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 ~~April 1, 2018~~March 31, 2019

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

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock	NYT	New York Stock Exchange

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

IfIf 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 27, 2018~~May 3, 2019 (exclusive of treasury shares):



Class A Common Stock	~~164,067,510~~165,197,690	shares
Class B Common Stock	~~803,763~~803,408	shares

THE NEW YORK TIMES COMPANY

INDEX


	ITEM NO.
PART I		Financial Information	1		Financial Information	1
Item	1	Financial Statements	1	1	Financial Statements	1
					Condensed Consolidated Balance Sheets as of March 31, 2019 (unaudited) and December 30, 2018	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 31, 2019 and April 1, 2018	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 31, 2019 and April 1, 2018	4
		Condensed Consolidated Statements of Comprehensive Income (unaudited) for the quarters ended April 1, 2018 and March 26, 2017	4		Condensed Consolidated Statements of Changes In Stockholder’s Equity (unaudited) as of March 31, 2019 and April 1, 2018	5
		Condensed Consolidated Statements of Cash Flows (unaudited) for the quarters ended April 1, 2018 and March 26, 2017	5		Condensed Consolidated Statements of Cash Flows (unaudited) for the quarters ended March 31, 2019 and April 1, 2018	6
		Notes to the Condensed Consolidated Financial Statements	6		Notes to the Condensed Consolidated Financial Statements	7
Item	2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22	2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item	3	Quantitative and Qualitative Disclosures about Market Risk	33	3	Quantitative and Qualitative Disclosures about Market Risk	30
Item	4	Controls and Procedures	34	4	Controls and Procedures	31

PART II		Other Information	35		Other Information	32
Item	1	Legal Proceedings	35	1	Legal Proceedings	32
Item	1A	Risk Factors	35	1A	Risk Factors	32
Item	2	Unregistered Sales of Equity Securities and Use of Proceeds	35	2	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item	6	Exhibits	36	6	Exhibits	33

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)


	April 1, 2018		December 31, 2017		March 31, 2019		December 30, 2018
	(Unaudited)				(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	213,814	$	182,911	$	235,674	$	241,504
Short-term marketable securities	299,834		308,589		388,077		371,301
Accounts receivable (net of allowances of $13,960 in 2018 and $14,542 in 2017)	151,416		184,885
Accounts receivable (net of allowances of $13,334 in 2019 and $13,249 in 2018)					180,055		222,464
Prepaid expenses	23,387		22,851		24,225		25,349
Other current assets	51,564		50,463		56,090		33,328
Total current assets	740,015		749,699		884,121		893,946
Other assets
Long-term marketable securities	235,641		241,411		185,083		213,558
Investments in joint ventures	1,751		1,736
Property, plant and equipment (less accumulated depreciation and amortization of $956,170 in 2018 and $945,401 in 2017)	645,519		640,939
Property, plant and equipment (less accumulated depreciation and amortization of $926,280 in 2019 and $911,845 in 2018)					635,444		638,846
Goodwill	145,612		143,549		138,949		140,282
Deferred income taxes	149,335		153,046		127,101		128,431
Miscellaneous assets	179,221		169,400		223,865		182,060
Total assets	$	2,097,094	$	2,099,780	$	2,194,563	$	2,197,123

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)


	April 1, 2018			December 31, 2017			March 31, 2019			December 30, 2018
	(Unaudited)						(Unaudited)
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	114,220		$	125,479		$	106,237		$	111,553
Accrued payroll and other related liabilities	67,391			104,614			68,107			104,543
Unexpired subscriptions revenue	85,361			75,054			92,739			84,044
Short-term debt and finance lease obligations							254,530			253,630
Accrued expenses and other	103,457			110,510			114,698			119,534
Total current liabilities	370,429			415,657			636,311			673,304
Other liabilities
Long-term debt and capital lease obligations	251,092			250,209
Pension benefits obligation	392,937			405,422			353,139			362,940
Postretirement benefits obligation	47,979			48,816			39,530			40,391
Other	76,580			82,313			105,769			77,847
Total other liabilities	768,588			786,760			498,438			481,178
Stockholders’ equity
Common stock of $.10 par value:
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
Class A – authorized: 300,000,000 shares; issued: 2019 – 174,017,535; 2018 – 173,158,414 (including treasury shares: 2019 – 8,870,801; 2018 – 8,870,801)							17,402			17,316
Class B – convertible – authorized and issued shares: 2019 – 803,408; 2018 – 803,408							80			80
Additional paid-in capital	199,029			164,275			197,626			206,316
Retained earnings	1,422,123			1,310,136			1,527,859			1,506,004
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	9,575			6,328			3,459			4,677
Funded status of benefit plans	(516,017		)	(427,819		)	(516,700		)	(520,308		)
Net unrealized loss on available-for-sale securities	(2,880		)	(1,538		)	(561		)	(2,093		)
Total accumulated other comprehensive loss, net of income taxes	(509,322		)	(423,029		)	(513,802		)	(517,724		)
Total New York Times Company stockholders’ equity	957,991			897,279			1,057,954			1,040,781
Noncontrolling interest	86			84			1,860			1,860
Total stockholders’ equity	958,077			897,363			1,059,814			1,042,641
Total liabilities and stockholders’ equity	$	2,097,094		$	2,099,780		$	2,194,563		$	2,197,123

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
	April 1, 2018			March 26, 2017			March 31, 2019		April 1, 2018
	(13 weeks)						(13 weeks)
Revenues
Subscription	$	260,593		$	242,375		$	270,810	$	260,593
Advertising	125,647			130,028			125,088		125,647
Other	27,708			26,401			43,164		27,708
Total revenues	413,948			398,804			439,062		413,948
Operating costs
Production costs:
Wages and benefits	91,993			91,014			102,908		91,993
Raw materials	16,692			16,930			19,838		16,692
Other production costs	45,656			45,353			45,337		45,656
Total production costs	154,341			153,297			168,083		154,341
Selling, general and administrative costs	208,623			199,137			221,463		208,623
Depreciation and amortization	15,041			16,153			14,918		15,041
Total operating costs	378,005			368,587			404,464		378,005
Headquarters redesign and consolidation	1,888			2,402			—		1,888
Operating profit	34,055			27,815			34,598		34,055
Other components of net periodic benefit costs/(income)	2,028			(1,194		)
Other components of net periodic benefit costs							1,835		2,028
Gain from joint ventures	15			173			—		15
Interest expense and other, net	4,877			5,325			1,303		4,877
Income from continuing operations before income taxes	27,165			23,857			31,460		27,165
Income tax expense	5,251			10,742			1,304		5,251
Net income	21,914			13,115			30,156		21,914
Net (income)/loss attributable to the noncontrolling interest	(2		)	66
Net income attributable to the noncontrolling interest							—		(2		)
Net income attributable to The New York Times Company common stockholders	$	21,912		$	13,181		$	30,156	$	21,912
Average number of common shares outstanding:
Basic	164,094			161,402			165,674		164,094
Diluted	166,237			162,592			167,129		166,237
Basic earnings per share attributable to The New York Times Company common stockholders	$	0.13		$	0.08		$	0.18	$	0.13
Diluted earnings per share attributable to The New York Times Company common stockholders	$	0.13		$	0.08		$	0.18	$	0.13
Dividends declared per share	$	0.04		$	0.04		$	0.05	$	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
	April 1, 2018			March 26, 2017		March 31, 2019			April 1, 2018
	(13 weeks)					(13 weeks)
Net income	$	21,914		$	13,115	$	30,156		$	21,914
Other comprehensive income, before tax:
Income on foreign currency translation adjustments	2,273			2,175
(Loss)/income on foreign currency translation adjustments						(1,649		)	2,273
Pension and postretirement benefits obligation	9,760			6,921		4,896			9,760
Net unrealized loss on available-for-sale securities	(1,371		)	—
Net unrealized gain/(loss) on available-for-sale securities						2,074			(1,371		)
Other comprehensive income, before tax	10,662			9,096		5,321			10,662
Income tax expense	2,820			3,531		1,399			2,820
Other comprehensive income, net of tax	7,842			5,565		3,922			7,842
Comprehensive income	29,756			18,680		34,078			29,756
Comprehensive (income)/loss attributable to the noncontrolling interest	(2		)	66
Comprehensive income attributable to the noncontrolling interest						—			(2		)
Comprehensive income attributable to The New York Times Company common stockholders	$	29,754		$	18,746	$	34,078		$	29,754

See Notes to Condensed Consolidated Financial Statements.

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands, except share data)



	Capital Stock - Class A and Class B Common		Additional Paid-in Capital			Retained Earnings			Common Stock Held in Treasury, at Cost			Accumulated Other Comprehensive Loss, Net of Income Taxes			Total New York Times Company Stockholders’ Equity			Non- controlling Interest		Total Stock- holders’ Equity

Balance, December 31, 2017	$	17,108	$	164,275		$	1,310,136		$	(171,211	)	$	(423,029	)	$	897,279		$	84	$	897,363
Impact of adopting new accounting guidance	—		—			96,707			—			(94,135		)	2,572			—		2,572
Net income	—		—			21,912			—			—			21,912			2		21,914
Dividends	—		—			(6,632		)	—			—			(6,632		)	—		(6,632		)
Other comprehensive income	—		—			—			—			7,842			7,842			—		7,842
Issuance of shares:
Stock options – 2,177,326 Class A shares	218		40,221			—			—			—			40,439			—		40,439
Restricted stock units vested – 191,817 Class A shares	19		(2,863		)	—			—			—			(2,844		)	—		(2,844		)
Performance-based awards – 271,841 Class A shares	27		(5,930		)	—			—			—			(5,903		)	—		(5,903		)
Stock-based compensation	—		3,326			—			—			—			3,326			—		3,326
Balance, April 1, 2018	$	17,372	$	199,029		$	1,422,123		$	(171,211	)	$	(509,322	)	$	957,991		$	86	$	958,077

Balance, December 30, 2018	$	17,396	$	206,316		$	1,506,004		$	(171,211	)	$	(517,724	)	$	1,040,781		$	1,860	$	1,042,641
Net income	—		—			30,156			—			—			30,156			—		30,156
Dividends	—		—			(8,301		)	—			—			(8,301		)	—		(8,301		)
Other comprehensive income	—		—			—			—			3,922			3,922			—		3,922
Issuance of shares:
Stock options – 279,510 Class A shares	28		2,937			—			—			—			2,965			—		2,965
Restricted stock units vested – 161,120 Class A shares	16		(3,468		)	—			—			—			(3,452		)	—		(3,452		)
Performance-based awards – 418,491 Class A shares	42		(11,966		)	—			—			—			(11,924		)	—		(11,924		)
Stock-based compensation	—		3,807			—			—			—			3,807			—		3,807
Balance, March 31, 2019	$	17,482	$	197,626		$	1,527,859		$	(171,211	)	$	(513,802	)	$	1,057,954		$	1,860	$	1,059,814

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	For the Quarters Ended						For the Quarters Ended
	April 1, 2018			March 26, 2017			March 31, 2019			April 1, 2018
	(13 weeks)						(13 weeks)
Cash flows from operating activities
Net income/(loss)	$	21,914		$	13,115
Net income							$	30,156		$	21,914
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	15,041			16,153			14,918			15,041
Stock-based compensation expense	4,263			3,958			3,827			4,263
Undistributed (gain)/loss of joint ventures	(15		)	(173		)
Long-term retirement benefit obligations	(3,406		)	(6,458		)	(5,754		)	(3,406		)
Other-net	2,580			1,788			(8,903		)	2,565
Changes in operating assets and liabilities:
Accounts receivable-net	33,469			20,442			42,409			33,469
Other assets	888			442			(4,329		)	888
Accounts payable, accrued payroll and other liabilities	(67,142		)	(34,995		)	(55,835		)	(67,142		)
Unexpired subscriptions	10,307			15,859			8,695			10,307
Net cash provided by operating activities	17,899			30,131			25,184			17,899
Cash flows from investing activities
Purchases of marketable securities	(110,346		)	(80,108		)	(112,029		)	(110,346		)
Maturities of marketable securities	122,936			117,465			108,792			122,936
Purchase of investments – net of proceeds	(484		)	—
Proceeds from/(purchase of) investments – net							41			(484		)
Capital expenditures	(24,882		)	(8,032		)	(10,473		)	(24,882		)
Other-net	635			510			689			635
Net cash (used in)/provided by investing activities	(12,141		)	29,835
Net cash used in investing activities							(12,980		)	(12,141		)
Cash flows from financing activities
Long-term obligations:
Repayment of debt and capital lease obligations	(138		)	(138		)
Repayment of debt and finance lease obligations							(138		)	(138		)
Dividends paid	(6,530		)	(6,473		)	(6,601		)	(6,530		)
Capital shares:
Proceeds from stock option exercises	40,439			445			2,965			40,439
Share-based compensation tax withholding	(8,747		)	(3,726		)	(15,376		)	(8,747		)
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
Net cash (used in)/provided by financing activities							(19,150		)	25,024
Net (decrease)/increase in cash, cash equivalents and restricted cash							(6,946		)	30,782
Effect of exchange rate changes on cash	195			232			(338		)	195
Cash, cash equivalents and restricted cash at the beginning of the period	200,936			125,550			259,799			200,936
Cash, cash equivalents and restricted cash at the end of the period	$	231,913		$	175,856		$	252,515		$	231,913

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 ~~April 1, 2018,~~March 31, 2019, and December ~~31, 2017,~~30, 2018, and the results of operations, changes in stockholder’s equity and cash flows of the Company for the periods ended March 31, 2019, and April 1, ~~2018, and March 26, 2017.~~2018. 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 ~~31, 2017.~~30, 2018. 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 ~~April 1, 2018,~~March 31, 2019, our significant accounting policies, which are detailed in our Annual Report on Form 10-K for the year ended December ~~31, 2017,~~30, 2018, have not changed materially.

Recently Adopted Accounting Pronouncements

In March 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”) 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 the effect of the change in the U.S. federal corporate income tax rate related to the Tax Cuts and Jobs Act is recorded. The amendments are effective for all organizations for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company elected to adopt this guidance to reclassify the stranded tax effects from AOCI to retained earnings in the first quarter of 2018. Our current accounting policy related to releasing tax effects from AOCI for pension and other postretirement benefits is a plan by plan approach. Accordingly, the Company recorded a $94.1 million cumulative effect adjustment for stranded tax effects, such as pension and other postretirement benefits, to “Retained earnings” on January 1, 2018. See Note 13 for more information.

In March 2017, the FASB issued ASU 2017-07, “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 “Operating costs”. The other components of net periodic benefit costs, such as interest cost, amortization of prior service cost and gains or losses are required to be presented outside of operations. The 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



Accounting Standard Update(s)	Topic	Effective Period	Summary
2016-02 2018-10 2018-11 2018-20 2019-01	Leases	Fiscal years beginning after December 30, 2018. Early adoption is permitted.	The Financial Accounting Standards Board (the “FASB”) issued authoritative 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 such lease’s commencement date: (1) a lease liability, which is the obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset representing the lessee’s right to use, or control the use of, the underlying asset for the lease term. A lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities for short-term leases with a term of 12 months or less. The guidance does not fundamentally change lessor accounting; however, some changes have been made to align that guidance with the lessee guidance and other areas within GAAP. The Company adopted this Accounting Standard Update (“ASU”) on December 31, 2018, utilizing the modified retrospective approach with optional transition relief. Prior periods have not been retrospectively adjusted and we recorded approximately $36 million of right-of-use asset and $42 million of lease liability in our Condensed Consolidated Balance Sheet. The difference between the right-of-use asset and lease liability was due to deferred rent relating to periods prior to December 31, 2018. We have elected the practical expedients under ASU 2016-02 and have not reassessed any of the following: (1) whether any expired or existing contracts are or contain a lease, (2) the classification of any existing leases prior to the adoption of ASU 2016-02 or (3) initial direct costs for any existing leases. The Company has elected not to apply the recognition requirements in ASU 2016-02 to leases with durations of 12 months or less. Lease payments for leases with durations of 12 months or less are recorded in the statement of operations on a straight-line basis over the term of the lease. In addition, we elected the practical expedient not to separate the lease and non-lease components in the contract for our office space and equipment leases and for office space we lease to third parties.

~~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.

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

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 and Not Yet Adopted 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 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 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 or the Company’s liquidity.

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~



Accounting Standard Update(s)	Topic	Effective Period	Summary
2018-15	Intangibles—Goodwill and Other—Internal-Use Software	Fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted.	The FASB issued authoritative guidance that clarifies the accounting for implementation costs in cloud computing arrangements. The standard provides that implementation costs be evaluated for capitalization using the same criteria as that used for internal-use software development costs, with amortization expense being recorded in the same income statement expense line as the hosted service costs and over the expected term of the hosting arrangement. We do not believe the adoption of this guidance will have a material impact on our condensed consolidated financial statements.
2018-14	Compensation—Retirement Benefits—Defined Benefit Plans—General	Fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted.	The FASB issued authoritative guidance that modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement benefit plans. The guidance removes disclosures, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant. We are currently in the process of evaluating the impact of this guidance on our disclosures.
2018-13	Fair Value Measurement (Topic 820) Disclosure Framework	Fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted.	The FASB issued authoritative guidance that modifies the disclosure requirements on fair value measurements. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. We are currently in the process of evaluating the impact of this guidance on our disclosures.
2016-13 2018-19 2019-04	Financial Instruments—Credit Losses	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.	The FASB issued authoritative guidance that amends guidance on reporting credit losses for assets, including trade receivables, available-for-sale marketable securities and any other financial assets not excluded from the scope that have the contractual right to receive cash. For trade receivables, ASU 2016-13 eliminates the probable initial recognition threshold in current generally accepted accounting standards, and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the gross trade receivables balance to present the net amount expected to be collected. For available-for-sale marketable securities, credit losses should be measured in a manner similar to current generally accepted accounting standards; however, ASU 2016-13 will require that credit losses be presented as an allowance rather than as a write-down. We are currently in the process of evaluating the impact of this guidance on our condensed consolidated financial statements.

The Company considers the applicability and impact of all recently issued accounting pronouncements. Recent accounting pronouncements not specifically identified in our disclosures are either not applicable to the Company or are not expected to have a material effect on our financial condition or results of operations.

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,)~~products) and single-copy and bulk sales of our print ~~products~~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.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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. Display advertising revenue is principally from advertisers promoting products, services or brands. Display advertising also includes branded content on The Times’s platforms. Other advertising primarily represents, for our print products, classified advertising revenue. Digital other advertising revenue primarily includes creative services fees; advertising revenue from our podcasts; and advertising revenue generated by Wirecutter, our product review and recommendation website.

Other revenues primarily consist of revenues from ~~news services/syndication, digital archive~~ licensing, commercial printing, building rental ~~income,~~revenue, affiliate referrals (revenue generated by offering direct links to merchants in exchange for a portion of the sale price), NYT Live (our live events business) and retail commerce.

Subscription, advertising and other revenues were as follows:



	For the Quarters Ended
(In thousands)	March 31, 2019		April 1, 2018
Subscription	$	270,810	$	260,593
Advertising	125,088		125,647
Other ⁽¹⁾	43,164		27,708
Total	$	439,062	$	413,948

⁽¹⁾ Other revenue includes ~~approximately $5 million and $6 million of~~building rental ~~income for the three months ended April 1, 2018, and March 26, 2017, respectively,~~revenue, which is not under the scope of Topic 606. Building rental revenue was approximately $8 million and $5 million for the quarters ended March 31, 2019 and April 1, 2018, respectively.

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~~The following table summarizes digital-only 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~~which are a ~~principal in the transaction and, therefore,~~component of subscription 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 priceabove, for the ~~specified good or service.~~ first quarters of 2019 and 2018:



	For the Quarters Ended
(In thousands)	March 31, 2019		April 1, 2018
Digital-only subscription revenues:
News product subscription revenues⁽¹⁾	$	102,346	$	90,577
Other product subscription revenues⁽²⁾	7,513		4,835
Total digital-only subscription revenues	$	109,859	$	95,412
⁽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 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(print and ~~rate adjustments.~~digital) by category were as follows:



	For the Quarters Ended
	March 31, 2019						April 1, 2018
(In thousands)	Print		Digital		Total		Print		Digital		Total
Advertising revenues:
Display	$	62,342	$	42,112	$	104,454	$	70,805	$	38,700	$	109,505
Other	7,203		13,431		20,634		8,139		8,003		16,142
Total advertising	$	69,545	$	55,543	$	125,088	$	78,944	$	46,703	$	125,647

Performance Obligations

We ~~recognize a rebate obligation as a reduction~~allocate the transaction price of ~~revenues,~~our digital archive licensing contracts among the performance obligations, (i) the delivery of archival content and (ii) the delivery of updated content, based on the Company’s estimate of the standalone selling price of each of the performance obligations, as they are currently not sold separately.

As of March 31, 2019, the aggregate amount of ~~estimated rebates that will be earned and claimed, related~~transaction price allocated to the ~~underlying revenue transactions during~~remaining performance obligations (which represents the ~~period. Measurement~~delivery 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 willupdated content to 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~~delivered under 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.digital archive licensing contracts) was approximately $91

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~~$15 million, ~~$10~~$19 million and $9$57 million, will be recognized in the remainder of ~~2018,~~ 2019, 2020, and ~~2020,~~thereafter, 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,~~March 31, 2019, and December 30, 2018, the Company had ~~$3.2~~$4.3 million and $2.5 million, respectively, in contract assets recorded in Other current assets in the Condensed Consolidated Balance ~~Sheet.~~Sheets related to the archival content of our digital archiving licensing revenue. The contract asset is reclassified to ~~“Accounts~~

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~receivable”~~Accounts receivable when the customer is invoiced based on the contractual billing schedule. The increase in the contract assets balance of $1.8 million for the ~~three months~~quarter ended ~~April 1, 2018,~~March 31, 2019, is primarily driven by ~~the cumulative catch-up adjustment recorded by the Company on January 1, 2018,~~new contract assets of ~~$3.5~~$2.0 million ~~as a result of adoption of Topic 606,~~ offset by ~~$0.3~~$0.2 million of consideration that was reclassified to ~~“Accounts receivable”~~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.March 31, 2019.

NOTE 4. MARKETABLE SECURITIES

The Company accounts for its marketable securities as available for sale (“AFS”). The Company recorded ~~$3.9~~$0.8 million and ~~$2.5~~$2.8 million of net unrealized loss in ~~AOCI~~Accumulated other comprehensive income (“AOCI”) as of ~~April 1, 2018,~~March 31, 2019, and December ~~31, 2017,~~30, 2018, respectively.

The following tables present the amortized cost, gross unrealized gains and losses, and fair market value of our AFS debt securities as of ~~April 1, 2018,~~March 31, 2019, and December ~~31, 2017:~~30, 2018:


	April 1, 2018									March 31, 2019
(In thousands)	Amortized Cost		Gross unrealized gains		Gross unrealized losses			Fair Value		Amortized Cost		Gross unrealized gains		Gross unrealized losses			Fair Value
Short-term AFS securities
Corporate debt securities	$	147,292	$	—	$	(460	)	$	146,832	$	141,399	$	25	$	(279	)	$	141,145
U.S Treasury securities	71,460		1		(62		)	71,399
U.S. Treasury securities										121,241		9		(183		)	121,067
U.S. governmental agency securities	60,240		—		(287		)	59,953		88,157		8		(346		)	87,819
Certificates of deposit										21,688		—		—			21,688
Commercial paper	15,450		—		—			15,450		16,358		—		—			16,358
Certificates of deposit	6,200		—		—			6,200
Total short-term AFS securities	$	300,642	$	1	$	(809	)	$	299,834	$	388,843	$	42	$	(808	)	$	388,077
Long-term AFS securities
Corporate debt securities	$	99,699	$	2	$	(1,326	)	$	98,375	$	107,085	$	372	$	(165	)	$	107,292
U.S. governmental agency securities	86,526		1		(1,113		)	85,414		39,315		7		(92		)	39,230
U.S Treasury securities	52,522		—		(670		)	51,852
U.S. Treasury securities										38,688		28		(155		)	38,561
Total long-term AFS securities	$	238,747	$	3	$	(3,109	)	$	235,641	$	185,088	$	407	$	(412	)	$	185,083



	December 30, 2018
(In thousands)	Amortized Cost		Gross unrealized gains		Gross unrealized losses			Fair Value
Short-term AFS securities
Corporate debt securities	$	140,631	$	1	$	(464	)	$	140,168
U.S. Treasury securities	107,717		—		(232		)	107,485
U.S. governmental agency securities	92,628		—		(654		)	91,974
Certificates of deposit	23,497		—		—			23,497
Commercial paper	8,177		—		—			8,177
Total short-term AFS securities	$	372,650	$	1	$	(1,350	)	$	371,301
Long-term AFS securities
Corporate debt securities	$	130,612	$	44	$	(1,032	)	$	129,624
U.S. governmental agency securities	37,362		3		(168		)	37,197
U.S. Treasury securities	47,079		5		(347		)	46,737
Total long-term AFS securities	$	215,053	$	52	$	(1,547	)	$	213,558

1110

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,~~March 31, 2019, and December ~~31, 2017,~~30, 2018, 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)~~



	March 31, 2019
	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	$	41,565	$	(8	)	$	65,613	$	(271	)	$	107,178	$	(279	)
U.S. Treasury securities	40,594		(7		)	36,612		(176		)	77,206		(183		)
U.S. governmental agency securities	8,347		(6		)	71,267		(340		)	79,614		(346		)
Total short-term AFS securities	$	90,506	$	(21	)	$	173,492	$	(787	)	$	263,998	$	(808	)
Long-term AFS securities
Corporate debt securities	$	28,658	$	(57	)	$	15,799	$	(108	)	$	44,457	$	(165	)
U.S. governmental agency securities	13,289		(22		)	11,929		(70		)	25,218		(92		)
U.S. Treasury securities	9,491		(20		)	15,553		(135		)	25,044		(155		)
Total long-term AFS securities	$	51,438	$	(99	)	$	43,281	$	(313	)	$	94,719	$	(412	)


	December 31, 2017															December 30, 2018
	Less than 12 Months					12 Months or Greater					Total					Less than 12 Months					12 Months or Greater					Total
(In thousands)	Fair Value		Gross unrealized losses			Fair Value		Gross unrealized losses			Fair Value		Gross unrealized losses			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	)	$	76,886	$	(115	)	$	61,459	$	(349	)	$	138,345	$	(464	)
U.S Treasury securities	70,951		(34		)	—		—			70,951		(34		)
U.S. Treasury securities																70,830		(31		)	28,207		(201		)	99,037		(232		)
U.S. governmental agency securities	19,770		(50		)	25,870		(129		)	45,640		(179		)	11,664		(4		)	80,311		(650		)	91,975		(654		)
Certificates of deposit																$	1,599	$	—		$	—	$	—		$	1,599	$	—
Total short-term AFS securities	$	230,832	$	(283	)	$	35,866	$	(157	)	$	266,698	$	(440	)	$	160,979	$	(150	)	$	169,977	$	(1,200	)	$	330,956	$	(1,350	)
Long-term AFS securities
Corporate debt securities	$	81,118	$	(579	)	$	10,886	$	(104	)	$	92,004	$	(683	)	$	81,655	$	(570	)	$	27,265	$	(462	)	$	108,920	$	(1,032	)
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		)	21,579		(36		)	11,868		(132		)	33,447		(168		)
U.S. Treasury securities																20,479		(29		)	23,762		(318		)	44,241		(347		)
Total long-term AFS securities	$	157,744	$	(1,107	)	$	83,667	$	(998	)	$	241,411	$	(2,105	)	$	123,713	$	(635	)	$	62,895	$	(912	)	$	186,608	$	(1,547	)

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~~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 ~~April 1, 2018,~~March 31, 2019, 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

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

primarily due to interest rate fluctuations as opposed to changes in credit quality. Therefore, as of ~~April 1, 2018,~~March 31, 2019, we have recognized no OTTI loss.

As of ~~April 1, 2018,~~March 31, 2019, our short-term and long-term marketable securities had remaining maturities of less than 1 month to 12 months and 13 months to 3536 months, respectively. See Note 9 for 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 5. GOODWILL AND INTANGIBLES

The changes in the carrying amount of goodwill as of ~~April 1, 2018,~~March 31, 2019, and since December ~~31, 2017,~~30, 2018, were as follows:


(In thousands)	Total Company		Total Company
Balance as of December 31, 2017	$	143,549
Balance as of December 30, 2018			$	140,282
Foreign currency translation	2,063		(1,333		)
Balance as of April 1, 2018	$	145,612
Balance as of March 31, 2019			$	138,949

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~~$5.7 million ~~has been~~is included in ~~“Miscellaneous assets”~~Miscellaneous assets in our Condensed Consolidated Balance ~~Sheets.~~Sheets as of March 31, 2019.

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

NOTE 6. INVESTMENTS

Equity Method Investments

~~As of April 1, 2018, our~~Our investments in joint ventures ~~of $1.8 million consisted~~consists of a 40% equity ownership interest in Madison Paper Industries (“Madison”), a partnership that previously operated a supercalendered paper mill in Maine.

The investment is accounted for under the equity method, and is recorded in “Investments in joint ventures” in our Condensed Consolidated Balance Sheets. Our proportionate share of the 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~~that owns 50% of Madison. UPM owns 60% of Madison, including a 10% interest through a 20% noncontrolling interest in the consolidated subsidiary of the Company.

In 2016, the paper mill ~~closed~~closed. During the fourth quarter of 2018, we received a $12.5 million cash distribution in connection with the pending liquidation of Madison. We expect to receive a final cash distribution in 2019 in the range of $5 million to $8 million.

As of March 31, 2019, and ~~we recognized a $41.4 million loss from~~December 30, 2018, the value of our investments in joint ventures ~~related to the closure. The Company’s~~was zero. Our proportionate share of the ~~loss was $20.1 million after tax and net~~operating results of ~~noncontrolling interest. As a result of the mill closure, we wrote~~ our investment ~~down to zero. In 2017 we recognized a gain of $20.8 million, primarily related to~~for the ~~sale of the remaining assets, partially offset by the loss related to our proportionate share of 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~~quarters ended March 31, 2019, and ~~we recognized a gain of $3.9 million related to the sale. In the first quarter of~~April 1, 2018, ~~we recognized a~~was de minimis ~~gain~~and was recorded in Gain from joint ~~ventures. We expect to receive~~ventures in our ~~proportionate share~~Condensed Consolidated Statements of ~~a cash distribution from the wind down of our Madison investment in 2018.~~

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

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 )
Operations.

We received no distributions from Madison induring the first quarters of 2019 and 2018, ~~and 2017.~~respectively.

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~~are recognized in ~~“Interest~~Interest expense and other, ~~net”~~net.

As of March 31, 2019, and December ~~31, 2017,~~30, 2018, non-marketable equity securities included in ~~“Miscellaneous assets’’~~Miscellaneous assets in our Condensed Consolidated Balance Sheets ~~accounted for under the cost method~~ had a carrying value of ~~$13.6 million.~~

~~Non-marketable equity securities remeasured during~~$15.6 million and $13.7 million, respectively. During the ~~first~~ quarter ended ~~April 1, 2018, are classified within Level 3 in the fair value hierarchy because~~March 31, 2019, we ~~estimate the value based on valuation methods using the observable transaction price at the transaction date. See Note 9 for the definition~~recorded a gain 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~~$1.9 million from fair value adjustments in ~~the first quarter~~Interest expense and other, net in our Condensed Consolidated Statements of ~~2018.~~Operations.

1412

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 7. DEBT OBLIGATIONS

Our indebtedness consisted of the repurchase option related to athe sale-leaseback of a portion of our New York ~~headquarters.~~headquarters building located at 620 Eighth Avenue, New York, New York (the “Company Headquarters”). Our total debt and ~~capital~~finance lease obligations consisted of the following:


(In thousands)	April 1, 2018		December 31, 2017		March 31, 2019		December 30, 2018
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%	5,719		6,596		2,309		3,202
Total option to repurchase ownership interest in headquarters building in 2019	244,281		243,404
Capital lease obligations	6,811		6,805
Total long-term debt and capital lease obligations	$	251,092	$	250,209
Net option to repurchase ownership interest in headquarters building in 2019					247,691		246,798
Finance lease obligations (due in August 2019)					6,839		6,832
Total short-term debt and finance lease obligations					254,530		253,630

See Note 9 for more information regarding the fair value of our ~~long-term debt.~~debt and Note 15 for more information regarding finance lease obligations.

“

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


	For the Quarters Ended						For the Quarters Ended
(In thousands)	April 1, 2018			March 26, 2017			March 31, 2019			April 1, 2018
Interest expense	$	6,958		$	6,864		$	7,059		$	6,958
Amortization of debt costs and discount on debt	876			800			893			876
Capitalized interest	(155		)	(220		)	(44		)	(155		)
Interest income and other expense, net(1)	(2,802		)	(2,119		)	(6,605		)	(2,802		)
Total interest expense and other, net	$	4,877		$	5,325		$	1,303		$	4,877

⁽¹⁾The quarter ended March 31, 2019, includes fair value adjustments of $1.9 million related to non-marketable equity securities.

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 in the fourth quarter of 2019 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”).~~Company Headquarters.

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~~in the ~~Condo Interest.~~Company Headquarters (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~~fourth quarter 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.

1513

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 8. OTHER

~~Advertising Expenses~~

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

Capitalized Computer Software Costs

Amortization of capitalized computer software costs included in ~~“Depreciation~~Depreciation and ~~amortization”~~amortization in our Condensed Consolidated Statements of Operations were ~~$3.4~~$4.3 million and ~~$3.1~~$3.4 million in the first quarters of 2019 and 2018, ~~and 2017,~~ respectively.

Headquarters Redesign and Consolidation

In ~~December 2016,~~2017 and 2018, we ~~announced plans~~undertook efforts to redesign our ~~headquarters building,~~Company Headquarters, consolidate our space within a smaller number of floors and lease the additional floors to third parties. ~~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~~As the project was substantially complete as of ~~total costs~~December 30, 2018, we did not incur significant expenses related to these measures in the first quarter of ~~2018 and 2017, respectively. The capital expenditures~~2019. We incurred $1.9 million of total expenses related to these measures ~~were approximately $6.4~~in the first quarter of 2018. We capitalized less than $1 million and ~~$1.0~~approximately $6 million in the first quarters of 2019 and 2018, respectively, related to these measures.

Marketing Expenses

Marketing expense to promote our brand and ~~2017,~~products and grow our subscriber base was $47.5 million and $31.6 million in the first quarters of 2019 and 2018, respectively.

Restricted Cash

A reconciliation of cash, cash equivalents and restricted cash as of ~~April 1, 2018,~~March 31, 2019, and December ~~31, 2017,~~30, 2018, 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		March 31, 2019		December 30, 2018

Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	$	213,814	$	182,911	$	235,674	$	241,504
Restricted cash included within other current assets	385		375		629		642
Restricted cash included within miscellaneous assets	17,714		17,650		16,212		17,653
Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statement of Cash Flows	$	231,913	$	200,936
Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows					$	252,515	$	259,799

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

Severance Costs

We recognized severance costs of ~~$2.4~~$1.4 million and ~~$1.6~~$2.4 million in the first quarters of 2019 and 2018, ~~and 2017,~~ respectively, ~~for~~related to workforce ~~reduction.~~reductions. These costs are recorded in ~~“Selling,~~Selling, general and administrative ~~costs”~~costs in our Condensed Consolidated Statements of Operations.

We had a severance liability of ~~$11.5~~$6.7 million and ~~$18.8~~$8.4 million included in ~~“Accrued~~Accrued expenses and ~~other”~~other in our Condensed Consolidated Balance Sheets as of ~~April 1, 2018,~~March 31, 2019, and December ~~31, 2017,~~30, 2018, respectively. We anticipate most of the payments will be made within the next twelve months.

NOTE 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.

1614

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 ~~April 1, 2018,~~March 31, 2019, and December ~~31, 2017:~~30, 2018:


(In thousands)	April 1, 2018								December 31, 2017								March 31, 2019								December 30, 2018
(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
Assets:
Short-term AFS securities ⁽¹⁾
Corporate debt securities	$	146,832	$	—	$	146,832	$	—	$	150,107	$	—	$	150,107	$	—	$	141,145	$	—	$	141,145	$	—	$	140,168	$	—	$	140,168	$	—
U.S Treasury securities	71,399		—		71,399		—		70,951		—		70,951		—
U.S. Treasury securities																	121,067		—		121,067		—		107,485		—		107,485		—
U.S. governmental agency securities	59,953		—		59,953		—		45,640		—		45,640		—		87,819		—		87,819		—		91,974		—		91,974		—
Certificates of deposit																	21,688		—		21,688		—		23,497		—		23,497		—
Commercial paper	15,450		—		15,450		—		32,591		—		32,591		—		16,358		—		16,358		—		8,177		—		8,177		—
Certificates of deposit	6,200		—		6,200		—		9,300		—		9,300		—
Total short-term AFS securities	$	299,834	$	—	$	299,834	$	—	$	308,589	$	—	$	308,589	$	—	$	388,077	$	—	$	388,077	$	—	$	371,301	$	—	$	371,301	$	—
Long-term AFS securities ⁽¹⁾
Corporate debt securities	$	98,374	$	—	$	98,374	$	—	$	92,004	$	—	$	92,004	$	—	$	107,292	$	—	$	107,292	$	—	$	129,624	$	—	$	129,624	$	—
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		—		39,230		—		39,230		—		37,197		—		37,197		—
U.S. Treasury securities																	38,561		—		38,561		—		46,737		—		46,737		—
Total long-term AFS securities	$	235,641	$	—	$	235,641	$	—	$	241,411	$	—	$	241,411	$	—	$	185,083	$	—	$	185,083	$	—	$	213,558	$	—	$	213,558	$	—
Liabilities:
Deferred compensation ⁽²⁾⁽³⁾	$	24,335	$	24,335	$	—	$	—	$	29,526	$	29,526	$	—	$	—	$	21,447	$	21,447	$	—	$	—	$	23,211	$	23,211	$	—	$	—

⁽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~~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~~previously enabled certain eligible executives to elect to defer a portion of their compensation on a pre-tax basis. The deferred amounts are invested at the executives’ option in various mutual funds. The fair value of deferred compensation is based on the mutual fund investments elected by the executives and on quoted prices in active markets for identical assets. Participation in the DEC was frozen effective December 31, 2015.

⁽³⁾The Company invests deferred compensation assets in life insurance products. Our investments in life insurance products are included in Miscellaneous assets in our Condensed Consolidated Balance Sheets, and were $41.8 million as of March 31, 2019, and $38.1 million as of December 30, 2018. The fair value of these assets is measured using the net asset value per share (or its equivalent) and has not been classified in the fair value hierarchy.

Financial Instruments Disclosed, But Not Reported, at Fair Value

The carrying value of our ~~long-term~~ debt was approximately ~~$244~~$248 million as of ~~April 1, 2018,~~March 31, 2019, and approximately ~~$243~~$247 million as of December ~~31, 2017.~~30, 2018. The fair value of our ~~long-term~~ debt was approximately ~~$274~~$259 million and ~~$279~~$260 million as of ~~April 1, 2018,~~March 31, 2019, and December ~~31, 2017,~~30, 2018, 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 10. PENSION AND OTHER POSTRETIREMENT BENEFITS

Pension

Single-Employer Plans

We sponsor several frozen single-employer defined benefit pension ~~plans including~~plans. The Company and The NewsGuild of New York jointly sponsor the Guild-Times Adjustable Pension Plan, which continues to accrue active benefits. Effective January 1, 2018, the Company became the sole sponsor of the frozen Newspaper Guild of New York - The New York Times Pension ~~Fund, which prior to January 1, 2018, was a joint Company and Guild-sponsored defined benefit pension plan. We also participate in~~Plan (the “Guild-Times Plan”). The Guild-Times ~~Adjustable Pension~~ Plan awas previously joint ~~Company~~trusteed between the Guild and ~~Guild sponsored defined benefit pension plan covering employees who are members~~the Company. Effective December 31, 2018, the Guild-Times Plan and the Retirement Annuity Plan For Craft Employees of The ~~NewsGuild of~~ New ~~York. Participants in The Guild-Times Adjustable Pension Plan continue to actively accrue benefits.~~York Times

1715

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Companies (the “RAP”) were merged into The New York Times Companies Pension Plan.

The components of net periodic pension cost were as follows:


	For the Quarters Ended																For the Quarters Ended
	April 1, 2018								March 26, 2017								March 31, 2019								April 1, 2018
(In thousands)	Qualified Plans			Non- Qualified Plans		All Plans			Qualified Plans			Non- Qualified Plans		All Plans			Qualified Plans			Non- Qualified Plans		All Plans			Qualified Plans			Non- Qualified Plans		All Plans
Service cost	$	2,647		$	—	$	2,647		$	2,423		$	—	$	2,423		$	1,278		$	—	$	1,278		$	2,647		$	—	$	2,647
Interest cost	13,151			1,848		14,999			15,594			1,956		17,550			14,709			2,088		16,797			13,151			1,848		14,999
Expected return on plan assets	(20,555		)	—		(20,555		)	(26,136		)	—		(26,136		)	(20,258		)	—		(20,258		)	(20,555		)	—		(20,555		)
Amortization of actuarial loss	6,762			1,294		8,056			7,353			1,088		8,441			4,635			1,094		5,729			6,762			1,294		8,056
Amortization of prior service credit	(486		)	—		(486		)	(486		)	—		(486		)	(486		)	—		(486		)	(486		)	—		(486		)
Net periodic pension cost/(income)(1)	$	1,519		$	3,142	$	4,661		$	(1,252	)	$	3,044	$	1,792		$	(122	)	$	3,182	$	3,060		$	1,519		$	3,142	$	4,661

In⁽¹⁾The service cost component of net periodic pension cost is recognized in Total operating costs, while the ~~first quarter~~other components are included in Other components of ~~2018, the Company signed an agreement that froze the accrual~~net periodic benefit costs in our Condensed Consolidated Statements 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. Operations, below Operating profit.

During the first quarters of ~~2018~~2019 and ~~2017,~~2018, we made pension contributions of ~~$2.1~~$2.0 million and ~~$2.0~~$2.1 million, respectively, to certain qualified pension plans. We expect contributions in ~~2018~~2019 to total approximately $8$9 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)	April 1, 2018			March 26, 2017			March 31, 2019			April 1, 2018
Service cost	$	5		$	92		$	7		$	5
Interest cost	369			470			400			369
Amortization of actuarial loss	1,184			905			844			1,184
Amortization of prior service credit	(1,539		)	(1,939		)	(1,191		)	(1,539		)
Net periodic postretirement benefit cost/(income)	$	19		$	(472	)
Net periodic postretirement benefit cost ⁽¹⁾							$	60		$	19

~~As a result of the adoption of ASU 2017-07 during the first quarter of 2018, the~~⁽¹⁾ The service cost component of net periodic pension ~~cost/(income) and net periodic postretirement benefit cost/(income) continues to be~~cost is recognized in ~~“Total~~Total operating ~~costs”~~costs, while the other components ~~have been reclassified to “Other~~are included in Other components of net periodic benefit ~~costs/(income)”~~costs 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.Operating profit.

NOTE 11. INCOME TAXES

The Company had income tax expense of ~~$5.3~~$1.3 million and ~~$10.7~~$5.3 million in the first ~~quarter~~quarters of ~~2018~~2019 and ~~2017,~~2018, respectively. The Company’s effective tax rates from continuing operations were ~~19.3%~~4.1% and ~~45.0%~~19.3% for the first ~~quarter~~quarters of ~~2018~~2019 and ~~2017,~~2018, 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~~Company received a tax benefit in both periods from stock price appreciation on stock-based ~~compensation~~awards that settled in the ~~first quarter of 2018.~~quarters, resulting in a lower than statutory tax rate.

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

We compute ~~earnings/(loss)~~earnings per share using a two-class method, which is an earnings allocation method used when a company’s capital structure includes either two or more classes of common stock or common stock and participating securities. This method determines ~~earnings/(loss)~~earnings 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)~~Earnings per share is computed using both basic shares and diluted shares. The difference between basic and diluted shares is that diluted shares include the dilutive effect of the assumed exercise of outstanding securities. Our stock options, stock-settled long-term performance awards and restricted stock units could have a significant impact on diluted shares. The difference between basic and diluted shares of approximately 1.5 million and 2.1 million as of March 31, 2019, and April 1, 2018, respectively, resulted primarily from the dilutive effect of certain stock options, restricted stock units and performance awards.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Securities that could potentially be dilutive are excluded from the computation of diluted earnings per share when a loss from continuing operations exists or when the exercise price exceeds the market value of our Class A Common Stock, because their inclusion would result in an anti-dilutive effect on per share amounts.

There were approximately 0.2 million restricted stock units excluded from the computation of diluted earnings per share because they were anti-dilutive in the first quarter of 2019. There were no anti-dilutive stock options or stock-settled long-term performance awards excluded from the computation of diluted earnings per share in the first quarter of 2019 and 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 in the first quarter of 2017.

NOTE 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

~~On January 14,~~In 2015, the Board of Directors ~~approved an authorization of~~authorized up to $101.1 million ~~to repurchase~~of repurchases of shares of the Company’s Class A Common Stock. As of March 31, 2019, repurchases under this authorization totaled $84.9 million (excluding commissions) and $16.2 million remained under this authorization. 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.~~2019. 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 ~~April 1, 2018:~~

March 31, 2019:

(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.~~

⁽²⁾ ~~The Company recorded a curtailment of $2.6 million~~in 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.~~



(In thousands)	Foreign Currency Translation Adjustments			Funded Status of Benefit Plans			Net Unrealized (Loss)/Gain on Available-For-Sale Securities			Total Accumulated Other Comprehensive Loss
Balance as of December 30, 2018	$	4,677		$	(520,308	)	$	(2,093	)	$	(517,724	)
Other comprehensive (loss)/income before reclassifications, before tax	(1,649		)	—			2,074			425
Amounts reclassified from accumulated other comprehensive loss, before tax	—			4,896			—			4,896
Income tax expense/(benefit)	(431		)	1,288			542			1,399
Net current-period other comprehensive (loss)/income, net of tax	(1,218		)	3,608			1,532			3,922
Balance as of March 31, 2019	$	3,459		$	(516,700	)	$	(561	)	$	(513,802	)

The following table summarizes the reclassifications from AOCI for the first quarter of ~~2018:~~2019:


(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
(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)	$	(1,677	)	Other components of net periodic benefit costs/(income)
Amortization of actuarial loss⁽¹⁾	9,240			Other components of net periodic benefit costs/(income)	6,573			Other components of net periodic benefit costs/(income)
Total reclassification, before tax⁽²⁾	7,163				4,896
Income tax expense	1,893			Income tax expense	1,288			Income tax expense
Total reclassification, net of tax	$	5,270			$	3,608

⁽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.~~March 31, 2019.

NOTE 14. SEGMENT INFORMATION

~~We have~~The Company identifies a business as an operating segment if: i) it engages in business activities from which it may earn revenues and incur expenses; ii) its operating results are regularly reviewed by the Chief Operating Decision Maker (who is the Company’s President and Chief Executive Officer) to make decisions about resources to be allocated to the segment and assess

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

its performance; and iii) it has available discrete financial information. The Company has determined that it has one reportable ~~segment that includes The New York Times, NYTimes.com and related businesses.~~segment. Therefore, all required segment information can be found in the Condensed Consolidated Financial Statements.

NOTE 15. LEASES

Lessee activities

Operating leases

We have operating leases for office space and equipment. We determine if an arrangement is a lease at inception. Certain office space leases provide for rent adjustments relating to changes in real estate taxes and other operating costs. Our operating ~~segment generated revenues principally~~leases generally include options to extend the term of the leases which are not recognized as part of the right-of-use asset until we are reasonably certain that the option will be exercised. We may terminate our leases with sufficient notice to the lessor and in some cases, upon the payment of a termination fee. Our leases do not include substantial variable payments based on index or rate. After the adoption of ASU 2016-02 in 2019, for all leases, a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, are recognized in the Condensed Consolidated Balance Sheet as of March 31, 2019 as described below.

Our leases do not provide a readily determinable implicit discount rate. Therefore, we estimate our incremental borrowing rate to discount the lease payments based on the information available at lease commencement.

We recognize a single lease cost on a straight-line basis over the term of the lease and we classify all cash payments within operating activities in the statement of cash flows. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

We evaluate right-of-use assets for impairment consistent with our property, plant and equipment policy disclosure included in our Annual Report on Form 10-K for the year ended December 30, 2018.

The table below presents the lease-related assets and liabilities recorded on the balance sheet:



(In thousands)	Classification in the Condensed Consolidated Balance Sheet	March 31, 2019
Operating lease right-of-use assets	Miscellaneous assets	$	35,955
Current operating lease liabilities	Accrued expenses and other	6,594
Noncurrent operating lease liabilities	Other	34,939
Total operating lease liabilities		$	41,533

The total lease cost for operating leases included in Selling, general and administrative costs in our Condensed Consolidated Statement of Operations was as follows:



	For the Quarter Ended
(In thousands)	March 31, 2019
Operating lease cost	$	2,239
Short term and variable lease cost	460
Total lease cost	$	2,699

The table below presents additional information regarding operating leases:



	For the Quarter Ended
(In thousands, except lease term and discount rate)	March 31, 2019
Cash paid for amounts included in the measurement of operating lease liabilities	$	2,197
Right-of-use assets obtained in exchange for operating lease liabilities⁽¹⁾	$	37,863
Weighted-average remaining lease term	7.3 years
Weighted-average discount rate	5.41		%

⁽¹⁾ Amounts for the quarter ended March 31, 2019, include the transition adjustment resulting from ~~subscriptions~~the adoption of ASU 2016-02 as discussed in Note 2.

Maturities of lease liabilities on an annual basis for the Company's operating leases as of March 31, 2019, were as follows:

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



(In thousands)	Amount
2019 (9 months ending December 29, 2019)	$	6,242
2020	7,682
2021	6,829
2022	6,261
2023	5,474
Later Years	18,158
Total lease payments	$	50,646
Less: Interest	(9,113		)
Present value of lease liabilities	$	41,533

Finance lease

We have a finance lease in connection with the land at our College Point, N.Y. printing facility. Interest on the lease liability has been recorded in Interest expense and ~~advertising. Other revenues primarily consists~~other, net in our Condensed Consolidated Statement of ~~revenues~~Operations. Repayments of the principal portion of our lease liability are recorded in financing activities and payments of interest on our lease liability are recorded in operating activities in the statement of cash flows for our finance lease.

As of March 31, 2019, the asset related to the finance lease of $5.0 million is included in Property, plant and equipment in the Condensed Consolidated Balance Sheet. As of March 31, 2019, the undiscounted cash flow related to the finance lease was $7.1 million offset by interest of $0.3 million, resulting in $6.8 million included in Short-term debt and finance lease obligations in the Condensed Consolidated Balance Sheet.

Lessor activities

Our leases to third parties predominantly relate to office space in the Company Headquarters. We determine if an arrangement is a lease at inception. Office space leases are operating leases and generally include options to extend the term of the lease. Our leases do not include variable payments based on index or rate. We do not separate the lease and non-lease components in a contract. The non-lease components predominantly include charges for utilities usage and other operating expenses estimated based on the proportionate share of the rental space of each lease.

For our office space operating leases, we recognize rental revenue on a straight-line basis over the term of the lease and we classify all cash payments within operating activities in the statement of cash flows.

Residual value risk is not a primary risk resulting from ~~news services/syndication, digital archive licensing,~~our office space operating leases because of the long-lived nature of the underlying real estate assets which generally hold their value or appreciate in the long term.

We evaluate assets leased to third parties for impairment consistent with our property, plant and equipment policy disclosure included in our Annual Report on Form 10-K for the year ended December 30, 2018.

As of March 31, 2019, the cost and accumulated depreciation related to the Company Headquarters building included in Property, plant and equipment in our Condensed Consolidated Balance Sheet was approximately $510 million and $192 million, respectively. Office space leased to third parties represents approximately 39% of rentable square feet of the Company Headquarters.

We generate building rental revenue from the floors in our headquarter building that we lease to third parties. The building rental revenue was as follows:



	For the Quarter Ended
(In thousands)	March 31, 2019
Building rental revenue ⁽¹⁾	$	7,639

⁽¹⁾ Building rental revenue includes approximately $2.9 million of sublease income ~~affiliate referrals, NYT Live (our live events business), and retail commerce.~~for the quarter ended March 31, 2019.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Maturities of lease payments to be received on an annual basis for the Company's office space operating leases as of March 31, 2019, were as follows:



(In thousands)	Amount
2019 (9 months ending December 29, 2019)	$	21,792
2020	32,214
2021	32,231
2022	32,226
2023	19,301
Later Years	142,057
Total building rental revenue from operating leases	$	279,821

NOTE ~~15.~~16. CONTINGENT LIABILITIES

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. In June 2016, the arbitrator issued an interim award and opinion that supported the NMDU Fund’s determination that a partial withdrawal had occurred, and concluded that the methodology used to calculate the Initial Assessment was correct. However, the arbitrator also concluded that the NMDU Fund’s calculation of the Revised Assessment was incorrect. 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 has appealed the court’s decision with respect to the determination that a partial withdrawal had ~~occurred.~~occurred, and the NMDU Fund has appealed the court’s decision with respect to the calculation of the withdrawal liability.

Due to requirements of the Employee Retirement Income Security Act of 1974 that sponsors make payments demanded by plans during arbitration and any resultant appeals, the Company had been making payments to the NMDU fund since September 2013 relating to the Initial Assessment and February 2015 relating to the Revised Assessment based on the NMDU Fund’s demand. As a result, as of ~~April 1, 2018,~~March 31, 2019, we have paid ~~$16.2~~$19.8 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 $0.1 million of expense for the first quarters of 2018 and 2017, respectively.~~

The Company had a liability of ~~$5.7~~$2.3 million as of ~~April 1, 2018,~~March 31, 2019, 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~~$11 million.

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~~Letters of Credit Commitment

We ~~arranged for the issuance of~~have issued letters of credit totaling ~~$56.0~~$45.7 million and $48.8 million as of March 31, 2019, and December 30, 2018, respectively, in connection with ~~a sub-lease entered into~~the leasing of floors in the ~~fourth quarter of 2017 for approximately four floors of our headquarters building. A portion of the~~Company Headquarters. The letters of credit will expire ~~pro rata through the second quarter of 2019, while the remaining portion of letters of credit will expire upon the Company’s repurchase of the Condo Interest in our headquarters building in 2019.~~ by 2020.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Approximately ~~$63~~$51 million and $54 million of marketable securities were used as collateral for the letters of credit, as of ~~April 1, 2018,~~March 31, 2019, and December ~~31, 2017,~~30, 2018, respectively.

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

EXECUTIVE OVERVIEW

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

We generate revenues principally from subscriptions and advertising. Other revenues primarily consist of revenues from ~~news services/syndication, digital archive~~ licensing, commercial printing, building rental ~~income,~~revenue, affiliate referrals, NYT Live (our live events business) and 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 “Non-Operating Items—Non-GAAP Financial 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 ~~2018,~~2019, diluted earnings per share from continuing operations were ~~$0.13,~~$0.18, compared with ~~$0.08~~$0.13 for the first quarter of ~~2017.~~2018. 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 ~~$0.17~~$0.20 and ~~$0.10~~$0.17 for the first quarters of ~~2018~~2019 and ~~2017,~~2018, respectively.

The Company had an operating profit of $34.6 million in the first quarter of 2019, compared with $34.1 million in the first quarter of ~~2018, compared with $27.8 million in the first quarter of 2017.~~2018. The increase was ~~largely due to~~principally driven by higher ~~digital~~digital-only subscription and other revenues, ~~which~~mostly offset ~~lower advertising revenues and~~by higher ~~selling, general and administrative~~operating costs. Operating profit before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items discussed below (or “adjusted operating profit,” a non-GAAP measure) was ~~$55.5~~$52.4 million and ~~$50.2~~$55.5 million for the first quarters of 2019 and 2018, ~~and 2017, respectively.~~respectively, primarily as a result of the factors identified above.

Total revenues increased ~~3.8%~~6.1% to $439.1 million in the first quarter of 2019 from $413.9 million in the first quarter of 2018, ~~from $398.8 million in the first quarter of 2017,~~ primarily driven by an increase in ~~digital~~digital-only subscription revenues, ~~which were~~other revenues and digital advertising revenues, partially offset by a decrease in print advertising ~~revenues~~ and ~~print~~ subscription revenues.

Subscription revenues increased 7.5% in the first quarter of 2018 compared with the first quarter of 2017, primarily due to growth in recent quarters in the number of subscriptions to the Company’s digital-only subscription products. Revenue from our digital-only subscription products (which include our news product, as well as our Crossword and Cooking products) increased 25.8% in the first quarter of 2018 compared with the first quarter of 2017.

Paid digital-only subscriptions totaled approximately 2,783,000 at the end of the first quarter of 2018, a 25.5% increase compared with the end of the first quarter of 2017. News product subscriptions totaled approximately 2,330,000 at the end of the first quarter of 2018, a 20.5% increase compared with the end of 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 3.4% in the first quarter of 2018 compared with the first quarter of 2017, reflecting a 6.0% and 1.8% decrease in digital and print advertising revenues, respectively. The decrease in digital advertising 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 declines in both display advertising and classified and other advertising.

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

Operating costs increased in the first quarter of ~~2018~~2019 to ~~$378.0~~$404.5 million from ~~$368.6~~$378.0 million in the first quarter of ~~2017,~~2018, largely due to higher ~~compensation~~marketing expenses, as well as higher labor and raw material costs ~~which were partially offset by lower print production~~related to our commercial printing operations and ~~distribution~~higher newsroom labor costs. Operating costs before depreciation, amortization, severance and multiemployer pension plan withdrawal costs (or “adjusted operating costs,” a non-GAAP measure) increased in the first quarter of ~~2018~~2019 to ~~$358.5~~$386.7 million from ~~$348.6~~$358.5 million in the first quarter of ~~2017.~~

2018, primarily as a result of the factors identified above.

2322

RESULTS OF OPERATIONS

The following table presents our consolidated financial results:


	For the Quarters Ended								For the Quarters Ended
(In thousands)	April 1, 2018			March 26, 2017			% Change		March 31, 2019		April 1, 2018			% Change
Revenues
Subscription	$	260,593		$	242,375		7.5	%	$	270,810	$	260,593		3.9	%
Advertising	125,647			130,028			(3.4	)%	125,088		125,647			(0.4	)%
Other	27,708			26,401			5.0	%	43,164		27,708			55.8	%
Total revenues	413,948			398,804			3.8	%	439,062		413,948			6.1	%
Operating costs
Production costs:
Wages and benefits	91,993			91,014			1.1	%	102,908		91,993			11.9	%
Raw materials	16,692			16,930			(1.4	)%	19,838		16,692			18.8	%
Other production costs	45,656			45,353			0.7	%	45,337		45,656			(0.7	)%
Total production costs	154,341			153,297			0.7	%	168,083		154,341			8.9	%
Selling, general and administrative costs	208,623			199,137			4.8	%	221,463		208,623			6.2	%
Depreciation and amortization	15,041			16,153			(6.9	)%	14,918		15,041			(0.8	)%
Total operating costs	378,005			368,587			2.6	%	404,464		378,005			7.0	%
Headquarters redesign and consolidation	1,888			2,402			(21.4	)%	—		1,888			*
Operating profit	34,055			27,815			22.4	%	34,598		34,055			1.6	%
Other components of net periodic benefit costs/(income)	2,028			(1,194		)	*
Other components of net periodic benefit costs									1,835		2,028			(9.5	)%
Gain from joint ventures	15			173			(91.3	)%	—		15			*
Interest expense, net	4,877			5,325			(8.4	)%
Interest expense and other, net									1,303		4,877			(73.3	)%
Income from continuing operations before income taxes	27,165			23,857			13.9	%	31,460		27,165			15.8	%
Income tax expense	5,251			10,742			(51.1	)%	1,304		5,251			(75.2	)%
Net income	21,914			13,115			67.1	%	30,156		21,914			37.6	%
Net (income)/loss attributable to the noncontrolling interest	(2		)	66			*
Net income attributable to the noncontrolling interest									—		(2		)	*
Net income attributable to The New York Times Company common stockholders	$	21,912		$	13,181		66.2	%	$	30,156	$	21,912		37.6	%


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

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

2423

Revenues

Subscription Revenues

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 (which represent less than 10% of these revenues). Revenues from our digital-only news subscriptions include e-readers and replica editions. Our Cooking product first launched as a paid digital product in the third quarter of 2017. Subscription revenues are based on both the number of copies of the printed newspaper sold and digital-only subscriptions, and the rates charged to the respective customers.

Subscription revenues increased ~~7.5%~~3.9% in the first quarter of ~~2018~~2019 compared with the same prior-year period, primarily due to ~~an approximately 26%~~year-over-year growth of 28.7% in the number of subscriptions to the Company’s digital subscription products. ~~Revenues from our digital-only news subscriptions (including e-readers and replica editions) were $90.6 million in the first quarter of 2018, an increase of 24.3% from the first quarter of 2017.~~

The following table summarizes digital-only subscription revenues, which are a component of subscription revenues, for the first quarters of ~~2018~~2019 and ~~2017:~~2018:


		For the Quarters Ended							For the Quarters Ended
(In thousands)		April 1, 2018		March 26, 2017		% Change			March 31, 2019		April 1, 2018		% Change
Digital-only subscription revenues:
News product subscription revenues⁽¹⁾		$	90,577	$	72,861	24.3	%		$	102,346	$	90,577	13.0	%
Other product subscription revenues⁽²⁾		4,835		2,956		63.6	%		7,513		4,835		55.4	%
Total digital-only subscription revenues		$	95,412	$	75,817	25.8	%		$	109,859	$	95,412	15.1	%
⁽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.							⁽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.							⁽²⁾Includes revenues from standalone subscriptions to the Company’s Crossword and Cooking products.

The following table summarizes digital-only subscriptions as of the end of the first quarters of ~~2018~~2019 and ~~2017:~~2018:


	For the Quarters Ended					For the Quarters Ended
(In thousands)	April 1, 2018	March 26, 2017	% Change			March 31, 2019	April 1, 2018	% Change
Digital-only subscriptions⁽¹⁾:
Digital-only subscriptions:
News product subscriptions⁽²⁾⁽¹⁾	2,330	1,934	20.5	%		2,857	2,330	22.6	%
Other product subscriptions⁽³⁾⁽²⁾	453	283	60.1	%		726	453	60.3	%
Total digital-only subscriptions	2,783	2,217	25.5	%		3,583	2,783	28.7	%
⁽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.
⁽¹⁾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.					⁽¹⁾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.
⁽²⁾Includes standalone subscriptions to the Company’s Crossword and Cooking products.					⁽²⁾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~~digital 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~~digital platforms in the form of banners, video, rich media and other interactive ads. Display advertising also includes branded content on The Times’s platforms. ~~Classified~~Other advertising primarily represents, for our print products, classified advertising revenue, ~~includes~~including line-ads sold in the major categories of real estate, help wanted, automotive and ~~other. Other~~other as well as revenue from preprinted advertising, also known as free-standing inserts. Digital other advertising revenue primarily includes creative services fees associated with, among other things, our digital marketing agencies and our branded content studio; advertising revenue from ~~preprinted~~our podcasts; and advertising ~~also known as free-standing inserts; and~~ revenue generated ~~from branded bags in which~~by Wirecutter, our ~~newspapers are delivered.~~product review and recommendation website.

2524

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


	For the Quarters Ended																		For the Quarters Ended
	April 1, 2018						March 26, 2017						% Change						March 31, 2019						April 1, 2018						% Change
(In thousands)	Print		Digital		Total		Print		Digital		Total		Print		Digital		Total		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	)%	$	62,342	$	42,112	$	104,454	$	70,805	$	38,700	$	109,505	(12.0	)%	8.8	%	(4.6	)%
Classified and Other	8,139		8,003		16,142		8,730		6,695		15,425		(6.8	)%	19.5	%	4.6	%
Other																			7,203		13,431		20,634		8,139		8,003		16,142		(11.5	)%	67.8	%	27.8	%
Total advertising	$	78,944	$	46,703	$	125,647	$	80,357	$	49,671	$	130,028	(1.8	)%	(6.0	)%	(3.4	)%	$	69,545	$	55,543	$	125,088	$	78,944	$	46,703	$	125,647	(11.9	)%	18.9	%	(0.4	)%

Print advertising revenues, which represented ~~62.8%~~55.6% of total advertising revenues for the first quarter of ~~2018,~~2019, declined ~~1.8%~~11.9 percent to ~~$78.9~~$69.5 million in the first quarter of ~~2018~~2019 compared with ~~$80.4~~$78.9 million in the same prior-year period. The ~~decrease~~decline in print advertising revenues in the first quarter of 2019 compared with the same period in the prior year was driven by a continued decline in display advertising revenue, primarily in the studio entertainment, luxury ~~retail,~~ and ~~entertainment~~financial categories, ~~which were mostly~~partially offset by growth in the ~~media, advocacy,~~packaged goods, technology and ~~financial~~education categories.

Digital advertising revenues, which represented ~~37.2%~~44.4% of total advertising revenues for the first quarter of ~~2018, declined 6.0%~~2019, increased 18.9 percent to ~~$46.7~~$55.5 million in the first quarter of ~~2018~~2019 compared with ~~$49.7~~$46.7 million in the same prior-year period. The ~~decrease primarily reflected a continued decrease~~increase in ~~traditional website display~~digital advertising ~~which was partially offset by increases in~~ revenue ~~from smartphone advertising.~~

~~Classified and other advertising revenues increased 4.6% in~~for the first quarter of ~~2018,~~2019 compared with the same ~~prior-year~~ period in the prior year primarily ~~due to an increase~~reflected growth in ~~podcast revenues.~~revenue in direct-sold advertising on our digital platforms, including podcasts.

Other Revenues

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

Other revenues increased ~~5.0%~~55.8% in the first quarter of ~~2018,~~2019, compared with the same prior-year period, ~~largely due to affiliate referral revenue associated with the product review and recommendation website, Wirecutter, and~~primarily as a result of growth in our commercial printing ~~revenue, which was partially offset by a decline in~~operations and additional floors of rental revenue from ~~our live events business.~~the Company Headquarters.

Operating Costs

Operating costs were as follows:


	For the Quarters Ended						For the Quarters Ended
(In thousands)	April 1, 2018		March 26, 2017		% Change		March 31, 2019		April 1, 2018		% Change
Production costs:
Wages and benefits	$	91,993	$	91,014	1.1	%	$	102,908	$	91,993	11.9	%
Raw materials	16,692		16,930		(1.4	)%	19,838		16,692		18.8	%
Other production costs	45,656		45,353		0.7	%	45,337		45,656		(0.7	)%
Total production costs	154,341		153,297		0.7	%	168,083		154,341		8.9	%
Selling, general and administrative costs	208,623		199,137		4.8	%	221,463		208,623		6.2	%
Depreciation and amortization	15,041		16,153		(6.9	)%	14,918		15,041		(0.8	)%
Total operating costs	$	378,005	$	368,587	2.6	%	$	404,464	$	378,005	7.0	%

Production Costs

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

Production costs increased in the first quarter of ~~2018~~2019 by $13.7 million compared with the first quarter of ~~2017,~~2018, primarily driven by ana $10.9 million increase in wage and benefits ~~($1.0 million)~~ and ~~other expenses ($0.3 million), partially offset by~~ a ~~decline~~$3.1 million increase in raw materials. The increase in wages and benefits was largely due to our newsroom and commercial printing operations. The increase in raw materials ~~($0.2 million).~~was largely due to higher volume as a result of commercial printing operations and higher newsprint prices.

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.

2625

Selling, general and administrative costs in the first quarter of ~~2018~~2019 increased by ~~$9.5~~$12.8 million compared with the first quarter of ~~2017 as higher compensation costs ($8.4 million)~~2018 driven by a $15.9 million increase in marketing expenses largely due to an increase in subscription acquisition and ~~other miscellaneous expenses ($4.1 million) were partially offset by lower print production and distribution costs ($2.4 million).~~brand marketing costs.

Depreciation and Amortization

Depreciation and amortization costs in the first quarter of ~~2018 decreased by $1.1 million~~2019 were relatively flat compared with the ~~first quarter of 2017 primarily as assets became fully depreciated in prior periods.~~same prior-year period.

Other Items

See Note 8 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.~~the Company Headquarters.

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

Interest Expense and other, Net

See Note 7 of the Notes to the Condensed Consolidated Financial Statements for information regarding interest expense and other, net.

Income Taxes

See Note 11 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, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit); and

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

There were no special items in 2019.

The special ~~item~~items in the first quarter of 2018 consisted of:

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

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

~~A $2.4 million charge ($1.4 million after tax or $.01 per share) in connection with~~ the ~~redesign and consolidation of space in our headquarters building.~~Company Headquarters.

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

2726

~~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 and amortization of actuarial ~~gain~~gains and loss components and amortization of prior service credits of ~~retiree~~retirement medical expense; and

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

These non-operating retirement costs are primarily tied to financial market performance ~~and~~including 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~~Management considers non-operating retirement costs to be outside the performance of ~~our ongoing core~~the business ~~operations~~ and ~~believe~~believes that presenting ~~operating results~~adjusted diluted earnings per share from continuing operations excluding non-operating retirement costs and presenting adjusted operating results excluding multiemployer pension plan withdrawal costs, in addition to ~~our~~the Company’s GAAP diluted earnings per share from continuing operations and GAAP operating results, ~~provides~~provide increased transparency and a better understanding of the underlying trends in ~~our~~the Company’s operating business performance.

Adjusted diluted earnings per share provides useful information in evaluating ~~our~~the Company’s period-to-period performance because it eliminates items that ~~we do~~the Company does not consider to be indicative of earnings from ongoing operating activities. Adjusted operating profit is useful in evaluating the ongoing performance of ~~our~~the Company’s 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 multiemployer pension plan withdrawal costs. ~~Adjusted~~Total operating costs, ~~which exclude~~excluding these items, provide investors with helpful supplemental information on ~~our~~the Company’s underlying operating costs that is used by management in its financial and operational decision-making.

Management considers special items, which may include impairment charges, pension settlement charges and other items that arise from time to time, to be outside the ordinary course of our operations. Management believes that excluding these items provides a better understanding of the underlying trends in the Company’s operating performance and allows more accurate comparisons of the Company’s operating results to historical performance. In addition, management excludes severance costs, which may fluctuate significantly from quarter to quarter, because it believes these costs do not necessarily reflect expected future operating costs and do not contribute to a meaningful comparison of the Company’s operating results to historical performance.

Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP 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									For the Quarters Ended
	April 1, 2018			March 26, 2017			⁽¹⁾	% Change		March 31, 2019			April 1, 2018			% Change
Diluted earnings per share from continuing operations	$	0.13		$	0.08			62.5	%	$	0.18		$	0.13		38.5	%
Add:
Severance	0.01			0.01				—	%	0.01			0.01			*
Non-operating retirement costs	0.02			0.01				100.0	%
Non-operating retirement costs:
Multiemployer pension plan withdrawal costs										0.01			0.01			*
Other components of net periodic benefit costs										0.01			0.01			*
Special item:
Headquarters redesign and consolidation	0.01			0.01				—	%	—			0.01			*
Income tax expense of adjustments	(0.01		)	(0.01		)		—	%	(0.01		)	(0.01		)	*
Adjusted diluted earnings per share from continuing operations ⁽²⁾	$	0.17		$	0.10			70.0	%
Adjusted diluted earnings per share from continuing operations⁽¹⁾										$	0.20		$	0.17		17.6	%

⁽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 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⁾ ~~Revised~~* Represents a change equal to ~~reflect recast~~or in excess 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.

100% or not meaningful

~~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.

3027

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.



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)	March 31, 2019		April 1, 2018		% Change
Operating profit	$	34,598	$	34,055	1.6	%
Add:
Depreciation & amortization	14,918		15,041		(0.8	)%
Severance	1,403		2,389		(41.3	)%
Multiemployer pension plan withdrawal costs	1,450		2,104		(31.1	)%
Special items:
Headquarters redesign and consolidation	—		1,888		*
Adjusted operating profit	$	52,369	$	55,477	(5.6	)%

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



Reconciliation of operating costs before depreciation & amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs)
	For the Quarters Ended
(In thousands)	March 31, 2019		April 1, 2018		% Change
Operating costs	$	404,464	$	378,005	7.0	%
Less:
Depreciation & amortization	14,918		15,041		(0.8	)%
Severance	1,403		2,389		(41.3	)%
Multiemployer pension plan withdrawal costs	1,450		2,104		(31.1	)%
Adjusted operating costs	$	386,693	$	358,471	7.9	%

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 ~~April 1, 2018,~~March 31, 2019, we had cash, cash equivalents and short- and long-term marketable securities of ~~$749.3~~$808.8 million and total debt and ~~capital~~finance lease obligations of ~~$251.1~~$254.5 million. Accordingly, our cash, cash equivalents, and marketable securities exceeded total debt and ~~capital~~finance lease obligations by ~~$498.2~~$554.3 million. Our cash and investment balances have ~~increased~~decreased since the end of ~~2017,~~2018, primarily due to ~~higher~~lower cash proceeds from ~~stock option exercises~~operating activities, stock-based compensation tax withholding payments and ~~operating activities~~cash capital expenditures, partially offset by ~~cash capital expenditures~~net maturities of ~~$25 million.~~marketable securities.

We have paid quarterly dividends of ~~$.04~~$0.04 per share on the Class A and Class B Common Stock since late ~~2013.~~2013 through early 2019. In February 2019, the Board of Directors approved an increase in the quarterly dividend to $0.05 per share. We currently expect to continue to pay comparable cash dividends in the future, although changes in our dividend program will be considered by our Board of Directors in light of our earnings, capital requirements, financial condition and other factors considered relevant.

In March 2009, we entered into an agreement to sell and simultaneously lease back the Condo Interest in ~~our headquarters building.~~the Company Headquarters. The sale price for the Condo Interest was $225.0 million less transaction costs, for net proceeds of approximately $211 million. We have an option, exercisable in the ~~second half~~fourth quarter of 2019, to repurchase the Condo Interest for $250.0 million, and we have provided notice of our intent to exercise this option. We believe that exercising this option is in the best interest of the Company given that the market value of the Condo Interest exceeds the exercise ~~price.~~price, and we plan to use existing cash and marketable securities for this repurchase.

The Company and UPM-Kymmene Corporation (“UPM”), a Finnish paper manufacturing company, are partners through subsidiary companies in Madison, which previously operated a supercalendered paper mill in 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. The paper mill was closed in May 2016. The Company’s joint venture in Madison is currently being liquidated. In 2018, weWe expect to receive a final cash distribution of approximately ~~$12~~$5 million to $8 million related to the wind down of our Madison ~~investment.~~investment in 2019. See Note 6 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 Three Months Ended
(In thousands)	April 1, 2018			March 26, 2017			% Change		March 31, 2019			April 1, 2018			% Change
Operating activities	$	17,899		$	30,131		(40.6	)%	$	25,184		$	17,899		40.7	%
Investing activities	$	(12,141	)	$	29,835		*		$	(12,980	)	$	(12,141	)	6.9	%
Financing activities	$	25,024		$	(9,892	)	*		$	(19,150	)	$	25,024		*

* 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 subscriptions, advertising sales and other revenue. Operating cash outflows include payments for employee compensation, pension and other benefits, raw materials, marketing expenses, interest and income taxes.

Net cash provided by operating activities ~~decreased~~increased in the first quarter of ~~2018~~2019 compared with the same prior-year period due to ~~higher~~lower cash payments made to settle accounts payable, accrued payroll and other liabilities and higher collections on accounts receivable, partially offset by higher ~~cash collections from customers~~inventory and ~~higher net income compared to the same prior-year period.~~lower unexpired subscriptions.

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, and acquisitions of new businesses and investments.

Net cash used in investing activities in the first quarter of ~~2018~~2019 was primarily related to ~~purchases of marketable securities and~~approximately $10 million in capital expenditures ~~partially offset by maturities/sales~~payments and $3 million in net purchases 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.~~

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Financing Activities

Cash from financing activities generally includes borrowings under third-party financing arrangements, the issuance of long-term debt and funds from stock option exercises. Cash used in financing activities generally includes the repayment of amounts outstanding under third-party financing arrangements, the payment of dividends, the payment of long-term debt and ~~capital~~finance lease obligations and ~~share-based~~stock-based compensation tax withholding.

Net cash ~~provided by~~used in financing activities in the first quarter of ~~2018~~2019 was primarily related to stock-based compensation tax withholding payments of $15.3 million and dividend payments of $6.6 million, partially offset by proceeds from stock option exercises of approximately ~~$40 million, partially offset by share-based compensation tax withholding payments of $8.7 million and dividend payments of $6.5~~$3 million.

Restricted Cash

We were required to maintain ~~$18.1~~$16.8 million of restricted cash as of ~~April 1, 2018,~~March 31, 2019, and ~~$18.0~~$18.3 million as of December ~~31, 2017,~~30, 2018, substantially all of which is set aside to collateralize workers’ compensation obligations.

Capital Expenditures

Capital expenditures totaled approximately ~~$19~~$11 million and $6$19 million in the first quarter of ~~2018~~2019 and ~~2017,~~2018, respectively. The ~~cash payments related to the~~decrease in 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~~higher expenditures in ~~College Point, New York and~~ the ~~ongoing~~first quarter of 2018 related to the redesign and consolidation of space in ~~our headquarters building.~~the Company Headquarters. The cash payments related to capital expenditures totaled approximately $10 million and $25 million in the first quarter of 2019 and 2018, respectively.

Third-Party Financing

As of ~~April 1, 2018,~~March 31, 2019, our current indebtedness consisted of the repurchase option related to a sale-leaseback of a portion of ~~our New York headquarters.~~the Company Headquarters. See Note 7 of the Notes to the Condensed Consolidated Financial Statements for information regarding our total debt and ~~capital~~finance lease obligations. See Note 9 of the Notes to the Condensed Consolidated Financial Statements for information regarding the fair value of our ~~long-term~~short-term debt.

CRITICAL ACCOUNTING POLICIES

Our critical accounting policies are detailed in our Annual Report on Form 10-K for the year ended December ~~31, 2017.~~30, 2018. Other than as described in Note 2 of the Notes to the Condensed Consolidated Financial Statements, as of ~~April 1, 2018,~~March 31, 2019, our critical accounting policies have not changed from December ~~31, 2017.~~30, 2018.

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 ~~31, 2017.~~30, 2018. As of ~~April 1, 2018,~~March 31, 2019, our contractual obligations and off-balance sheet arrangements have not changed materially from December ~~31, 2017.~~30, 2018.

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 ~~31, 2017,~~30, 2018, 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 ~~31, 2017,~~30, 2018, details our disclosures about market risk. As of ~~April 1, 2018,~~March 31, 2019, there were no material changes in our market risks from December ~~31, 2017.~~30, 2018.

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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 ~~April 1, 2018.~~March 31, 2019. 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 ~~April 1, 2018,~~March 31, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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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 1516 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 ~~31, 2017.~~30, 2018.

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

~~On January 14,~~In 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 31, 2019, repurchases under this authorization totaled $84.9 million (excluding commissions), and $16.2 million remained under this authorization. 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.2019. 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.

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Item 6. Exhibits



Exhibit No.

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.

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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~~8, 2019	/s/ ROLAND A. CAPUTO
		Roland A. Caputo Executive Vice President and Chief Financial Officer (Principal Financial Officer)

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	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	)



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.