for an aggregate of $15.4 million in all-cash transactions.~~

During the fourth quarter of 2016, the Company acquired Submarine Leisure Club, Inc., which owns the product review and recommendation websites The Wirecutter and The Sweethome, in an all-cash transaction. We paid $25.0 million, including a payment made for a non-compete agreement. In connection with the transaction, we also entered into a consulting agreement and retention agreements that will likely require payments over the three years following the acquisition.

The Company allocated the purchase prices based on the final valuation of assets acquired and liabilities assumed, resulting in allocations to goodwill, intangibles, property, plant and equipment and other miscellaneous assets.

The aggregate carrying amount of intangible assets of $9.6 million related to these acquisitions has been included in “Miscellaneous Assets” in our Condensed Consolidated Balance Sheets. The estimated useful lives for these assets range from 3 to 7 years and are amortized on a straight-line basis.

The changes in the carrying amount of goodwill as of ~~March 26, 2017,~~April 1, 2018, and since December ~~25, 2016,~~31, 2017, were as follows:

(In thousands) Total Company
Balance as of December 25, 2016 $ 134,517
Measurement period adjustment ⁽¹⁾
(198 )
Foreign currency translation 2,072
Balance as of March 26, 2017 $ 136,391



(In thousands)	Total Company
Balance as of December 31, 2017	$	143,549
Foreign currency translation	2,063
Balance as of April 1, 2018	$	145,612

~~(1)Includes measurement period adjustment in connection with Submarine Leisure Club, Inc. acquisition.~~

The foreign currency translation line item reflects changes in goodwill resulting from fluctuating exchange rates related to the consolidation of certain international subsidiaries.

The aggregate carrying amount of intangible assets of $7.7 million has been included in “Miscellaneous assets” in our Condensed Consolidated Balance Sheets.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 5.6. INVESTMENTS

Equity Method Investments

As of ~~March 26, 2017,~~April 1, 2018, our investments in joint ventures of ~~$16.5~~$1.8 million consisted of a 40% equity ownership ~~interests~~interest in ~~the following entities:~~



~~Company~~	~~Approximate %~~ ~~Ownership~~
~~Donohue Malbaie Inc.~~	49	%
~~Madison Paper Industries~~	40	%
~~Women in the World Media, LLC~~	30	%

~~We have investments in Donohue Malbaie Inc. (“Malbaie”), a Canadian newsprint company,~~ Madison Paper Industries (“Madison”), a partnership that previously operated a supercalendered paper mill in ~~Maine,~~Maine.

The investment is accounted for under the equity method, and ~~Women~~is recorded in “Investments in joint ventures” in our Condensed Consolidated Balance Sheets. Our proportionate share of the ~~World Media, LLC, a live-event conference business.~~operating results of our investment is recorded in “Gain from joint ventures” in our Condensed Consolidated Statements of Operations.

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 which 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 ~~March~~ 2016, ~~UPM announced the closure of~~ the paper mill ~~which occurred in May 2016. During the first quarter of 2016,~~closed and we recognized a $41.4 million loss from joint ventures related to the ~~announced closure of the paper mill. Our~~closure. The Company’s proportionate share of the loss ~~is reduced by the 20%~~was $20.1 million after tax and net of noncontrolling interest. As a result of the mill closure, we wrote our investment down to ~~zero and recorded~~zero. In 2017 we recognized a ~~liability~~gain of ~~$28.8~~$20.8 million, ~~reflecting~~primarily related to the sale of the remaining assets, partially offset by the loss related to our proportionate share of ~~the losses incurred to date by Madison. These amounts are presented in “Accrued expenses and other” in our Condensed Consolidated Balance Sheets.~~

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Madison’s settlement of certain pension obligations.

The Company’s joint venture in Madison is currently being liquidated. In the fourth quarter of 2016, Madison sold certain assets at the mill site and we recognized a gain of $3.9 million related to the sale. In ~~April 2017, Madison entered into an agreement to sell~~ the ~~remaining assets at the mill site (consisting~~first quarter of ~~hydro power assets).~~2018 we recognized a de minimis gain from joint ventures. We expect ~~the sale~~to receive our proportionate share of ~~the hydro power assets to be completed later this year and we believe the proceeds~~a cash distribution from the ~~sale will be more than sufficient to cover Madison’s obligations and therefore allow us to reverse~~wind down of our ~~liability at that time.~~

~~We received no distributions from our equity method investments during the the first quarters of 2017 and 2016.~~

~~We purchase newsprint from Malbaie, and previously purchased supercalendered paper from~~ Madison ~~at competitive prices. Such purchases totaled approximately $3 million~~investment in ~~the first quarters of 2017 and 2016.~~2018.

The following table presents summarized income statement information for Madison, which follows a calendar year:

For the Quarters Ended
(In thousands) March 31, 2017
March 31, 2016
Revenues $ —
$ 25,179
Costs and expenses:
Cost of sales (1,054 ) (48,935 )
General and administrative (26 ) (63,101 )
(1,080 ) (112,036 )
Operating loss (1,080 ) (86,857 )
Other (expense)/income (2 ) 1
Net loss $ (1,082 ) $ (86,856 )



	For the Quarters Ended
(In thousands)	March 31, 2018		March 31, 2017
Revenues	$	—	$	—
Expenses:
Cost of sales	—		(1,054		)
General and administrative income/(expense) and other	9		(26		)
Total income/(costs)	9		(1,080		)
Operating income/(loss)	9		(1,080		)
Other income/(expense)	20		(2		)
Net income/(loss)	$	29	$	(1,082	)

~~Cost Method Investments~~We received no distributions from Madison in the first quarters of 2018 and 2017.

~~The aggregate carrying amounts~~Non-Marketable Equity Securities

Our non-marketable equity securities are investments in privately held companies/funds without readily determinable market values. Prior to January 1, 2018, we accounted for our non-marketable equity securities at cost less impairment. Realized gains and losses on non-marketable securities sold or impaired were recognized in “Interest expense and other, net”. As of ~~cost method investments~~December 31, 2017, non-marketable equity securities included in “Miscellaneous assets’’ in our Condensed Consolidated Balance Sheets ~~were $13.7 million and~~accounted for under the cost method had a carrying value of $13.6 ~~million~~million.

Non-marketable equity securities remeasured during the first quarter ended April 1, 2018, are classified within Level 3 in the fair value hierarchy because we estimate the value based on valuation methods using the observable transaction price at the transaction date. See Note 9 for ~~March 26, 2017 and December 25, 2016, respectively.~~the definition of Level 3. As of April 1, 2018, non-marketable equity securities had a carrying value of $14.1 million. We did not have any material fair value adjustments in the first quarter of 2018.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 6.7. DEBT OBLIGATIONS

Our ~~current~~ indebtedness 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)	March 26, 2017		December 25, 2016		April 1, 2018		December 31, 2017
Option to repurchase ownership interest in headquarters building in 2019:
Principal amount	250,000		250,000		$	250,000	$	250,000
Less unamortized discount based on imputed interest rate of 13.0%	9,001		9,801		5,719		6,596
Total option to repurchase ownership interest in headquarters building in 2019	240,999		240,199		244,281		243,404
Capital lease obligations	6,786		6,779		6,811		6,805
Total debt and capital lease obligations	247,785		246,978
Total long-term debt and capital lease obligations	$	247,785	$	246,978	$	251,092	$	250,209

See Note 89 for ~~additional~~more information regarding the fair value of our long-term debt.

“Interest expense and other, net,” as shown in the accompanying Condensed Consolidated Statements of Operations was as follows:



	For the Quarters Ended
(In thousands)	April 1, 2018			March 26, 2017
Interest expense	$	6,958		$	6,864
Amortization of debt costs and discount on debt	876			800
Capitalized interest	(155		)	(220		)
Interest income and other expense, net	(2,802		)	(2,119		)
Total interest expense and other, net	$	4,877		$	5,325

Notice of Intent to Exercise Repurchase Option Under Lease Agreement

On January 30, 2018, the Company provided notice to an affiliate of W.P. Carey & Co. LLC of the Company’s intention to exercise its option under the Lease Agreement, dated March 6, 2009, by and between the parties (the “Lease”) to repurchase a portion of the Company’s leasehold condominium interest in the Company’s headquarters building located at 620 Eighth Avenue, New York, New York (the “Condo Interest”).

The Lease was part of a transaction in 2009 under which the Company sold and simultaneously leased back approximately 750,000 rentable square feet, comprising the Condo Interest. The sale price for the Condo Interest was approximately $225 million. Under the Lease, the Company has an option exercisable in the second half of 2019 to repurchase the Condo Interest for approximately $250 million.

The Company has accounted for the transaction as a financing transaction, and has continued to depreciate the Condo Interest and account for the rental payments as interest expense. The difference between the purchase option price and the net sale proceeds from the transaction is being amortized over the 10-year period of 2009-2019 through interest expense.

915

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~“Interest expense, net,” as shown in the accompanying Condensed Consolidated Statements of Operations was as follows:~~

For the Quarters Ended
(In thousands) March 26, 2017
March 27, 2016
Interest expense $ 6,864
$ 9,922
Amortization of debt costs and discount on debt 800
1,253
Capitalized interest (220 ) (116 )
Interest income (2,119 ) (2,233 )
Total interest expense, net $ 5,325
$ 8,826

NOTE 7.8. OTHER

Advertising Expenses

Advertising expenses incurred to promote our ~~consumer~~brand, subscription products and marketing services were ~~$33.6~~$31.6 million and ~~$21.1~~$33.6 million in the first quarters of ~~2017~~2018 and ~~2016,~~2017, respectively.

Capitalized Computer Software Costs

Amortization of capitalized computer software costs included in “Depreciation and amortization” in our Condensed Consolidated Statements of Operations ~~was $3.1~~were $3.4 million and ~~$3.0~~$3.1 million in the first quarters of ~~2017~~2018 and ~~2016,~~2017, 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 ~~remaining~~additional floors to third parties. ~~During the first quarter of 2017, we~~These changes are expected to generate additional rental income and result in a more collaborative workspace. We incurred $1.9 million and $2.4 million of total costs related to these ~~measures.~~measures in the first quarter of 2018 and 2017, respectively. The capital expenditures related to these measures were approximately $6.4 million and $1.0 million in the first quarters of 2018 and 2017, respectively.

Restricted Cash

A reconciliation of cash, cash equivalents, and restricted cash as of April 1, 2018, and December 31, 2017, from the Condensed Consolidated Balance Sheets to the Condensed Consolidated Statements of Cash Flows is as follows:



	For the Quarters Ended
(In thousands)	April 1, 2018		December 31, 2017

Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	$	213,814	$	182,911
Restricted cash included within other current assets	385		375
Restricted cash included within miscellaneous assets	17,714		17,650
Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statement of Cash Flows	$	231,913	$	200,936

Substantially all of the amount included in restricted cash is set aside to collateralize workers’ compensation obligations.

Severance Costs

We recognized severance costs of ~~$1.6~~$2.4 million and ~~$3.6~~$1.6 million in the first quarters of 2018 and 2017, ~~and 2016, respectively.~~respectively, for workforce reduction. These costs are recorded in “Selling, general and administrative costs” in our Condensed Consolidated Statements of Operations.

We had a severance liability of ~~$14.4~~$11.5 million and ~~$23.2~~$18.8 million included in “Accrued expenses and other” in our Condensed Consolidated Balance Sheets as of ~~March 26, 2017,~~April 1, 2018, and December ~~25, 2016,~~31, 2017, respectively. We anticipate most of the payments will be made within the next twelve months.

NOTE 8.9. 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.

1016

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Assets/Liabilities Measured and Recorded at Fair Value on a Recurring Basis

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of ~~March 26, 2017~~April 1, 2018, and December ~~25, 2016:~~31, 2017:


(In thousands)	March 26, 2017								December 25, 2016								April 1, 2018								December 31, 2017
(In thousands)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Deferred compensation	$	26,699	$	26,699	$	—	$	—	$	31,006	$	31,006	$	—	$	—
Assets:
Short-term AFS securities ⁽¹⁾
Corporate debt securities																	$	146,832	$	—	$	146,832	$	—	$	150,107	$	—	$	150,107	$	—
U.S Treasury securities																	71,399		—		71,399		—		70,951		—		70,951		—
U.S. governmental agency securities																	59,953		—		59,953		—		45,640		—		45,640		—
Commercial paper																	15,450		—		15,450		—		32,591		—		32,591		—
Certificates of deposit																	6,200		—		6,200		—		9,300		—		9,300		—
Total short-term AFS securities																	$	299,834	$	—	$	299,834	$	—	$	308,589	$	—	$	308,589	$	—
Long-term AFS securities ⁽¹⁾
Corporate debt securities																	$	98,374	$	—	$	98,374	$	—	$	92,004	$	—	$	92,004	$	—
U.S Treasury securities																	51,852		—		51,852		—		52,628		—		52,628		—
U.S. governmental agency securities																	85,415		—		85,415		—		96,779		—		96,779		—
Total long-term AFS securities																	$	235,641	$	—	$	235,641	$	—	$	241,411	$	—	$	241,411	$	—
Liabilities:
Deferred compensation ⁽²⁾																	$	24,335	$	24,335	$	—	$	—	$	29,526	$	29,526	$	—	$	—

⁽¹⁾ Our marketable securities, which include U.S. Treasury securities, corporate debt securities, U.S. government agency securities, municipal securities, certificates of deposit and commercial paper, are recorded at fair value (see Note 4). 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 “Other liabilities—~~Other”~~other” in our Condensed Consolidated Balance Sheets, consists of deferrals under The New York Times Company Deferred Executive Compensation Plan (the “DEC”), which enables 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.

Financial Instruments Disclosed, But Not Reported, at Fair Value

Our marketable securities, which include U.S. Treasury securities, corporate debt securities, U.S. government agency securities, municipal securities, certificates of deposit and commercial paper, are recorded at amortized cost (see Note 3). As of March 26, 2017 and December 25, 2016, the amortized cost approximated fair value because of the short-term maturity and highly liquid nature of these investments. We classified these investments as Level 2 since the fair value estimates are based on market observable inputs for investments with similar terms and maturities.

The carrying value of our long-term debt was approximately ~~$241~~$244 million as of ~~March 26, 2017~~April 1, 2018, and approximately ~~$240~~$243 million as of December ~~25, 2016.~~31, 2017. The fair value of our long-term debt was approximately ~~$293~~$274 million and ~~$298~~$279 million as of ~~March 26, 2017~~April 1, 2018, and December ~~25, 2016,~~31, 2017, respectively. We estimate the fair value of our debt utilizing market quotations for debt that have quoted prices in active markets. Since our debt does not trade on a daily basis 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).

NOTE 9.10. PENSION AND OTHER POSTRETIREMENT BENEFITS

Pension

Single-Employer Plans

We sponsor several frozen single-employer defined benefit pension plans ~~the majority of which have been frozen. We also participate in two joint Company and Guild-sponsored defined benefit pension plans covering employees who are members of The NewsGuild of New York,~~ including The Newspaper Guild of New York - The New York Times Pension Fund, which prior to January 1, 2018, was ~~frozen~~a joint Company and Guild-sponsored defined benefit pension plan. We also participate in ~~2012 and replaced by a successor plan,~~ The Guild-Times Adjustable Pension ~~Plan.~~

Plan, a joint Company and Guild sponsored defined benefit pension plan covering employees who are members of The ~~components~~NewsGuild of ~~net periodic pension cost were as follows:~~

For the Quarters Ended
March 26, 2017 March 27, 2016
(In thousands)
Qualified
Plans

Non-
Qualified
Plans

All
Plans

Qualified
Plans

Non-
Qualified
Plans

All
Plans
Service cost $ 2,423
$ —
$ 2,423
$ 2,247
$ —
$ 2,247
Interest cost 15,594
1,956
17,550
16,574
2,034
18,608
Expected return on plan assets (26,136 ) —
(26,136 ) (27,790 ) —
(27,790 )
Amortization of actuarial loss 7,353
1,088
8,441
7,069
1,053
8,122
Amortization of prior service credit (486 ) —
(486 ) (486 ) —
(486 )
Net periodic pension (income)/cost $ (1,252 ) $ 3,044
$ 1,792
$ (2,386 ) $ 3,087
$ 701

~~During the first quarters of 2017 and 2016, we made pension contributions of $2.0 million and $2.1 million, respectively,~~New York. Participants in The Guild-Times Adjustable Pension Plan continue to ~~certain qualified pension plans. We expect contributions to total approximately $8 million to satisfy funding requirements in 2017.~~actively accrue benefits.

1117

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The components of net periodic pension cost were as follows:



	For the Quarters Ended
	April 1, 2018								March 26, 2017
(In thousands)	Qualified Plans			Non- Qualified Plans		All Plans			Qualified Plans			Non- Qualified Plans		All Plans
Service cost	$	2,647		$	—	$	2,647		$	2,423		$	—	$	2,423
Interest cost	13,151			1,848		14,999			15,594			1,956		17,550
Expected return on plan assets	(20,555		)	—		(20,555		)	(26,136		)	—		(26,136		)
Amortization of actuarial loss	6,762			1,294		8,056			7,353			1,088		8,441
Amortization of prior service credit	(486		)	—		(486		)	(486		)	—		(486		)
Net periodic pension cost/(income)	$	1,519		$	3,142	$	4,661		$	(1,252	)	$	3,044	$	1,792

In the first quarter of 2018, the Company signed an agreement that froze the accrual of benefits under the Retirement Annuity Plan For Craft Employees of The New York Times Companies (“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. As a result, we recorded a curtailment of $2.6 million in 2018.

During the first quarters of 2018 and 2017, we made pension contributions of $2.1 million and $2.0 million, respectively, to certain qualified pension plans. We expect contributions in 2018 to total approximately $8 million to satisfy funding requirements.

Other Postretirement Benefits

The components of net periodic postretirement benefit income were as follows:


	For the Quarters Ended						For the Quarters Ended
(In thousands)	March 26, 2017			March 27, 2016			April 1, 2018			March 26, 2017
Service cost	$	92		$	104		$	5		$	92
Interest cost	470			495			369			470
Amortization of actuarial loss	905			1,026			1,184			905
Amortization of prior service credit	(1,939		)	(2,110		)	(1,539		)	(1,939		)
Net periodic postretirement benefit income	$	(472	)	$	(485	)
Net periodic postretirement benefit cost/(income)							$	19		$	(472	)

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/(income) and 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/(income)” in our Condensed Consolidated Statements of Operations below “Operating profit” on a retrospective basis. We recognized $2.0 million and ($1.2) million of “Other components of net periodic benefit costs/(income)” for single employer pension plans and other postretirement benefits in the first quarters of 2018 and 2017, respectively.

NOTE ~~10.~~11. INCOME TAXES

The Company had income tax expense of $5.3 million and $10.7 million in the first quarter of 2018 and 2017, ~~compared to an~~respectively. The Company’s effective tax rates from continuing operations were 19.3% and 45.0% for the first quarter of 2018 and 2017, respectively. The decrease in income tax expense and effective tax rate was primarily due to a reduction in the U.S. federal corporate income tax rate which took effect in 2018, and a tax benefit ~~of $9.2 million~~from stock-based compensation in the first quarter of 2016. The increase in income tax expense was primarily due to higher income from continuing operations in the first quarter of 2017. Income tax expense also increased as a result of the Company’s recent adoption of ASU 2016-09 in the first quarter of 2017. See Note 2 for information regarding ASU 2016-09.2018.

NOTE ~~11.~~12. EARNINGS/(LOSS) PER SHARE

We compute earnings/(loss) per share using a two-class method, 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.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Earnings/(loss) 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 have ~~the most~~a significant impact on diluted shares.

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.

~~The number~~There were no anti-dilutive stock options, stock-settled long-term performance awards or restricted stock units excluded from the computation of diluted earnings per share in the first quarter of 2018. There were approximately 2 million stock options, as well as approximately 1 million stock-settled long-term performance awards and restricted stock units, excluded from the computation of diluted earnings per share because they were anti-dilutive ~~was approximately 2 million~~ in the first quarter of ~~2017 and approximately 6 million in the first quarter of 2016.~~

The number of restricted stock units and long-term incentive compensation stock-settled awards excluded from the computation of diluted earnings per share because they were anti-dilutive was approximately 1 million in the first quarter of 2017 and approximately 2 million for the first quarter of 2016.2017.

NOTE ~~12.~~13. SUPPLEMENTAL STOCKHOLDERS’ EQUITY INFORMATION

Stockholders’ equity is summarized as follows:



(In thousands)	Total New York Times Company Stockholders’ Equity			Noncontrolling Interest		Total Stockholders’ Equity
Balance as of December 31, 2017	$	897,279		$	84	$	897,363
Adjustments to retained earnings⁽¹⁾	96,707			—		96,707
AOCI reclassification to retained earnings⁽²⁾	(94,135		)	—		(94,135		)
Net income	21,912			2		21,914
Other comprehensive income, net of tax	7,842			—		7,842
Effect of issuance of shares⁽³⁾	31,692			—		31,692
Dividends declared	(6,632		)	—		(6,632		)
Stock-based compensation	3,326			—		3,326
Balance as of April 1, 2018	$	957,991		$	86	$	958,077

⁽¹⁾As a result of adopting ASU 2018-02 and Topic 606 in the first quarter of 2018, “Retained earnings” increased by $94.1 million and $2.6 million, respectively. See Note 2 for more information.

⁽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.

⁽³⁾The Company issued 2,177,326, 271,841, and 191,817 of Class A shares in connection with stock option exercises, vesting of performance-based awards, and vesting of restricted stock units in the first quarter of 2018, respectively.



(In thousands)	Total New York Times Company Stockholders’ Equity			Noncontrolling Interest			Total Stockholders’ Equity
Balance as of December 25, 2016	$	847,815		$	(3,571	)	$	844,244
Net income/(loss)	13,181			(66		)	13,115
Other comprehensive income, net of tax	5,565			—			5,565
Effect of issuance of shares	(3,281		)	—			(3,281		)
Dividends declared	(6,495		)	—			(6,495		)
Stock-based compensation	3,815			—			3,815
Balance as of March 26, 2017	$	860,600		$	(3,637	)	$	856,963

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

(In thousands) Total New York Times Company Stockholders’ Equity Noncontrolling Interest Total Stockholders’ Equity
Balance as of December 27, 2015 $ 826,751
$ 1,704
$ 828,455
Net loss (8,271 ) (5,315 ) (13,586 )
Other comprehensive income, net of tax 5,091
—
5,091
Effect of issuance of shares (8,675 ) —
(8,675 )
Share repurchases (15,056 ) —
(15,056 )
Dividends declared (6,443 ) —
(6,443 )
Stock-based compensation 3,294
—
3,294
Balance as of March 27, 2016 $ 796,691
$ (3,611 ) $ 793,080

On January 14, 2015, the Board of Directors approved an authorization of $101.1 million to repurchase shares of the Company’s Class A Common Stock. The Company did not repurchase any shares during the first quarter of 2018. As of ~~March 26, 2017,~~April 1, 2018, the Company had repurchased 6,690,905 Class A shares under this authorization for a cost of $84.9 million (excluding commissions) and $16.2 million remained. All purchases were made pursuant to our publicly announced share repurchase

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

program. Our Board of Directors has authorized us to purchase shares under this authorization from time to time, subject to market conditions and other factors. There is no expiration date with respect to this authorization.

The following table summarizes the changes in AOCI by component as of ~~March 26, 2017:~~April 1, 2018:

(In thousands) Foreign Currency Translation Adjustments Funded Status of Benefit Plans Total Accumulated Other Comprehensive Loss
Balance as of December 25, 2016 $ (1,822 ) $ (477,994 ) $ (479,816 )
Other comprehensive income before reclassifications, before tax⁽¹⁾
2,175
—
2,175
Amounts reclassified from accumulated other comprehensive loss, before tax⁽¹⁾
—
6,921
6,921
Income tax expense⁽¹⁾
795
2,736
3,531
Net current-period other comprehensive income, net of tax 1,380
4,185
5,565
Balance as of March 26, 2017 $ (442 ) $ (473,809 ) $ (474,251 )



(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 income/(loss) before reclassifications, before tax⁽¹⁾⁽²⁾	2,273		2,597			(1,371		)	3,499
Amounts reclassified from accumulated other comprehensive loss, before tax⁽¹⁾	—		7,163			—			7,163
Income tax expense/(benefit) ⁽¹⁾	602		2,580			(362		)	2,820
Net current-period other comprehensive income/(loss), net of tax	1,671		7,180			(1,009		)	7,842
AOCI reclassification to retained earnings ⁽³⁾	1,576		(95,378		)	(333		)	(94,135		)
Balance as of April 1, 2018	$	9,575	$	(516,017	)	$	(2,880	)	$	(509,322	)


~~(1)~~	~~All amounts are shown net of noncontrolling interest.~~

⁽¹⁾All amounts are shown net of noncontrolling interest.

⁽²⁾ The Company recorded a curtailment of $2.6 millionin AOCI in connection with freezing of benefits for the RAP in the first quarter of 2018. This transaction does not have any impact to net income for the first quarter of 2018. See Note 10 for more information.

⁽³⁾ 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 following table summarizes the reclassifications from AOCI for the first quarter of ~~2017:~~

2018:

(In thousands)
Detail about accumulated other comprehensive loss components Amounts reclassified from accumulated other comprehensive loss Affect line item in the statement where net income is presented
Funded status of benefit plans:
Amortization of prior service credit⁽¹⁾
$ (2,425 ) Selling, general & administrative costs
Amortization of actuarial loss⁽¹⁾
9,346
Selling, general & administrative costs
Total reclassification, before tax⁽²⁾
6,921

Income tax expense 2,736
Income tax (benefit)/expense
Total reclassification, net of tax $ 4,185


~~(1)~~	~~These accumulated other comprehensive income components are included in the computation of net periodic benefit cost for pension and other retirement benefits. See Note 9 for additional information.~~


~~(2)~~	~~There were no reclassifications relating to noncontrolling interest for the quarter ended March 26, 2017.~~



(In thousands)
Detail about accumulated other comprehensive loss components	Amounts reclassified from accumulated other comprehensive loss			Affects line item in the statement where net income is presented
Funded status of benefit plans:
Amortization of prior service credit⁽¹⁾	$	(2,077	)	Other components of net periodic benefit costs/(income)
Amortization of actuarial loss⁽¹⁾	9,240			Other components of net periodic benefit costs/(income)
Total reclassification, before tax⁽²⁾	7,163
Income tax expense	1,893			Income tax expense
Total reclassification, net of tax	$	5,270

13⁽¹⁾ These AOCI components are included in the computation of net periodic benefit cost for pension and other retirement benefits. See Note 10 for more information.

⁽²⁾ There were no reclassifications relating to noncontrolling interest for the quarter ended April 1, 2018.

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

NOTE ~~13.~~14. SEGMENT INFORMATION

We have one reportable segment that includes The New York Times, NYTimes.com and related businesses. Therefore, all required segment information can be found in the Condensed Consolidated Financial Statements.

Our operating segment generated revenues principally from ~~circulation~~subscriptions and advertising. Other revenues ~~consist~~ primarily consists of revenues from news services/syndication, digital ~~archives,~~archive licensing, building rental income, ~~our~~affiliate referrals, NYT Live ~~business, e-commerce~~(our live events business), and ~~affiliate referrals.~~retail commerce.

NOTE ~~14.~~15. CONTINGENT LIABILITIES

~~Restricted Cash~~

~~We were required to maintain $24.9 million of restricted cash as of March 26, 2017 and December 25, 2016, 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

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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. OnIn June ~~14,~~ 2016, the arbitrator issued an interim award and opinion that supported the NMDU Fund’s determination that a partial withdrawal had occurred, ~~including concluding~~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. In July 2017, the arbitrator issued a final award and opinion reflecting the same conclusions, which both the Company and NMDU Fund challenged 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 ~~expects~~has appealed the court’s decision with respect to ~~appeal~~ the ~~arbitrator’s decision following the issuance of the final opinion and award.~~determination that a partial withdrawal had occurred.

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 ~~March 26, 2017,~~April 1, 2018, we have paid ~~$12.6~~$16.2 million relating to the Initial Assessment since the receipt of the initial demand letter. We also paid $5.0 million related to the Revised Assessment, which was refunded in July 2016 based on the arbitrator’s ruling. The Company recognized $0.1 million and ~~$1.8~~$0.1 million of expense for the first quarters of ~~2017~~2018 and ~~2016,~~2017, respectively.

~~As a result of the interim opinion and award relating to the Initial Assessment, the~~The Company had a liability of ~~$8.9~~$5.7 million as of ~~March 26, 2017.~~April 1, 2018, related 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 $10 million.

~~NEMG T&G, Inc.~~

The Company has been 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. This settlement remains subject to court approval. As a result of the settlement, the Company recorded a charge of $3.7 million in the fourth quarter of 2016 within discontinued operations.

Other

We are involved in various legal actions incidental to our business that are now pending against us. These actions are generally for amounts greatly in excess of the payments, if any, that may be required to be made. 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 Commitment

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~NOTE 15. SUBSEQUENT EVENT~~

~~In April 2017, Madison~~We arranged for the issuance of letters of credit totaling $56.0 million in connection with a sub-lease entered into ~~an agreement to sell~~in the fourth quarter of 2017 for approximately four floors of our headquarters building. A portion of the letters of credit will expire pro rata through the second quarter of 2019, while the remaining ~~assets at its mill site (consisting~~portion of ~~hydro power assets). We expect this sale to be completed later this year. See Note 5 for more information on~~letters of credit will expire upon the Company’s ~~investment~~repurchase of the Condo Interest in ~~Madison.~~our headquarters building in 2019. Approximately $63 million of marketable securities were used as collateral for the letters of credit, as of April 1, 2018, and December 31, 2017, respectively.

1521

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

EXECUTIVE OVERVIEW

We are a global media organization that includes ~~newspapers,~~The New York Times newspaper, print and digital products and investments. We have one reportable segment with businesses that include our ~~newspapers,~~newspaper, websites, mobile applications and related businesses.

We generate revenues principally from ~~circulation~~subscriptions and advertising. Other revenues primarily consist of revenues from news services/syndication, digital ~~archives,~~archive licensing, building rental income, ~~our~~affiliate referrals, NYT Live ~~business, e-commerce~~(our live events business) and ~~affiliate referrals.~~retail commerce. Our main operating costs are employee-related costs.

In the accompanying analysis of financial information, we present certain information derived from 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-operating retirement costs or multiemployer pension plan withdrawal 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-Operating Items—Non-GAAP Financial ~~Measures.”~~Measurements” for more details.

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 first quarter of 2017 and the full year 2017 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. See “Non-Operating Items—Non-GAAP Financial Measurements” for more details.

Financial Highlights

For the first quarter of ~~2017,~~2018, diluted earnings per share from continuing operations were ~~$0.08,~~$0.13, compared with ~~a diluted loss per share of $0.05~~$0.08 for the first quarter of ~~2016.~~2017. Diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and special items discussed below (or “adjusted diluted earnings per share,” a non-GAAP measure) were ~~$0.11~~$0.17 and $0.10 for the first quarters of ~~2017~~2018 and ~~2016,~~2017, respectively.

The Company had an operating profit of ~~$29.0~~$34.1 million in the first quarter of ~~2017,~~2018, compared with ~~$27.9~~$27.8 million ~~for~~in the first quarter of ~~2016.~~2017. The increase was ~~driven by growth in overall~~largely due to higher digital subscription revenues, ~~that more than~~which offset ~~increased~~lower advertising revenues and higher selling, general and administrative costs. Operating profit before depreciation, amortization, severance, ~~non-operating retirement~~multiemployer pension plan withdrawal costs and special items discussed below (or “adjusted operating profit,” a non-GAAP measure) was ~~$52.7~~$55.5 million and ~~$51.5~~$50.2 million for the first quarters of ~~2017~~2018 and ~~2016,~~2017, respectively.

Total revenues increased ~~5.1%~~3.8% to $413.9 million in the first quarter of 2018 from $398.8 million in the first quarter of 2017, ~~from $379.5 million in the first quarter of 2016,~~ primarily driven by ~~increases~~an increase in digital ~~and print circulation revenue, as well as digital advertising revenue,~~subscription revenues, which were partially offset by a decrease in advertising revenues and print ~~advertising revenue.~~subscription revenues.

~~Circulation~~Subscription revenues increased ~~11.2%~~7.5% in the first quarter of ~~2017~~2018 compared with the first quarter of ~~2016,~~2017, primarily due to ~~digital~~growth in recent quarters in the number of subscriptions to the Company’s digital-only subscription ~~initiatives and the 2017 increase in home-delivery prices at The New York Times newspaper, which more than offset a decline in print copies sold. Circulation revenues~~products. Revenue from our digital-only ~~subscriptions~~subscription products (which ~~includes~~include our news product, as well as our Crossword and ~~Crossword product subscriptions)~~Cooking products) increased ~~40.0%~~25.8% in the first quarter of ~~2017~~2018 compared with the first quarter of ~~2016.~~2017.

Paid digital-only subscriptions totaled approximately ~~2,201,000~~2,783,000 at the end of the first quarter of ~~2017,~~2018, a ~~62.2%~~25.5% increase compared towith the end of the first quarter of ~~2016. We continued to see significant growth in~~2017. News product subscriptions totaled approximately 2,330,000 at the ~~number~~end of ~~paid digital-only subscriptions to our news products following~~ the ~~2016 presidential election. We expect continued year-over-year growth in the second~~first quarter of ~~2017; however, we expect this rate~~2018, a 20.5% increase compared with the end of ~~growth to be slower than in the prior two quarters.~~

~~Advertising revenues remained under pressure during~~ the first quarter of 2017. Other product subscriptions totaled approximately 453,000 at the end of the first quarter of 2018, a 60.1% increase compared with the end of the first quarter of 2017.

Total advertising revenues decreased ~~6.9%~~3.4% in the first quarter of ~~2017~~2018 compared with the first quarter of ~~2016,~~2017, reflecting a ~~17.9%~~6.0% and 1.8% decrease in digital and print advertising revenues, ~~partially offset by an 18.9% increase~~respectively. The decrease in digital advertising ~~revenues.~~revenue reflected a continued decrease in traditional website display advertising, which more than offset increases in revenue from smartphone advertising. The character of our digital advertising model, with its increasing reliance on strategic commercial partnerships and often large individual campaigns, means more variable results as individual partnerships and campaigns launch and end. The decrease in print advertising revenues resulted from ~~a decline~~declines in both display ~~advertising. The increase in digital~~ advertising ~~revenues primarily reflected increases in revenue from our mobile platform, our programmatic channels~~ and ~~branded content, partially offset by a decrease in traditional website display~~classified and other advertising.

~~Compared~~

Other revenues increased 5.0% in the first quarter of 2018 compared with the first quarter of ~~2016, other revenues~~2017.

Operating costs increased ~~20.9%~~in the first quarter of 2018 to $378.0 million from $368.6 million in the first quarter of 2017, largely due to ~~affiliate referral revenue associated with the product review and recommendation websites, The Wirecutter and The Sweethome, which the Company acquired in October 2016.~~

~~Operating~~higher compensation costs, ~~increased in the first quarter of 2017 to $367.4 million from $351.6 million in the first quarter of 2016, largely due to higher marketing costs and costs from acquired companies,~~ which were partially offset by lower print production and distribution ~~costs as well as lower severance, international operations, technology and non-operating retirement~~ costs. ~~First quarter 2017 operating costs also included $2.4 million of costs related to the redesign of our headquarters building.~~ Operating costs before depreciation, amortization, severance and ~~non-operating retirement~~multiemployer pension plan withdrawal costs (or “adjusted operating costs,” a non-GAAP measure) increased in the first quarter of ~~2017~~2018 to ~~$346.1~~$358.5 million from ~~$328.0~~$348.6 million in the first quarter of ~~2016.~~2017.

1623

~~Non-operating retirement costs decreased to $3.5 million during the first quarter of 2017 from $4.5 million in the first quarter of 2016 due to lower multiemployer pension plan withdrawal obligations.~~

RESULTS OF OPERATIONS

The following table presents our consolidated financial results:


	For the Quarters Ended							For the Quarters Ended
(In thousands)	March 26, 2017		March 27, 2016			% Change		April 1, 2018			March 26, 2017			% Change
Revenues
Circulation	$	242,375	$	217,994		11.2	%
Subscription								$	260,593		$	242,375		7.5	%
Advertising	130,028		139,680			(6.9	)%	125,647			130,028			(3.4	)%
Other	26,401		21,841			20.9	%	27,708			26,401			5.0	%
Total revenues	398,804		379,515			5.1	%	413,948			398,804			3.8	%
Operating costs
Production costs:
Wages and benefits	90,778		92,471			(1.8	)%	91,993			91,014			1.1	%
Raw materials	16,930		17,875			(5.3	)%	16,692			16,930			(1.4	)%
Other	45,528		47,516			(4.2	)%
Other production costs								45,656			45,353			0.7	%
Total production costs	153,236		157,862			(2.9	)%	154,341			153,297			0.7	%
Selling, general and administrative costs	198,004		178,246			11.1	%	208,623			199,137			4.8	%
Depreciation and amortization	16,153		15,472			4.4	%	15,041			16,153			(6.9	)%
Total operating costs	367,393		351,580			4.5	%	378,005			368,587			2.6	%
Headquarters redesign and consolidation	2,402		—			*		1,888			2,402			(21.4	)%
Operating profit	29,009		27,935			3.8	%	34,055			27,815			22.4	%
Income/(loss) from joint ventures	173		(41,896		)	*
Other components of net periodic benefit costs/(income)								2,028			(1,194		)	*
Gain from joint ventures								15			173			(91.3	)%
Interest expense, net	5,325		8,826			(39.7	)%	4,877			5,325			(8.4	)%
Income/(loss) from continuing operations before income taxes	23,857		(22,787		)	*
Income from continuing operations before income taxes								27,165			23,857			13.9	%
Income tax expense	10,742		(9,201		)	*		5,251			10,742			(51.1	)%
Income/(loss) from continuing operations	13,115		(13,586		)	*
Net loss attributable to the noncontrolling interest	66		5,315			*
Net income/(loss) attributable to The New York Times Company common stockholders	$	13,181	$	(8,271	)	*
Net income								21,914			13,115			67.1	%
Net (income)/loss attributable to the noncontrolling interest								(2		)	66			*
Net income attributable to The New York Times Company common stockholders								$	21,912		$	13,181		66.2	%


*	Represents a change equal to or in excess of 100% or not meaningful.

Revenues

~~Circulation~~Subscription Revenues

~~Circulation~~Subscription revenues consist of revenues from subscriptions to our print and digital products ~~including~~(which include our ~~digital-only subscription packages, e-readers~~news product, as well as our Crossword and ~~replica editions. These~~Cooking products), and single-copy and bulk sales of our print products (which represent less than 10% 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 ~~(through home-delivery subscriptions and single-copy and bulk sales)~~ and digital-only subscriptions, and the rates charged to the respective customers.

~~Circulation~~Subscription revenues increased ~~11.2%~~7.5% in the first quarter of ~~2017~~2018 compared with the same prior-year period, primarily due to ~~digital subscription initiatives and a print home-delivery price increase for The New York Times newspaper, partially offset by a reduction~~an approximately 26% growth in the number of ~~print copies sold.~~subscriptions to the Company’s digital subscription products. Revenues from our digital-only news subscriptions (including e-readers and replica editions) were ~~$72.9~~$90.6 million in the first quarter of ~~2017,~~2018, an increase of ~~39.9%~~24.3% from the first quarter of ~~2016.~~2017.

The following table summarizes ~~first-quarter 2017 and 2016~~ digital-only subscription ~~revenues:~~revenues for the first quarters of 2018 and 2017:


	For the Quarters Ended							For the Quarters Ended
(In thousands)	March 26, 2017		March 27, 2016		% Change			April 1, 2018		March 26, 2017		% Change
Digital-only subscription revenues:
Digital-only news product subscription revenues	$	72,861	$	52,075	39.9	%
Digital Crossword product subscription revenues	2,956		2,098		40.9	%
News product subscription revenues⁽¹⁾								$	90,577	$	72,861	24.3	%
Other product subscription revenues⁽²⁾								4,835		2,956		63.6	%
Total digital-only subscription revenues	$	75,817	$	54,173	40.0	%		$	95,412	$	75,817	25.8	%
⁽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.							⁽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.							⁽²⁾Includes revenues from standalone subscriptions to the Company’s Crossword and Cooking products.

The following table summarizes ~~first-quarter 2017~~digital-only subscriptions as of the end of the first quarters of 2018 and ~~2016 digital-only subscriptions:~~ 2017:

For the Quarters Ended
(In thousands) March 26, 2017 March 27, 2016 % Change
Digital-only subscriptions:
Digital-only news product subscriptions 1,916
1,161
65.0 %
Digital Crossword product subscriptions 285
196
45.4 %
Total digital-only subscriptions 2,201
1,357
62.2 %



	For the Quarters Ended
(In thousands)	April 1, 2018	March 26, 2017	% Change
Digital-only subscriptions⁽¹⁾:
News product subscriptions⁽²⁾	2,330	1,934	20.5	%
Other product subscriptions⁽³⁾	453	283	60.1	%
Total digital-only subscriptions	2,783	2,217	25.5	%
⁽¹⁾ Reflects certain immaterial prior-period corrections.
⁽²⁾Includes 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.
⁽³⁾Includes standalone subscriptions to the Company’s Crossword and Cooking products.

Advertising Revenues

Advertising revenues are derived from the sale of our advertising products and services on our print, web and mobile platforms. These revenues are primarily determined by the volume, rate and mix of advertisements. Display advertising revenue is principally from advertisers promoting products, services or brands in print in the form of column-inch ads, and on our web and mobile platforms in the form of banners, video, rich media and other interactive ads. Display advertising also includes branded content on The Times’s platforms. Classified advertising revenue includes line-ads sold in the major categories of real estate, help wanted, automotive and other. Other advertising revenue primarily includes creative services fees associated with, among other things, our branded content studio; revenue from preprinted advertising, also known as free-standing inserts; and revenue generated from branded bags in which our newspapers are delivered.

Advertising revenues (print and digital) by category were as follows:

For the Quarters Ended
March 26, 2017 March 27, 2016 % Change
(In thousands) Print Digital Total Print Digital Total Print Digital Total
Display $ 71,627
$ 42,976
$ 114,603
$ 88,637
$ 37,384
$ 126,021
(19.2 )% 15.0 % (9.1 )%
Classified and Other 8,730
6,695
15,425
9,262
4,397
13,659
(5.7 )% 52.3 % 12.9 %
Total advertising $ 80,357
$ 49,671
$ 130,028
$ 97,899
$ 41,781
$ 139,680
(17.9 )% 18.9 % (6.9 )%

~~Below is a percentage breakdown of advertising revenues (print and digital) for the first quarters of 2017 and 2016:~~

Display Classified and Other Total
2017 88 % 12 % 100 %
2016 90 % 10 % 100 %



	For the Quarters Ended
	April 1, 2018						March 26, 2017						% Change
(In thousands)	Print		Digital		Total		Print		Digital		Total		Print		Digital		Total
Display	$	70,805	$	38,700	$	109,505	$	71,627	$	42,976	$	114,603	(1.1	)%	(9.9	)%	(4.4	)%
Classified and Other	8,139		8,003		16,142		8,730		6,695		15,425		(6.8	)%	19.5	%	4.6	%
Total advertising	$	78,944	$	46,703	$	125,647	$	80,357	$	49,671	$	130,028	(1.8	)%	(6.0	)%	(3.4	)%

Print advertising revenues, which represented ~~61.8%~~62.8% of total advertising revenues for the first quarter of ~~2017,~~2018, declined ~~17.9%~~1.8% to ~~$80.4~~$78.9 million in the first quarter of ~~2017~~2018 compared with ~~$97.9~~$80.4 million in the same prior-year period. The decrease ~~in print advertising revenues resulted from steep declines in display advertising, primarily~~was driven by a decline in the luxury, ~~goods, technology~~retail, and ~~telecommunications,~~entertainment categories which were mostly offset by growth in the media, advocacy, and financial ~~and travel~~ categories.

Digital advertising revenues, which represented ~~38.2%~~37.2% of total advertising revenues for the first quarter of ~~2017, increased 18.9%~~2018, declined 6.0% to ~~$49.7~~$46.7 million in the first quarter of 2018 compared with ~~$41.8~~$49.7 million in the same prior-year period. The ~~increase~~decrease primarily reflected a continued decrease in ~~digital~~traditional website display advertising, ~~revenues primarily reflected~~which was partially offset by increases in revenue from ~~our programmatic channels, our mobile platform and branded content, which were partially offset by declines in traditional website display~~smartphone advertising.

Classified and ~~Other~~other advertising revenues increased ~~12.9%~~4.6% in the first quarter of ~~2017,~~2018, compared with the same prior-year period, primarily due to an increase in ~~digital creative services fees, offset by a decrease in the real estate and other categories of classified advertising.~~podcast revenues.

Other Revenues

Other revenues primarily consist of revenues from news services/syndication, digital ~~archives,~~archive licensing, building rental income, ~~our~~affiliate referrals, NYT Live ~~business, e-commerce~~(our live events business), retail commerce and ~~affiliate referrals.~~commercial printing.

Other revenues increased ~~20.9%~~5.0% in the first quarter of ~~2017,~~2018, compared with the same prior-year period, largely due to affiliate referral revenue associated with ~~our acquisition of~~ the product review and recommendation ~~websites, The~~website, Wirecutter, and ~~The Sweethome.~~commercial printing revenue, which was partially offset by a decline in revenue from our live events business.

Operating Costs

Operating costs were as follows:


	For the Quarters Ended						For the Quarters Ended
(In thousands)	March 26, 2017		March 27, 2016		% Change		April 1, 2018		March 26, 2017		% Change
Production costs:
Wages and benefits	$	90,778	$	92,471	(1.8	)%	$	91,993	$	91,014	1.1	%
Raw materials	16,930		17,875		(5.3	)%	16,692		16,930		(1.4	)%
Other	45,528		47,516		(4.2	)%
Other production costs							45,656		45,353		0.7	%
Total production costs	153,236		157,862		(2.9	)%	154,341		153,297		0.7	%
Selling, general and administrative costs	198,004		178,246		11.1	%	208,623		199,137		4.8	%
Depreciation and amortization	16,153		15,472		4.4	%	15,041		16,153		(6.9	)%
Total operating costs	$	367,393	$	351,580	4.5	%	$	378,005	$	368,587	2.6	%

Production Costs

Production costs include items such as labor costs, raw materials, and machinery and equipment expenses related to news-gathering and production activity, as well as costs related to producing branded content.

Production costs ~~decreased~~increased in the first quarter of ~~2017~~2018 compared with the first quarter of ~~2016,~~2017, driven by ~~a decrease~~an increase in wage and benefits ($1.0 million) and other expenses ($~~2.0 million) and wages and benefits ($1.7~~0.3 million), partially offset by ~~an increase~~a decline in ~~outside services costs~~raw materials ($~~1.5~~0.2 million). Other expenses decreased primarily as a result of outside printing expenses. Raw materials expense decreased in the first quarter of 2017 compared with the first quarter of 2016 due to lower newsprint and magazine consumption, partially offset by higher newsprint pricing.

Selling, General and Administrative Costs

Selling, general and administrative costs include costs associated with the selling, marketing and distribution of products as well as administrative expenses.

Selling, general and administrative costs ~~increased~~ in the first quarter of ~~2017~~2018 increased by $9.5 million compared with the first quarter of ~~2016, primarily due to an increase in promotion and marketing~~2017 as higher compensation costs ($~~12.8~~8.4 million) and ~~compensation~~other miscellaneous expenses ($4.1 million) were partially offset by lower print production and distribution costs ($~~6.6~~2.4 million).

Depreciation and Amortization

Depreciation and amortization costs ~~increased~~ in the first quarter of ~~2017~~2018 decreased by $1.1 million compared with the ~~same prior-year period,~~first quarter of 2017 primarily ~~due to the Company’s acquisitions of digital marketing agencies, Hello Society and Fake Love, and product review and recommendation websites, The Wirecutter and The Sweethome.~~as assets became fully depreciated in prior periods.

Other Items

See Note 78 of the Notes to the Condensed Consolidated Financial Statements for additional information regarding other items, including costs related to the redesign of our headquarters building.

NON-OPERATING ITEMS

Other Components of Net Periodic Benefit Costs/(Income)

See Note 10 of the Notes to the Condensed Consolidated Financial Statements for information regarding other components of net periodic benefit costs/(income).

Joint Ventures

See Note 56 of the Notes to the Condensed Consolidated Financial Statements for information regarding our joint venture investments.

Interest Expense and other, Net

See Note 67 of the Notes to the Condensed Consolidated Financial Statements for information regarding interest ~~expense.~~expense and other, net.

Income Taxes

See Note 1011 of the Notes to the Condensed Consolidated Financial Statements for information regarding income taxes.

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, ~~non-operating retirement~~multiemployer pension plan withdrawal costs and special items (or adjusted operating profit); and

operating costs before depreciation, amortization, severance and ~~non-operating retirement~~multiemployer pension plan withdrawal costs (or adjusted operating costs).

The special ~~items~~item in ~~2017~~2018 consisted of:

A ~~$2.4~~$1.9 million ~~pre-tax expense~~charge ($1.4 million after tax or $.01 per share) ~~related to~~in connection with the ~~planned~~ redesign and consolidation of space in our headquarters building.

The special ~~items~~item in ~~2016~~2017 consisted of:

A ~~$41.4~~$2.4 million ~~pre-tax loss~~charge ($~~20.1~~1.4 million after tax ~~and net of noncontrolling interest,~~ or ~~$.13~~$.01 per share) ~~from joint ventures related to~~in connection with the ~~announced closure~~redesign and consolidation of ~~the paper mill operated by Madison Paper Industries,~~space in ~~which the Company has an investment through a subsidiary.~~our headquarters building.

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.

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 Condensed 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.

Revised the definition of adjusted operating profit and adjusted operating costs to exclude 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 operating costs under GAAP, or adjusted 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, amortization of actuarial gain and loss components and amortization of prior service credits of single employer pension expense;

interest cost, amortization of actuarial gain and loss components and amortization of prior service credits of retiree medical expense; and

multiemployer pension plan withdrawal costs, not otherwise included as special items.

These non-operating retirement costs are primarily tied to financial market performance and changes in market interest rates and investment performance. Non-operating retirement costs do not include service costs, which we believe reflect the ongoing operating costs of providing pension and retiree medical benefits to our employees. We consider non-operating retirement costs to be outside the performance of our ongoing core business operations and believe that presenting operating results excluding non-operating retirement costs, in addition to our GAAP operating results, provides increased transparency and a better understanding of the underlying trends in our operating business performance.

Adjusted diluted earnings per share provides useful information in evaluating our period-to-period performance because it eliminates items that we do not consider to be indicative of earnings from ongoing operating activities. Adjusted operating profit is useful in evaluating the ongoing performance of our businesses 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 ~~non-operating retirement~~multiemployer pension plan withdrawal costs. Adjusted operating costs, which exclude these items, provide investors with helpful supplemental information on our 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.

~~Non-operating retirement costs include:~~

~~interest cost, expected return on plan assets and amortization of actuarial gain and loss components of pension expense;~~

~~interest cost and amortization of actuarial gain and loss components of retiree medical expense; and~~

~~all expenses associated with multiemployer pension plan withdrawal obligations, not otherwise included as special items.~~

These non-operating retirement costs are primarily tied to financial market performance and changes in market interest rates and investment performance. Non-operating retirement costs do not include service costs and amortization of prior service costs for pension and retiree medical benefits, which we believe reflect the ongoing operating costs of providing pension and retiree medical benefits to our employees. We consider non-operating retirement costs to be outside the performance of our ongoing core business operations and believe that presenting operating results excluding non-operating retirement costs, in addition to our GAAP operating results, provides increased transparency and a better understanding of the underlying trends in our operating business performance.

Reconciliations of these non-GAAP financial measures ~~from, respectively, diluted earnings per share from continuing operations, operating profit and operating costs,~~to the most directly comparable GAAP ~~items,~~measures are set out in the tables below.



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)
	For the Quarters Ended
	April 1, 2018			March 26, 2017			⁽¹⁾	% Change
Diluted earnings per share from continuing operations	$	0.13		$	0.08			62.5	%
Add:
Severance	0.01			0.01				—	%
Non-operating retirement costs	0.02			0.01				100.0	%
Special item:
Headquarters redesign and consolidation	0.01			0.01				—	%
Income tax expense of adjustments	(0.01		)	(0.01		)		—	%
Adjusted diluted earnings per share from continuing operations ⁽²⁾	$	0.17		$	0.10			70.0	%

⁽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.

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)
For the Quarters Ended
March 26, 2017
March 27, 2016 % Change
Diluted earnings/(loss) per share from continuing operations $ 0.08
$ (0.05 ) *
Add:
Severance 0.01
0.02
(50.0 )%
Non-operating retirement costs 0.02
0.03
(33.3 )%
Special items:
Headquarters redesign and consolidation 0.01
—
*
Loss from joint ventures, net of noncontrolling interest —
0.21
*
Income tax expense of adjustments (0.01 ) (0.11 ) (90.9 )%
Adjusted diluted earnings per share from continuing operations ⁽¹⁾
$ 0.11
$ 0.10
10.0 %



Reconciliation of operating profit before depreciation & amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit)
	For the Quarters Ended
(In thousands)	April 1, 2018		March 26, 2017		⁽¹⁾	% Change
Operating profit	$	34,055	$	27,815		22.4	%
Add:
Depreciation & amortization	15,041		16,153			(6.9	)%
Severance	2,389		1,600			49.3	%
Multiemployer pension plan withdrawal costs	2,104		2,273			(7.4	)%
Special items:
Headquarters redesign and consolidation	1,888		2,402			(21.4	)%
Adjusted operating profit	$	55,477	$	50,243		10.4	%


~~(1)~~	~~Amounts may not add due to rounding.~~


*	~~Represents a change equal to or in excess of 100% or not meaningful~~

⁽¹⁾ Revised to reflect recast of GAAP results to conform with current period presentation and the revised definition of adjusted operating profit. See “—Impact of Modification of Non-GAAP Measures” for more detail.



Reconciliation of operating costs before depreciation & amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs)
	For the Quarters Ended
(In thousands)	April 1, 2018		March 26, 2017		⁽¹⁾	% Change
Operating costs	$	378,005	$	368,587		2.6	%
Less:
Depreciation & amortization	15,041		16,153			(6.9	)%
Severance	2,389		1,600			49.3	%
Multiemployer pension plan withdrawal costs	2,104		2,273			(7.4	)%
Adjusted operating costs	$	358,471	$	348,561		2.8	%

⁽¹⁾ Revised to reflect recast of GAAP results to conform with current period presentation and the revised definition of adjusted operating costs. See “—Impact of Modification of Non-GAAP Measures” for more detail.

2129

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 quarter of 2017 reflecting the recast of its financial statements for such period 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

	First Quarter
	2017 Previously Reported			Adjustment				2017 Recast
Diluted earnings per share from continuing operations	$	0.08		$	—			$	0.08
Add:
Severance	0.01			—				0.01
Non-operating retirement costs	0.02			(0.01		)	⁽²⁾	0.01
Special items:
Headquarters redesign and consolidation	0.01			—				0.01
Income tax expense of adjustments	(0.01		)	—				(0.01		)
Adjusted diluted earnings per share from continuing operations ⁽¹⁾	$	0.11		$	(0.01	)		$	0.10
⁽¹⁾ Amounts may not add due to rounding.
⁽²⁾ Reflects the inclusion of amortization of prior service credits in the definition of non-operating retirement costs.

Adjustments made to the reconciliation of operating profit to adjusted operating profit

	First Quarter
(In thousands)	2017 Previously Reported			Adjustment				2017 Recast
Operating profit	$	29,009		$	(1,194	)	⁽¹⁾	$	27,815
Add:
Depreciation & amortization	16,153			—				16,153
Severance	1,600			—				1,600
Non-operating retirement costs	3,503			(3,503		)	⁽²⁾	—
Multiemployer pension plan withdrawal costs	—			2,273			⁽²⁾	2,273
Special items:
Headquarters redesign and consolidation	2,402			—				2,402
Adjusted operating profit	$	52,667		$	(2,424	)	⁽³⁾	$	50,243
⁽¹⁾ Recast as a result of the adoption of ASU 2017-07. See Note 2 of the Notes to the Condensed 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 costs.
⁽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 rather than operating profit. For the first quarter of 2017, $(2.4) million amortization of prior service credits have been reclassified out of operating profit thereby reducing operating profit and adjusted operating profit.

Reconciliation of operating profit before depreciation & amortization, severance, non-operating retirement costs and special items (or adjusted operating profit)
For the Quarters Ended
(In thousands) March 26, 2017 March 27, 2016 % Change
Operating profit $ 29,009
$ 27,935
3.8 %
Add:
Depreciation & amortization 16,153
15,472
4.4 %
Severance 1,600
3,600
(55.6 )%
Non-operating retirement costs 3,503
4,536
(22.8 )%
Special items:
Headquarters redesign and consolidation 2,402
—
*
Adjusted operating profit $ 52,667
$ 51,543
2.2 %


*	~~Represents a change equal to or in excess of 100% or not meaningful~~

Reconciliation of operating costs before depreciation & amortization, severance and non-operating retirement costs (or adjusted operating costs)
For the Quarters Ended
(In thousands) March 26, 2017 March 27, 2016 % Change
Operating costs $ 367,393
$ 351,580
4.5 %
Less:
Depreciation & amortization 16,153
15,472
4.4 %
Severance 1,600
3,600
(55.6 )%
Non-operating retirement costs 3,503
4,536
(22.8 )%
Adjusted operating costs $ 346,137
$ 327,972
5.5 %





Adjustments made to the reconciliation of operating costs to adjusted operating costs

	First Quarter
(In thousands)	2017 Previously Reported			Adjustment				2017 Recast
Operating costs	$	367,393		$	1,194		⁽¹⁾	$	368,587
Less:
Depreciation & amortization	16,153			—				16,153
Severance	1,600			—				1,600
Non-operating retirement costs	3,503			(3,503		)	⁽²⁾	—
Multiemployer pension plan withdrawal costs	—			2,273			⁽²⁾	2,273
Adjusted operating costs	$	346,137		$	2,424		⁽³⁾	$	348,561
⁽¹⁾ Recast as a result of the adoption of ASU 2017-07. See Note 2 of the Notes to the Condensed 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 rather than operating costs. For the first quarter of 2017, $(2.4) million amortization of prior service credits have been reclassified out of operating costs thereby increasing operating costs and adjusted operating costs.

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)	First Quarter of 2017
Pension:
Interest cost	$	17,550
Expected return on plan assets	(26,136		)
Amortization and other costs	8,441
Amortization of prior service credit ⁽¹⁾	(486		)
Non-operating pension income	(631		)
Other postretirement benefits:
Interest cost	470
Amortization and other costs	905
Amortization of prior service credit ⁽¹⁾	(1,938		)
Non-operating other postretirement benefits income	(563		)
Other components of net periodic benefit income	(1,194		)
Multiemployer pension plan withdrawal costs	2,273
Total non-operating retirement costs	$	1,079

⁽¹⁾ The total amortization of prior service credit was $2.4 million for the first quarter of 2017.

2231

LIQUIDITY AND CAPITAL RESOURCES

We believe our cash balance and cash provided by operations, in combination with other sources of cash, will be sufficient to meet our financing needs over the next twelve months. As of ~~March 26, 2017,~~April 1, 2018, we had cash, cash equivalents and short- and long-term marketable securities of ~~$752.5~~$749.3 million and total debt and capital lease obligations of ~~$247.8~~$251.1 million. Accordingly, our cash, cash equivalents and marketable securities exceeded total debt and capital lease obligations by ~~$504.7~~$498.2 million. Our cash and investment balances have increased since the end of ~~2016,~~2017, primarily due to higher ~~overall revenue,~~cash proceeds from stock option exercises and operating activities partially offset by ~~variable compensation payments~~cash capital expenditures of ~~approximately $41~~$25 million.

On January 14, 2015, the Board of Directors approved an authorization of $101.1 million to repurchase shares of the Company’s Class A Common Stock. As of March 26, 2017, the Company had repurchased 6,690,905 Class A shares under this authorization for a cost of $84.9 million (excluding commissions) and $16.2 million remained. Our Board of Directors has authorized us to purchase shares under this authorization from time to time, subject to market conditions and other factors. There is no expiration date with respect to this authorization.

We have paid quarterly dividends of ~~$0.04~~$.04 per share on the Class A and Class B Common Stock since late 2013. 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 ~~addition,~~March 2009, we entered into an agreement to sell and simultaneously lease back the ~~Board~~Condo Interest in our headquarters building. The sale price for the Condo Interest was $225.0 million less transaction costs, for net proceeds of ~~Directors will consider restrictions~~approximately $211 million. We have an option, exercisable in ~~any existing indebtedness.~~the second half 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.

The Company and UPM-Kymmene Corporation (“UPM”), a Finnish paper manufacturing company, are partners through subsidiary companies in Madison, ~~Paper Industries,~~ which previously operated a supercalendered paper mill in ~~Maine (“Madison”).~~Maine. 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 March 2016, UPM announced the closure of the~~The paper mill ~~which occurred~~was closed in May 2016. The Company’s joint venture in Madison is currently being liquidated. In ~~the fourth quarter~~2018, we expect to receive a cash distribution of ~~2016, Madison sold certain assets at the mill site and we recognized a gain of $3.9~~approximately $12 million related to the ~~sale. In April 2017,~~wind down of our Madison entered into an agreement to sell the remaining assets at the mill site (consisting of hydro power assets). We expect the sale of the hydro power assets to be completed later this year and we believe the proceeds from the sale will be more than sufficient to cover Madison’s obligations and therefore allow us to reverse our liability at that time.investment. See Note 56 of the Notes to the Condensed Consolidated Financial Statements for more information on the Company’s investment in Madison.

Capital Resources

Sources and Uses of Cash

Cash flows provided by/(used in) by category were as follows:


	For the Quarters Ended								For the Quarters Ended
(In thousands)	March 26, 2017			March 27, 2016			% Change		April 1, 2018			March 26, 2017			% Change
Operating activities	$	30,131		$	(12,009	)	(350.9	)%	$	17,899		$	30,131		(40.6	)%
Investing activities	$	29,820		$	122,765		(75.7	)%	$	(12,141	)	$	29,835		*
Financing activities	$	(9,892	)	$	(30,958	)	(68.0	)%	$	25,024		$	(9,892	)	*

* Represents a change equal to or in excess of 100% or not meaningful

Operating Activities

Cash from operating activities is generated by cash receipts from ~~circulation,~~subscriptions, advertising sales and other ~~revenue transactions.~~revenue. Operating cash outflows include payments for employee compensation, pension and other benefits, raw materials, interest and income taxes.

Net cash provided by operating activities ~~increased~~decreased in the first quarter of ~~2017~~2018 compared with the same prior-year period due to ~~lower~~higher cash payments made to settle accounts payable, accrued payroll and other liabilities partially offset by higher cash collections from customers and higher net income ~~tax payments and an overall increase in revenues.~~compared to the same prior-year period.

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, ~~restricted cash,~~and acquisitions of new businesses and investments.

Net cash ~~provided by~~used in investing activities in the first quarter of ~~2017~~2018 was primarily related to ~~maturities of marketable securities, partially offset by~~ purchases of marketable securities and capital ~~expenditures.~~expenditures, partially offset by maturities/sales of marketable securities.

Payments for capital expenditures were approximately $25 million in the first quarter of 2018 and $8 million in the first quarter of 2017.

2332

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, ~~and~~ the payment of long-term debt and capital lease ~~obligations.~~obligations and share-based compensation tax withholding.

Net cash ~~used in~~provided by financing activities in the first quarter of ~~2017~~2018 was primarily related to ~~dividend payments~~proceeds from stock option exercises of ~~$6.5~~approximately $40 million, ~~and~~partially offset by share-based compensation tax withholding payments of ~~$3.7~~$8.7 million and dividend payments of $6.5 million.

Restricted Cash

We were required to maintain ~~$24.9~~$18.1 million of restricted cash as of ~~March 26,~~April 1, 2018, and $18.0 million as of December 31, 2017, ~~and December 25, 2016, the majority~~substantially all of which is set aside to collateralize workers’ compensation obligations.

Capital Expenditures

Capital expenditures totaled approximately $19 million and $6 million in the first quarter of 2018 and 2017, respectively. The cash payments related to the capital expenditures totaled approximately $25 million and $8 million in the first quarters of 2018 and 2017, respectively. The increase was primarily driven by certain improvements at our printing and distribution facility in College Point, New York and the ongoing redesign and consolidation of space in our headquarters building.

Third-Party Financing

As of ~~March 26, 2017,~~April 1, 2018, our current indebtedness consisted of the repurchase option related to a sale-leaseback of a portion of our New York headquarters. See Note 67 of the Notes to the Condensed Consolidated Financial Statements for information regarding our total debt and capital lease obligations. See Note 89 of the Notes to the Condensed Consolidated Financial Statements for information regarding the fair value of our long-term debt.

CRITICAL ACCOUNTING POLICIES

Our critical accounting policies are detailed in our Annual Report on Form 10-K for the year ended December ~~25, 2016. As~~31, 2017. Other than as described in Note 2 of ~~March 26, 2017,~~the Notes to the Condensed Consolidated Financial Statements, as of April 1, 2018, our critical accounting policies have not changed from December ~~25, 2016.~~31, 2017.

CONTRACTUAL OBLIGATIONS & OFF-BALANCE SHEET ARRANGEMENTS

Our contractual obligations and off-balance sheet arrangements are detailed in our Annual Report on Form 10-K for the year ended December ~~25, 2016.~~31, 2017. As of ~~March 26, 2017,~~April 1, 2018, our contractual obligations and off-balance sheet arrangements have not changed materially from December ~~25, 2016.~~31, 2017.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements that relate to future events or our future financial performance. We may also make written and oral 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. Any forward-looking statements are and will be based upon our then-current 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 to risks and uncertainties that could cause actual results to differ materially from those anticipated in any 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 our Annual Report on Form 10-K for the year ended December ~~25, 2016,~~31, 2017, as well as other risks and factors identified from time to time in our SEC filings.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our Annual Report on Form 10-K for the year ended December ~~25, 2016,~~31, 2017, details our disclosures about market risk. As of ~~March 26, 2017,~~April 1, 2018, there were no material changes in our market risks from December ~~25, 2016.~~31, 2017.

Item 4. 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) as of ~~March 26, 2017.~~April 1, 2018. 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 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.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in our internal control over financial reporting during the quarter ended ~~March 26, 2017,~~April 1, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

2534

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are involved in various legal actions incidental to our business that are now pending against us. These actions are generally for amounts greatly in excess of the payments, if any, that may be required to be made. See Note 1415 of the Notes to the Condensed Consolidated Financial Statements for a description of certain matters, which is incorporated herein by reference. 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 1A. Risk Factors

There have been no material changes to our risk factors as set forth in “Item 1A—Risk Factors” in our Annual Report on Form 10-K for the year ended December ~~25, 2016.~~31, 2017.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On January 14, 2015, the Board of Directors approved an authorization of $101.1 million to repurchase shares of the Company’s Class A Common Stock. The Company did not repurchase any shares during the first quarter of 2018. As of April 1, 2018, the Company had repurchased 6,690,905 Class A shares under this authorization for a cost of $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 Board 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.

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)
December 26, 2016 - January 29, 2017 — — — $ 16,236,612
January 30, 2017 - February 26, 2017 — — — $ 16,236,612
February 27, 2017 - March 26, 2017 — — — $ 16,236,612
Total for the first quarter of 2017 — — — $ 16,236,612

~~(1)~~

On January 14, 2015, the Board of Directors approved an authorization of $101.1 million to repurchase shares of the Company’s Class A Common Stock. The Company did not repurchase any shares during the first quarter of 2017. As of March 26, 2017, repurchases 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 Board 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.

Item 6. Exhibits

~~An exhibit index has been filed as part of this Quarterly Report on Form 10-Q and is incorporated herein by reference.~~

~~SIGNATURES~~

~~Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.~~



		~~THE NEW YORK TIMES COMPANY~~
		~~(Registrant)~~

~~Date:~~	~~May 3, 2017~~	~~/s/ JAMES M. FOLLO~~
		~~James M. Follo~~ ~~Executive Vice President and~~ ~~Chief Financial Officer~~ ~~(Principal Financial Officer)~~

~~Exhibit Index to Quarterly Report on Form 10-Q~~

~~For the Quarter Ended March 26, 2017~~



Exhibit No.

~~10.1~~		~~Amendment No. 3 to The New York Times Companies Supplemental Retirement and Investment Plan, amended March 10, 2017, and effective January 1, 2017.~~

~~10.2~~		~~Form of Non-Employee Director Restricted Stock Unit Award Agreement under the Company’s 2010 Incentive Compensation Plan.~~

12		~~Ratio of Earnings to Fixed Charges.~~

31.1		Rule 13a-14(a)/15d-14(a) Certification.

31.2		Rule 13a-14(a)/15d-14(a) Certification.

32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		THE NEW YORK TIMES COMPANY
		(Registrant)

Date:	May 4, 2018	/s/ ROLAND CAPUTO
		Roland Caputo Executive Vice President and Chief Financial Officer (Principal Financial Officer)

2837



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)
December 26, 2016 - January 29, 2017	—	—	—	$	16,236,612
January 30, 2017 - February 26, 2017	—	—	—	$	16,236,612
February 27, 2017 - March 26, 2017	—	—	—	$	16,236,612
Total for the first quarter of 2017	—	—	—	$	16,236,612