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 ~~July 1, 2018~~June 30, 2019

Commission file number 1-5837

THE NEW YORK TIMES ~~COMPANY~~COMPANY

(Exact name of registrant as specified in its charter)



~~NEW YORK~~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~~

, New York(Address of principal executive offices)

10018

(Zip Code)

Registrant’s telephone number, including area code ~~212-556-1234~~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. Yesx 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). Yesx 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 filerx	☒	Accelerated filero	☐	Non-accelerated filero	☐
Smaller reporting companyo	☐	Emerging growth companyo	☐

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 August ~~3, 2018~~2, 2019 (exclusive of treasury shares):



Class A Common Stock	~~164,086,219~~165,206,701	shares
Class B Common Stock	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 July 1, 2018 (unaudited) and December 31, 2017	1		Condensed Consolidated Balance Sheets as of June 30, 2019 (unaudited) and December 30, 2018	1
		Condensed Consolidated Statements of Operations (unaudited) for the quarters and six months ended July 1, 2018 and June 25, 2017	3		Condensed Consolidated Statements of Operations (unaudited) for the quarters and six months ended June 30, 2019 and July 1, 2018	3
		Condensed Consolidated Statements of Comprehensive Income (unaudited) for the quarters and six months ended July 1, 2018 and June 25, 2017	4		Condensed Consolidated Statements of Comprehensive Income (unaudited) for the quarters and six months ended June 30, 2019 and July 1, 2018	4
		Condensed Consolidated Statements of Changes In Stockholder’s Equity (unaudited) as of July 1, 2018 and June 25, 2017	5		Condensed Consolidated Statements of Changes In Stockholder’s Equity (unaudited) for the quarters and six months ended June 30, 2019 and July 1, 2018	5
		Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended July 1, 2018 and June 25, 2017	6		Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2019 and July 1, 2018	7
		Notes to the Condensed Consolidated Financial Statements	7		Notes to the Condensed Consolidated Financial Statements	8
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	24
Item	3	Quantitative and Qualitative Disclosures about Market Risk	35	3	Quantitative and Qualitative Disclosures about Market Risk	33
Item	4	Controls and Procedures	36	4	Controls and Procedures	34

PART II		Other Information	37		Other Information	35
Item	1	Legal Proceedings	37	1	Legal Proceedings	35
Item	1A	Risk Factors	37	1A	Risk Factors	35
Item	2	Unregistered Sales of Equity Securities and Use of Proceeds	37	2	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item	6	Exhibits	38	6	Exhibits	36

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)


	July 1, 2018		December 31, 2017		June 30, 2019		December 30, 2018
	(Unaudited)				(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	236,511	$	182,911	$	255,790	$	241,504
Short-term marketable securities	293,791		308,589		427,797		371,301
Accounts receivable (net of allowances of $12,886 in 2018 and $14,542 in 2017)	137,909		184,885
Accounts receivable (net of allowances of $13,302 in 2019 and $13,249 in 2018)					162,791		222,464
Prepaid expenses	27,021		22,851		28,899		25,349
Other current assets	34,722		50,463		47,459		33,328
Total current assets	729,954		749,699		922,736		893,946
Other assets
Long-term marketable securities	248,848		241,411		162,911		213,558
Property, plant and equipment (less accumulated depreciation and amortization of $936,283 in 2018 and $945,401 in 2017)	645,567		640,939
Property, plant and equipment (less accumulated depreciation and amortization of $940,034 in 2019 and $911,845 in 2018)					633,049		638,846
Goodwill	141,742		143,549		139,850		140,282
Deferred income taxes	148,686		153,046		125,093		128,431
Miscellaneous assets	184,325		171,136		222,729		182,060
Total assets	$	2,099,122	$	2,099,780	$	2,206,368	$	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)


	July 1, 2018			December 31, 2017			June 30, 2019			December 30, 2018
	(Unaudited)						(Unaudited)
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	105,389		$	125,479		$	101,259		$	111,553
Accrued payroll and other related liabilities	70,149			104,614			74,153			104,543
Unexpired subscriptions revenue	82,410			75,054			87,681			84,044
Short-term debt and finance lease obligations							254,378			253,630
Accrued expenses and other	103,916			110,510			114,173			119,534
Total current liabilities	361,864			415,657			631,644			673,304
Other liabilities
Long-term debt and capital lease obligations	251,911			250,209
Pension benefits obligation	382,031			405,422			343,379			362,940
Postretirement benefits obligation	46,559			48,816			38,603			40,391
Other	77,066			82,313			107,539			77,847
Total other liabilities	757,567			786,760			489,521			481,178
Stockholders’ equity
Common stock of $.10 par value:
Class A – authorized: 300,000,000 shares; issued: 2018 – 172,957,020; 2017 – 170,276,449 (including treasury shares: 2018 – 8,870,801; 2017 – 8,870,801)	17,296			17,028
Class B – convertible – authorized and issued shares: 2018 – 803,408; 2017 – 803,763	80			80
Class A – authorized: 300,000,000 shares; issued: 2019 – 174,077,502; 2018 – 173,158,414 (including treasury shares: 2019 – 8,870,801; 2018 – 8,870,801)							17,408			17,316
Class B – convertible – authorized and issued shares: 2019 – 803,408; 2018 – 803,408							80			80
Additional paid-in capital	201,601			164,275			200,356			206,316
Retained earnings	1,439,121			1,310,136			1,544,694			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	6,164			6,328			4,583			4,677
Funded status of benefit plans	(510,763		)	(427,819		)	(513,051		)	(520,308		)
Net unrealized loss on available-for-sale securities	(2,682		)	(1,538		)
Net unrealized gain/(loss) on available-for-sale securities							484			(2,093		)
Total accumulated other comprehensive loss, net of income taxes	(507,281		)	(423,029		)	(507,984		)	(517,724		)
Total New York Times Company stockholders’ equity	979,606			897,279			1,083,343			1,040,781
Noncontrolling interest	85			84			1,860			1,860
Total stockholders’ equity	979,691			897,363			1,085,203			1,042,641
Total liabilities and stockholders’ equity	$	2,099,122		$	2,099,780		$	2,206,368		$	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 Six Months Ended						For the Quarters Ended					For the Six Months Ended
	July 1, 2018			June 25, 2017			July 1, 2018			June 25, 2017			June 30, 2019		July 1, 2018			June 30, 2019		July 1, 2018
	(13 weeks)						(26 weeks)						(13 weeks)					(26 weeks)
Revenues
Subscription	$	260,629		$	250,037		$	521,222		$	492,412		$	270,456	$	260,629		$	541,266	$	521,222
Advertising	119,201			132,234			244,848			262,262			120,761		119,201			245,849		244,848
Other	34,730			24,803			62,438			51,204			45,041		34,730			88,205		62,438
Total revenues	414,560			407,074			828,508			805,878			436,258		414,560			875,320		828,508
Operating costs
Production costs:
Wages and benefits	92,754			88,799			184,747			179,813			103,959		92,754			206,867		184,747
Raw materials	17,826			15,813			34,518			32,743			19,158		17,826			38,996		34,518
Other production costs	45,277			45,082			90,933			90,435			49,897		45,277			95,234		90,933
Total production costs	155,857			149,694			310,198			302,991			173,014		155,857			341,097		310,198
Selling, general and administrative costs	203,368			213,788			411,991			412,925			210,131		203,368			431,594		411,991
Depreciation and amortization	14,081			15,131			29,122			31,284			15,180		14,081			30,098		29,122
Total operating costs	373,306			378,613			751,311			747,200			398,325		373,306			802,789		751,311
Headquarters redesign and consolidation	1,252			1,985			3,140			4,387			—		1,252			—		3,140
Operating profit	40,002			26,476			74,057			54,291			37,933		40,002			72,531		74,057
Other components of net periodic benefit costs/(income)	1,863			(1,193		)	3,891			(2,387		)
(Loss)/Gain from joint ventures	(8		)	(266		)	7			(93		)
Other components of net periodic benefit costs													1,833		1,863			3,668		3,891
(Loss)/gain from joint ventures													—		(8		)	—		7
Interest expense and other, net	4,536			5,133			9,413			10,458			1,514		4,536			2,817		9,413
Income from continuing operations before income taxes	33,595			22,270			60,760			46,127			34,586		33,595			66,046		60,760
Income tax expense	9,999			6,711			15,250			17,453			9,415		9,999			10,719		15,250
Net income	23,596			15,559			45,510			28,674			25,171		23,596			55,327		45,510
Net loss/(income) attributable to the noncontrolling interest	1			40			(1		)	106			—		1			—		(1		)
Net income attributable to The New York Times Company common stockholders	$	23,597		$	15,599		$	45,509		$	28,780		$	25,171	$	23,597		$	55,327	$	45,509
Average number of common shares outstanding:
Basic	165,027			161,787			164,581			161,624			166,152		165,027			165,915		164,581
Diluted	166,899			163,808			166,515			163,673			167,549		166,899			167,322		166,515
Basic earnings per share attributable to The New York Times Company common stockholders	$	0.14		$	0.10		$	0.28		$	0.18		$	0.15	$	0.14		$	0.33	$	0.28
Diluted earnings per share attributable to The New York Times Company common stockholders	$	0.14		$	0.09		$	0.27		$	0.17		$	0.15	$	0.14		$	0.33	$	0.27
Dividends declared per share	$	0.04		$	—		$	0.08		$	0.04		$	0.05	$	0.04		$	0.10	$	0.08

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 Six Months Ended					For the Quarters Ended					For the Six Months Ended
	July 1, 2018			June 25, 2017		July 1, 2018			June 25, 2017		June 30, 2019		July 1, 2018			June 30, 2019			July 1, 2018
	(13 weeks)					(26 weeks)					(13 weeks)					(26 weeks)
Net income	$	23,596		$	15,559	$	45,510		$	28,674	$	25,171	$	23,596		$	55,327		$	45,510
Other comprehensive income, before tax:
(Loss)/income on foreign currency translation adjustments	(4,629		)	2,896		(2,356		)	5,071
Income/(loss) on foreign currency translation adjustments											1,522		(4,629		)	(127		)	(2,356		)
Pension and postretirement benefits obligation	7,081			6,920		16,841			13,841		4,896		7,081			9,792			16,841
Net unrealized income/(loss) on available-for-sale securities	273			—		(1,098		)	—
Net unrealized gain/(loss) on available-for-sale securities											1,415		273			3,489			(1,098		)
Other comprehensive income, before tax	2,725			9,816		13,387			18,912		7,833		2,725			13,154			13,387
Income tax expense	684			3,826		3,504			7,357		2,015		684			3,414			3,504
Other comprehensive income, net of tax	2,041			5,990		9,883			11,555		5,818		2,041			9,740			9,883
Comprehensive income	25,637			21,549		55,393			40,229		30,989		25,637			65,067			55,393
Comprehensive loss/(income) attributable to the noncontrolling interest	1			40		(1		)	106		—		1			—			(1		)
Comprehensive income attributable to The New York Times Company common stockholders	$	25,638		$	21,589	$	55,392		$	40,335	$	30,989	$	25,638		$	65,067		$	55,392

See Notes to Condensed Consolidated Financial Statements.

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Quarters Ended June 30, 2019 and July 1, 2018

(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, April 1, 2018	$	17,372	$	199,029		$	1,422,123		$	(171,211	)	$	(509,322	)	$	957,991		$	86		$	958,077
Net income	—		—			23,597			—			—			23,597			(1		)	23,596
Dividends	—		—			(6,599		)	—			—			(6,599		)	—			(6,599		)
Other comprehensive income	—		—			—			—			2,041			2,041			—			2,041
Issuance of shares:
Stock options – 7,875 Class A shares	1		87			—			—			—			88			—			88
Restricted stock units vested – 31,357 Class A shares	3		(213		)	—			—			—			(210		)	—			(210		)
Stock-based compensation	—		2,698			—			—			—			2,698			—			2,698
Balance, July 1, 2018	$	17,376	$	201,601		$	1,439,121		$	(171,211	)	$	(507,281	)	$	979,606		$	85		$	979,691

Balance, March 31, 2019	$	17,482	$	197,626		$	1,527,859		$	(171,211	)	$	(513,802	)	$	1,057,954		$	1,860		$	1,059,814
Net income	—		—			25,171			—			—			25,171			—			25,171
Dividends	—		—			(8,336		)	—			—			(8,336		)	—			(8,336		)
Other comprehensive income	—		—			—			—			5,818			5,818			—			5,818
Issuance of shares:
Restricted stock units vested – 59,967 Class A shares	6		(279		)	—			—			—			(273		)	—			(273		)
Stock-based compensation	—		3,009			—			—			—			3,009			—			3,009
Balance, June 30, 2019	$	17,488	$	200,356		$	1,544,694		$	(171,211	)	$	(507,984	)	$	1,083,343		$	1,860		$	1,085,203

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Six Months Ended June 30, 2019 and ~~per~~July 1, 2018

(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 25, 2016 $ 17,003
$ 149,928
$ 1,331,911
$ (171,211 ) $ (479,816 ) $ 847,815
$ (3,571 ) $ 844,244
Net income —
—
28,780
—
—
28,780
(106 ) 28,674
Dividends —
—
(6,496 ) —
—
(6,496 ) —
(6,496 )
Other comprehensive income —
—
—
—
11,555
11,555
—
11,555
Issuance of shares:
Stock options – 460,909 Class A shares 46
2,661
—
—
—
2,707
—
2,707
Restricted stock units vested – 245,858 Class A shares 24
(2,479 ) —
—
—
(2,455 ) —
(2,455 )
Performance-based awards – 115,881 Class A shares 12
(1,360 ) —
—
—
(1,348 ) —
(1,348 )
Stock-based compensation —
7,145
—
—
—
7,145
—
7,145
Balance, June 25, 2017 $ 17,085
$ 155,895
$ 1,354,195
$ (171,211 ) $ (468,261 ) $ 887,703
$ (3,677 ) $ 884,026

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 —
—
45,509
—
—
45,509
1
45,510
Dividends —
—
(13,231 ) —
—
(13,231 ) —
(13,231 )
Other comprehensive income —
—
—
—
9,883
9,883
—
9,883
Issuance of shares:
Stock options – 2,185,201 Class A shares 219
40,308
—
—
—
40,527
—
40,527
Restricted stock units vested – 223,174 Class A shares 22
(3,076 ) —
—
—
(3,054 ) —
(3,054 )
Performance-based awards – 271,841 Class A shares 27
(5,930 ) —
—
—
(5,903 ) —
(5,903 )
Stock-based compensation —
6,024
—
—
—
6,024
—
6,024
Balance, July 1, 2018 $ 17,376
$ 201,601
$ 1,439,121
$ (171,211 ) $ (507,281 ) $ 979,606
$ 85
$ 979,691



	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	—		—			45,509			—			—			45,509			1		45,510
Dividends	—		—			(13,231		)	—			—			(13,231		)	—		(13,231		)
Other comprehensive income	—		—			—			—			9,883			9,883			—		9,883
Issuance of shares:
Stock options – 2,185,201 Class A shares	219		40,308			—			—			—			40,527			—		40,527
Restricted stock units vested – 223,174 Class A shares	22		(3,076		)	—			—			—			(3,054		)	—		(3,054		)
Performance-based awards – 271,841 Class A shares	27		(5,930		)	—			—			—			(5,903		)	—		(5,903		)
Stock-based compensation	—		6,024			—			—			—			6,024			—		6,024
Balance, July 1, 2018	$	17,376	$	201,601		$	1,439,121		$	(171,211	)	$	(507,281	)	$	979,606		$	85	$	979,691

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	—		—			55,327			—			—			55,327			—		55,327
Dividends	—		—			(16,637		)	—			—			(16,637		)	—		(16,637		)
Other comprehensive income	—		—			—			—			9,740			9,740			—		9,740
Issuance of shares:
Stock options – 279,510 Class A shares	28		2,937			—			—			—			2,965			—		2,965
Restricted stock units vested – 221,087 Class A shares	22		(3,747		)	—			—			—			(3,725		)	—		(3,725		)
Performance-based awards – 418,491 Class A shares	42		(11,966		)	—			—			—			(11,924		)	—		(11,924		)
Stock-based compensation	—		6,816			—			—			—			6,816			—		6,816
Balance, June 30, 2019	$	17,488	$	200,356		$	1,544,694		$	(171,211	)	$	(507,984	)	$	1,083,343		$	1,860	$	1,085,203

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	For the Six Months Ended						For the Six Months Ended
	July 1, 2018			June 25, 2017			June 30, 2019			July 1, 2018
	(26 weeks)						(26 weeks)
Cash flows from operating activities
Net income	$	45,510		$	28,674		$	55,327		$	45,510
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	29,122			31,284			30,098			29,122
Stock-based compensation expense	7,145			8,010			6,826			7,145
Undistributed (gain)/loss of joint ventures	(7		)	93
Long-term retirement benefit obligations	(8,435		)	(13,279		)	(11,574		)	(8,435		)
Fair market value adjustment on life insurance products							(2,048		)	(325		)
Other-net	965			1,737			(6,167		)	1,283
Changes in operating assets and liabilities:
Accounts receivable-net	46,976			47,802			59,673			46,976
Other assets	14,430			3,040			(14,555		)	14,430
Accounts payable, accrued payroll and other liabilities	(65,393		)	(20,353		)	(57,217		)	(65,393		)
Unexpired subscriptions	7,356			12,453			3,637			7,356
Net cash provided by operating activities	77,669			99,461			64,000			77,669
Cash flows from investing activities
Purchases of marketable securities	(229,534		)	(245,033		)	(225,765		)	(229,534		)
Maturities of marketable securities	234,883			277,499			223,327			234,883
Capital expenditures	(45,529		)	(21,411		)	(23,065		)	(45,529		)
Other-net	(1,474		)	36			1,982			(1,474		)
Net cash (used in)/provided by investing activities	(41,654		)	11,091
Net cash used in investing activities							(23,521		)	(41,654		)
Cash flows from financing activities
Long-term obligations:
Repayment of debt and capital lease obligations	(276		)	(276		)
Repayment of debt and finance lease obligations							(230		)	(276		)
Dividends paid	(13,128		)	(12,969		)	(14,936		)	(13,128		)
Capital shares:
Proceeds from stock option exercises	40,527			2,706			2,965			40,527
Share-based compensation tax withholding	(8,956		)	(3,803		)	(15,649		)	(8,956		)
Net cash provided by/(used in) financing activities	18,167			(14,342		)
Net cash (used in)/provided by financing activities							(27,850		)	18,167
Net increase in cash, cash equivalents and restricted cash	54,182			96,210			12,629			54,182
Effect of exchange rate changes on cash	(473		)	268			305			(473		)
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	$	254,645		$	222,028		$	272,733		$	254,645

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 ~~July 1, 2018,~~June 30, 2019, and December ~~31, 2017,~~30, 2018, and the results of operations, changes in stockholder’s equity ~~statement~~ and cash flows of the Company for the periods ended June 30, 2019, and July 1, ~~2018, and June 25, 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 second 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 ~~July 1, 2018,~~June 30, 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 Accounting Standards Update (“ASU”) 2018-05, which amends Accounting Standards Codification (“ASC”) Topic 740 “Income Taxes” to conform with SEC Staff Accounting Bulletin 118, issued in December 2017 which allowed SEC registrants to record provisional amounts for the year ended December 31, 2017, due to the complexities involved in accounting for the enactment of the 2017 Tax Cuts and Jobs Act (the “Act”). The standard was effective upon issuance. During the six months ended July 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 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 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.



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.

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 to be recognized in total operating costs and the other components of net periodic benefit costs have been reclassified to “Other

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

components of net periodic benefit costs/(income)” in the Condensed Consolidated Statements of Operations below “Operating profit” on a retrospective basis. The Company reclassified $0.4 million and $0.8 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 second quarter of 2017 and $0.5 million and $1.9 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 six months 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 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 or restricted cash equivalents, (2) a reconciliation between the statement of financial position and the statement of cash flows must be disclosed when the statement of financial position includes more than one line item for cash, cash equivalents and restricted cash, (3) changes in restricted cash that result from transfers between cash, cash equivalents and restricted cash should not be presented as cash flow activities in the statement of cash flows, and (4) an entity with a material balance of amounts generally described as restricted cash must disclose information about the nature of the restrictions. 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 six months of 2017. The Company has added a reconciliation from the Condensed Consolidated Balance Sheets to the Condensed Consolidated Statement of Cash Flows. 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. The new guidance must be adopted by the third quarter of 2018 (an interim period). Early adoption is permitted.

We adopted ASU 2016-01 in the first quarter of 2018 and elected the measurement alternative, defined as cost, less impairments, adjusted by observable price changes, given our equity instruments are without readily determinable fair values. This guidance did not impact our 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.

Subsequently, in March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” which clarifies the implementation guidance on principal versus agent considerations in ASU 2014-09. In April 2016, the FASB also issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” to reduce the cost and complexity of applying the guidance 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. 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-

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

up adjustment to be recorded to “Retained earnings.” The Company recognizes revenue under the core principle to depict the transfer of control to the Company’s customers in an amount reflecting the consideration to which the Company expects to be entitled. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.

The most significant change to the Company’s accounting practices related to accounting for certain licensing arrangements in the other revenue category for which archival and updated content is included. Under the former revenue guidance, licensing revenue was generally recognized over the term of the contract based on the annual minimum guarantee amount specified in the contractual agreement with the licensee. Based on the guidance of Topic 606, the Company has determined that the archival content and updated content included in these licensing arrangements represent two separate performance obligations. As such, a portion of the total contract consideration related to the archival content was recognized at the commencement of the contract when control of the archival content is transferred. The remaining contractual consideration will be recognized proportionately over the term of the contract when updated content is transferred to the licensee, in line with when the control of the new content is transferred.

The net impact of these changes accelerated the revenue of contracts not completed as of January 1, 2018. In connection with the adoption of the standard the Company recorded a net increase to opening retained earnings of $2.6 million ($3.5 million before tax) and a contract asset of $3.5 million, with $1.3 million categorized as a current asset and $2.2 million categorized as a long term asset as of January 1, 2018. The impact to “Other revenues” as a result of applying Topic 606 will be a decrease of $1.3 million for the twelve months ended December 30, 2018.

~~Our subscription and advertising revenues were not changed 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 for 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



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 ~~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 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.

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. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842 (Leases), which provides narrow amendments to clarify how to apply certain aspects of the new lease standard. In July 2018, the FASB also issued ASU 2018-11, Targeted Improvements to Topic 842, which provides an alternative transition method at the transition date, allowing entities to recognize a cumulative effect adjustment to the opening balance of retained earnings upon adoption.

This guidance becomes effective for the Company for fiscal years beginning after December 30, 2018. While early application is permitted, the Company expects to adopt this guidance in the first quarter of 2019 utilizing the alternative transition method. The adoption of the standards will require us to add right-of-use assets and lease liabilities onto our balance sheet. Based on our lease portfolio at December 31, 2017, the right-of-use asset and lease liability would have been in the range of $40 million to $45 million on our Consolidated Balance Sheets based on the remaining lease payments, with no material impact to our Condensed Consolidated Statement of Operations or liquidity. However, the ultimate impact of adopting ASU 2016-02 will depend on the Company’s lease portfolio as of the adoption date.

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

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

products) and single-copy and bulk sales of our print products. Subscription revenues are based on both the number of copies of the printed newspaper sold and digital-only subscriptions, and the rates charged to the respective customers.

Advertising revenues are derived from the sale of our advertising products and services on our print and digital platforms. These revenues are primarily determined by the volume, rate and mix of advertisements. 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, building rental income,~~licensing, commercial printing, the leasing of floors in the Company Headquarters, affiliate referrals ~~digital archive licensing,~~(revenue generated by offering direct links to merchants in exchange for a portion of the sale price), television (primarily from our television series, “The Weekly”), NYT Live (our live events business)~~, commercial printing,~~ and retail commerce.

Revenue is recognized when a performance obligation is satisfied by transferring a promised good or service to a customer. A good or service is considered transferred when the customer obtains control, which is when the customer has the ability to direct the use of and/or obtain substantially all of the benefits of an asset.

Proceeds from subscription revenues are deferred at the time of sale and are recognized on a pro rata basis over the terms of the subscriptions. Payment is typically due upfront and the revenue is recognized ratably over the subscription period. The deferred proceeds are recorded within “Unexpired subscription revenue” in the Condensed Consolidated Balance Sheet. Single-copy revenue is recognized based on date of publication, net of provisions for related returns. Payment for single-copy sales is typically due upon complete satisfaction of our performance obligations. The Company does not have significant financing components or significant payment terms as we only offer industry standard payment terms to our customers.

When our subscriptions are sold through third parties, we are a principal in the transaction and, therefore, revenues and related costs to third parties for these sales are reported on a gross basis. We are considered a principal if we control a promised good or service before transferring that good or service to the customer. The Company considers several factors to determine if it controls the good and therefore is the principal. These factors include: (i) if we have primary responsibility for fulfilling the promise, (ii) if we have inventory risk before the goods or services are transferred to the customer or after the transfer of control to the customer, and (iii) if we have discretion in establishing price for the specified good or service.

Advertising revenues are recognized when advertisements are published in newspapers or placed on digital platforms or, with respect to certain digital advertising, each time a user clicks on certain advertisements, net of provisions for estimated rebates and rate adjustments.

We recognize a rebate obligation as a reduction of revenues based on the amount of estimated rebates that will be earned related to the underlying revenue transactions during the period. Measurement of the rebate obligation is estimated based on the historical experience of the number of customers that ultimately earn and use the rebate. We recognize a reserve for rate adjustments as a reduction of revenues based on the amount of estimated post-billing adjustments that will be claimed. Measurement of the rate adjustment reserve is estimated based on historical experience of credits actually issued.

Payment for advertising is due upon complete satisfaction of our performance obligations. The Company has a formal credit checking policy, procedures, and controls in place that evaluate collectability prior to ad publication. 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.

Subscription, advertising and other revenues were as follows:


	For the Quarters Ended				For the Six Months Ended				For the Quarters Ended				For the Six Months Ended
(In thousands)	July 1, 2018		June 25, 2017		July 1, 2018		June 25, 2017		June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018
Subscription	$	260,629	$	250,037	$	521,222	$	492,412	$	270,456	$	260,629	$	541,266	$	521,222
Advertising	119,201		132,234		244,848		262,262		120,761		119,201		245,849		244,848
Other ⁽¹⁾	34,730		24,803		62,438		51,204		45,041		34,730		88,205		62,438
Total	$	414,560	$	407,074	$	828,508	$	805,878	$	436,258	$	414,560	$	875,320	$	828,508

⁽¹⁾ Other revenue includes building rental revenue, which is not under the scope of Revenue from Contracts with Customers (Topic 606). Building rental revenue was approximately $7 million and $6 million ~~and $4 million of building rental income~~ for the second quarters of ~~2018~~2019 and ~~2017,~~2018, respectively, and approximately ~~$10~~$15 million and $8$10 million for the first six months of 2019 and 2018, ~~and 2017, respectively, which is not under the scope of Topic 606.~~

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

respectively.

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



	For the Quarters Ended				For the Six Months Ended
(In thousands)	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018
Digital-only subscription revenues:
News product subscription revenues⁽¹⁾	$	104,430	$	93,549	$	206,776	$	184,125
Other product subscription revenues⁽²⁾	8,205		5,194		15,718		10,030
Total digital-only subscription revenues	$	112,635	$	98,743	$	222,494	$	194,155
⁽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.

For the Quarters Ended For the Six Months Ended
(In thousands) July 1, 2018
June 25, 2017
July 1, 2018
June 25, 2017
Digital-only subscription revenues:
News product subscription revenues⁽¹⁾
$ 93,549
$ 79,300
$ 184,125
$ 152,161
Other product subscription revenues⁽²⁾
5,194
3,243
10,030
6,199
Total digital-only subscription revenues $ 98,743
$ 82,543
$ 194,155
$ 158,360
⁽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												For the Quarters Ended
	July 1, 2018						June 25, 2017						June 30, 2019						July 1, 2018
(In thousands)	Print		Digital		Total		Print		Digital		Total		Print		Digital		Total		Print		Digital		Total
Advertising revenues:
Display	$	60,803	$	41,443	$	102,246	$	68,499	$	44,485	$	112,984	$	55,859	$	42,833	$	98,692	$	60,803	$	41,443	$	102,246
Classified and Other	7,367		9,588		16,955		8,557		10,693		19,250
Other													6,876		15,193		22,069		7,367		9,588		16,955
Total advertising	$	68,170	$	51,031	$	119,201	$	77,056	$	55,178	$	132,234	$	62,735	$	58,026	$	120,761	$	68,170	$	51,031	$	119,201

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	For the Six Months Ended												For the Six Months Ended
	July 1, 2018						June 25, 2017						June 30, 2019						July 1, 2018
(In thousands)	Print		Digital		Total		Print		Digital		Total		Print		Digital		Total		Print		Digital		Total
Advertising revenues:
Display	$	131,608	$	80,140	$	211,748	$	140,126	$	87,461	$	227,587	$	118,201	$	84,945	$	203,146	$	131,608	$	80,140	$	211,748
Classified and Other	15,506		17,594		33,100		17,287		17,388		34,675
Other													14,079		28,624		42,703		15,506		17,594		33,100
Total advertising	$	147,114	$	97,734	$	244,848	$	157,413	$	104,849	$	262,262	$	132,280	$	113,569	$	245,849	$	147,114	$	97,734	$	244,848

Performance Obligations

~~Our contracts with customers may include multiple performance obligations. For such arrangements, we~~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~~of 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 ~~July 1, 2018,~~June 30, 2019, the aggregate amount of ~~the~~ transaction price allocated to the remaining performance obligations is(which represents the delivery of updated content to be delivered under our digital archive licensing contracts) was approximately ~~$29~~$86 million. The Company will recognize this revenue as control of the performance obligation is transferred to the customer. We expect that approximately ~~$9 million,~~ $10 million, $19 million and ~~$10~~$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 ~~July 1,~~June 30, 2019, and December 30, 2018, the Company had ~~$2.9~~$4.0 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 receivable”~~Accounts receivable when the customer is invoiced based on the contractual billing schedule. The increase in the contract assets balance of $1.5 million for the six months ended ~~July 1, 2018,~~June 30, 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 ~~$0.6~~$0.5 million of consideration that was reclassified to ~~“Accounts receivable”~~Accounts receivable when invoiced based on the contractual billing schedules for the ~~period~~six months ended ~~July 1, 2018.~~

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~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.June 30, 2019.

NOTE 4. MARKETABLE SECURITIES

The Company accounts for its marketable securities as ~~AFS.~~available for sale (“AFS”). The Company recorded ~~$3.6~~$0.6 million and ~~$2.5~~$2.8 million of net unrealized ~~loss~~gains and net unrealized losses, respectively, in ~~AOCI~~Accumulated other comprehensive income (“AOCI”) as of ~~July 1, 2018,~~June 30, 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 ~~July 1, 2018,~~June 30, 2019, and December ~~31, 2017:~~30, 2018:



	June 30, 2019
(In thousands)	Amortized Cost		Gross unrealized gains		Gross unrealized losses			Fair Value
Short-term AFS securities
U.S. Treasury securities	$	144,518	$	73	$	(111	)	$	144,480
Corporate debt securities	120,936		117		(116		)	120,937
U.S. governmental agency securities	108,911		29		(120		)	108,820
Commercial paper	35,063		—		—			35,063
Certificates of deposit	18,497		—		—			18,497
Total short-term AFS securities	$	427,925	$	219	$	(347	)	$	427,797
Long-term AFS securities
Corporate debt securities	$	103,793	$	748	$	(64	)	$	104,477
U.S. governmental agency securities	31,247		38		(8		)	31,277
U.S. Treasury securities	27,098		81		(22		)	27,157
Total long-term AFS securities	$	162,138	$	867	$	(94	)	$	162,911

July 1, 2018
(In thousands) Amortized Cost Gross unrealized gains Gross unrealized losses Fair Value
Short-term AFS securities
Corporate debt securities $ 120,937
$ 1
$ (453 ) $ 120,485
U.S Treasury securities 101,952
—
(142 ) 101,810
U.S. governmental agency securities 50,932
—
(149 ) 50,783
Commercial paper 17,520
—
—
17,520
Certificates of deposit 3,193
—
—
3,193
Total short-term AFS securities $ 294,534
$ 1
$ (744 ) $ 293,791
Long-term AFS securities
Corporate debt securities $ 117,341
$ 7
$ (1,123 ) $ 116,225
U.S. governmental agency securities 91,824
—
(1,146 ) 90,678
U.S Treasury securities 42,582
—
(637 ) 41,945
Total long-term AFS securities $ 251,747
$ 7
$ (2,906 ) $ 248,848

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 NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



	December 30, 2018
(In thousands)	Amortized Cost		Gross unrealized gains		Gross unrealized losses			Fair Value
Short-term AFS securities
U.S. Treasury securities	$	107,717	$	—	$	(232	)	$	107,485
Corporate debt securities	140,631		1		(464		)	140,168
U.S. governmental agency securities	92,628		—		(654		)	91,974
Commercial paper	8,177		—		—			8,177
Certificates of deposit	23,497		—		—			23,497
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

The following tables represent the AFS securities as of ~~July 1, 2018~~June 30, 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:


	July 1, 2018															June 30, 2019
	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
U.S. Treasury securities																$	8,750	$	(2	)	$	37,911	$	(109	)	$	46,661	$	(111	)
Corporate debt securities	$	97,827	$	(347	)	$	16,353	$	(106	)	$	114,180	$	(453	)	7,159		(2		)	46,538		(114		)	53,697		(116		)
U.S Treasury securities	102,834		(142		)	—		—			102,834		(142		)
U.S. governmental agency securities	17,319		(12		)	33,465		(137		)	50,784		(149		)	9,743		(14		)	77,799		(106		)	87,542		(120		)
Total short-term AFS securities	$	217,980	$	(501	)	$	49,818	$	(243	)	$	267,798	$	(744	)	$	25,652	$	(18	)	$	162,248	$	(329	)	$	187,900	$	(347	)
Long-term AFS securities
Corporate debt securities	$	112,576	$	(1,094	)	$	1,972	$	(29	)	$	114,548	$	(1,123	)	$	25,839	$	(54	)	$	10,761	$	(10	)	$	36,600	$	(64	)
U.S Treasury securities	41,500		(637		)	—		—			41,500		(637		)
U.S. governmental agency securities	32,245		(300		)	58,432		(846		)	90,677		(1,146		)	—		—			5,992		(8		)	5,992		(8		)
U.S. Treasury securities																10,988		(20		)	1,101		(2		)	12,089		(22		)
Total long-term AFS securities	$	186,321	$	(2,031	)	$	60,404	$	(875	)	$	246,725	$	(2,906	)	$	36,827	$	(74	)	$	17,854	$	(20	)	$	54,681	$	(94	)

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

December 31, 2017
Less than 12 Months 12 Months or Greater Total
(In thousands) Fair Value Gross unrealized losses Fair Value Gross unrealized losses Fair Value Gross unrealized losses
Short-term AFS securities
Corporate debt securities $ 140,111
$ (199 ) $ 9,996
$ (28 ) $ 150,107
$ (227 )
U.S Treasury securities 70,951
(34 ) —
—
70,951
(34 )
U.S. governmental agency securities 19,770
(50 ) 25,870
(129 ) 45,640
(179 )
Total short-term AFS securities $ 230,832
$ (283 ) $ 35,866
$ (157 ) $ 266,698
$ (440 )
Long-term AFS securities
Corporate debt securities $ 81,118
$ (579 ) $ 10,886
$ (104 ) $ 92,004
$ (683 )
U.S Treasury securities 23,998
(125 ) 72,781
(894 ) 96,779
(1,019 )
U.S. governmental agency securities 52,628
(403 ) —
—
52,628
(403 )
Total long-term AFS securities $ 157,744
$ (1,107 ) $ 83,667
$ (998 ) $ 241,411
$ (2,105 )



	December 30, 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
U.S. Treasury securities	$	70,830	$	(31	)	$	28,207	$	(201	)	$	99,037	$	(232	)
Corporate debt securities	76,886		(115		)	61,459		(349		)	138,345		(464		)
U.S. governmental agency securities	11,664		(4		)	80,311		(650		)	91,975		(654		)
Certificates of deposit	1,599		—			—		—			1,599		—
Total short-term AFS securities	$	160,979	$	(150	)	$	169,977	$	(1,200	)	$	330,956	$	(1,350	)
Long-term AFS securities
Corporate debt securities	$	81,655	$	(570	)	$	27,265	$	(462	)	$	108,920	$	(1,032	)
U.S. governmental agency securities	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	$	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. 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 ~~July 1, 2018,~~June 30, 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 primarily due to interest rate fluctuations as opposed to changes in credit quality. Therefore, as of ~~July 1, 2018,~~June 30, 2019, we have recognized no OTTI loss.

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

As of ~~July 1, 2018,~~June 30, 2019, our short-term and long-term marketable securities had remaining maturities of less than 1 month to 12 months and 13 months to 3534 months, respectively. See Note 9 for more information regarding the fair value of our marketable securities.

NOTE 5. GOODWILL AND INTANGIBLES

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



(In thousands)	Total Company
Balance as of December 30, 2018	$	140,282
Foreign currency translation	(432		)
Balance as of June 30, 2019	$	139,850

(In thousands) Total Company
Balance as of December 31, 2017 $ 143,549
Foreign currency translation (1,807 )
Balance as of July 1, 2018 $ 141,742

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 ~~$7.2~~$5.3 million is included in ~~“Miscellaneous assets”~~Miscellaneous assets in our Condensed Consolidated Balance Sheets as of ~~July 1, 2018.~~June 30, 2019.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 6. INVESTMENTS

Equity Method Investments

~~As of July 1, 2018, our~~Our investments in joint ventures ~~of $1.7 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. ~~In 2016, the paper mill closed and the partnership is currently in the process of liquidation.~~

The investment is accounted for under the equity method, and is recorded in “Miscellaneous assets” in our Condensed Consolidated Balance Sheets. Our proportionate share of the operating results of our investment is recorded in “(Loss)/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, ~~we recognized a $41.4 million loss from joint ventures related to~~ the ~~closure. The Company’s proportionate share of the loss was $20.1 million after tax and net of noncontrolling interest. As a result of the~~paper mill ~~closure, we wrote our investment down to zero. In~~closed. During the fourth quarter of ~~2016, Madison sold certain assets at~~2018, we received a $12.5 million cash distribution in connection with the ~~mill site and we recognized a gain~~pending liquidation of $3.9 million related to the sale. In 2017, we recognized a gain of $20.8 million, primarily related to 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 following table presents summarized income statement information for Madison, which follows a calendar year:~~

For the Quarters Ended For the Six Months Ended
(In thousands) June 30, 2018
June 30, 2017
June 30, 2018
June 30, 2017
Revenues $ —
$ —
$ —
$ —
Expenses:
Cost of sales —
(118 ) —
(1,172 )
General and administrative income/(expense) and other (43 ) (528 ) (34 ) (554 )
Total expense (43 ) (646 ) (34 ) (1,726 )
Operating loss (43 ) (646 ) (34 ) (1,726 )
Other income/(expense) 28
(4 ) 48
(6 )
Net (loss)/income $ (15 ) $ (650 ) $ 14
$ (1,732 )

Madison. We received no distributions from Madison during the ~~second quarters and~~ first six months of 2019 and 2018, respectively. We expect to receive a final cash distribution in 2019 in the range of $5 million to $8 million.

As of June 30, 2019, and ~~2017, respectively.~~

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

December 30, 2018, the value of our investments in joint ventures was zero. Our proportionate share of the operating results of our investment for the quarters ended June 30, 2019, and July 1, 2018, was de minimis and was recorded in (Loss)/gain from joint ventures in our Condensed Consolidated Statements of Operations.

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 and the adoption of ASU 2016-01, we accounted for our non-marketable equity securities at cost less impairment. Subsequent to the adoption of ASU 2016-01 as of January 1, 2018, we elected the measurement alternative, defined as cost, less impairments, adjusted by observable price changes given our non-marketable equity securities are without readily determinable fair values. We estimate the fair value based on valuation methods using the observable transaction price at the transaction date. Realized gains and losses on non-marketable securities sold or impaired are recognized in ~~“Interest~~Interest expense and other, ~~net.”~~net.

~~Non-marketable equity securities are classified within Level 3 in the fair value hierarchy. See Note 9 for the definition of Level 3.~~ As of ~~July 1, 2018~~June 30, 2019, and December ~~31, 2017,~~30, 2018, non-marketable equity securities included in ~~“Miscellaneous assets’’~~Miscellaneous assets in our Condensed Consolidated Balance Sheets had a carrying value of ~~$14.4~~$13.3 million and ~~$13.6~~$13.7 million, respectively. ~~We did not have any material~~During the first quarter of 2019, we recorded a gain of $1.9 million from fair value ~~adjustments~~adjustment related to the sale of one of our investments in ~~the second quarter~~Interest expense and ~~first six months~~other, net in our Condensed Consolidated Statements of ~~2018.~~Operations.

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)	June 30, 2019			December 30, 2018
Option to repurchase ownership interest in headquarters building in 2019:
Principal amount ⁽¹⁾	$	245,339		$	250,000
Less unamortized (premium)/discount based on imputed interest rate of 12.0% in 2019 and 13.0% in 2018	(2,146		)	3,202
Net option to repurchase ownership interest in headquarters building in 2019	247,485			246,798
Finance lease obligation (due in August 2019)	6,893			6,832
Total short-term debt and finance lease obligations	$	254,378		$	253,630

(In thousands) July 1, 2018
December 31, 2017
Option to repurchase ownership interest in headquarters building in 2019:
Principal amount $ 250,000
$ 250,000
Less unamortized discount based on imputed interest rate of 13.0% 4,907
6,596
Net option to repurchase ownership interest in headquarters building in 2019 245,093
243,404
Capital lease obligations 6,818
6,805
Total long-term debt and capital lease obligations $ 251,911
$ 250,209
⁽¹⁾ The reduction in principal amount reflects a $4.7 million credit to the repurchase price as the result of a change in the closing date to December 2019. This credit will be accounted for as a reduction in interest expense.

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 obligation.

“

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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



	For the Quarters Ended						For the Six Months Ended
(In thousands)	June 30, 2019			July 1, 2018			June 30, 2019			July 1, 2018
Interest expense	$	7,137		$	7,059		$	14,196		$	14,017
Amortization of debt costs and (premium)/discount on debt	(205		)	813			688			1,689
Capitalized interest	(8		)	(219		)	(52		)	(374		)
Interest income and other expense, net ⁽¹⁾	(5,410		)	(3,117		)	(12,015		)	(5,919		)
Total interest expense and other, net	$	1,514		$	4,536		$	2,817		$	9,413

For the Quarters Ended For the Six Months Ended
(In thousands) July 1, 2018
June 25, 2017
July 1, 2018
June 25, 2017
Interest expense $ 7,059
$ 6,955
$ 14,017
$ 13,819
Amortization of debt costs and discount on debt 813
778
1,689
1,578
Capitalized interest (219 ) (287 ) (374 ) (507 )
Interest income and other, net (3,117 ) (2,313 ) (5,919 ) (4,432 )
Total interest expense and other, net $ 4,536
$ 5,133
$ 9,413
$ 10,458
⁽¹⁾The six months ended June 30, 2019, include a fair value adjustment of $1.9 million related to the sale of a non-marketable equity security.

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”).~~

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

The Company has accounted for the transaction as a financing transaction and ~~has continued to depreciate the Condo Interest and account~~accounted 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.

The Lease was part of a transaction in 2009 under which the Company sold and simultaneously leased back approximately 750,000 rentable square feet, in the 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 December 2019 to repurchase the Condo Interest for $245.3 million.

NOTE 8. OTHER

Capitalized Computer Software Costs

Amortization of capitalized computer software costs included in Depreciation and amortization in our Condensed Consolidated Statements of Operations were $4.4 million and $3.9 million in the second quarters of 2019 and 2018, respectively, and $8.7 million and $7.3 million in the first six months of 2019 and 2018, respectively.

Headquarters Redesign and Consolidation

In 2017 and 2018, we redesigned our Company Headquarters, consolidated our space within a smaller number of floors and leased the additional floors to third parties. As the project was substantially completed as of December 30, 2018, we did not incur significant expenses related to these measures in the second quarter and in the first six months of 2019. We incurred $1.3 million and $3.1 million of total expenses related to these measures in the second quarter and in the first six months of 2018. We capitalized a de minimis amount and approximately $5 million in the second quarters of 2019 and 2018, respectively, and less than $1 million and $11 million in the first six months of 2019 and 2018, related to these measures.

Marketing Expenses

Marketing expense to promote our brand and products and grow our subscriber base was $36.6 million and $35.6 million in the second quarters of 2019 and 2018, respectively, and $84.1 million and $67.2 million in the first six months of 2019 and 2018, respectively.

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 $35.6 million and $25.8 million in the second quarters of 2018 and 2017, respectively, and $67.2 million and $59.4 million in the first six months of 2018 and 2017, respectively.

~~Capitalized Computer Software Costs~~

Amortization of capitalized computer software costs included in “Depreciation and amortization” in our Condensed Consolidated Statements of Operations were $3.9 million and $2.7 million in the second quarters of 2018 and 2017, respectively, and $7.3 million and $5.8 million in the first six months of 2018 and 2017, respectively.

~~Headquarters Redesign and Consolidation~~

In December 2016, we announced plans to redesign our headquarters building, consolidate our space within a smaller number of floors and lease the additional floors to third parties. We expect to complete this project by the fourth quarter of 2018. These changes are expected to generate additional rental income and result in a more collaborative workspace. We incurred $1.3 million and $2.0 million of total expenses related to these measures in the second quarter of 2018 and 2017, respectively, and $3.1 million and $4.4 million in the first six months of 2018 and 2017, respectively. The capital expenditures related to these measures were approximately $5 million and $10 million in the second quarters of 2018 and 2017, respectively, and $11 million in the first six months of 2018 and 2017, respectively.

Restricted Cash

A reconciliation of cash, cash equivalents and restricted cash as of ~~July 1, 2018~~June 30, 2019, and December ~~31, 2017~~30, 2018, from the Condensed Consolidated Balance Sheets to the Condensed Consolidated Statements of Cash Flows is as follows:



(In thousands)	June 30, 2019		December 30, 2018
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	$	255,790	$	241,504
Restricted cash included within other current assets	638		642
Restricted cash included within miscellaneous assets	16,305		17,653
Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows	$	272,733	$	259,799

(In thousands) July 1, 2018
December 31, 2017

Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents $ 236,511
$ 182,911
Restricted cash included within other current assets 365
375
Restricted cash included within miscellaneous assets 17,769
17,650
Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows $ 254,645
$ 200,936

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

Severance Costs

We recognized severance costs of ~~$2.2~~$0.7 million and ~~$19.3~~$2.2 million in the second quarters of ~~2018~~2019 and ~~2017,~~2018, respectively, and ~~$4.6~~$2.1 million and ~~$20.9~~$4.6 million in the first six months 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 ~~$10.7~~$6.0 million and ~~$18.8~~$8.4 million included in ~~“Accrued~~Accrued expenses and ~~other”~~other in our Condensed Consolidated Balance Sheets as of ~~July 1, 2018,~~June 30, 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.

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 ~~July 1, 2018,~~June 30, 2019, and December ~~31, 2017:~~30, 2018:



(In thousands)	June 30, 2019								December 30, 2018
(In thousands)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Short-term AFS securities ⁽¹⁾
U.S. Treasury securities	$	144,480	$	—	$	144,480	$	—	$	107,485	$	—	$	107,485	$	—
Corporate debt securities	120,937		—		120,937		—		140,168		—		140,168		—
U.S. governmental agency securities	108,820		—		108,820		—		91,974		—		91,974		—
Commercial paper	35,063		—		35,063		—		8,177		—		8,177		—
Certificates of deposit	18,497		—		18,497		—		23,497		—		23,497		—
Total short-term AFS securities	$	427,797	$	—	$	427,797	$	—	$	371,301	$	—	$	371,301	$	—
Long-term AFS securities ⁽¹⁾
Corporate debt securities	$	104,477	$	—	$	104,477	$	—	$	129,624	$	—	$	129,624	$	—
U.S. governmental agency securities	31,277		—		31,277		—		37,197		—		37,197		—
U.S. Treasury securities	27,157		—		27,157		—		46,737		—		46,737		—
Total long-term AFS securities	$	162,911	$	—	$	162,911	$	—	$	213,558	$	—	$	213,558	$	—
Liabilities:
Deferred compensation ⁽²⁾⁽³⁾	$	22,132	$	22,132	$	—	$	—	$	23,211	$	23,211	$	—	$	—

(In thousands) July 1, 2018 December 31, 2017
Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3
Assets:
Short-term AFS securities ⁽¹⁾

Corporate debt securities $ 120,485
$ —
$ 120,485
$ —
$ 150,107
$ —
$ 150,107
$ —
U.S. Treasury securities 101,810
—
101,810
—
70,951
—
70,951
—
U.S. governmental agency securities 50,783
—
50,783
—
45,640
—
45,640
—
Commercial paper 17,520
—
17,520
—
32,591
—
32,591
—
Certificates of deposit 3,193
—
3,193
—
9,300
—
9,300
—
Total short-term AFS securities $ 293,791
$ —
$ 293,791
$ —
$ 308,589
$ —
$ 308,589
$ —
Long-term AFS securities ⁽¹⁾

Corporate debt securities $ 116,225
$ —
$ 116,225
$ —
$ 92,004
$ —
$ 92,004
$ —
U.S. Treasury securities 41,945
—
41,945
—
52,628
—
52,628
—
U.S. governmental agency securities 90,678
—
90,678
—
96,779
—
96,779
—
Total long-term AFS securities $ 248,848
$ —
$ 248,848
$ —
$ 241,411
$ —
$ 241,411
$ —
Liabilities:
Deferred compensation ⁽²⁾
$ 24,826
$ 24,826
$ —
$ —
$ 29,526
$ 29,526
$ —
$ —

⁽¹⁾ Our marketable securities, which include U.S. Treasury securities, corporate debt securities, U.S. government agency securities, municipal securities, certificates of deposit and commercial paper, are recorded at fair value (see Note 4). We classified these investments as Level 2 since the fair value is based on market observable inputs for investments with similar terms and maturities.

⁽²⁾ The deferred compensation liability, included in ~~“Other~~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 $43.1 million as of June 30, 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 ~~$245~~$247 million as of ~~July 1,~~June 30, 2019 and December 30, 2018, ~~and approximately $243 million as of December 31, 2017.~~respectively. The fair value of our ~~long-term~~ debt was approximately ~~$268~~$251 million and ~~$279~~$260 million as of ~~July 1, 2018,~~June 30, 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~~historically sponsored several frozen single-employer defined benefit pension ~~plans including The~~plans. 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 The Guild-Times Adjustable Pension~~ Plan ~~a joint Company and Guild sponsored defined benefit pension plan covering employees who are members of The~~(the “Guild-Times Plan”). Previously, the NewsGuild of New ~~York. Participants in~~York (the “Guild”) and the Company were joint trustees of The Guild-Times ~~Adjustable~~Plan. Effective December 31, 2018, the Guild-Times Plan and the Retirement Annuity Plan For Craft Employees of The New York Times Companies (the “RAP”) were merged into The New York Times Companies Pension ~~Plan continue to actively accrue benefits.~~Plan.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The Company and the Guild jointly sponsor the Guild-Times Adjustable Pension Plan (the “APP”), which continues to accrue active benefits.

The components of net periodic pension cost were as follows:



	For the Quarters Ended
	June 30, 2019								July 1, 2018
(In thousands)	Qualified Plans			Non- Qualified Plans		All Plans			Qualified Plans			Non- Qualified Plans		All Plans
Service cost	$	1,279		$	—	$	1,279		$	2,553		$	—	$	2,553
Interest cost	14,708			2,088		16,796			13,206			1,848		15,054
Expected return on plan assets	(20,259		)	—		(20,259		)	(20,591		)	—		(20,591		)
Amortization of actuarial loss	4,635			1,094		5,729			6,680			1,294		7,974
Amortization of prior service credit	(486		)	—		(486		)	(486		)	—		(486		)
Net periodic pension (income)/cost ⁽¹⁾	$	(123	)	$	3,182	$	3,059		$	1,362		$	3,142	$	4,504

For the Quarters Ended
July 1, 2018 June 25, 2017
(In thousands) Qualified
Plans Non-
Qualified
Plans All
Plans Qualified
Plans Non-
Qualified
Plans All
Plans
Service cost $ 2,553
$ —
$ 2,553
$ 2,423
$ —
$ 2,423
Interest cost 13,206
1,848
15,054
15,594
1,956
17,550
Expected return on plan assets (20,591 ) —
(20,591 ) (26,136 ) —
(26,136 )
Amortization of actuarial loss 6,680
1,294
7,974
7,353
1,088
8,441
Amortization of prior service credit (486 ) —
(486 ) (486 ) —
(486 )
Net periodic pension cost/(income) $ 1,362
$ 3,142
$ 4,504
$ (1,252 ) $ 3,044
$ 1,792


	For the Six Months Ended																For the Six Months Ended
	July 1, 2018								June 25, 2017								June 30, 2019								July 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	$	5,200		$	—	$	5,200		$	4,846		$	—	$	4,846		$	2,557		$	—	$	2,557		$	5,200		$	—	$	5,200
Interest cost	26,357			3,695		30,052			31,188			3,912		35,100			29,417			4,176		33,593			26,357			3,695		30,052
Expected return on plan assets	(41,145		)	—		(41,145		)	(52,272		)	—		(52,272		)	(40,517		)	—		(40,517		)	(41,145		)	—		(41,145		)
Amortization of actuarial loss	13,442			2,588		16,030			14,706			2,176		16,882			9,270			2,188		11,458			13,442			2,588		16,030
Amortization of prior service credit	(972		)	—		(972		)	(972		)	—		(972		)	(972		)	—		(972		)	(972		)	—		(972		)
Net periodic pension cost/(income)	$	2,882		$	6,283	$	9,165		$	(2,504	)	$	6,088	$	3,584
Net periodic pension (income)/cost ⁽¹⁾																	$	(245	)	$	6,364	$	6,119		$	2,882		$	6,283	$	9,165

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 six months of ~~2018~~2019 and ~~2017,~~2018, we made pension contributions of ~~$4.2~~$4.3 million and ~~$3.8~~$4.2 million, respectively, to ~~certain qualified pension plans.~~the APP. 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 Six Months Ended
(In thousands)	June 30, 2019			July 1, 2018			June 30, 2019			July 1, 2018
Service cost	$	7		$	5		$	14		$	10
Interest cost	400			369			800			738
Amortization of actuarial loss	844			1,184			1,688			2,368
Amortization of prior service credit	(1,191		)	(1,643		)	(2,382		)	(3,182		)
Net periodic postretirement benefit cost/(income) ⁽¹⁾	$	60		$	(85	)	$	120		$	(66	)

For the Quarters Ended For the Six Months Ended
(In thousands) July 1, 2018
June 25, 2017
July 1, 2018
June 25, 2017
Service cost $ 5
$ 92
$ 10
$ 184
Interest cost 369
470
738
940
Amortization of actuarial loss 1,184
905
2,368
1,810
Amortization of prior service credit (1,643 ) (1,938 ) (3,182 ) (3,877 )
Net periodic postretirement benefit income $ (85 ) $ (471 ) $ (66 ) $ (943 )

~~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.~~Operating profit.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 11. INCOME TAXES

The Company had income tax expense of $9.4 million and $10.7 million in the second quarter and first six months of 2019, respectively. The Company had income tax expense of $10.0 million and $15.3 million in the second quarter and first six months of 2018, respectively. The ~~Company had income~~Company’s effective tax ~~expense of $6.7 million~~rates from continuing operations were 27.2% and ~~$17.5 million in~~16.2% for the second quarter and first six months of ~~2017,~~2019, respectively. The ~~increase in income~~Company received a tax ~~expense~~benefit in the ~~second~~first quarter of ~~2018 compared to the same period~~2019 from stock price appreciation on stock-based awards that settled in the ~~prior year was largely due to higher income from continuing operations~~quarter, resulting in ~~the second quarter of 2018. The decrease in income~~a lower than statutory tax ~~expense in~~rate for the first six months of 2018 compared to the same period in the prior year was largely due to the reduction in the U.S. federal corporate income tax rate which took effect in 2018, partially offset by higher income from continuing operations in the first six months of 2018.

2019. The Company’s effective tax rates from continuing operations were 29.8% and 25.1% for the second quarter and first six months of 2018, respectively. The Company’s effective tax rates from continuing operations were 30.1% and 37.8% for the second quarter and first six months of 2017, respectively. The effective tax rate in the second quarter of 2018 was impacted by the reduction in the U.S. federal corporate income tax rate which took effect in 2018. The effective tax rate in the second quarter of 2017 was impacted by a tax benefit from stock-based compensation. The decrease in the effective tax rate for the first six months of 2018 compared to the same period in the prior year was largely due to the reduction in the U.S. federal corporate income tax rate which took effect in 2018.

NOTE 12. EARNINGS PER SHARE

We compute 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 per share based on dividends declared on common stock and participating securities (i.e., distributed earnings), as well as participation rights of participating securities in any undistributed earnings.

Earnings 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 1.4 million and 1.9 million as of the second quarters and first six months of 2019 and 2018, respectively, resulted primarily from the dilutive effect of certain stock options, restricted stock units and performance awards.

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

There were no anti-dilutive stock options, stock-settled long-term performance awards or restricted stock units excluded from the computation of diluted earnings per share in the second ~~quarter~~quarters and first six months of ~~2018. There were approximately 2 million stock options excluded from the computation of diluted earnings per share because they were anti-dilutive in the second quarter~~2019 and first six months of 2017. There were no anti-dilutive restricted stock units or stock-settled long-term incentive compensation awards excluded from the computation of diluted earnings per share in the second quarter and first six months of 2017.2018, respectively.

NOTE 13. SUPPLEMENTAL STOCKHOLDERS’ EQUITY INFORMATION

~~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 June 30, 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 ~~second quarter~~first six months of ~~2018. As of July 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 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 June 30, 2019:



(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	(127		)	—			3,489			3,362
Amounts reclassified from accumulated other comprehensive loss, before tax	—			9,792			—			9,792
Income tax (benefit)/expense	(33		)	2,535			912			3,414
Net current-period other comprehensive (loss)/income, net of tax	(94		)	7,257			2,577			9,740
Balance as of June 30, 2019	$	4,583		$	(513,051	)	$	484		$	(507,984	)

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~The following table summarizes the changes in AOCI by component as of July 1, 2018:~~

(In thousands) Foreign Currency Translation Adjustments Funded Status of Benefit Plans Net Unrealized Loss on Available-For-Sale Securities Total Accumulated Other Comprehensive Loss
Balance as of December 31, 2017 $ 6,328
$ (427,819 ) $ (1,538 ) $ (423,029 )
Other comprehensive (loss)/income before reclassifications, before tax⁽¹⁾⁽²⁾
(2,356 ) 2,597
(1,098 ) (857 )
Amounts reclassified from accumulated other comprehensive loss, before tax⁽¹⁾
—
14,244
—
14,244
Income tax expense/(benefit) ⁽¹⁾
(616 ) 4,407
(287 ) 3,504
Net current-period other comprehensive (loss)/income, net of tax (1,740 ) 12,434
(811 ) 9,883
AOCI reclassification to retained earnings ⁽³⁾
1,576
(95,378 ) (333 ) (94,135 )
Balance as of July 1, 2018 $ 6,164
$ (510,763 ) $ (2,682 ) $ (507,281 )

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

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

⁽³⁾ ~~As a result of adopting ASU 2018-02 in the first quarter of 2018, stranded tax effects of $94.1 million were reclassified from AOCI to “Retained earnings.” See Note 2 for more information.~~

The following table summarizes the reclassifications from AOCI for the first six months ~~of 2018:~~ended June 30, 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⁾	$	(4,154	)	Other components of net periodic benefit costs/(income)	$	(3,354	)	Other components of net periodic benefit costs
Amortization of actuarial loss⁽¹⁾	18,398			Other components of net periodic benefit costs/(income)	13,146			Other components of net periodic benefit costs
Total reclassification, before tax⁽²⁾	14,244				9,792
Income tax expense	3,727			Income tax expense	2,535			Income tax expense
Total reclassification, net of tax	$	10,517			$	7,257

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

⁽²⁾ There were no reclassifications relating to noncontrolling interest for the six months ended ~~July 1, 2018.~~June 30, 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 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. Options to extend the term of operating leases are not recognized as part of the right-of-use asset until we are reasonably certain that the option will be exercised. We may terminate our leases with the notice required under the lease and upon the payment of a termination fee, if required. Our leases do not include substantial variable payments based on index or rate. 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 June 30, 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 ~~segment generated revenues principally~~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	June 30, 2019
Operating lease right-of-use assets	Miscellaneous assets	$	36,810
Current operating lease liabilities	Accrued expenses and other	$	7,088
Noncurrent operating lease liabilities	Other	35,771
Total operating lease liabilities		$	42,859

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

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



	For the Quarter Ended		For the Six Months Ended
(In thousands)	June 30, 2019
Operating lease cost	$	2,308	$	4,547
Short term and variable lease cost	552		1,012
Total lease cost	$	2,860	$	5,559

The table below presents additional information regarding operating leases:



(In thousands, except lease term and discount rate)	June 30, 2019
Cash paid for amounts included in the measurement of operating lease liabilities	$	4,474
Right-of-use assets obtained in exchange for operating lease liabilities⁽¹⁾	$	40,524
Weighted-average remaining lease term	7.1 years
Weighted-average discount rate	5.29		%

⁽¹⁾ Amounts for the six months ended June 30, 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 June 30, 2019, were as follows:



(In thousands)	Amount
2019 (6 months ending December 29, 2019)	$	4,390
2020	8,220
2021	7,136
2022	6,698
2023	6,146
Later Years	19,131
Total lease payments	$	51,721
Less: Interest	(8,862		)
Present value of lease liabilities	$	42,859

Finance lease

We have a finance lease in connection with the land at our College Point, N.Y., printing and ~~advertising. Other revenues primarily consist~~distribution facility. Interest on the lease liability has been recorded in Interest expense and 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 June 30, 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 June 30, 2019, the undiscounted cash flow related to the finance lease was $7.0 million offset by interest of $0.1 million, resulting in $6.9 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,~~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.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As of June 30, 2019, the cost and accumulated depreciation related to the Company Headquarters included in Property, plant and equipment in our Condensed Consolidated Balance Sheet was approximately $508 million and $195 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 the Company Headquarters that we lease to third parties. The building rental revenue was as follows:



	For the Quarter Ended		For the Six Months Ended
(In thousands)	June 30, 2019
Building rental revenue ⁽¹⁾	$	7,436	$	15,075

⁽¹⁾ Building rental revenue includes approximately $2.9 million and $5.8 million of sublease income ~~affiliate referrals, digital archive licensing, NYT Live (our live events business), commercial printing,~~for the quarter and ~~retail commerce.~~six months ended June 30, 2019, respectively.

Maturities of lease payments to be received on an annual basis for the Company's office space operating leases as of June 30, 2019, were as follows:



(In thousands)	Amount
2019 (6 months ending December 29, 2019)	$	15,123
2020	32,214
2021	32,231
2022	32,226
2023	19,301
Later Years	142,057
Total building rental revenue from operating leases	$	273,152

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 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

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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, and the NMDU Fund ~~has~~ appealed the court’s decision with respect to the calculation of the withdrawal liability. Oral arguments were held in May 2019.

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 ~~July 1, 2018,~~June 30, 2019, we have paid ~~$17.1~~$20.7 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 had a liability of ~~$4.9~~$1.4 million as of ~~July 1, 2018,~~June 30, 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~~

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

$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 have issued letters of credit totaling ~~$59.8~~$45.7 million and ~~$56.0~~$48.8 million as of ~~July 1, 2018~~June 30, 2019, and December ~~31, 2017,~~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, as well as a sub-lease entered into in the second quarter of 2018 for a portion of the 16th floor. A portion of the~~Company Headquarters. The letters of credit will expire pro rata through the second quarter of 2019, while a substantial amount of the remaining portion of the letters of credit will expire upon the Company’s repurchase of the Condo Interest in our headquarters building in 2019.by 2020. Approximately ~~$68~~$51 million and ~~$63~~$54 million of marketable securities were ~~used~~designated as collateral for the letters of credit, as of ~~July 1, 2018,~~June 30, 2019, and December ~~31, 2017,~~30, 2018, respectively.

NOTE 17. SUBSEQUENT EVENTS

On July 2, 2019, the Company entered into a lease agreement for additional office space in Long Island City, N.Y., (the “LIC Lease”), which commenced in July and ends in 2035. The present value of lease liabilities associated with the LIC Lease at the commencement date was $22 million.

2123

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, building rental income,~~licensing, commercial printing, the leasing of floors in the Company Headquarters, affiliate referrals, ~~digital archive licensing,~~television (primarily from our television series, “The Weekly”), NYT Live (our live events business)~~, commercial printing,~~ 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 second quarter and first six months of 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 second quarter of ~~2018,~~2019, diluted earnings per share from continuing operations were ~~$0.14,~~$0.15, compared with ~~$0.09~~$0.14 for the second 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 for the second quarters of ~~2018~~2019 and ~~2017.~~2018.

The Company had an operating profit of $37.9 million in the second quarter of 2019, compared with $40.0 million in the second quarter of ~~2018, compared with $26.5 million in the second quarter of 2017.~~2018. The ~~increase~~decrease was ~~largely~~principally driven by ~~strong digital~~higher costs that more than offset higher digital-only subscription ~~and~~revenues, other revenues ~~as well as lower operating costs, which were partially offset by lower~~and digital advertising revenues. 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 ~~$59.4~~$55.6 million and ~~$64.7~~$59.4 million for the second quarters of 2019 and 2018, ~~and 2017,~~ respectively, primarily as ~~lower advertising revenues and higher marketing costs more than offset growth in both digital subscription and other revenues.~~a result of the factors identified above.

Total revenues increased ~~1.8%~~5.2% to $436.3 million in the second quarter of 2019 from $414.6 million in the second quarter of 2018, primarily driven by an increase in digital-only subscription revenues, other revenues and digital advertising revenues, partially offset by a decrease in print advertising and subscription revenues.

Operating costs increased in the second quarter of 2019 to $398.3 million from ~~$407.1~~$373.3 million in the second quarter of ~~2017, primarily driven by an increase in digital subscription revenues and other revenues, which were partially offset by a decrease in advertising revenues and print subscription revenues.~~

~~Subscription revenues increased 4.2% in the second quarter of~~ 2018, ~~compared with the second quarter of 2017, primarily~~largely due to higher content costs, including 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 19.6% in the second quarter of 2018 compared with the second quarter of 2017.

Paid digital-only subscriptions totaled approximately 2,892,000 at the end of the second quarter of 2018, a 24.0% increase compared with the end of the second quarter of 2017. News product subscriptions totaled approximately 2,398,000 at the end of the second quarter of 2018, a 18.3% increase compared with the end of the second quarter of 2017. Other product subscriptions totaled approximately 494,000 at the end of the second quarter of 2018, a 61.4% increase compared with the end of the second quarter of 2017.

Total advertising revenues decreased 9.9% in the second quarter of 2018 compared with the second quarter of 2017, reflecting a 7.5% and 11.5% decrease in digital and print advertising revenues, respectively. The decrease in digital advertising revenue reflected a smaller audience as well as a decline in creative services revenue. 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 40.0% in the second quarter of 2018 compared with the second quarter of 2017 as a result of growth in our commercial printing operations, four additional floors of rental income from our New York headquarters building and affiliate referral revenue associated with the product review and recommendation website, Wirecutter.

Operating costs decreased in the second quarter of 2018 to $373.3 million from $378.6 million in the second quarter of 2017, largely due to lower severance costs, which were partially offset by higher marketing costs as well as costs related to growth in commercial printing. We expect higher marketing costsnewsroom employees and costs related to ~~growth in~~our television series, “The Weekly,” as well as labor and raw material costs from commercial printing ~~to continue in the third quarter of 2018.~~and advertising costs. Operating costs before depreciation, amortization, severance and multiemployer pension plan withdrawal costs (or “adjusted operating costs,” a non-GAAP measure) increased in the second quarter of ~~2018~~2019 to ~~$355.2~~$380.7 million from ~~$342.4~~$355.2 million in the second quarter of ~~2017~~2018, primarily as a result of ~~higher marketing and commercial printing costs.~~the factors identified above.

2324

RESULTS OF OPERATIONS

The following table presents our consolidated financial results:

For the Quarters Ended For the Six Months Ended
(In thousands) July 1, 2018
June 25, 2017
% Change
July 1, 2018
June 25, 2017
% Change
Revenues

Subscription $ 260,629
$ 250,037
4.2 % $ 521,222
$ 492,412
5.9 %
Advertising 119,201
132,234
(9.9 )% 244,848
262,262
(6.6 )%
Other 34,730
24,803
40.0 % 62,438
51,204
21.9 %
Total revenues 414,560
407,074
1.8 % 828,508
805,878
2.8 %
Operating costs
Production costs:

Wages and benefits 92,754
88,799
4.5 % 184,747
179,813
2.7 %
Raw materials 17,826
15,813
12.7 % 34,518
32,743
5.4 %
Other production costs 45,277
45,082
0.4 % 90,933
90,435
0.6 %
Total production costs 155,857
149,694
4.1 % 310,198
302,991
2.4 %
Selling, general and administrative costs 203,368
213,788
(4.9 )% 411,991
412,925
(0.2 )%
Depreciation and amortization 14,081
15,131
(6.9 )% 29,122
31,284
(6.9 )%
Total operating costs 373,306
378,613
(1.4 )% 751,311
747,200
0.6 %
Headquarters redesign and consolidation 1,252
1,985
(36.9 )% 3,140
4,387
(28.4 )%
Operating profit 40,002
26,476
51.1 % 74,057
54,291
36.4 %
Other components of net periodic benefit costs/(income) 1,863
(1,193 ) *
3,891
(2,387 ) *
(Loss)/Gain from joint ventures (8 ) (266 ) (97.0 )% 7
(93 ) *
Interest expense, net 4,536
5,133
(11.6 )% 9,413
10,458
(10.0 )%
Income from continuing operations before income taxes 33,595
22,270
50.9 % 60,760
46,127
31.7 %
Income tax expense 9,999
6,711
49.0 % 15,250
17,453
(12.6 )%
Net income 23,596
15,559
51.7 % 45,510
28,674
58.7 %
Net (income)/loss attributable to the noncontrolling interest 1
40
(97.5 )% (1 ) 106
*
Net income attributable to The New York Times Company common stockholders $ 23,597
$ 15,599
51.3 % $ 45,509
$ 28,780
58.1 %


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



	For the Quarters Ended							For the Six Months Ended
(In thousands)	June 30, 2019		July 1, 2018			% Change		June 30, 2019		July 1, 2018			% Change
Revenues
Subscription	$	270,456	$	260,629		3.8	%	$	541,266	$	521,222		3.8	%
Advertising	120,761		119,201			1.3	%	245,849		244,848			0.4	%
Other	45,041		34,730			29.7	%	88,205		62,438			41.3	%
Total revenues	436,258		414,560			5.2	%	875,320		828,508			5.7	%
Operating costs
Production costs:
Wages and benefits	103,959		92,754			12.1	%	206,867		184,747			12.0	%
Raw materials	19,158		17,826			7.5	%	38,996		34,518			13.0	%
Other production costs	49,897		45,277			10.2	%	95,234		90,933			4.7	%
Total production costs	173,014		155,857			11.0	%	341,097		310,198			10.0	%
Selling, general and administrative costs	210,131		203,368			3.3	%	431,594		411,991			4.8	%
Depreciation and amortization	15,180		14,081			7.8	%	30,098		29,122			3.4	%
Total operating costs	398,325		373,306			6.7	%	802,789		751,311			6.9	%
Headquarters redesign and consolidation	—		1,252			*		—		3,140			*
Operating profit	37,933		40,002			(5.2	)%	72,531		74,057			(2.1	)%
Other components of net periodic benefit costs	1,833		1,863			(1.6	)%	3,668		3,891			(5.7	)%
(Loss)/gain from joint ventures	—		(8		)	*		—		7			*
Interest expense and other, net	1,514		4,536			(66.6	)%	2,817		9,413			(70.1	)%
Income from continuing operations before income taxes	34,586		33,595			2.9	%	66,046		60,760			8.7	%
Income tax expense	9,415		9,999			(5.8	)%	10,719		15,250			(29.7	)%
Net income	25,171		23,596			6.7	%	55,327		45,510			21.6	%
Net loss/(income) attributable to the noncontrolling interest	—		1			*		—		(1		)	*
Net income attributable to The New York Times Company common stockholders	$	25,171	$	23,597		6.7	%	$	55,327	$	45,509		21.6	%

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

2425

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~~print newspaper sold and digital-only subscriptions, and the rates charged to the respective customers.

Subscription revenues increased ~~4.2%~~3.8% in the second quarter and ~~5.9%~~ in the first six months of ~~2018~~2019 compared with the same prior-year ~~periods,~~period, primarily due to ~~an approximately 24.0%~~year-over-year growth of 30.7% 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 $98.7 million in the second quarter and $194.2 million in the first six months of 2018, an increase of 19.6% and 22.6% from the second quarter and first six months of 2017, respectively.

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


		For the Quarters Ended						For the Six Months Ended							For the Quarters Ended						For the Six Months Ended
(In thousands)		July 1, 2018		June 25, 2017		% Change		July 1, 2018		June 25, 2017		% Change			June 30, 2019		July 1, 2018		% Change		June 30, 2019		July 1, 2018		% Change
Digital-only subscription revenues:
News product subscription revenues⁽¹⁾		$	93,549	$	79,300	18.0	%	$	184,125	$	152,161	21.0	%		$	104,430	$	93,549	11.6	%	$	206,776	$	184,125	12.3	%
Other product subscription revenues⁽²⁾		5,194		3,243		60.2	%	10,030		6,199		61.8	%		8,205		5,194		58.0	%	15,718		10,030		56.7	%
Total digital-only subscription revenues		$	98,743	$	82,543	19.6	%	$	194,155	$	158,360	22.6	%		$	112,635	$	98,743	14.1	%	$	222,494	$	194,155	14.6	%
⁽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 second quarters of ~~2018~~2019 and ~~2017:~~2018:


		For the Quarters Ended					For the Quarters Ended
(In thousands)		July 1, 2018	June 25, 2017	% Change			June 30, 2019	July 1, 2018	% Change
Digital-only subscriptions:
News product subscriptions⁽¹⁾		2,398	2,027	18.3	%		2,988	2,398	24.6	%
Other product subscriptions⁽²⁾		494	306	61.4	%		792	494	60.3	%
Total digital-only subscriptions		2,892	2,333	24.0	%		3,780	2,892	30.7	%
⁽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.					⁽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.					⁽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.

2526

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


	For the Quarters Ended																			For the Quarters Ended
	July 1, 2018						June 25, 2017						% Change							June 30, 2019						July 1, 2018						% Change
(In thousands)	Print		Digital		Total		Print		Digital		Total		Print		Digital		Total			Print		Digital		Total		Print		Digital		Total		Print		Digital		Total
Advertising revenues:																			Advertising revenues:
Display	$	60,803	$	41,443	$	102,246	$	68,499	$	44,485	$	112,984	(11.2	)%	(6.8	)%	(9.5	)%		$	55,859	$	42,833	$	98,692	$	60,803	$	41,443	$	102,246	(8.1	)%	3.4	%	(3.5	)%
Classified and Other	7,367		9,588		16,955		8,557		10,693		19,250		(13.9	)%	(10.3	)%	(11.9	)%
Other																				6,876		15,193		22,069		7,367		9,588		16,955		(6.7	)%	58.5	%	30.2	%
Total advertising	$	68,170	$	51,031	$	119,201	$	77,056	$	55,178	$	132,234	(11.5	)%	(7.5	)%	(9.9	)%		$	62,735	$	58,026	$	120,761	$	68,170	$	51,031	$	119,201	(8.0	)%	13.7	%	1.3	%


	For the Six Months Ended																			For the Six Months Ended
	July 1, 2018						June 25, 2017						% Change							June 30, 2019						July 1, 2018						% Change
(In thousands)	Print		Digital		Total		Print		Digital		Total		Print		Digital		Total			Print		Digital		Total		Print		Digital		Total		Print		Digital		Total
Advertising revenues:																			Advertising revenues:
Display	$	131,608	$	80,140	$	211,748	$	140,126	$	87,461	$	227,587	(6.1	)%	(8.4	)%	(7.0	)%		$	118,201	$	84,945	$	203,146	$	131,608	$	80,140	$	211,748	(10.2	)%	6.0	%	(4.1	)%
Classified and Other	15,506		17,594		33,100		17,287		17,388		34,675		(10.3	)%	1.2	%	(4.5	)%
Other																				14,079		28,624		42,703		15,506		17,594		33,100		(9.2	)%	62.7	%	29.0	%
Total advertising	$	147,114	$	97,734	$	244,848	$	157,413	$	104,849	$	262,262	(6.5	)%	(6.8	)%	(6.6	)%		$	132,280	$	113,569	$	245,849	$	147,114	$	97,734	$	244,848	(10.1	)%	16.2	%	0.4	%

Print advertising revenues, which represented ~~57.2%~~51.9% of total advertising revenues for the second quarter of ~~2018~~2019 and ~~60.1%~~53.8% of total advertising revenues for the first six months of ~~2018,~~2019, declined ~~11.5 percent~~8.0% to ~~$68.2~~$62.7 million in the second quarter of ~~2018~~2019 and ~~6.5 percent~~10.1% to ~~$147.1~~$132.3 million in the first six months of ~~2018,~~2019, compared with ~~$77.1~~$68.2 million and ~~$157.4~~$147.1 million, respectively, in the same prior-year periods. The ~~decrease~~decline in ~~both~~print advertising revenues in the second quarter and in the first six months of 2019 compared with the same periods in the prior year was ~~primarily~~ driven by a continued decline in display advertising revenue. The decline in display advertising revenue in the ~~technology~~second quarter of 2019 was primarily in the financial, retail and ~~telecommunications, entertainment, and luxury~~media categories, ~~which were~~ partially offset by growth in the technology category. The decline in display advertising revenue in the first six months of 2019 was primarily in the financial, luxury, media and retail categories, partially offset by growth in the technology category.

Digital advertising revenues, which represented ~~42.8%~~48.1% of total advertising revenues for the second quarter of ~~2018~~2019 and ~~39.9%~~46.2% of total advertising revenues for the first six months of ~~2018, declined 7.5 percent~~2019, increased 13.7% to ~~$51.0~~$58.0 million in the second quarter of ~~2018~~2019 and ~~6.8 percent~~16.2% to ~~$97.7~~$113.6 million in the first six months of ~~2018,~~2019, compared with ~~$55.2~~$51.0 million and ~~$104.8~~$97.7 million, respectively, in the same prior-year periods. The ~~decrease~~increase in digital advertising revenue ~~reflected a smaller audience as well as a decline in creative services revenue.~~

~~Classified and other advertising revenues decreased 11.9% in~~for the second quarter ~~of 2018~~ and ~~4.5% in the~~ first six months of ~~2018,~~2019 compared with the same ~~prior-year~~ periods in the prior year primarily ~~due to a decline~~reflected growth in direct-sold advertising revenue on our digital platforms, including podcasts and creative ~~services revenue and classified real estate category partially offset by an increase in podcast revenue.~~services.

Other Revenues

Other revenues primarily consist of revenues from ~~news services/syndication, building rental income,~~licensing, commercial printing, the leasing of floors in the Company Headquarters, affiliate referrals, ~~digital archive licensing,~~television (primarily from our television series, “The Weekly”), NYT Live (our live events business)~~, commercial printing,~~ and retail commerce.

Other revenues increased ~~40.0%~~29.7% in the second quarter of ~~2018~~2019 and ~~21.9%~~41.3% in the first six months of ~~2018,~~2019, compared with the same prior-year ~~periods, largely due to~~periods. The increase in other revenues for the second quarter of 2019 compared with the same period in the prior year is primarily a result of revenue earned from our television series, “The Weekly,” and growth in our commercial printing operations. The increase in other revenues for the first six months of 2019 compared with the same period in the prior year is primarily a result of growth in our commercial printing operations, ~~four~~revenue earned from “The Weekly,” and additional floors of rental ~~income~~revenue from ~~our New York headquarters building and affiliate referral revenue associated with~~ the ~~product review and recommendation website, Wirecutter.~~Company Headquarters.

2627

Operating Costs

Operating costs were as follows:


	For the Quarters Ended						For the Six Months Ended						For the Quarters Ended						For the Six Months Ended
(In thousands)	July 1, 2018		June 25, 2017		% Change		July 1, 2018		June 25, 2017		% Change		June 30, 2019		July 1, 2018		% Change		June 30, 2019		July 1, 2018		% Change
Production costs:
Wages and benefits	$	92,754	$	88,799	4.5	%	$	184,747	$	179,813	2.7	%	$	103,959	$	92,754	12.1	%	$	206,867	$	184,747	12.0	%
Raw materials	17,826		15,813		12.7	%	34,518		32,743		5.4	%	19,158		17,826		7.5	%	38,996		34,518		13.0	%
Other production costs	45,277		45,082		0.4	%	90,933		90,435		0.6	%	49,897		45,277		10.2	%	95,234		90,933		4.7	%
Total production costs	155,857		149,694		4.1	%	310,198		302,991		2.4	%	173,014		155,857		11.0	%	341,097		310,198		10.0	%
Selling, general and administrative costs	203,368		213,788		(4.9	)%	411,991		412,925		(0.2	)%	210,131		203,368		3.3	%	431,594		411,991		4.8	%
Depreciation and amortization	14,081		15,131		(6.9	)%	29,122		31,284		(6.9	)%	15,180		14,081		7.8	%	30,098		29,122		3.4	%
Total operating costs	$	373,306	$	378,613	(1.4	)%	$	751,311	$	747,200	0.6	%	$	398,325	$	373,306	6.7	%	$	802,789	$	751,311	6.9	%

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 second quarter of ~~2018~~2019 by $17.2 million compared with the second quarter of ~~2017,~~2018, primarily driven by ana $11.2 million increase in wage and benefits, ~~of $4.0~~a $4.6 million increase in other production costs and a $1.3 million increase in raw materials. The increase in wages and benefits was largely due to our newsroom and commercial printing operations. The increase in other production costs was primarily due to ~~annual merit increases and additional headcount~~expenses incurred in connection with ~~commercial printing operations,~~our television series ,“The Weekly.” The increase in raw materials ~~of $2.0 million~~was largely due to ~~higher prices and~~ higher volume as a result of commercial printing operations and ~~other expenses of $0.2 million.~~higher newsprint prices.

Production costs increased in the first six months of ~~2018~~2019 by $30.9 million compared with the first six months of ~~2017,~~2018, primarily driven by ana $22.1 million increase in wage and benefits, ~~of $4.9~~a $4.5 million ~~primarily due to annual merit increases and additional headcount~~increase in ~~connection with commercial printing operations,~~ raw materials ~~of $1.8~~and a $4.3 million increase in other production costs. The increase in wages and benefits was largely due to ~~higher prices~~our newsroom and commercial printing operations. The increase in raw materials was largely due to higher volume as a result of commercial printing operations and higher newsprint prices, partially offset by lower newsprint copies. The increase in other production costs was primarily due to expenses ~~of $0.5 million.~~incurred in connection with our television series, “The Weekly.”

Selling, General and Administrative Costs

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

Selling, general and administrative costs in the second quarter of ~~2018 decreased~~2019 increased by ~~$10.4~~$6.8 million compared with the second quarter of ~~2017 largely due~~2018 driven primarily by a $10.0 million increase in wages and benefits to ~~lower severance costs of $17.0 million and compensation expense of $2.7 million, which were~~support growth initiatives, partially offset by ~~higher marketing costs of $11.4 million.~~$1.6 million in lower severance costs.

Selling, general and administrative costs in the first six months of ~~2018 decreased~~2019 increased by ~~$0.9~~$19.6 million compared with the first six months of ~~2017 as~~2018 driven primarily by a $16.9 million increase in marketing expenses largely due to an increase in subscription acquisition and brand marketing costs and a $9.5 million increase in wages and benefits to support growth initiatives, partially offset by a $3.6 million decrease in outside services and $2.6 million in lower severance ~~costs of $16.2 million and print production and distribution costs of $2.5 million were mostly offset by higher marketing costs of $10.9 million and higher compensation expense of $5.7 million.~~costs.

Depreciation and Amortization

Depreciation and amortization costs in the second quarter and ~~the~~ first six months of ~~2018 decreased by~~2019 increased $1.1 million and ~~$2.2~~$1.0 million, respectively, compared with the same prior-year periods ~~respectively,~~ primarily ~~as assets became fully depreciated~~due to building and software projects that were placed in ~~prior periods.~~service and started depreciating in the second half of 2018.

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.~~items.

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 in 2018 consisted of:

A $1.3 million charge ($0.9 million after tax or $.01 per share) in the second quarter and a $1.9 million charge ($1.4 million after tax or $.01 per share) in the first quarter in connection with the redesign and consolidation of space in ~~our headquarters building.~~

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

~~A $2.0 million pre-tax expense ($1.2 million after tax or $.01 per share) in~~ the second quarter and a $2.4 million pre-tax expense ($1.4 million after tax or $.01 per share) in the first quarter, related to the planned redesign and consolidation of space in our headquarters buildingCompany 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 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 Six Months Ended									For the Quarters Ended								For the Six Months Ended
	July 1, 2018			June 25, 2017			⁽¹⁾	% Change		July 1, 2018			June 25, 2017			⁽¹⁾	% Change		June 30, 2019			July 1, 2018			% Change		June 30, 2019			July 1, 2018			% Change
Diluted earnings per share from continuing operations	$	0.14		$	0.09			55.6	%	$	0.27		$	0.17			58.8	%	$	0.15		$	0.14		7.1	%	$	0.33		$	0.27		22.2	%
Add:
Severance	0.01			0.12				(91.7	)%	0.03			0.13				(76.9	)%	—			0.01			*		0.01			0.03			(66.7	)%
Non-operating retirement costs	0.02			—				*		0.05			0.01				*
Non-operating retirement costs:
Multiemployer pension plan withdrawal costs																			0.01			0.01			—	%	0.02			0.02			—	%
Other components of net periodic benefit costs																			0.01			0.01			—	%	0.02			0.03			(33.3	)%
Special item:
Headquarters redesign and consolidation	0.01			0.02				(50.0	)%	0.02			0.03				(33.3	)%	—			0.01			*		—			0.02			*
Income tax expense of adjustments	(0.01		)	(0.06		)		(83.3	)%	(0.03		)	(0.07		)		(57.1	)%	(0.01		)	(0.01		)	—	%	(0.01		)	(0.03		)	(66.7	)%
Adjusted diluted earnings per share from continuing operations ⁽²⁾	$	0.17		$	0.17			—	%	$	0.34		$	0.27			25.9	%
Adjusted diluted earnings per share from continuing operations⁽¹⁾																			$	0.17		$	0.17		—	%	$	0.37		$	0.34		8.8	%

⁽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.

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

2930



Reconciliation of operating profit before depreciation & amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit)
	For the Quarters Ended						For the Six Months Ended
(In thousands)	June 30, 2019		July 1, 2018		% Change		June 30, 2019		July 1, 2018		% Change
Operating profit	$	37,933	$	40,002	(5.2	)%	$	72,531	$	74,057	(2.1	)%
Add:
Depreciation & amortization	15,180		14,081		7.8	%	30,098		29,122		3.4	%
Severance	672		2,244		(70.1	)%	2,075		4,633		(55.2	)%
Multiemployer pension plan withdrawal costs	1,801		1,791		0.6	%	3,250		3,895		(16.6	)%
Special items:
Headquarters redesign and consolidation	—		1,252		*		—		3,140		*
Adjusted operating profit	$	55,586	$	59,370	(6.4	)%	$	107,954	$	114,847	(6.0	)%

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

Reconciliation of operating profit before depreciation & amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit)
For the Quarters Ended For the Six Months Ended
(In thousands) July 1, 2018
June 25, 2017
⁽¹⁾
% Change
July 1, 2018
June 25, 2017
⁽¹⁾
% Change
Operating profit $ 40,002
$ 26,476
51.1 % $ 74,057
$ 54,291
36.4 %
Add:
Depreciation & amortization 14,081
15,131
(6.9 )% 29,122
31,284
(6.9 )%
Severance 2,244
19,254
(88.3 )% 4,633
20,854
(77.8 )%
Multiemployer pension plan withdrawal costs 1,791
1,808
(0.9 )% 3,895
4,081
(4.6 )%
Special items:
Headquarters redesign and consolidation 1,252
1,985
(36.9 )% 3,140
4,387
(28.4 )%
Adjusted operating profit $ 59,370
$ 64,654
(8.2 )% $ 114,847
$ 114,897
— %



Reconciliation of operating costs before depreciation & amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs)
	For the Quarters Ended						For the Six Months Ended
(In thousands)	June 30, 2019		July 1, 2018		% Change		June 30, 2019		July 1, 2018		% Change
Operating costs	$	398,325	$	373,306	6.7	%	$	802,789	$	751,311	6.9	%
Less:
Depreciation & amortization	15,180		14,081		7.8	%	30,098		29,122		3.4	%
Severance	672		2,244		(70.1	)%	2,075		4,633		(55.2	)%
Multiemployer pension plan withdrawal costs	1,801		1,791		0.6	%	3,250		3,895		(16.6	)%
Adjusted operating costs	$	380,672	$	355,190	7.2	%	$	767,366	$	713,661	7.5	%

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

Reconciliation of operating costs before depreciation & amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs)
For the Quarters Ended For the Six Months Ended
(In thousands) July 1, 2018
June 25, 2017
⁽¹⁾
% Change
July 1, 2018
June 25, 2017
⁽¹⁾
% Change
Operating costs $ 373,306
$ 378,613
(1.4 )% $ 751,311
$ 747,200
0.6 %
Less:
Depreciation & amortization 14,081
15,131
(6.9 )% 29,122
31,284
(6.9 )%
Severance 2,244
19,254
(88.3 )% 4,633
20,854
(77.8 )%
Multiemployer pension plan withdrawal costs 1,791
1,808
(0.9 )% 3,895
4,081
(4.6 )%
Adjusted operating costs $ 355,190
$ 342,420
3.7 % $ 713,661
$ 690,981
3.3 %

⁽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.

~~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 second quarter and first six months 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

Second Quarter Six Months

2017
Previously Reported
Adjustment
2017
Recast
2017
Previously Reported Adjustment 2017
Recast
Diluted earnings per share from continuing operations $ 0.09
$ —
$ 0.09
$ 0.17
$ —
0.17
Add:
Severance 0.12
—
0.12
0.13
—
0.13
Non-operating retirement costs 0.02
(0.02 )
⁽¹⁾
—
0.04
(0.03 )
⁽¹⁾
0.01
Special items:
Headquarters redesign and consolidation 0.02
—
0.02
0.03
—
0.03
Income tax expense of adjustments (0.07 ) 0.01
(0.06 ) (0.08 ) 0.01
(0.07 )
Adjusted diluted earnings per share from continuing operations⁽²⁾
$ 0.18
$ (0.01 ) $ 0.17
$ 0.29
$ (0.02 ) 0.27
⁽¹⁾ Reflects the inclusion of amortization of prior service credits in the definition of non-operating retirement costs.
⁽²⁾ Amounts may not add due to rounding.

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

Second Quarter Six Months
(In thousands)
2017
Previously Reported
Adjustment
2017
Recast
2017
Previously Reported Adjustment 2017
Recast
Operating profit $ 27,669
$ (1,193 )
⁽¹⁾
$ 26,476
$ 56,678
$ (2,387 )
⁽¹⁾
$ 54,291
Add:
Depreciation & amortization 15,131
—
15,131
31,284
—
31,284
Severance 19,254
—
19,254
20,854
—
20,854
Non-operating retirement costs 3,040
(3,040 )
⁽²⁾
—
6,543
(6,543 )
⁽²⁾
—
Multiemployer pension plan withdrawal costs —
1,808
⁽²⁾
1,808
—
4,081
⁽²⁾
4,081
Special items:
Headquarters redesign and consolidation 1,985
—
1,985
4,387
—
4,387
Adjusted operating profit $ 67,079
$ (2,425 )
⁽³⁾
$ 64,654
$ 119,746
$ (4,849 )
⁽³⁾
$ 114,897
⁽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 profit.

⁽³⁾ Represents amortization of prior service credits, which historically were a component of operating profit but not an adjustment to adjusted operating profit. As a result of the adoption of ASU 2017-07, amortization of prior service credits are now a component of other components of net periodic benefit costs/(income) rather than operating profit. For the second quarter and first six months of 2017, $(2.4) million and $(4.8) million, respectively, of amortization of prior service credits have been reclassified out of operating profit thereby reducing operating profit and adjusted operating profit.

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

Second Quarter Six Months
(In thousands)
2017
Previously Reported
Adjustment
2017
Recast
2017
Previously Reported Adjustment
2017
Recast
Operating costs $ 377,420
$ 1,193
⁽¹⁾
$ 378,613
$ 744,813
$ 2,387
$ 747,200
Less:
Depreciation & amortization 15,131
—
15,131
31,284
—
31,284
Severance 19,254
—
19,254
20,854
—
20,854
Non-operating retirement costs 3,040
(3,040 )
⁽²⁾
—
6,543
(6,543 ) —
Multiemployer pension plan withdrawal costs —
1,808
⁽²⁾
1,808
—
4,081
4,081
Adjusted operating costs $ 339,995
$ 2,425
⁽³⁾
$ 342,420
$ 686,132
$ 4,849
$ 690,981
⁽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/(income) rather than operating costs. For the second quarter and first six months of 2017, $(2.4) million and $(4.8) million, respectively, of 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) Second Quarter of 2017 Six Months of 2017
Pension:
Interest cost $ 17,550
$ 35,100
Expected return on plan assets (26,135 ) (52,270 )
Amortization and other costs 8,441
16,882
Amortization of prior service credit ⁽¹⁾
(486 ) (972 )
Non-operating pension income (630 ) (1,260 )
Other postretirement benefits:
Interest cost 470
940
Amortization and other costs 905
1,810
Amortization of prior service credit ⁽¹⁾
(1,938 ) (3,877 )
Non-operating other postretirement benefits income (563 ) (1,127 )
Other components of net periodic benefit income (1,193 ) (2,387 )
Multiemployer pension plan withdrawal costs 1,808
4,081
Total non-operating retirement costs $ 615
$ 1,694

⁽¹⁾The total amortization of prior service credit was $(2.4) million and $(4.8) million for the second quarter and first six months of 2017, respectively.

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 ~~July 1, 2018,~~June 30, 2019, we had cash, cash equivalents and short- and long-term marketable securities of ~~$779.2~~$846.5 million and total debt and ~~capital~~finance lease obligations of ~~$251.9~~$254.4 million. Accordingly, our cash, cash equivalents, and marketable securities exceeded total debt and ~~capital~~finance lease obligations by ~~$527.3~~$592.1 million. Our cash and investment balances have increased since the end of ~~2017,~~2018, primarily due to cash proceeds from operating activities and ~~stock option exercises~~lower capital expenditures, partially offset by ~~cash capital expenditures of approximately $46 million.~~share based compensation tax withholding and dividend payments.

We ~~have~~ paid quarterly dividends of ~~$.04~~$0.04 per share on the Class A and Class B Common Stock ~~since~~from 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, which was paid in April 2019. In June 2019, the Board of Directors declared a quarterly dividend of $0.05 per share on the Class A and Class B Common Stock, which was paid in July 2019. We currently expect to continue to pay comparable cash dividends in the future, although changes in our ~~dividend program~~dividends 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 of~~December 2019, to repurchase the Condo Interest for ~~$250.0~~$245.3 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.

In ~~2018,~~addition, on August 1, 2019, using existing cash, we purchased the previously leased land at our College Point, N.Y., printing and distribution facility for $6.9 million.

We 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 Six Months Ended								For the Six Months Ended
(In thousands)	July 1, 2018			June 25, 2017			% Change		June 30, 2019			July 1, 2018			% Change
Operating activities	$	77,669		$	99,461		(21.9	)%	$	64,000		$	77,669		(17.6	)%
Investing activities	$	(41,654	)	$	11,091		*		$	(23,521	)	$	(41,654	)	(43.5	)%
Financing activities	$	18,167		$	(14,342	)	*		$	(27,850	)	$	18,167		*

* 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 in the first six months of ~~2018~~2019 compared with the same prior-year period due to higher cash tax payments, ~~made to settle accounts payable, accrued payroll and other liabilities~~lower cash received from subscriptions, partially offset by higher ~~net income~~cash collections from customers and lower ~~cash tax~~incentive compensation payments.

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 six months of ~~2018~~2019 was primarily related to approximately ~~$46~~$23 million in capital expenditures ~~payments.~~payments and $2 million in net purchases of marketable securities.

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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 compensation tax withholding.

Net cash ~~provided by~~used in financing activities in the first six months of ~~2018~~2019 was primarily related to stock-based compensation tax withholding payments of $15.6 million and dividend payments of $14.9 million, partially offset by proceeds from stock option exercises of approximately ~~$41 million, partially offset by dividend payments of $13.1 million and share-based compensation tax withholding payments of $9.0~~$3 million.

Restricted Cash

We were required to maintain ~~$18.1~~$16.9 million of restricted cash as of ~~July 1, 2018,~~June 30, 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 ~~$34~~$24 million and ~~$28~~$34 million in the first six months of 2019 and 2018, respectively. The decrease in capital expenditures was primarily driven by higher expenditures in the first six months of 2018 related to the redesign and ~~2017, respectively.~~consolidation of space in the Company Headquarters. The cash payments related to capital expenditures totaled approximately ~~$46~~$23 million and ~~$21~~$46 million in the first six months of 2019 and 2018, ~~and 2017,~~ respectively. The increase was primarily driven by certain improvements at our printing and distribution facility in College Point, New York and the ongoing redesign and consolidation of space in our headquarters building.

Third-Party Financing

As of ~~July 1, 2018,~~June 30, 2019, our current indebtedness primarily 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 ~~July 1, 2018,~~June 30, 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 ~~July 1, 2018,~~June 30, 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 ~~July 1, 2018,~~June 30, 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 ~~July 1, 2018.~~June 30, 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 ~~July 1, 2018,~~June 30, 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

~~(a) Unregistered Sales of Equity Securities~~

On May 10, 2018, we issued 355 shares of Class A Common Stock to holders of Class B Common Stock upon the conversion of such Class B shares into Class A shares. The conversion, which was in accordance with our Certificate of Incorporation, did not involve a public offering and was exempt from registration pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended.

~~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 June 30, 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 ~~second quarter~~first six months of 2018. As of July 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.

3735

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.~~Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

3836

SIGNATURES

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



		THE NEW YORK TIMES COMPANY
		(Registrant)

Date:	August ~~8, 2018~~7, 2019	/s/ ~~ROLAND~~/Roland A. ~~CAPUTO~~Caputo
		Roland A. Caputo Executive Vice President and Chief Financial Officer (Principal Financial Officer)

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(In thousands)	Total Company
Balance as of December 31, 2017	$	143,549
Foreign currency translation	(1,807		)
Balance as of July 1, 2018	$	141,742



Adjustments made to the reconciliation of diluted earnings per share from continuing operations to adjusted diluted earnings per share from continuing operations

	Second Quarter										Six Months
	2017 Previously Reported			Adjustment				2017 Recast			2017 Previously Reported			Adjustment				2017 Recast
Diluted earnings per share from continuing operations	$	0.09		$	—			$	0.09		$	0.17		$	—			0.17
Add:
Severance	0.12			—				0.12			0.13			—				0.13
Non-operating retirement costs	0.02			(0.02		)	⁽¹⁾	—			0.04			(0.03		)	⁽¹⁾	0.01
Special items:
Headquarters redesign and consolidation	0.02			—				0.02			0.03			—				0.03
Income tax expense of adjustments	(0.07		)	0.01				(0.06		)	(0.08		)	0.01				(0.07		)
Adjusted diluted earnings per share from continuing operations⁽²⁾	$	0.18		$	(0.01	)		$	0.17		$	0.29		$	(0.02	)		0.27
⁽¹⁾ Reflects the inclusion of amortization of prior service credits in the definition of non-operating retirement costs.
⁽²⁾ Amounts may not add due to rounding.

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

	Second Quarter										Six Months
(In thousands)	2017 Previously Reported			Adjustment				2017 Recast			2017 Previously Reported			Adjustment				2017 Recast
Operating profit	$	27,669		$	(1,193	)	⁽¹⁾	$	26,476		$	56,678		$	(2,387	)	⁽¹⁾	$	54,291
Add:
Depreciation & amortization	15,131			—				15,131			31,284			—				31,284
Severance	19,254			—				19,254			20,854			—				20,854
Non-operating retirement costs	3,040			(3,040		)	⁽²⁾	—			6,543			(6,543		)	⁽²⁾	—
Multiemployer pension plan withdrawal costs	—			1,808			⁽²⁾	1,808			—			4,081			⁽²⁾	4,081
Special items:
Headquarters redesign and consolidation	1,985			—				1,985			4,387			—				4,387
Adjusted operating profit	$	67,079		$	(2,425	)	⁽³⁾	$	64,654		$	119,746		$	(4,849	)	⁽³⁾	$	114,897
⁽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 profit.



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)	Second Quarter of 2017			Six Months of 2017
Pension:
Interest cost	$	17,550		$	35,100
Expected return on plan assets	(26,135		)	(52,270		)
Amortization and other costs	8,441			16,882
Amortization of prior service credit ⁽¹⁾	(486		)	(972		)
Non-operating pension income	(630		)	(1,260		)
Other postretirement benefits:
Interest cost	470			940
Amortization and other costs	905			1,810
Amortization of prior service credit ⁽¹⁾	(1,938		)	(3,877		)
Non-operating other postretirement benefits income	(563		)	(1,127		)
Other components of net periodic benefit income	(1,193		)	(2,387		)
Multiemployer pension plan withdrawal costs	1,808			4,081
Total non-operating retirement costs	$	615		$	1,694

⁽¹⁾The total amortization of prior service credit was $(2.4) million and $(4.8) million for the second quarter and first six months of 2017, respectively.