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 JuneMarch 27, 20212022
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission file number 1-5837
THE NEW YORK TIMES COMPANY
(Exact name of registrant as specified in its charter)
| | | | | | | | |
New York | | 13-1102020 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
620 Eighth Avenue, New York, New York 10018
(Address and zip code of principal executive offices)
Registrant’s telephone number, including area code 212-556-1234
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Class A Common Stock | | NYT | | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | | | | | | |
Large accelerated filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | | |
Smaller reporting company | ☐ | Emerging growth company | ☐ | | | | |
If an emerging growth company, indicate by the check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
Number of shares of each class of the registrant’s common stock outstanding as of July 30, 2021April 29, 2022 (exclusive of treasury shares):
| | | | | | | | |
Class A Common Stock | 167,091,902166,699,568 | | shares |
Class B Common Stock | 781,724 | | shares |
THE NEW YORK TIMES COMPANY
INDEX
| | | | | | | | | | | |
PART I | PART I | | | | Financial Information | | | PART I | | | | Financial Information | | |
Item | Item | 1 | | Financial Statements | | | Item | 1 | | Financial Statements | | |
| | | | Condensed Consolidated Balance Sheets as of June 27, 2021 (unaudited) and December 27, 2020 | | | | | | Condensed Consolidated Balance Sheets as of March 27, 2022 (unaudited) and December 26, 2021 | | |
| | | | Condensed Consolidated Statements of Operations (unaudited) for the quarters and six months ended June 27, 2021 and June 28, 2020 | | | | | | Condensed Consolidated Statements of Operations (unaudited) for the quarters ended March 27, 2022 and March 28, 2021 | | |
| | | | Condensed Consolidated Statements of Comprehensive Income (unaudited) for the quarters and six months ended June 27, 2021 and June 28, 2020 | | | | | | Condensed Consolidated Statements of Comprehensive Income (unaudited) for the quarters ended March 27, 2022 and March 28, 2021 | | |
| | | | Condensed Consolidated Statements of Changes In Stockholders’ Equity (unaudited) for the quarters and six months ended June 27, 2021 and June 28, 2020 | | | | | | Condensed Consolidated Statements of Changes In Stockholders’ Equity (unaudited) for the quarters ended March 27, 2022 and March 28, 2021 | | |
| | | | Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 27, 2021 and June 28, 2020 | | | | | | Condensed Consolidated Statements of Cash Flows (unaudited) for the quarters ended March 27, 2022 and March 28, 2021 | | |
| | | | Notes to the Condensed Consolidated Financial Statements | | | | | | Notes to the Condensed Consolidated Financial Statements | | |
Item | Item | 2 | | Management’s Discussion and Analysis of Financial Condition and Results of Operations | | | Item | 2 | | Management’s Discussion and Analysis of Financial Condition and Results of Operations | | |
Item | Item | 3 | | Quantitative and Qualitative Disclosures about Market Risk | | | Item | 3 | | Quantitative and Qualitative Disclosures About Market Risk | | |
Item | Item | 4 | | Controls and Procedures | | | Item | 4 | | Controls and Procedures | | |
| PART II | PART II | | | | Other Information | | | PART II | | | | Other Information | | |
Item | Item | 1 | | Legal Proceedings | | | Item | 1 | | Legal Proceedings | | |
Item | Item | 1A | | Risk Factors | | | Item | 1A | | Risk Factors | | |
Item | Item | 2 | | Unregistered Sales of Equity Securities and Use of Proceeds | | | Item | 2 | | Unregistered Sales of Equity Securities and Use of Proceeds | | |
Item | Item | 6 | | Exhibits | | | Item | 6 | | Exhibits | | |
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)
| | | June 27, 2021 | | December 27, 2020 | | March 27, 2022 | | December 26, 2021 |
| | (Unaudited) | | | | (Unaudited) | | |
Assets | Assets | | Assets | |
Current assets | Current assets | | Current assets | |
Cash and cash equivalents | Cash and cash equivalents | | $ | 320,871 | | | $ | 286,079 | | Cash and cash equivalents | | $ | 169,171 | | | $ | 319,973 | |
Short-term marketable securities | Short-term marketable securities | | 338,455 | | | 309,080 | | Short-term marketable securities | | 52,788 | | | 341,075 | |
Accounts receivable (net of allowances of $12,269 in 2021 and $13,797 in 2020) | | 153,540 | | | 183,692 | | |
Accounts receivable (net of allowances of $12,234 in 2022 and $12,374 in 2021) | | Accounts receivable (net of allowances of $12,234 in 2022 and $12,374 in 2021) | | 197,492 | | | 232,908 | |
Prepaid expenses | Prepaid expenses | | 36,262 | | | 29,487 | | Prepaid expenses | | 41,766 | | | 33,199 | |
Other current assets | Other current assets | | 32,110 | | | 27,497 | | Other current assets | | 25,798 | | | 25,553 | |
Total current assets | Total current assets | | 881,238 | | | 835,835 | | Total current assets | | 487,015 | | | 952,708 | |
Other assets | Other assets | | | | | Other assets | | | | |
Long-term marketable securities | Long-term marketable securities | | 287,265 | | | 286,831 | | Long-term marketable securities | | 252,815 | | | 413,380 | |
Property, plant and equipment (less accumulated depreciation and amortization of $891,635 in 2021 and $886,149 in 2020) | | 582,331 | | | 594,516 | | |
Property, plant and equipment (less accumulated depreciation and amortization of $790,884 in 2022 and $777,637 in 2021) | | Property, plant and equipment (less accumulated depreciation and amortization of $790,884 in 2022 and $777,637 in 2021) | | 570,803 | | | 574,952 | |
Goodwill | Goodwill | | 170,156 | | | 171,657 | | Goodwill | | 414,200 | | | 166,360 | |
Intangible assets, net | | Intangible assets, net | | 343,351 | | | 14,246 | |
Deferred income taxes | Deferred income taxes | | 96,869 | | | 99,518 | | Deferred income taxes | | 110,628 | | | 95,800 | |
Miscellaneous assets | Miscellaneous assets | | 330,148 | | | 319,332 | | Miscellaneous assets | | 350,454 | | | 346,662 | |
Total assets | Total assets | | $ | 2,348,007 | | | $ | 2,307,689 | | Total assets | | $ | 2,529,266 | | | $ | 2,564,108 | |
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)
| | | June 27, 2021 | | December 27, 2020 | | March 27, 2022 | | December 26, 2021 |
| | (Unaudited) | | | | (Unaudited) | | |
Liabilities and stockholders’ equity | Liabilities and stockholders’ equity | | Liabilities and stockholders’ equity | |
Current liabilities | Current liabilities | | Current liabilities | |
Accounts payable | Accounts payable | | $ | 94,480 | | | $ | 123,157 | | Accounts payable | | $ | 146,152 | | | $ | 127,073 | |
Accrued payroll and other related liabilities | Accrued payroll and other related liabilities | | 101,637 | | | 121,159 | | Accrued payroll and other related liabilities | | 111,568 | | | 166,464 | |
Unexpired subscriptions revenue | Unexpired subscriptions revenue | | 114,740 | | | 105,346 | | Unexpired subscriptions revenue | | 154,360 | | | 119,296 | |
| Accrued expenses and other | Accrued expenses and other | | 135,660 | | | 137,086 | | Accrued expenses and other | | 180,933 | | | 146,319 | |
Total current liabilities | Total current liabilities | | 446,517 | | | 486,748 | | Total current liabilities | | 593,013 | | | 559,152 | |
Other liabilities | Other liabilities | | | | | Other liabilities | | | | |
| Pension benefits obligation | Pension benefits obligation | | 317,543 | | | 326,555 | | Pension benefits obligation | | 291,035 | | | 295,104 | |
Postretirement benefits obligation | Postretirement benefits obligation | | 35,712 | | | 38,690 | | Postretirement benefits obligation | | 35,413 | | | 36,086 | |
Other | Other | | 129,448 | | | 127,585 | | Other | | 114,729 | | | 133,041 | |
Total other liabilities | Total other liabilities | | 482,703 | | | 492,830 | | Total other liabilities | | 441,177 | | | 464,231 | |
Stockholders’ equity | Stockholders’ equity | | | | | Stockholders’ equity | | | | |
Common stock of $.10 par value: | Common stock of $.10 par value: | | Common stock of $.10 par value: | |
Class A – authorized: 300,000,000 shares; issued: 2021 – 175,962,272; 2020 – 175,308,672 (including treasury shares: 2021 – 8,870,801; 2020 – 8,870,801) | | 17,596 | | | 17,531 | | |
Class B – convertible – authorized and issued shares: 2021 – 781,724; 2020 – 781,724 | | 78 | | | 78 | | |
Class A – authorized: 300,000,000 shares; issued: 2022 – 176,263,169; 2021 – 175,971,801 (including treasury shares: 2022 – 9,563,601; 2021 – 8,870,801) | | Class A – authorized: 300,000,000 shares; issued: 2022 – 176,263,169; 2021 – 175,971,801 (including treasury shares: 2022 – 9,563,601; 2021 – 8,870,801) | | 17,626 | | | 17,597 | |
Class B – convertible – authorized and issued shares: 2022 – 781,724; 2021 – 781,724 | | Class B – convertible – authorized and issued shares: 2022 – 781,724; 2021 – 781,724 | | 78 | | | 78 | |
Additional paid-in capital | Additional paid-in capital | | 217,565 | | | 216,714 | | Additional paid-in capital | | 227,815 | | | 230,115 | |
Retained earnings | Retained earnings | | 1,756,198 | | | 1,672,586 | | Retained earnings | | 1,834,734 | | | 1,845,343 | |
Common stock held in treasury, at cost | Common stock held in treasury, at cost | | (171,211) | | | (171,211) | | Common stock held in treasury, at cost | | (200,245) | | | (171,211) | |
Accumulated other comprehensive loss, net of income taxes: | Accumulated other comprehensive loss, net of income taxes: | | Accumulated other comprehensive loss, net of income taxes: | |
Foreign currency translation adjustments | Foreign currency translation adjustments | | 7,092 | | | 8,386 | | Foreign currency translation adjustments | | 2,146 | | | 3,754 | |
Funded status of benefit plans | Funded status of benefit plans | | (412,315) | | | (421,698) | | Funded status of benefit plans | | (382,014) | | | (385,680) | |
Net unrealized gain on available-for-sale securities | | 1,779 | | | 3,131 | | |
Net unrealized loss on available-for-sale securities | | Net unrealized loss on available-for-sale securities | | (7,069) | | | (1,276) | |
Total accumulated other comprehensive loss, net of income taxes | Total accumulated other comprehensive loss, net of income taxes | | (403,444) | | | (410,181) | | Total accumulated other comprehensive loss, net of income taxes | | (386,937) | | | (383,202) | |
Total New York Times Company stockholders’ equity | Total New York Times Company stockholders’ equity | | 1,416,782 | | | 1,325,517 | | Total New York Times Company stockholders’ equity | | 1,493,071 | | | 1,538,720 | |
Noncontrolling interest | Noncontrolling interest | | 2,005 | | | 2,594 | | Noncontrolling interest | | 2,005 | | | 2,005 | |
Total stockholders’ equity | Total stockholders’ equity | | 1,418,787 | | | 1,328,111 | | Total stockholders’ equity | | 1,495,076 | | | 1,540,725 | |
Total liabilities and stockholders’ equity | Total liabilities and stockholders’ equity | | $ | 2,348,007 | | | $ | 2,307,689 | | Total liabilities and stockholders’ equity | | $ | 2,529,266 | | | $ | 2,564,108 | |
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 | |
| | June 27, 2021 | | June 28, 2020 | | June 27, 2021 | | June 28, 2020 | | March 27, 2022 | | March 28, 2021 | |
| | (13 weeks) | | (26 weeks) | | (13 weeks) | |
Revenues | Revenues | | Revenues | | |
Subscription | Subscription | | $ | 339,217 | | | $ | 293,189 | | | $ | 668,301 | | | $ | 578,623 | | Subscription | | $ | 371,979 | | | $ | 329,084 | | |
Advertising | Advertising | | 112,774 | | | 67,760 | | | 209,890 | | | 173,897 | | Advertising | | 116,270 | | | 97,116 | | |
Other | Other | | 46,506 | | | 42,801 | | | 93,351 | | | 94,866 | | Other | | 49,176 | | | 46,845 | | |
Total revenues | Total revenues | | 498,497 | | | 403,750 | | | 971,542 | | | 847,386 | | Total revenues | | 537,425 | | | 473,045 | | |
Operating costs | Operating costs | | Operating costs | | |
Cost of revenue (excluding depreciation and amortization) | Cost of revenue (excluding depreciation and amortization) | | 251,358 | | | 229,913 | | | 502,355 | | | 473,397 | | Cost of revenue (excluding depreciation and amortization) | | 281,365 | | | 250,997 | | |
Sales and marketing | Sales and marketing | | 53,555 | | | 39,605 | | | 113,708 | | | 113,389 | | Sales and marketing | | 77,588 | | | 60,153 | | |
Product development | Product development | | 39,699 | | | 30,983 | | | 78,642 | | | 61,985 | | Product development | | 47,433 | | | 38,943 | | |
General and administrative | General and administrative | | 62,283 | | | 58,812 | | | 118,860 | | | 111,673 | | General and administrative | | 71,357 | | | 56,577 | | |
Depreciation and amortization | Depreciation and amortization | | 14,486 | | | 15,631 | | | 29,203 | | | 30,816 | | Depreciation and amortization | | 18,686 | | | 14,717 | | |
Total operating costs | Total operating costs | | 421,381 | | | 374,944 | | | 842,768 | | | 791,260 | | Total operating costs | | 496,429 | | | 421,387 | | |
Acquisition-related costs | | Acquisition-related costs | | 34,712 | | | — | | |
| Lease termination charge | | 3,831 | | | 0 | | | 3,831 | | | 0 | | |
| Operating profit | Operating profit | | 73,285 | | | 28,806 | | | 124,943 | | | 56,126 | | Operating profit | | 6,284 | | | 51,658 | | |
Other components of net periodic benefit costs | Other components of net periodic benefit costs | | 2,598 | | | 2,149 | | | 5,197 | | | 4,463 | | Other components of net periodic benefit costs | | 1,522 | | | 2,599 | | |
| Interest income and other, net | Interest income and other, net | | 1,873 | | | 2,786 | | | 3,384 | | | 16,640 | | Interest income and other, net | | 1,075 | | | 1,511 | | |
Income from continuing operations before income taxes | Income from continuing operations before income taxes | | 72,560 | | | 29,443 | | | 123,130 | | | 68,303 | | Income from continuing operations before income taxes | | 5,837 | | | 50,570 | | |
Income tax expense | Income tax expense | | 18,243 | | | 5,781 | | | 27,704 | | | 11,787 | | Income tax expense | | 1,112 | | | 9,461 | | |
| Net income | Net income | | 54,317 | | | 23,662 | | | 95,426 | | | 56,516 | | Net income | | 4,725 | | | 41,109 | | |
| Net income attributable to The New York Times Company common stockholders | Net income attributable to The New York Times Company common stockholders | | $ | 54,317 | | | $ | 23,662 | | | $ | 95,426 | | | $ | 56,516 | | Net income attributable to The New York Times Company common stockholders | | $ | 4,725 | | | $ | 41,109 | | |
Average number of common shares outstanding: | Average number of common shares outstanding: | | | | | | | | | Average number of common shares outstanding: | | | | | |
Basic | Basic | | 168,012 | | | 166,869 | | | 167,828 | | | 166,725 | | Basic | | 167,866 | | | 167,647 | | |
Diluted | Diluted | | 168,346 | | | 168,083 | | | 168,312 | | | 167,968 | | Diluted | | 168,257 | | | 168,165 | | |
Basic earnings per share attributable to The New York Times Company common stockholders | Basic earnings per share attributable to The New York Times Company common stockholders | | $ | 0.32 | | | $ | 0.14 | | | $ | 0.57 | | | $ | 0.34 | | Basic earnings per share attributable to The New York Times Company common stockholders | | $ | 0.03 | | | $ | 0.25 | | |
Diluted earnings per share attributable to The New York Times Company common stockholders | Diluted earnings per share attributable to The New York Times Company common stockholders | | $ | 0.32 | | | $ | 0.14 | | | $ | 0.57 | | | $ | 0.34 | | Diluted earnings per share attributable to The New York Times Company common stockholders | | $ | 0.03 | | | $ | 0.24 | | |
Dividends declared per share | Dividends declared per share | | $ | 0 | | | $ | 0 | | | $ | 0.07 | | | $ | 0.06 | | Dividends declared per share | | $ | 0.09 | | | $ | 0.07 | | |
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 |
| | June 27, 2021 | | June 28, 2020 | | June 27, 2021 | | June 28, 2020 |
| | (13 weeks) | | (26 weeks) |
Net income | | $ | 54,317 | | | $ | 23,662 | | | $ | 95,426 | | | $ | 56,516 | |
Other comprehensive income, before tax: | | | | | | | | |
Gain/(loss) on foreign currency translation adjustments | | 935 | | | 619 | | | (1,767) | | | 365 | |
Pension and postretirement benefits obligation | | 6,409 | | | 6,231 | | | 12,815 | | | 12,628 | |
Net unrealized (loss)/gain on available-for-sale securities | | (779) | | | 4,075 | | | (1,846) | | | 4,790 | |
Other comprehensive income, before tax | | 6,565 | | | 10,925 | | | 9,202 | | | 17,783 | |
Income tax expense | | 1,756 | | | 2,848 | | | 2,465 | | | 4,763 | |
Other comprehensive income, net of tax | | 4,809 | | | 8,077 | | | 6,737 | | | 13,020 | |
| | | | | | | | |
| | | | | | | | |
Comprehensive income attributable to The New York Times Company common stockholders | | $ | 59,126 | | | $ | 31,739 | | | $ | 102,163 | | | $ | 69,536 | |
| | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | |
| | March 27, 2022 | | March 28, 2021 | | | | |
| | (13 weeks) | | |
Net income | | $ | 4,725 | | | $ | 41,109 | | | | | |
Other comprehensive (loss)/income, before tax: | | | | | | | | |
Loss on foreign currency translation adjustments | | (2,209) | | | (2,702) | | | | | |
Pension and postretirement benefits obligation | | 5,010 | | | 6,406 | | | | | |
Net unrealized loss on available-for-sale securities | | (7,916) | | | (1,067) | | | | | |
Other comprehensive (loss)/income, before tax | | (5,115) | | | 2,637 | | | | | |
Income tax (benefit)/expense | | (1,380) | | | 709 | | | | | |
Other comprehensive (loss)/income, net of tax | | (3,735) | | | 1,928 | | | | | |
| | | | | | | | |
| | | | | | | | |
Comprehensive income attributable to The New York Times Company common stockholders | | $ | 990 | | | $ | 43,037 | | | | | |
See Notes to Condensed Consolidated Financial Statements.
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
For the Quarters Ended JuneMarch 27, 20212022 and JuneMarch 28, 20202021
(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, March 29, 2020 | $ | 17,552 | | $ | 199,933 | | $ | 1,635,473 | | $ | (171,211) | | $ | (490,033) | | $ | 1,191,714 | | $ | 1,860 | | $ | 1,193,574 | |
| | | | | | | | |
Net income | — | | — | | 23,662 | | — | | — | | 23,662 | | — | | 23,662 | |
Dividends | — | | — | | 23 | | — | | — | | 23 | | — | | 23 | |
Other comprehensive income | — | | — | | — | | — | | 8,077 | | 8,077 | | — | | 8,077 | |
Issuance of shares: | | | | | | | | |
Stock options – 90,735 Class A shares | 9 | | 933 | | — | | — | | — | | 942 | | — | | 942 | |
Restricted stock units vested – 6,516 Class A shares | 1 | | (275) | | — | | — | | — | | (274) | | — | | (274) | |
| | | | | | | | |
Stock-based compensation | — | | 5,027 | | — | | — | | — | | 5,027 | | — | | 5,027 | |
| | | | | | | | |
Balance, June 28, 2020 | $ | 17,562 | | $ | 205,618 | | $ | 1,659,158 | | $ | (171,211) | | $ | (481,956) | | $ | 1,229,171 | | $ | 1,860 | | $ | 1,231,031 | |
| | | | | | | | |
Balance, March 28, 2021 | $ | 17,670 | | $ | 212,802 | | $ | 1,701,860 | | $ | (171,211) | | $ | (408,253) | | $ | 1,352,868 | | $ | 2,594 | | $ | 1,355,462 | |
| | | | | | | | |
Net income | — | | — | | 54,317 | | — | | — | | 54,317 | | — | | 54,317 | |
Dividends | — | | — | | 21 | | — | | — | | 21 | | — | | 21 | |
Other comprehensive income | — | | — | | — | | — | | 4,809 | | 4,809 | | — | | 4,809 | |
Issuance of shares: | | | | | | | | |
| | | | | | | | |
Restricted stock units vested – 45,280 Class A shares | 4 | | (390) | | — | | — | | — | | (386) | | — | | (386) | |
| | | | | | | | |
Stock-based compensation | — | | 5,153 | | — | | — | | — | | 5,153 | | — | | 5,153 | |
Distributions | — | | — | | — | | — | | — | | — | | (589) | | (589) | |
| | | | | | | | |
Balance, June 27, 2021 | $ | 17,674 | | $ | 217,565 | | $ | 1,756,198 | | $ | (171,211) | | $ | (403,444) | | $ | 1,416,782 | | $ | 2,005 | | $ | 1,418,787 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Capital Stock - Class A and Class B Common | Additional Paid-in Capital | Retained Earnings | Common Stock Held in Treasury, at Cost | Accumulated Other Comprehensive Loss, Net of Income Taxes | Total New York Times Company Stockholders’ Equity | Non- controlling Interest | Total Stock- holders’ Equity |
|
Balance, December 27, 2020 | $ | 17,609 | | $ | 216,714 | | $ | 1,672,586 | | $ | (171,211) | | $ | (410,181) | | $ | 1,325,517 | | $ | 2,594 | | $ | 1,328,111 | |
| | | | | | | | |
Net income | — | | — | | 41,109 | | — | | — | | 41,109 | | — | | 41,109 | |
Dividends | — | | — | | (11,835) | | — | | — | | (11,835) | | — | | (11,835) | |
Other comprehensive income | — | | — | | — | | — | | 1,928 | | 1,928 | | — | | 1,928 | |
Issuance of shares: | | | | | | | | |
Stock options – 323,360 Class A shares | 33 | | 2,414 | | — | | — | | — | | 2,447 | | — | | 2,447 | |
Restricted stock units vested – 142,707 Class A shares | 14 | | (4,564) | | — | | — | | — | | (4,550) | | — | | (4,550) | |
Performance-based awards – 142,253 Class A shares | 14 | | (5,947) | | — | | — | | — | | (5,933) | | — | | (5,933) | |
Stock-based compensation | — | | 4,185 | | — | | — | | — | | 4,185 | | — | | 4,185 | |
| | | | | | | | |
Balance, March 28, 2021 | $ | 17,670 | | $ | 212,802 | | $ | 1,701,860 | | $ | (171,211) | | $ | (408,253) | | $ | 1,352,868 | | $ | 2,594 | | $ | 1,355,462 | |
| | | | | | | | |
Balance, December 26, 2021 | $ | 17,675 | | $ | 230,115 | | $ | 1,845,343 | | $ | (171,211) | | $ | (383,202) | | $ | 1,538,720 | | $ | 2,005 | | $ | 1,540,725 | |
| | | | | | | | |
Net income | — | | — | | 4,725 | | — | | — | | 4,725 | | — | | 4,725 | |
Dividends | — | | — | | (15,334) | | — | | — | | (15,334) | | — | | (15,334) | |
Other comprehensive loss | — | | — | | — | | — | | (3,735) | | (3,735) | | — | | (3,735) | |
Issuance of shares: | | | | | | | | |
Stock options – 400 Class A shares | — | | 3 | | — | | — | | — | | 3 | | — | | 3 | |
Restricted stock units vested – 127,450 Class A shares | 13 | | (3,784) | | — | | — | | — | | (3,771) | | — | | (3,771) | |
Performance-based awards – 163,518 Class A shares | 16 | | (5,573) | | — | | — | | — | | (5,557) | | — | | (5,557) | |
Share Repurchases - 692,800 Class A shares | — | | — | | — | | (29,034) | | — | | (29,034) | | — | | (29,034) | |
Stock-based compensation | — | | 7,054 | | — | | — | | — | | 7,054 | | — | | 7,054 | |
| | | | | | | | |
| | | | | | | | |
Balance, March 27, 2022 | $ | 17,704 | | $ | 227,815 | | $ | 1,834,734 | | $ | (200,245) | | $ | (386,937) | | $ | 1,493,071 | | $ | 2,005 | | $ | 1,495,076 | |
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
For the Six Months Ended June 27, 2021 and June 28, 2020
(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 29, 2019 | $ | 17,504 | | $ | 208,028 | | $ | 1,612,658 | | $ | (171,211) | | $ | (494,976) | | $ | 1,172,003 | | $ | 1,860 | | $ | 1,173,863 | |
| | | | | | | | |
Net income | — | | — | | 56,516 | | — | | — | | 56,516 | | — | | 56,516 | |
Dividends | — | | — | | (10,016) | | — | | — | | (10,016) | | — | | (10,016) | |
Other comprehensive income | — | | — | | — | | — | | 13,020 | | 13,020 | | — | | 13,020 | |
Issuance of shares: | | | | | | — | | | — | |
Stock options – 179,510 Class A shares | 18 | | 1,855 | | — | | — | | — | | 1,873 | | — | | 1,873 | |
Restricted stock units vested – 141,501 Class A shares | 14 | | (3,897) | | — | | — | | — | | (3,883) | | — | | (3,883) | |
Performance-based awards – 257,098 Class A shares | 26 | | (7,850) | | — | | — | | — | | (7,824) | | — | | (7,824) | |
Stock-based compensation | — | | 7,482 | | — | | — | | — | | 7,482 | | — | | 7,482 | |
| | | | | | | | |
Balance, June 28, 2020 | $ | 17,562 | | $ | 205,618 | | $ | 1,659,158 | | $ | (171,211) | | $ | (481,956) | | $ | 1,229,171 | | $ | 1,860 | | $ | 1,231,031 | |
| | | | | | | | |
Balance, December 27, 2020 | $ | 17,609 | | $ | 216,714 | | $ | 1,672,586 | | $ | (171,211) | | $ | (410,181) | | $ | 1,325,517 | | $ | 2,594 | | $ | 1,328,111 | |
| | | | | | | | |
Net income | — | | — | | 95,426 | | — | | — | | 95,426 | | — | | 95,426 | |
Dividends | — | | — | | (11,814) | | — | | — | | (11,814) | | — | | (11,814) | |
Other comprehensive income | — | | — | | — | | — | | 6,737 | | 6,737 | | — | | 6,737 | |
Issuance of shares: | | | | | | | | |
Stock options – 323,360 Class A shares | 33 | | 2,414 | | — | | — | | — | | 2,447 | | — | | 2,447 | |
Restricted stock units vested – 187,987 Class A shares | 18 | | (4,954) | | — | | — | | — | | (4,936) | | — | | (4,936) | |
Performance-based awards – 142,253 Class A shares | 14 | | (5,947) | | — | | — | | — | | (5,933) | | — | | (5,933) | |
Stock-based compensation | — | | 9,338 | | — | | — | | — | | 9,338 | | — | | 9,338 | |
Distributions | — | | — | | — | | — | | — | | — | | (589) | | (589) | |
| | | | | | | | |
Balance, June 27, 2021 | $ | 17,674 | | $ | 217,565 | | $ | 1,756,198 | | $ | (171,211) | | $ | (403,444) | | $ | 1,416,782 | | $ | 2,005 | | $ | 1,418,787 | |
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| | | For the Six Months Ended | | For the Three Months Ended |
| | June 27, 2021 | | June 28, 2020 | | March 27, 2022 | | March 28, 2021 |
| | (26 weeks) | | (13 weeks) |
Cash flows from operating activities | Cash flows from operating activities | | Cash flows from operating activities | |
Net income | Net income | | $ | 95,426 | | | $ | 56,516 | | Net income | | $ | 4,725 | | | $ | 41,109 | |
Adjustments to reconcile net income to net cash provided by operating activities: | Adjustments to reconcile net income to net cash provided by operating activities: | | Adjustments to reconcile net income to net cash provided by operating activities: | |
| Depreciation and amortization | Depreciation and amortization | | 29,203 | | | 30,816 | | Depreciation and amortization | | 18,685 | | | 14,717 | |
Lease termination charge | | 3,831 | | | 0 | | |
| Amortization of right of use asset | Amortization of right of use asset | | 4,442 | | | 4,645 | | Amortization of right of use asset | | 5,400 | | | 2,166 | |
Stock-based compensation expense | Stock-based compensation expense | | 9,338 | | | 7,482 | | Stock-based compensation expense | | 7,054 | | | 4,185 | |
| Gain on non-marketable equity investment | | 0 | | | (10,074) | | |
| Long-term retirement benefit obligations | | (8,866) | | | (8,524) | | |
| Change in long-term retirement benefit obligations | | Change in long-term retirement benefit obligations | | (4,555) | | | (4,004) | |
| Fair market value adjustment on life insurance products | | Fair market value adjustment on life insurance products | | 514 | | | 208 | |
Other – net | Other – net | | (289) | | | 475 | | Other – net | | (12,198) | | | (1,277) | |
Changes in operating assets and liabilities: | | |
Changes in operating assets and liabilities, net of business acquisitions: | | Changes in operating assets and liabilities, net of business acquisitions: | |
Accounts receivable – net | Accounts receivable – net | | 30,152 | | | 91,310 | | Accounts receivable – net | | 40,930 | | | 38,522 | |
Other assets | Other assets | | (8,027) | | | (1,292) | | Other assets | | (6,646) | | | (3,768) | |
Accounts payable, accrued payroll and other liabilities | Accounts payable, accrued payroll and other liabilities | | (54,170) | | | (64,019) | | Accounts payable, accrued payroll and other liabilities | | (75,571) | | | (68,428) | |
Unexpired subscriptions | Unexpired subscriptions | | 9,394 | | | 11,255 | | Unexpired subscriptions | | 7,003 | | | 9,499 | |
Net cash provided by operating activities | Net cash provided by operating activities | | 110,434 | | | 118,590 | | Net cash provided by operating activities | | (14,659) | | | 32,929 | |
Cash flows from investing activities | Cash flows from investing activities | | | | | Cash flows from investing activities | | | | |
Purchases of marketable securities | Purchases of marketable securities | | (326,996) | | | (278,773) | | Purchases of marketable securities | | (2,492) | | | (177,543) | |
Maturities of marketable securities | Maturities of marketable securities | | 293,053 | | | 228,938 | | Maturities of marketable securities | | 442,895 | | | 155,782 | |
| Business acquisitions | | 0 | | | (8,055) | | |
Business acquisitions, net of cash acquired | | Business acquisitions, net of cash acquired | | (515,299) | | | — | |
Sales of investments – net | Sales of investments – net | | 271 | | | 4,074 | | Sales of investments – net | | (958) | | | (70) | |
Capital expenditures | Capital expenditures | | (14,677) | | | (21,510) | | Capital expenditures | | (8,580) | | | (6,394) | |
Other-net | Other-net | | 2,017 | | | 2,388 | | Other-net | | 425 | | | 2,017 | |
Net cash used in investing activities | Net cash used in investing activities | | (46,332) | | | (72,938) | | Net cash used in investing activities | | (84,009) | | | (26,208) | |
Cash flows from financing activities | Cash flows from financing activities | | | | | Cash flows from financing activities | | | | |
Long-term obligations: | Long-term obligations: | | Long-term obligations: | |
| Dividends paid | Dividends paid | | (21,825) | | | (18,359) | | Dividends paid | | (11,839) | | | (10,072) | |
| Payment of contingent consideration | | Payment of contingent consideration | | (1,724) | | | — | |
Capital shares: | Capital shares: | | Capital shares: | |
Proceeds from stock option exercises | Proceeds from stock option exercises | | 2,441 | | | 1,873 | | Proceeds from stock option exercises | | 3 | | | 2,447 | |
| Repurchases | | Repurchases | | (29,034) | | | — | |
Share-based compensation tax withholding | Share-based compensation tax withholding | | (10,901) | | | (11,706) | | Share-based compensation tax withholding | | (9,328) | | | (10,483) | |
Net cash used in financing activities | Net cash used in financing activities | | (30,285) | | | (28,192) | | Net cash used in financing activities | | (51,922) | | | (18,108) | |
Net increase in cash, cash equivalents and restricted cash | | 33,817 | | | 17,460 | | |
Net decrease in cash, cash equivalents and restricted cash | | Net decrease in cash, cash equivalents and restricted cash | | (150,590) | | | (11,387) | |
Effect of exchange rate changes on cash | Effect of exchange rate changes on cash | | (280) | | | 162 | | Effect of exchange rate changes on cash | | (164) | | | (341) | |
Cash, cash equivalents and restricted cash at the beginning of the period | Cash, cash equivalents and restricted cash at the beginning of the period | | 301,964 | | | 247,518 | | Cash, cash equivalents and restricted cash at the beginning of the period | | 334,306 | | | 301,964 | |
Cash, cash equivalents and restricted cash at the end of the period | Cash, cash equivalents and restricted cash at the end of the period | | $ | 335,501 | | | $ | 265,140 | | Cash, cash equivalents and restricted cash at the end of the period | | $ | 183,552 | | | $ | 290,236 | |
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 JuneMarch 27, 2021,2022, and December 27, 2020,26, 2021, and the results of operations, changes in stockholders’ equity and cash flows of the Company for the periods ended JuneMarch 27, 2021,2022, and JuneMarch 28, 2020.2021. 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 27, 2020.26, 2021. 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 and 26 weeks for the secondfirst quarter.
In December 2021, the Board of Directors approved a resolution to change the Company’s fiscal year from a 52/53 week fiscal year ending the last Sunday of December to a calendar year. Accordingly, the Company’s 2022 fiscal year, which commenced December 27, 2021, will be extended from December 25, 2022, to December 31,2022, and subsequent fiscal years will begin on January 1 and end on December 31 of each year.
On February 1, 2022, we acquired The Athletic Media Company (“The Athletic”), a global digital subscription-based sports media business that provides national and local coverage of more than 200 clubs and teams in the U.S. and around the world. For the first quarter of 2022, the results of The Athletic have been included in our Condensed Consolidated Financial Statements beginning February 1, 2022. The Athletic is a separate reportable segment of the Company. As a result, beginning in the first quarter of 2022, we have two reportable segments: The New York Times Group and six months, respectively.The Athletic. Management, including the Company’s President and Chief Executive Officer (who is the Company’s Chief Operating Decision Maker), uses adjusted operating profit by segment (as defined below) in assessing performance and allocating resources. The Company includes in its presentation revenues and adjusted operating costs (as defined below) to arrive at adjusted operating profit by segment.
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.
Certain prior period amounts have been reclassified to conform with the current period presentation.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Except as described herein, as of JuneMarch 27, 2021,2022, our significant accounting policies, which are detailed in our Annual Report on Form 10-K for the year ended December 27, 2020,26, 2021, have not changed materially.
Recently Adopted Accounting Pronouncements
| | | | | | | | | | | |
Accounting Standard Update(s) | Topic | Effective Period | Summary |
2019-122021-08 | Simplifying theBusiness Combinations (Topic 805): Accounting for Income Taxes (Topic 740)Contract Assets and Contract Liabilities from Contracts with Customers | Fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.2022. Early adoption is permitted. | Simplifies the accounting for income taxes by eliminating certain exceptionsRequires entities to the guidancerecognize and measure contract assets and contract liabilities acquired in Accounting Standards Codification 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxesa business combination in accordance with ASC 2014-09, Revenue from Contracts with Customers (Topic 606). The update will generally result in an interim periodentity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the recognition of deferred tax liabilities for outside basis differences. The standard also simplifies aspects ofacquiree immediately before the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.acquisition date rather than at fair value. The Company adopted this guidance on December 28, 2020.27, 2021. As a result of The adoption did not have a material impact onAthletic acquisition, the Company’s consolidated financial statements.Company assumed unexpired subscriptions revenue of $28.1 million. |
Recently Issued Accounting Pronouncements
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 digital and print products (which include our news product, as well as The Athletic and our Games, Cooking, Audm and AudmWirecutter products), and single-copy and bulk sales of our print products. Subscription revenues are based on both the number of copies of the printed newspaper sold and digital-only subscriptions, and the rates charged to the respective customers.
Advertising revenue is principally from advertisers (such as technology, financial and luxury goods companies) promoting products, services or brands on digital platforms in the form of display ads, audio and video, and in print in the form of column-inch ads. Advertising revenue is primarily derived from offerings sold directly to marketers by our advertising sales teams. A smaller proportion of our total advertising revenues is generated through programmatic auctions run by third-party ad exchanges. Advertising revenue is primarily determined by the volume (e.g., impressions), rate and mix of advertisements. Digital advertising includes our core digital advertising business and other digital advertising. Our core digital advertising business includes direct-sold website, mobile application, podcast, email and video advertisements. Advertising revenue from The Athletic is primarily podcast revenue and therefore is reflected in this category. Direct-sold display
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
advertising, a component of core digital advertising, includes offerings on websites and mobile applications sold directly to marketers by our advertising sales teams. Other digital advertising includes open-market programmatic advertising and creative services fees. Print advertising includes revenue from column-inch ads and classified advertising including line-ads as well as preprinted advertising, also known as freestanding inserts.
Other revenues primarily consist of revenues from licensing, Wirecutter affiliate referrals, commercial printing, the leasing of floors in the New York headquarters building located at 620 Eighth Avenue, New York, New York (the “Company Headquarters”), commercial printing, retail commerce, television and film, our student subscription sponsorship program, and our live events business.business and television and film.
Subscription, advertising and other revenues were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Six Months Ended |
(In thousands) | | June 27, 2021 | | As % of total | | June 28, 2020 | | As % of total | | June 27, 2021 | | As % of total | | June 28, 2020 | | As % of total |
Subscription | | $ | 339,217 | | | 68.1 | % | | $ | 293,189 | | | 72.6 | % | | $ | 668,301 | | | 68.8 | % | | $ | 578,623 | | | 68.3 | % |
Advertising | | 112,774 | | | 22.6 | % | | 67,760 | | | 16.8 | % | | 209,890 | | | 21.6 | % | | 173,897 | | | 20.5 | % |
Other (1) | | 46,506 | | | 9.3 | % | | 42,801 | | | 10.6 | % | | 93,351 | | | 9.6 | % | | 94,866 | | | 11.2 | % |
Total | | $ | 498,497 | | | 100.0 | % | | $ | 403,750 | | | 100.0 | % | | $ | 971,542 | | | 100.0 | % | | $ | 847,386 | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | |
(In thousands) | | March 27, 2022 | | As % of total | | March 28, 2021 | | As % of total | | | | | | | | |
Subscription | | $ | 371,979 | | | 69.2 | % | | $ | 329,084 | | | 69.6 | % | | | | | | | | |
Advertising | | 116,270 | | | 21.5 | % | | 97,116 | | | 20.5 | % | | | | | | | | |
Other (1) | | 49,176 | | | 9.3 | % | | 46,845 | | | 9.9 | % | | | | | | | | |
Total | | $ | 537,425 | | | 100.0 | % | | $ | 473,045 | | | 100.0 | % | | | | | | | | |
(1) Other revenues include 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 for the secondfirst quarters of 20212022 and 2020, respectively, and approximately $13 million and $15 million for the first six months of 2021, and 2020, respectively.
The following table summarizes digital and print subscription revenues, which are components of subscription revenues above, for the second quarters ended March 27, 2022, and first six months ended June 27, 2021, and JuneMarch 28, 2020:2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Six Months Ended |
(In thousands) | | June 27, 2021 | | June 28, 2020 | | June 27, 2021 | | June 28, 2020 |
Digital-only subscription revenues: | | | | | | | | |
News product subscription revenues(1) | | $ | 170,893 | | | $ | 132,922 | | | $ | 332,181 | | | $ | 251,880 | |
Other product subscription revenues(2) | | 19,252 | | | 13,062 | | | 37,564 | | | 24,114 | |
Subtotal digital-only subscriptions | | 190,145 | | | 145,984 | | | 369,745 | | | 275,994 | |
Print subscription revenues: | | | | | | | | |
Domestic home delivery subscription revenues(3) | | 134,755 | | | 132,971 | | | 269,150 | | | 266,708 | |
Single-copy, NYT International and other subscription revenues(4) | | 14,317 | | | 14,234 | | | 29,406 | | | 35,921 | |
Subtotal print subscription revenues | | 149,072 | | | 147,205 | | | 298,556 | | | 302,629 | |
Total subscription revenues | | $ | 339,217 | | | $ | 293,189 | | | $ | 668,301 | | | $ | 578,623 | |
(1) Includes revenues from subscriptions to the Company’s news product. News product subscription packages that include access to the Company’s Games and Cooking products are also included in this category. |
(2) Includes revenues from standalone subscriptions to the Company’s Games, Cooking and Audm products. |
(3) Includes free access to some of the Company’s digital products. |
(4) NYT International is the international edition of our print newspaper. |
The following table summarizes digital and print advertising revenues for the second quarters and first six months ended June 27, 2021, and June 28, 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Six Months Ended |
(In thousands) | | June 27, 2021 | | June 28, 2020 | | June 27, 2021 | | June 28, 2020 |
Advertising revenues: | | | | | | | | |
Digital | | $ | 70,995 | | | $ | 39,531 | | | $ | 130,491 | | | $ | 90,689 | |
Print | | 41,779 | | | 28,229 | | | 79,399 | | | 83,208 | |
Total advertising | | $ | 112,774 | | | $ | 67,760 | | | $ | 209,890 | | | $ | 173,897 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | | | |
(In thousands) | | March 27, 2022 | | As % of total | | March 28, 2021 | | As % of total | | | | | | | | |
Digital-only subscription revenues (1) | | $ | 226,763 | | | 61.0 | % | | $ | 179,599 | | | 54.6 | % | | | | | | | | |
Print subscription revenues: | | | | | | | | | | | | | | | | |
Domestic home delivery subscription revenues (2) | | 131,391 | | | 35.3 | % | | 134,395 | | | 40.8 | % | | | | | | | | |
Single-copy, NYT International and Other subscription revenues (3) | | 13,825 | | | 3.7 | % | | 15,090 | | | 4.6 | % | | | | | | | | |
Subtotal print subscription revenues | | 145,216 | | | 39.0 | % | | 149,485 | | | 45.4 | % | | | | | | | | |
Total subscription revenues | | $ | 371,979 | | | 100.0 | % | | $ | 329,084 | | | 100.0 | % | | | | | | | | |
(1) Includes revenue from digital-only bundled and standalone subscriptions to the Company’s news product, as well as The Athletic and our Games, Cooking, Audm and Wirecutter products. | | | | |
(2) Domestic home delivery subscriptions include access to digital news, Games, Cooking and Wirecutter products. | | | | |
(3) NYT International is the international edition of our print newspaper. | | | | | | | | | | |
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table summarizes digital and print advertising revenues, which are components of advertising revenues above, for the quarters ended March 27, 2022, and March 28, 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | | | |
(In thousands) | | March 27, 2022 | | As % of total | | March 28, 2021 | | As % of total | | | | | | | | |
Advertising revenues: | | | | | | | | | | | | | | | | |
Digital | | $ | 67,014 | | | 57.6 | % | | $ | 59,496 | | | 61.3 | % | | | | | | | | |
Print | | 49,256 | | | 42.4 | % | | 37,620 | | | 38.7 | % | | | | | | | | |
Total advertising | | $ | 116,270 | | | 100.0 | % | | $ | 97,116 | | | 100.0 | % | | | | | | | | |
Performance Obligations
We have remaining performance obligations related to digital archive and other licensing and certain advertising contracts. As of JuneMarch 27, 2021,2022, the aggregate amount of the transaction price allocated to the remaining performance obligations for contracts with a duration greater than one year was approximately $104$128 million. The Company will recognize this revenue as performance obligations are satisfied. We expect that approximately $24$35 million, $36$25 million and $44$68 million will be recognized in the remainder of 2021, 2022, 2023 and thereafter through 2028, respectively.
Contract Assets
As of JuneMarch 27, 2021,2022, and December 27, 2020,26, 2021, the Company had $1.9$3.6 million and $1.8$3.4 million, respectively, in contract assets recorded in the Condensed Consolidated Balance Sheets related to digital archiving licensing revenue. The contract asset is reclassified to Accounts receivable when the customer is invoiced based on the contractual billing schedule.
NOTE 4. MARKETABLE SECURITIES
The Company accounts for its marketable securities as available for sale (“AFS”). The Company recorded $2.4$9.7 million and $4.3$1.7 million of net unrealized gainslosses in Accumulated other comprehensive income (“AOCI”) as of JuneMarch 27, 2021,2022, and December 27, 2020,26, 2021, respectively.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following tables present the amortized cost, gross unrealized gains and losses, and fair market value of our AFS securities as of JuneMarch 27, 2021,2022, and December 27, 2020:26, 2021:
| | | June 27, 2021 | | March 27, 2022 |
(In thousands) | (In thousands) | | Amortized Cost | | Gross unrealized gains | | Gross unrealized losses | | Fair Value | (In thousands) | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value |
| Short-term AFS securities | Short-term AFS securities | | | | | | | | | Short-term AFS securities | | | | | | | | |
U.S. Treasury securities | | U.S. Treasury securities | | $ | 28,481 | | | $ | 4 | | | $ | (217) | | | $ | 28,268 | |
| Corporate debt securities | Corporate debt securities | | $ | 110,415 | | | $ | 496 | | | $ | (12) | | | $ | 110,899 | | Corporate debt securities | | 22,681 | | | 12 | | | (157) | | | 22,536 | |
Certificates of deposit | | 105,954 | | | 0 | | | 0 | | | 105,954 | | |
U.S. Treasury securities | | 74,984 | | | 547 | | | (3) | | | 75,528 | | |
U.S. governmental agency securities | | 26,137 | | | 16 | | | 0 | | | 26,153 | | |
Commercial paper | | 19,921 | | | 0 | | | 0 | | | 19,921 | | |
| Municipal securities | | Municipal securities | | 2,000 | | | — | | | (16) | | | 1,984 | |
Total short-term AFS securities | Total short-term AFS securities | | $ | 337,411 | | | $ | 1,059 | | | $ | (15) | | | $ | 338,455 | | Total short-term AFS securities | | $ | 53,162 | | | $ | 16 | | | $ | (390) | | | $ | 52,788 | |
Long-term AFS securities | Long-term AFS securities | | | | | | | | | Long-term AFS securities | | | | | | | | |
Corporate debt securities | Corporate debt securities | | $ | 161,767 | | | $ | 725 | | | $ | (123) | | | $ | 162,369 | | Corporate debt securities | | $ | 167,793 | | | $ | — | | | $ | (6,365) | | | $ | 161,428 | |
U.S. Treasury securities | U.S. Treasury securities | | 60,377 | | | 861 | | | (15) | | | 61,223 | | U.S. Treasury securities | | 56,576 | | | — | | | (1,892) | | | 54,684 | |
U.S. governmental agency securities | U.S. governmental agency securities | | 51,591 | | | 6 | | | (67) | | | 51,530 | | U.S. governmental agency securities | | 28,804 | | | — | | | (850) | | | 27,954 | |
Municipal securities | Municipal securities | | 12,142 | | | 7 | | | (6) | | | 12,143 | | Municipal securities | | 8,932 | | | — | | | (183) | | | 8,749 | |
Total long-term AFS securities | Total long-term AFS securities | | $ | 285,877 | | | $ | 1,599 | | | $ | (211) | | | $ | 287,265 | | Total long-term AFS securities | | $ | 262,105 | | | $ | — | | | $ | (9,290) | | | $ | 252,815 | |
| | | December 27, 2020 | | December 26, 2021 |
(In thousands) | (In thousands) | | Amortized Cost | | Gross unrealized gains | | Gross unrealized losses | | Fair Value | (In thousands) | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value |
| Short-term AFS securities | Short-term AFS securities | | | | | | | | | Short-term AFS securities | | | | | | | | |
U.S. Treasury securities | | U.S. Treasury securities | | $ | 148,899 | | | $ | 692 | | | $ | (43) | | | $ | 149,548 | |
Corporate debt securities | Corporate debt securities | | $ | 129,805 | | | $ | 504 | | | $ | (8) | | | $ | 130,301 | | Corporate debt securities | | 107,158 | | | 245 | | | (69) | | | 107,334 | |
Certificates of deposit | Certificates of deposit | | 36,525 | | | 0 | | | 0 | | | 36,525 | | Certificates of deposit | | 55,551 | | | — | | | — | | | 55,551 | |
U.S. Treasury securities | | 79,467 | | | 39 | | | (3) | | | 79,503 | | |
Commercial paper | | Commercial paper | | 21,145 | | | — | | | — | | | 21,145 | |
Municipal securities | | Municipal securities | | 3,999 | | | — | | | (2) | | | 3,997 | |
U.S. governmental agency securities | U.S. governmental agency securities | | 25,113 | | | 61 | | | (3) | | | 25,171 | | U.S. governmental agency securities | | 3,500 | | | — | | | — | | | 3,500 | |
Commercial paper | | 37,580 | | | 0 | | | 0 | | | 37,580 | | |
| Total short-term AFS securities | Total short-term AFS securities | | $ | 308,490 | | | $ | 604 | | | $ | (14) | | | $ | 309,080 | | Total short-term AFS securities | | $ | 340,252 | | | $ | 937 | | | $ | (114) | | | $ | 341,075 | |
Long-term AFS securities | Long-term AFS securities | | | | | | | | | Long-term AFS securities | | | | | | | | |
Corporate debt securities | Corporate debt securities | | $ | 134,296 | | | $ | 1,643 | | | $ | (5) | | | $ | 135,934 | | Corporate debt securities | | $ | 242,764 | | | $ | 149 | | | $ | (1,858) | | | $ | 241,055 | |
U.S. Treasury securities | U.S. Treasury securities | | 95,511 | | | 2,054 | | | 0 | | | 97,565 | | U.S. Treasury securities | | 119,695 | | | — | | | (549) | | | 119,146 | |
U.S. governmental agency securities | U.S. governmental agency securities | | 48,342 | | | 19 | | | (13) | | | 48,348 | | U.S. governmental agency securities | | 39,498 | | | — | | | (252) | | | 39,246 | |
Municipal securities | Municipal securities | | 4,994 | | | 0 | | | (10) | | | 4,984 | | Municipal securities | | 13,994 | | | — | | | (61) | | | 13,933 | |
Total long-term AFS securities | Total long-term AFS securities | | $ | 283,143 | | | $ | 3,716 | | | $ | (28) | | | $ | 286,831 | | Total long-term AFS securities | | $ | 415,951 | | | $ | 149 | | | $ | (2,720) | | | $ | 413,380 | |
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following tables represent the AFS securities as of JuneMarch 27, 2021,2022, and December 27, 2020,26, 2021, that were in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position:
| | | June 27, 2021 | | March 27, 2022 |
| | Less than 12 Months | | 12 Months or Greater | | Total | | Less than 12 Months | | 12 Months or Greater | | Total |
(In thousands) | (In thousands) | | Fair Value | | Gross unrealized losses | | Fair Value | | Gross unrealized losses | | Fair Value | | Gross unrealized losses | (In thousands) | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses |
| Short-term AFS securities | Short-term AFS securities | | | | | | | | | | | | | Short-term AFS securities | | | | | | | | | | | | |
U.S. Treasury securities | | U.S. Treasury securities | | $ | 24,589 | | | $ | (217) | | | $ | — | | | $ | — | | | $ | 24,589 | | | $ | (217) | |
Corporate debt securities | Corporate debt securities | | $ | 28,033 | | | $ | (12) | | | $ | 0 | | | $ | 0 | | | $ | 28,033 | | | $ | (12) | | Corporate debt securities | | 13,887 | | | (157) | | | — | | | — | | | 13,887 | | | (157) | |
U.S. Treasury securities | | 22,670 | | | (3) | | | 0 | | | 0 | | | 22,670 | | | (3) | | |
| Municipal securities | | Municipal securities | | 1,984 | | | (16) | | | — | | | — | | | 1,984 | | | (16) | |
Total short-term AFS securities | Total short-term AFS securities | | $ | 50,703 | | | $ | (15) | | | $ | 0 | | | $ | 0 | | | $ | 50,703 | | | $ | (15) | | Total short-term AFS securities | | $ | 40,460 | | | $ | (390) | | | $ | — | | | $ | — | | | $ | 40,460 | | | $ | (390) | |
Long-term AFS securities | Long-term AFS securities | | | | | | | | | | | | | Long-term AFS securities | | | | | | | | | | | | |
Corporate debt securities | Corporate debt securities | | $ | 50,552 | | | $ | (123) | | | $ | 0 | | | $ | 0 | | | $ | 50,552 | | | $ | (123) | | Corporate debt securities | | $ | 154,995 | | | $ | (6,253) | | | $ | 6,433 | | | $ | (112) | | | $ | 161,428 | | | $ | (6,365) | |
U.S. Treasury securities | U.S. Treasury securities | | 11,212 | | | (15) | | | 0 | | | 0 | | | 11,212 | | | (15) | | U.S. Treasury securities | | 51,923 | | | (1,805) | | | 2,761 | | | (87) | | | 54,684 | | | (1,892) | |
U.S. governmental agency securities | U.S. governmental agency securities | | 42,428 | | | (67) | | | 0 | | | 0 | | | 42,428 | | | (67) | | U.S. governmental agency securities | | 27,954 | | | (850) | | | — | | | — | | | 27,954 | | | (850) | |
Municipal securities | Municipal securities | | 5,141 | | | (6) | | | 0 | | | 0 | | | 5,141 | | | (6) | | Municipal securities | | 8,749 | | | (183) | | | — | | | — | | | 8,749 | | | (183) | |
Total long-term AFS securities | Total long-term AFS securities | | $ | 109,333 | | | $ | (211) | | | $ | 0 | | | $ | 0 | | | $ | 109,333 | | | $ | (211) | | Total long-term AFS securities | | $ | 243,621 | | | $ | (9,091) | | | $ | 9,194 | | | $ | (199) | | | $ | 252,815 | | | $ | (9,290) | |
| | | December 27, 2020 | | December 26, 2021 |
| | Less than 12 Months | | 12 Months or Greater | | Total | | Less than 12 Months | | 12 Months or Greater | | Total |
(In thousands) | (In thousands) | | Fair Value | | Gross unrealized losses | | Fair Value | | Gross unrealized losses | | Fair Value | | Gross unrealized losses | (In thousands) | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses |
| Short-term AFS securities | Short-term AFS securities | | | | | | | | | | | | | Short-term AFS securities | | | | | | | | | | | | |
U.S. Treasury securities | | U.S. Treasury securities | | $ | 61,018 | | | $ | (43) | | | $ | — | | | $ | — | | | $ | 61,018 | | | $ | (43) | |
Corporate debt securities | Corporate debt securities | | $ | 33,735 | | | $ | (8) | | | $ | 0 | | | $ | 0 | | | $ | 33,735 | | | $ | (8) | | Corporate debt securities | | 53,148 | | | (69) | | | — | | | — | | | 53,148 | | | (69) | |
U.S. Treasury securities | | 20,133 | | | (3) | | | 0 | | | 0 | | | 20,133 | | | (3) | | |
U.S. governmental agency securities | | 4,999 | | | (2) | | | 8,749 | | | (1) | | | 13,748 | | | (3) | | |
Municipal securities | | Municipal securities | | 1,998 | | | (2) | | | — | | | — | | | 1,998 | | | (2) | |
| | Total short-term AFS securities | Total short-term AFS securities | | $ | 58,867 | | | $ | (13) | | | $ | 8,749 | | | $ | (1) | | | $ | 67,616 | | | $ | (14) | | Total short-term AFS securities | | $ | 116,164 | | | $ | (114) | | | $ | — | | | $ | — | | | $ | 116,164 | | | $ | (114) | |
Long-term AFS securities | Long-term AFS securities | | | | | | | | | | | | | Long-term AFS securities | | | | | | | | | | | | |
Corporate debt securities | Corporate debt securities | | $ | 6,717 | | | $ | (5) | | | $ | 0 | | | $ | 0 | | | $ | 6,717 | | | $ | (5) | | Corporate debt securities | | $ | 224,022 | | | $ | (1,858) | | | $ | — | | | $ | — | | | $ | 224,022 | | | $ | (1,858) | |
| U.S. Treasury securities | | U.S. Treasury securities | | 119,146 | | | (549) | | | — | | | — | | | 119,146 | | | (549) | |
U.S. governmental agency securities | U.S. governmental agency securities | | 26,236 | | | (13) | | | 0 | | | 0 | | | 26,236 | | | (13) | | U.S. governmental agency securities | | 39,246 | | | (252) | | | — | | | — | | | 39,246 | | | (252) | |
Municipal securities | Municipal securities | | 4,984 | | | (10) | | | 0 | | | 0 | | | 4,984 | | | (10) | | Municipal securities | | 13,933 | | | (61) | | | — | | | — | | | 13,933 | | | (61) | |
Total long-term AFS securities | Total long-term AFS securities | | $ | 37,937 | | | $ | (28) | | | $ | 0 | | | $ | 0 | | | $ | 37,937 | | | $ | (28) | | Total long-term AFS securities | | $ | 396,347 | | | $ | (2,720) | | | $ | — | | | $ | — | | | $ | 396,347 | | | $ | (2,720) | |
We assess AFS securities on a quarterly basis or more often if a potential loss-triggering event occurs.
As of JuneMarch 27, 20212022, and December 27, 2020,26, 2021, 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 JuneMarch 27, 20212022, and December 27, 2020,26, 2021, we have recognized 0no losses or allowance for credit losses related to AFS securities.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
As of JuneMarch 27, 2021, and December 27, 2020,2022, our short-term and long-term marketable securities had remaining maturities of less than one month to 12 months and 13 months to 3632 months, respectively. See Note 8 for more information regarding the fair value of our marketable securities.
NOTE 5. BUSINESS COMBINATION
The Athletic Acquisition
The Company accounts for business combinations using the acquisition method of accounting. The purchase price is allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. The excess of the purchase price over the estimated fair value of the net assets acquired is recorded as goodwill. The results of businesses acquired in a business combination are included in the Company’s consolidated financial statements from the date of acquisition.
On February 1, 2022, the Company acquired The Athletic in an all-cash transaction. The consideration paid of approximately $550 million was funded from cash on hand and included $523.5 million which we determined to be the purchase price for assets acquired and liabilities assumed, and $26.7 million paid in connection with the acceleration of The Athletic stock options. The stock options acceleration is included in Acquisition-related costs in our Condensed Consolidated Statements of Operations as of March 27, 2022.
The purchase price allocation has been prepared on a preliminary basis. As additional information becomes available, the Company may revise the allocation to certain assets and liabilities, including tax estimates. The Company will finalize the acquisition accounting within the required measurement period of one year.
The following table summarizes the preliminary allocation of the purchase price (at fair value) to the assets acquired and liabilities assumed of The Athletic as of February 1, 2022 (the date of acquisition):
| | | | | | | | | | | | | | |
(In thousands) | | Preliminary Purchase Price Allocation | | Estimated Useful Life (in years) |
Total current assets | | $ | 18,495 | | | |
Property, plant and equipment | | 281 | | | 3- 5 |
Right of use asset (1) | | 2,612 | | | |
Trademark (2) | | 160,000 | | | 20 |
Existing subscriber base (2) | | 135,000 | | | 12 |
Developed technology (2) | | 35,000 | | | 5 |
Content archive (2) | | 2,000 | | | 2 |
Goodwill | | 249,792 | | | Indefinite |
Total current liabilities (3) | | (41,107) | | | |
Other liabilities — Other | | (3,491) | | | |
Deferred tax liability, net (4) | | (35,116) | | | |
| | | | |
Total purchase price | | $ | 523,466 | | | |
(1) Included in Miscellaneous assets in our Condensed Consolidated Balance Sheets.
(2) Included in Intangible assets, net in our Condensed Consolidated Balance Sheets.
(3) Includes Unexpired subscriptions revenue of $28.1 million.
(4) Included in Deferred income taxes in our Condensed Consolidated Balance Sheets.
Goodwill is primarily attributable to future subscribers expected to be acquired both organically and through synergies from adding The Athletic to the Company’s products as well as the acquired assembled workforce. Goodwill is not expected to be deductible for tax purposes. The fair value of trademarks is estimated using a relief from royalty valuation method, the fair
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 5. GOODWILL AND INTANGIBLESvalue of subscriber relationships is estimated using a multi-period excess earnings valuation method, and the fair value of developed technology and content archive is estimated using a replacement cost method.
The following unaudited pro forma summary presents consolidated information of the Company, including The Athletic, as if the business combination had occurred on December 27, 2021, the earliest period presented herein:
| | | | | | | | | | | | | | |
| | For the Quarters Ended |
(In thousands) | | March 27, 2022 | | March 28, 2021 |
Revenue | | $ | 544,572 | | | $ | 487,167 | |
Net income/(loss) | | 28,045 | | | (8,215) | |
The pro forma adjustments include (1) transaction costs and other one-time non-recurring costs which reduced expenses by $47.8 million for the quarter ended March 27, 2022 and increased expenses by $47.8 million for the quarter ended March 28, 2021, (2) recognition of additional amortization related to the intangible assets acquired (3) alignment of accounting policies (4) recognition of the estimated income tax impact of the pro forma adjustments. The pro forma does not reflect cost savings or operating synergies expected to result from the acquisition. These pro forma results are illustrative only and not indicative of the actual results of operations that would have been achieved nor are they indicative of future results of operations.
Goodwill and Intangibles
The changes in the carrying amount of goodwill as of JuneMarch 27, 2021,2022, and since December 27, 2020,26, 2021, were as follows:
| | | | | | | | |
(In thousands) | | Total Company |
Balance as of December 27, 2020 | | $ | 171,657 | |
Foreign currency translation | | (1,501) | |
Balance as of June 27, 2021 | | $ | 170,156 | |
| | | | | | | | | | | | | | | | | | | | |
(In thousands) | | The New York Times Group | | The Athletic | | Total |
Balance as of December 27, 2020 | | $ | 171,657 | | | $ | — | | | $ | 171,657 | |
Foreign currency translation | | (5,297) | | | 0 | | (5,297) | |
Balance as of December 26, 2021 | | 166,360 | | | — | | | 166,360 | |
Foreign currency translation | | (1,952) | | | — | | | (1,952) | |
Acquisition of The Athletic | | — | | | 249,792 | | | 249,792 | |
Balance as of March 27, 2022 | | $ | 164,408 | | | $ | 249,792 | | | $ | 414,200 | |
The foreign currency translation line item reflects changes in goodwill resulting from fluctuating exchange rates related to the consolidation of certain international subsidiaries.
As of March 27, 2022, the gross book value and accumulated amortization of acquired intangible assets from the acquisition of The Athletic were as follows: | | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Gross book value | | Accumulated amortization | | Net book value |
Trademark | | $ | 160,000 | | | $ | (1,333) | | | $ | 158,667 | |
Existing subscriber base | | 135,000 | | | (1,875) | | | 133,125 | |
Developed technology | | 35,000 | | | (1,167) | | | 33,833 | |
Content archive | | 2,000 | | | (167) | | | 1,833 | |
Total | | $ | 332,000 | | | $ | (4,542) | | | $ | 327,458 | |
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Amortization expense for intangible assets from the acquisition of The Athletic included in Depreciation and amortization in our Condensed Consolidated Statements of Operations was $4.5 million as of March 27, 2022. The estimated aggregate amortization expense for the remainder of 2022 and each of the following fiscal years ending December 31 is presented below:
| | | | | | | | |
(In thousands) | | |
Remainder of 2022 | | $ | 20,438 | |
2023 | | 27,500 | |
2024 | | 27,500 | |
2025 | | 27,500 | |
2026 | | 27,500 | |
Thereafter | | 197,020 | |
Total amortization expense | | $ | 327,458 | |
The aggregate carrying amount of intangible assets of $15.2$343.4 million, which includes an indefinite-lived intangible of $9.0 million, is included in MiscellaneousIntangible assets, net in our Condensed Consolidated Balance Sheets as of JuneMarch 27, 2021.2022.
NOTE 6. INVESTMENTS
Non-Marketable Equity Securities
Our non-marketable equity securities are investments in privately held companies/funds without readily determinable market values. Gains and losses on non-marketable securities revalued, sold or impaired are recognized in Interest income and other, net.in our Condensed Consolidated Statements of Operations.
As of JuneMarch 27, 2021,2022, and December 27, 2020,26, 2021, non-marketable equity securities included in Miscellaneous assets in our Condensed Consolidated Balance Sheets had a carrying value of $20.6$28.8 million and $20.9$27.9 million, respectively. During the first six months of 2020, we recorded a $10.1 million gain related to a non-marketable equity investment transaction. The gain is comprised of $2.5 million realized gain due to the partial sale of the investment and a $7.6 million unrealized gain due to the mark to market of the remaining investment, and is included in Interest income and other, net in our Condensed Consolidated Statements of Operations.
NOTE 7. OTHER
Capitalized Computer Software Costs
Amortization of capitalized computer software costs included in Depreciation and amortization in our Condensed Consolidated Statements of Operations were $2.4was $1.9 million and $3.9 million in the second quarters of 2021 and 2020, respectively, and $5.0 million and $7.7$2.6 million in the first six monthsquarters of 20212022 and 2020,2021, respectively.
Interest income and other, net
Interest income 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 | | For the Quarters Ended | |
(In thousands) | (In thousands) | | June 27, 2021 | | June 28, 2020 | | June 27, 2021 | | June 28, 2020 | (In thousands) | | March 27, 2022 | | March 28, 2021 | |
Interest income and other expense, net (1) | Interest income and other expense, net (1) | | $ | 2,053 | | | $ | 2,965 | | | $ | 3,743 | | | $ | 17,004 | | Interest income and other expense, net (1) | | $ | 1,222 | | | $ | 1,689 | | |
| Interest expense | Interest expense | | (180) | | | (179) | | | (359) | | | (364) | | Interest expense | | (147) | | | (178) | | |
| Total interest income and other, net | Total interest income and other, net | | $ | 1,873 | | | $ | 2,786 | | | $ | 3,384 | | | $ | 16,640 | | Total interest income and other, net | | $ | 1,075 | | | $ | 1,511 | | |
(1) The six months ended June 28, 2020 includes a $10.1 million gain related to a non-marketable equity investment transaction.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Restricted Cash
A reconciliation of cash, cash equivalents and restricted cash as of JuneMarch 27, 2021,2022, and December 27, 2020,26, 2021, from the Condensed Consolidated Balance Sheets to the Condensed Consolidated Statements of Cash Flows is as follows:
| (In thousands) | (In thousands) | | June 27, 2021 | | December 27, 2020 | (In thousands) | | March 27, 2022 | | December 26, 2021 |
Reconciliation of cash, cash equivalents and restricted cash | Reconciliation of cash, cash equivalents and restricted cash | | | | | Reconciliation of cash, cash equivalents and restricted cash | | | | |
Cash and cash equivalents | Cash and cash equivalents | | $ | 320,871 | | | $ | 286,079 | | Cash and cash equivalents | | $ | 169,171 | | | $ | 319,973 | |
Restricted cash included within other current assets | | 299 | | | 686 | | |
| Restricted cash included within miscellaneous assets | Restricted cash included within miscellaneous assets | | 14,331 | | | 15,199 | | Restricted cash included within miscellaneous assets | | 14,381 | | | 14,333 | |
Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows | Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows | | $ | 335,501 | | | $ | 301,964 | | Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows | | $ | 183,552 | | | $ | 334,306 | |
Substantially all of the amount included in restricted cash is set aside to collateralize workers’ compensation obligations.
Revolving Credit Facility
In September 2019, the Company entered into a $250.0 million five-year unsecured revolving credit facility (the “Credit Facility”). Certain of the Company’s domestic subsidiaries have guaranteed the Company’s obligations under the Credit Facility. Borrowings under the Credit Facility bear interest at specified rates based on our utilization and consolidated leverage ratio. The Credit Facility contains various customary affirmative and negative covenants. In addition, the Company is obligated to pay a quarterly unused commitment fee at an annual rate of 0.20%.
As of JuneMarch 27, 2021,2022, there were 0no outstanding borrowings under the Credit Facility and the Company was in compliance with the financial covenants contained in the documents governing the Credit Facility.
Severance Costs
We recognized 0no severance costs in the secondfirst quarter of 20212022 and $6.3 million in$0.4 severance costs in the secondfirst quarter of 2020, and $0.4 million and $6.7 million in the first six months of 2021, and 2020, respectively. These costs are recorded in General and administrative costs in our Condensed Consolidated Statements of Operations.
We had a severance liability of $2.4$1.9 million and $5.0$2.1 million included in Accrued expenses and other in our Condensed Consolidated Balance Sheets as of JuneMarch 27, 2021,2022, and December 27, 2020,26, 2021, respectively.
Acquisition-Related Costs
The Company incurred $34.7 million of acquisition-related costs during the quarter ended March 27, 2022. Acquisition-related costs primarily include expenses paid in connection with the acceleration of The Athletic stock options, and legal, accounting, financial advisory and integration planning expenses.
NOTE 8. FAIR VALUE MEASUREMENTS
Fair value is the price that would be received upon the sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. The transaction would be in the principal or most advantageous market for the asset or liability, based on assumptions that a market participant would use in pricing the asset or liability. The fair value hierarchy consists of three levels:
Level 1–quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date;
Level 2–inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
Level 3–unobservable inputs for the asset or liability.
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 JuneMarch 27, 2021,2022, and December 27, 2020:26, 2021:
| (In thousands) | (In thousands) | | June 27, 2021 | | December 27, 2020 | (In thousands) | | March 27, 2022 | | December 26, 2021 |
| Total | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 |
Assets: | Assets: | | | | | | | | | | | | | | | | | Assets: | | | | | | | | | | | | | | | | |
Short-term AFS securities (1) | Short-term AFS securities (1) | | Short-term AFS securities (1) | |
U.S. Treasury securities | | U.S. Treasury securities | | $ | 28,268 | | | $ | — | | | $ | 28,268 | | | $ | — | | | $ | 149,548 | | | $ | — | | | $ | 149,548 | | | $ | — | |
Corporate debt securities | Corporate debt securities | | $ | 110,899 | | | $ | 0 | | | $ | 110,899 | | | $ | 0 | | | $ | 130,301 | | | $ | 0 | | | $ | 130,301 | | | $ | 0 | | Corporate debt securities | | 22,536 | | | — | | | 22,536 | | | — | | | 107,334 | | | — | | | 107,334 | | | — | |
Certificates of deposit | Certificates of deposit | | 105,954 | | | 0 | | | 105,954 | | | 0 | | | 36,525 | | | 0 | | | 36,525 | | | 0 | | Certificates of deposit | | — | | | — | | | — | | | — | | | 55,551 | | | — | | | 55,551 | | | — | |
U.S. Treasury securities | | 75,528 | | | 0 | | | 75,528 | | | 0 | | | 79,503 | | | 0 | | | 79,503 | | | 0 | | |
Municipal securities | | Municipal securities | | 1,984 | | | — | | | 1,984 | | | — | | | 3,997 | | | — | | | 3,997 | | | — | |
U.S. governmental agency securities | U.S. governmental agency securities | | 26,153 | | | 0 | | | 26,153 | | | 0 | | | 25,171 | | | 0 | | | 25,171 | | | 0 | | U.S. governmental agency securities | | — | | | — | | | — | | | — | | | 3,500 | | | — | | | 3,500 | | | — | |
Commercial paper | Commercial paper | | 19,921 | | | 0 | | | 19,921 | | | 0 | | | 37,580 | | | 0 | | | 37,580 | | | 0 | | Commercial paper | | — | | | — | | | — | | | — | | | 21,145 | | | — | | | 21,145 | | | — | |
Total short-term AFS securities | Total short-term AFS securities | | $ | 338,455 | | | $ | 0 | | | $ | 338,455 | | | $ | 0 | | | $ | 309,080 | | | $ | 0 | | | $ | 309,080 | | | $ | 0 | | Total short-term AFS securities | | $ | 52,788 | | | $ | — | | | $ | 52,788 | | | $ | — | | | $ | 341,075 | | | $ | — | | | $ | 341,075 | | | $ | — | |
Long-term AFS securities (1) | Long-term AFS securities (1) | | | | | | | | | | | | | | | | | Long-term AFS securities (1) | | | | | | | | | | | | | | | | |
Corporate debt securities | Corporate debt securities | | $ | 162,369 | | | $ | 0 | | | $ | 162,369 | | | $ | 0 | | | $ | 135,934 | | | $ | 0 | | | $ | 135,934 | | | $ | 0 | | Corporate debt securities | | $ | 161,428 | | | $ | — | | | $ | 161,428 | | | $ | — | | | $ | 241,055 | | | $ | — | | | $ | 241,055 | | | $ | — | |
U.S. Treasury securities | U.S. Treasury securities | | 61,223 | | | 0 | | | 61,223 | | | 0 | | | 97,565 | | | 0 | | | 97,565 | | | 0 | | U.S. Treasury securities | | 54,684 | | | — | | | 54,684 | | | — | | | 119,146 | | | — | | | 119,146 | | | — | |
U.S. governmental agency securities | U.S. governmental agency securities | | 51,530 | | | 0 | | | 51,530 | | | 0 | | | 48,348 | | | 0 | | | 48,348 | | | 0 | | U.S. governmental agency securities | | 27,954 | | | — | | | 27,954 | | | — | | | 39,246 | | | — | | | 39,246 | | | — | |
Municipal securities | Municipal securities | | 12,143 | | | 0 | | | 12,143 | | | 0 | | | 4,984 | | | 0 | | | 4,984 | | | 0 | | Municipal securities | | 8,749 | | | — | | | 8,749 | | | — | | | 13,933 | | | — | | | 13,933 | | | — | |
Total long-term AFS securities | Total long-term AFS securities | | $ | 287,265 | | | $ | 0 | | | $ | 287,265 | | | $ | 0 | | | $ | 286,831 | | | $ | 0 | | | $ | 286,831 | | | $ | 0 | | Total long-term AFS securities | | $ | 252,815 | | | $ | — | | | $ | 252,815 | | | $ | — | | | $ | 413,380 | | | $ | — | | | $ | 413,380 | | | $ | — | |
Liabilities: | Liabilities: | | | | | | | | | | | | | | | | | Liabilities: | | | | | | | | | | | | | | | | |
Deferred compensation (2)(3) | Deferred compensation (2)(3) | | $ | 19,754 | | | $ | 19,754 | | | $ | 0 | | | $ | 0 | | | $ | 22,245 | | | $ | 22,245 | | | $ | 0 | | | $ | 0 | | Deferred compensation (2)(3) | | $ | 16,467 | | | $ | 16,467 | | | $ | — | | | $ | — | | | $ | 21,101 | | | $ | 21,101 | | | $ | — | | | $ | — | |
Contingent consideration | Contingent consideration | | $ | 7,450 | | | $ | 0 | | | $ | 0 | | | $ | 7,450 | | | $ | 8,431 | | | $ | 0 | | | $ | 0 | | | $ | 8,431 | | Contingent consideration | | $ | 5,858 | | | $ | — | | | $ | — | | | $ | 5,858 | | | $ | 7,450 | | | $ | — | | | $ | — | | | $ | 7,450 | |
(1) We classified these investments as Level 2 since the fair value is based on market observable inputs for investments with similar terms and maturities.
(2) The deferred compensation liability, included in Other liabilities—other in our Condensed Consolidated Balance Sheets, consists of deferrals under The New York Times Company Deferred Executive Compensation Plan (the “DEC”), which 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 the assets associated with the deferred compensation liability in life insurance products. Our investments in life insurance products are included in Miscellaneous assets in our Condensed Consolidated Balance Sheets, and were $51.1$50.8 million as of JuneMarch 27, 2021,2022, and $49.2$52.5 million as of December 27, 2020.26, 2021. 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.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Level 3 Liabilities
The contingent consideration liability is related to the 2020 acquisition of substantially all the assets and certain liabilities of Serial Productions, LLC (the “Serial acquisition”) and represents contingent payments based on the achievement of certain operational targets, as defined in the acquisition agreement, over the 5five years following the acquisition. The Company estimated the fair value using a probability-weighted discounted cash flow model. The estimate of the fair value of contingent consideration requires subjective assumptions to be made regarding probabilities assigned to operational targets and the discount rate. As the fair value is based on significant unobservable inputs, this is a Level 3 liability.
The following table presents changes in the contingent consideration balances for the quarterquarters ended March 27, 2022 and six months ended June 27,March 28, 2021:
| | | Quarter ended | | Six months ended | | For the Quarters Ended | |
(In thousands) | (In thousands) | | June 27, 2021 | | June 27, 2021 | (In thousands) | | March 27, 2022 | | March 28, 2021 | |
Balance at the beginning of the period (1) | Balance at the beginning of the period (1) | | $ | 7,728 | | | $ | 8,431 | | Balance at the beginning of the period (1) | | $ | 7,450 | | | $ | 8,431 | | |
| Payments | Payments | | (862) | | | (862) | | Payments | | (1,724) | | | — | | |
Fair value adjustments (2)(1) | Fair value adjustments (2)(1) | | 584 | | | (119) | | Fair value adjustments (2)(1) | | 132 | | | (703) | | |
Contingent consideration at the end of the period | Contingent consideration at the end of the period | | $ | 7,450 | | | $ | 7,450 | | Contingent consideration at the end of the period | | $ | 5,858 | | | $ | 7,728 | | |
(1) There were no transactions involving contingent consideration during the quarter and six months ended June 28, 2020. The contingent consideration reflected above relates to the Serial acquisition, which was completed during the third quarter of 2020.
(2) Fair value adjustments are included in General and administrative expenses in our Condensed Consolidated Statements of Operations.
The remaining contingent consideration balances as of JuneMarch 27, 2021,2022, and December 27, 2020,26, 2021, of $7.5$5.9 million and $8.4$7.5 million, respectively, are included in Accrued expenses and other, for the current portion of the liability, and Other non-current liabilities, for the long-term portion of the liability, in our Condensed Consolidated Balance Sheets.
NOTE 9. PENSION AND OTHER POSTRETIREMENT BENEFITS
Pension
Single-Employer Plans
We maintain The New York Times Companies Pension Plan, (the “Pension Plan”), a frozen single-employer defined benefit pension plan. The Company also jointly sponsors a defined benefit plan with The NewsGuild of New York known as the Guild-Times Adjustable Pension Plan (the “APP”) that continues to accrue active benefits.
We also have a foreign-based pension plan for certain employees (the “foreign plan”). The information for the foreign plan is combined with the information for U.S. non-qualified plans. The benefit obligation of the foreign plan is immaterial to our total benefit obligation.
The components of net periodic pension cost were as follows:
| | | For the Quarters Ended | | For the Quarters Ended |
| | | June 27, 2021 | | June 28, 2020 | | | March 27, 2022 | | March 28, 2021 |
(In thousands) | (In thousands) | | Qualified Plans | | Non- Qualified Plans | | All Plans | | Qualified Plans | | Non- Qualified Plans | | All Plans | (In thousands) | | Qualified Plans | | Non- Qualified Plans | | All Plans | | Qualified Plans | | Non- Qualified Plans | | All Plans |
Service cost | Service cost | | $ | 2,276 | | | $ | 0 | | | $ | 2,276 | | | $ | 2,607 | | | $ | 0 | | | $ | 2,607 | | Service cost | | $ | 2,882 | | | $ | — | | | $ | 2,882 | | | $ | 2,276 | | | $ | — | | | $ | 2,276 | |
Interest cost | Interest cost | | 7,629 | | | 1,088 | | | 8,717 | | | 11,742 | | | 1,649 | | | 13,391 | | Interest cost | | 8,837 | | | 1,284 | | | 10,121 | | | 7,629 | | | 1,088 | | | 8,717 | |
Expected return on plan assets | Expected return on plan assets | | (12,678) | | | 0 | | | (12,678) | | | (17,745) | | | 0 | | | (17,745) | | Expected return on plan assets | | (13,807) | | | — | | | (13,807) | | | (12,677) | | | — | | | (12,677) | |
Amortization of actuarial loss | Amortization of actuarial loss | | 5,057 | | | 1,822 | | | 6,879 | | | 5,655 | | | 1,522 | | | 7,177 | | Amortization of actuarial loss | | 3,266 | | | 1,643 | | | 4,909 | | | 5,055 | | | 1,821 | | | 6,876 | |
Amortization of prior service credit | Amortization of prior service credit | | (486) | | | 0 | | | (486) | | | (486) | | | 0 | | | (486) | | Amortization of prior service credit | | (486) | | | — | | | (486) | | | (486) | | | — | | | (486) | |
| Net periodic pension cost (1) | Net periodic pension cost (1) | | $ | 1,798 | | | $ | 2,910 | | | $ | 4,708 | | | $ | 1,773 | | | $ | 3,171 | | | $ | 4,944 | | Net periodic pension cost (1) | | $ | 692 | | | $ | 2,927 | | | $ | 3,619 | | | $ | 1,797 | | | $ | 2,909 | | | $ | 4,706 | |
(1) The service cost component of net periodic pension cost is recognized in Total operating costs, while the other components are included in Other components of net periodic benefit costs in our Condensed Consolidated Statements of Operations, below Operating profit.
During the first quarters of 2022 and 2021, we made pension contributions of $2.3 million and $1.5 million, respectively, to the APP. We expect to make contractual contributions in 2022 of approximately $10 million, which more than satisfy minimum funding requirements.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Six Months Ended |
| | June 27, 2021 | | June 28, 2020 |
(In thousands) | | Qualified Plans | | Non- Qualified Plans | | All Plans | | Qualified Plans | | Non- Qualified Plans | | All Plans |
Service cost | | $ | 4,552 | | | $ | 0 | | | $ | 4,552 | | | $ | 5,214 | | | $ | 0 | | | $ | 5,214 | |
Interest cost | | 15,258 | | | 2,176 | | | 17,434 | | | 23,484 | | | 3,297 | | | 26,781 | |
Expected return on plan assets | | (25,355) | | | 0 | | | (25,355) | | | (35,481) | | | 0 | | | (35,481) | |
Amortization of actuarial loss | | 10,113 | | | 3,642 | | | 13,755 | | | 11,310 | | | 3,043 | | | 14,353 | |
Amortization of prior service credit | | (972) | | | 0 | | | (972) | | | (972) | | | 0 | | | (972) | |
| | | | | | | | | | | | |
Net periodic pension cost (1) | | $ | 3,596 | | | $ | 5,818 | | | $ | 9,414 | | | $ | 3,555 | | | $ | 6,340 | | | $ | 9,895 | |
(1) The service cost component of net periodic pension cost is recognized in Total operating costs, while the other components are included in Other components of net periodic benefit costs in our Condensed Consolidated Statements of Operations, below Operating profit.
During the first six months of 2021 and 2020, we made pension contributions of $4.2 million and $4.6 million, respectively, to the APP. We expect contributions in 2021 to total approximately $9 million to satisfy minimum funding requirements.
Other Postretirement Benefits
The components of net periodic postretirement benefit cost/(income) were as follows:
| | | For the Quarters Ended | | For the Six Months Ended | | For the Quarters Ended | |
(In thousands) | (In thousands) | | June 27, 2021 | | June 28, 2020 | | June 27, 2021 | | June 28, 2020 | (In thousands) | | March 27, 2022 | | March 28, 2021 | |
Service cost | Service cost | | $ | 13 | | | $ | 7 | | | $ | 26 | | | $ | 14 | | Service cost | | $ | 12 | | | $ | 13 | | |
Interest cost | Interest cost | | 141 | | | 257 | | | 282 | | | 513 | | Interest cost | | 183 | | | 141 | | |
Amortization of actuarial loss | Amortization of actuarial loss | | 852 | | | 763 | | | 1,704 | | | 1,526 | | Amortization of actuarial loss | | 823 | | | 852 | | |
Amortization of prior service credit | Amortization of prior service credit | | (836) | | | (1,223) | | | (1,672) | | | (2,279) | | Amortization of prior service credit | | (236) | | | (836) | | |
Net periodic postretirement benefit cost/(income) (1) | | $ | 170 | | | $ | (196) | | | $ | 340 | | | $ | (226) | | |
Net periodic postretirement benefit cost (1) | | Net periodic postretirement benefit cost (1) | | $ | 782 | | | $ | 170 | | |
(1) The service cost component of net periodic postretirement benefit cost/(income) is recognized in Total operating costs, while the other components are included in Other components of net periodic benefit costs in our Condensed Consolidated Statements of Operations, below Operating profit.
NOTE 10. INCOME TAXES
The Company had income tax expense of $18.2$1.1 million and $27.7$9.5 million in the second quarterfirst quarters of 2022 and first six months of 2021, respectively. The Company had income tax expense of $5.8 million and $11.8 million in the second quarter and first six months of 2020, respectively. The Company’s effective tax rates from continuing operations were 25.1% and 22.5% for the second quarter and first six months of 2021, respectively. The Company’s effective tax rates from continuing operations were 19.6%19.1% and 17.3%18.7% for the second quarterfirst quarters of 2022 and first six months of 2020,2021, respectively. The increasedecrease in income tax expense and increase in the second quarter and first six months of 2021 is primarily due to higher income from continuing operations in those periods. The Company received aeffective tax benefit in the second quarter of 2020 from a reduction in the Company’s reserve for uncertain tax positions, andrate in the first quarter of both2022 were primarily due to lower income from continuing operations resulting from costs related to The Athletic acquisition. Excluding the tax benefit resulting from the special item related to the acquisition of The Athletic, tax expense in the first quarter of 2022 exceeded tax expense in the first quarter of 2021 and 2020primarily due to a lower benefit in the first quarter of 2022 from stock price appreciation on stock-based awards that settled in the quarter, whichquarters.
Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminates the option to deduct research and development expenditures immediately in the caseyear incurred and instead requires taxpayers to capitalize and amortize such expenditures over five years. If Congress does not repeal or defer the effective date of 2020, resulted in lower than statutorythis provision, we expect our 2022 cash tax rates in the second quarterpayments will increase significantly as compared to 2021. We would also expect significant increases to our deferred tax assets as we begin to capitalize our research and first six months of 2020.development expenditures.
NOTE 11. EARNINGS PER SHARE
We compute earnings per share using abased upon the lower of the two-class method whichor the treasury stock method. The two-class method is an earnings allocation method used when a company’s capital structure includes either two or more classes of common stock or common stock and participating securities. This method determines earnings 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,
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 0.30.4 million and 0.5 million in the second quarterfirst quarters of 2022 and first six months of 2021, respectively, and 1.2 million in each of the second quarter and first six months of 2020,respectively. In 2022, dilution resulted primarily from the dilutive effect of certain restricted stock options,units, performance awards and stock options. In 2021, dilution resulted primarily from the dilutive effect of certain performance awards, restricted stock units.units and stock options.
Securities that could potentially be dilutive are excluded from the computation of diluted earnings per share when a loss from continuing operations exists or when the exercise price exceeds the market value of our Class A Common Stock because their inclusion would result in an anti-dilutive effect on per share amounts.
There were approximately 0.2 million and 0.1 million restricted stock units excluded from the computation of diluted earnings per share in the first six monthsquarters of 20212022 and 2020,2021, respectively, because they were anti-dilutive, and 0anti-dilutive. There were no anti-dilutive stock options or stock-settled long-term performance awards excluded in the same periods. There were approximately 0.3 million restricted stock units excluded from the computation of diluted earnings per share in the second quarterfirst quarters of 2021, because they were anti-dilutive,2022 and 0 anti-dilutive stock options or stock-settled long-term performance awards excluded in the same period.2021.
NOTE 12. SUPPLEMENTAL STOCKHOLDERS’ EQUITY INFORMATION
In 2015,February 2022, the Board of Directors authorized up to $101.1approved a $150 million of repurchases of shares of the Company’s Class A Common Stock. As of June 27, 2021, repurchases under thisstock repurchase program. The authorization totaled $84.9 million (excluding commissions) and $16.2 million remained. Our Board of Directors has authorized us to purchaseprovides that Class A shares may be purchased from time to time subject toas market conditions andwarrant, through open market purchases,
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
privately negotiated transactions or other factors.means, including Rule 10b5-1 trading plans. There is no expiration date with respect to this authorization. There have been no purchases
As of March 27, 2022, repurchases under this authorization since 2016.totaled approximately $29.0 million (excluding commissions) and approximately $121.0 million remained.
The following table summarizes the changes in AOCI by component as of JuneMarch 27, 2021:2022:
| (In thousands) | (In thousands) | | Foreign Currency Translation Adjustments | | Funded Status of Benefit Plans | | Net Unrealized Gain on Available-For-Sale Securities | | Total Accumulated Other Comprehensive Loss | (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 27, 2020 | | $ | 8,386 | | | $ | (421,698) | | | $ | 3,131 | | | $ | (410,181) | | |
Other comprehensive income before reclassifications, before tax | | (1,767) | | | 0 | | | (1,846) | | | (3,613) | | |
Balance as of December 26, 2021 | | Balance as of December 26, 2021 | | $ | 3,754 | | | $ | (385,680) | | | $ | (1,276) | | | $ | (383,202) | |
Other comprehensive loss before reclassifications, before tax | | Other comprehensive loss before reclassifications, before tax | | (2,209) | | | — | | | (7,916) | | | (10,125) | |
Amounts reclassified from accumulated other comprehensive loss, before tax | Amounts reclassified from accumulated other comprehensive loss, before tax | | 0 | | | 12,815 | | | 0 | | | 12,815 | | Amounts reclassified from accumulated other comprehensive loss, before tax | | — | | | 5,010 | | | — | | | 5,010 | |
Income tax (benefit)/expense | Income tax (benefit)/expense | | (473) | | | 3,432 | | | (494) | | | 2,465 | | Income tax (benefit)/expense | | (601) | | | 1,344 | | | (2,123) | | | (1,380) | |
Net current-period other comprehensive (loss)/ income, net of tax | Net current-period other comprehensive (loss)/ income, net of tax | | (1,294) | | | 9,383 | | | (1,352) | | | 6,737 | | Net current-period other comprehensive (loss)/ income, net of tax | | (1,608) | | | 3,666 | | | (5,793) | | | (3,735) | |
| Balance as of June 27, 2021 | | $ | 7,092 | | | $ | (412,315) | | | $ | 1,779 | | | $ | (403,444) | | |
Balance as of March 27, 2022 | | Balance as of March 27, 2022 | | $ | 2,146 | | | $ | (382,014) | | | $ | (7,069) | | | $ | (386,937) | |
The following table summarizes the reclassifications from AOCI for the six monthsquarter ended JuneMarch 27, 2021:2022:
| | | | | | | | | | | | | | |
| | | | |
(In thousands)
Detail about accumulated other comprehensive loss components | | Amounts reclassified from accumulated other comprehensive loss | | Affects line item in the statement where net income is presented |
Funded status of benefit plans: | | | | |
Amortization of prior service credit(1) | | $ | (2,644)(722) | | | Other components of net periodic benefit costs |
Amortization of actuarial loss(1) | | 15,4595,732 | | | Other components of net periodic benefit costs |
| | | | |
Total reclassification, before tax(2) | | 12,8155,010 | | | |
Income tax expense | | 3,4321,344 | | | Income tax expense |
Total reclassification, net of tax | | $ | 9,3833,666 | | | |
(1) These AOCI components are included in the computation of net periodic benefit cost for pension and other postretirement benefits. See Note 9 for more information.
(2) There were no reclassifications relating to noncontrolling interest for the six monthsquarter ended JuneMarch 27, 2021.2022.
Total stock-based compensation expense included in the Condensed Consolidated Statements of Operations is as follows:
| | | | | | | | | | | | | | |
| | For the Quarters Ended |
(In thousands) | | March 27, 2022 | | March 28, 2021 |
Cost of revenue | | $ | 1,589 | | | $ | 1,129 | |
Sales and marketing | | 365 | | | 347 | |
Product development | | 1,751 | | | 677 | |
General and administrative | | 3,349 | | | 2,032 | |
Total stock-based compensation expense | | $ | 7,054 | | | $ | 4,185 | |
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 13. SEGMENT INFORMATION
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)Officer (who is the Company’s Chief Operating Decision Maker) to make decisions about resources to be allocated to the segment and assess its performance; and (iii) it has available discrete financial information.
On February 1, 2022, the Company acquired The Company has determined that it has 1 reportable segment. Therefore, all required segment information can be foundAthletic (see Note 5). For the first quarter of 2022, the results of The Athletic have been included in the Company's Condensed Consolidated Financial Statements.Statements beginning February 1, 2022. The Athletic is a separate reportable segment of the Company. As a result, beginning in the first quarter of 2022, we have 2 reportable segments: The New York Times Group and The Athletic. These segments are evaluated regularly by the Company’s Chief Operating Decision Maker in assessing performance and allocating resources. Management uses adjusted operating profit by segment in assessing performance and allocating resources. The Company includes in its presentation revenues and adjusted operating costs to arrive at adjusted operating profit by segment. Adjusted operating costs are defined as operating costs before depreciation and amortization, severance and multiemployer pension plan withdrawal costs. Adjusted operating profit is defined as operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items.
The following tables present segment information:
| | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | |
(In thousands) | | March 27, 2022 | | March 28, 2021 | | % Change |
Revenues | | | | | | |
The New York Times Group | | $ | 525,268 | | | $ | 473,045 | | | 11.0 | % |
The Athletic | | 12,157 | | | — | | | * |
Total revenues | | $ | 537,425 | | | $ | 473,045 | | | 13.6 | % |
Adjusted operating costs | | | | | | |
The New York Times Group | | $ | 457,543 | | | $ | 404,938 | | | 13.0 | % |
The Athletic | | 18,979 | | | — | | | * |
Total adjusted operating costs | | $ | 476,522 | | | $ | 404,938 | | | 17.7 | % |
Adjusted operating profit | | | | | | |
The New York Times Group | | $ | 67,725 | | | $ | 68,107 | | | (0.6) | % |
The Athletic | | (6,822) | | | — | | | * |
Total adjusted operating profit | | $ | 60,903 | | | $ | 68,107 | | | (10.6) | % |
* Represents a change equal to or in excess of 100% or not meaningful. |
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| | | | | | | | | | | | | | | | | | | | |
Revenues detail by segment | | | | | | |
| | For the Quarters Ended | | |
(In thousands) | | March 27, 2022 | | March 28, 2021 | | % Change |
The New York Times Group | | | | | | |
Subscription | | $ | 361,602 | | | $ | 329,084 | | | 9.9 | % |
Advertising | | 114,490 | | | 97,116 | | | 17.9 | % |
Other | | 49,176 | | | 46,845 | | | 5.0 | % |
Total | | $ | 525,268 | | | $ | 473,045 | | | 11.0 | % |
The Athletic | | | | | | |
Subscription | | $ | 10,377 | | | $ | — | | | * |
Advertising | | 1,780 | | | — | | | * |
| | | | | | |
Total | | $ | 12,157 | | | $ | — | | | * |
The New York Times Company | | | | | | |
Subscription | | $ | 371,979 | | | $ | 329,084 | | | 13.0 | % |
Advertising | | 116,270 | | | 97,116 | | | 19.7 | % |
Other | | 49,176 | | | 46,845 | | | 5.0 | % |
Total | | $ | 537,425 | | | $ | 473,045 | | | 13.6 | % |
* Represents a change equal to or in excess of 100% or not meaningful. |
| | | | | | | | | | | | | | | | | | | | |
Adjusted operating costs (operating costs before depreciation and amortization, severance and multiemployer pension plan withdrawal costs) detail by segment |
| | For the Quarters Ended | | |
(In thousands) | | March 27, 2022 | | March 28, 2021 | | % Change |
The New York Times Group | | | | | | |
Cost of revenue (excluding depreciation and amortization) | | $ | 269,476 | | | $ | 250,997 | | | 7.4 | % |
Sales and marketing | | 74,460 | | | 60,153 | | | 23.8 | % |
Product development | | 45,179 | | | 38,943 | | | 16.0 | % |
Adjusted general and administrative (1) | | 68,428 | | | 54,845 | | | 24.8 | % |
Total | | $ | 457,543 | | | $ | 404,938 | | | 13.0 | % |
The Athletic | | | | | | |
Cost of revenue (excluding depreciation and amortization) | | $ | 11,889 | | | $ | — | | | * |
Sales and marketing | | 3,128 | | | — | | | * |
Product development | | 2,254 | | | — | | | * |
Adjusted general and administrative | | 1,708 | | | — | | | * |
Total | | $ | 18,979 | | | $ | — | | | * |
The New York Times Company | | | | | | |
Cost of revenue (excluding depreciation and amortization) | | $ | 281,365 | | | $ | 250,997 | | | 12.1 | % |
Sales and marketing | | 77,588 | | | 60,153 | | | 29.0 | % |
Product development | | 47,433 | | | 38,943 | | | 21.8 | % |
Adjusted general and administrative (1) | | 70,136 | | | 54,845 | | | 27.9 | % |
Total | | $ | 476,522 | | | $ | 404,938 | | | 17.7 | % |
(1) Excludes multiemployer pension withdrawal costs of $1.2 million for the quarter ended March 27, 2022 and severance and multiemployer pension withdrawal costs of $0.4 million and $1.3 million, respectively, for the quarter ended March 28,2021. |
* Represents a change equal to or in excess of 100% or not meaningful. |
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of operating costs before depreciation and amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs) |
| | | | | | | | | | |
| | For the Quarters Ended | | | | | | |
(In thousands) | | March 27, 2022 | | March 28, 2021 | | % Change | | | | |
Operating costs | | $ | 496,429 | | | $ | 421,387 | | | 17.8 | % | | | | |
Less: | | | | | | | | | | |
Depreciation and amortization | | 18,686 | | | 14,717 | | | 27.0 | % | | | | |
Severance | | — | | | 406 | | | * | | | | |
Multiemployer pension plan withdrawal costs | | 1,221 | | | 1,326 | | | (7.9) | % | | | | |
Adjusted operating costs | | $ | 476,522 | | | $ | 404,938 | | | 17.7 | % | | | | |
* Represents a change equal to or in excess of 100% or not meaningful. |
| | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit) |
| | | | | | | | | | |
| | For the Quarters Ended | | | | | | |
(In thousands) | | March 27, 2022 | | March 28, 2021 | | % Change | | | | |
Operating profit | | $ | 6,284 | | | $ | 51,658 | | | (87.8) | % | | | | |
Add: | | | | | | | | | | |
Depreciation and amortization | | 18,686 | | | 14,717 | | | 27.0 | % | | | | |
Severance | | — | | | 406 | | | * | | | | |
Multiemployer pension plan withdrawal costs | | 1,221 | | | 1,326 | | | (7.9) | % | | | | |
Special items: | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Acquisition-related costs | | 34,712 | | | — | | | * | | | | |
Adjusted operating profit | | $ | 60,903 | | | $ | 68,107 | | | (10.6) | % | | | | |
* Represents a change equal to or in excess of 100% or not meaningful. |
NOTE 14. CONTINGENT LIABILITIES
Legal Proceedings
We are involved in various legal actions incidental to our business that are now pending against us. These actions generally have damage claims that are greatly in excess of the payments, if any, that we would be required to pay if we lost or settled the cases. Although the Company cannot predict the outcome of these matters, it is possible that an unfavorable outcome in one or more matters could be material to the Company’s consolidated results of operations or cash flows for an individual reporting period. However, based on currently available information, management does not believe that the ultimate resolution of these matters, individually or in the aggregate, is likely to have a material effect on the Company’s financial position.
NOTE 15. SUBSEQUENT EVENTS
On June 30, 2021,December 9, 2020, we entered into an agreement to lease and subsequently sell approximately 4 acres of land at our Board of Directors approved a quarterly dividend of $0.07 per shareprinting and distribution facility in College Point, N.Y., subject to certain conditions. The lease commenced on our Class A and Class B common stock that was paid on July 22, 2021, to all stockholders of record asApril 11, 2022. At the time of the closelease expiration in February 2025, we will sell the parcel to the lessee for approximately $36 million. The transaction is accounted for as a sales-type lease and as a result, we recognized a gain of business on July 12, 2021.
approximately $34 million (net of commissions) at the time of lease commencement.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
EXECUTIVE OVERVIEW
We are a global media organization that includes digital and print products and related businesses. WeOn February 1, 2022, we acquired The Athletic Media Company (“The Athletic”), a global digital subscription-based sports media business that provides national and local coverage of more than 200 clubs and teams in the U.S. and around the world. For the first quarter of 2022, the results of The Athletic have onebeen included in our Condensed Consolidated Financial Statements beginning February 1, 2022. The Athletic is a separate reportable segment with businesses that include our core news productof the Company. As a result, beginning in the first quarter of 2022, we have two reportable segments: The New York Times Group and other interest-specific products, and related content and services.The Athletic.
We generate revenues principally from subscriptions and advertising. In addition, we generate other revenues primarily consisting of revenues from licensing, Wirecutter affiliate referrals, commercial printing, the leasing of floors in our New York headquarters building located at 620 Eighth Avenue, New York, New York (the “Company Headquarters”), commercial printing, retail commerce, television and film, our student subscription sponsorship program, and our live events business.business, and television and film.
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“Non-GAAP Financial Measurements.Measures.”
Financial Highlights
•On February 1, 2022, we acquired The Athletic and have included its results in our Condensed Consolidated Financial Statements beginning February 1, 2022.
•Diluted earnings per share from continuing operations were $0.32$0.03 and $0.14$0.24 for the secondfirst quarters of 20212022 and 2020,2021, respectively. Diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and special items discussed below under “ Non-GAAP Financial Measures” (or “adjusted diluted earnings per share,” a non-GAAP measure) were $0.36$0.19 and $0.18$0.26 for the secondfirst quarters of 20212022 and 2020,2021, respectively.
•The Company had an operatingOperating profit of $73.3decreased 87.8% to $6.3 million in the secondfirst quarter of 2021,2022, compared with $28.8$51.7 million in the secondfirst quarter of 2020.2021. Operating profit before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items discussed below under “Non-GAAP Financial Measures” (or “adjusted operating profit,” a non-GAAP measure) increaseddecreased 10.6% to $92.9$60.9 million in the secondfirst quarter of 2021 from $52.12022 compared with $68.1 million in the secondfirst quarter of 2020.2021.
•Total revenues increased 23.5%13.6% to $498.5$537.4 million in the secondfirst quarter of 20212022 from $403.8$473.0 million in the secondfirst quarter of 2020.2021.
•SubscriptionTotal subscription revenues increased 15.7%13.0% to $372.0 million in the secondfirst quarter of 2021 compared with2022 from $329.1 million in the same prior-year period.first quarter of 2021. Paid digital-only subscriptionssubscribers totaled approximately 7,133,0008,328,000 with 9,620,000 paid digital-only subscriptions at the end of the secondfirst quarter of 2021,2022, a net increase of 142,000387,000 digital-only subscribers and 382,000 digital-only subscriptions compared with the end of the fourth quarter of 2021 and a net increase of 1,354,000 digital-only subscriptions compared with the end of the first quarter of 2021. Of the 142,000 total net additions, 77,000 came from the Company’s digital news product, while 65,000 came from the Company’s Cooking, Games and Audm products. We expect total net subscription additions in 2021 to be in the range of the number of total net subscription additions in 2019, though it remains difficult to predict with precision.
•Total advertising revenues increased 66.4%19.7% to $116.3 in the secondfirst quarter of 2021 compared with2022 from $97.1 in the same prior-year period,first quarter of 2021, due to an increase of 79.6%12.6% in digital advertising revenues and an increase of 48.0%30.9% in print advertising revenues.
•Operating costs increased 12.4%17.8% to $496.4 million in the first quarter of 2022 from $421.4 million in the secondfirst quarter of 2021 from $374.9 million compared with the second quarter of 2020.2021. Operating costs before depreciation, amortization, severance and multiemployer pension plan withdrawal costs (or “adjusted operating costs,” a non-GAAP measure) increased 15.4%17.7% in the secondfirst quarter of 20212022 to $405.6$476.5 million from $351.6$404.9 million in the secondfirst quarter of 2020.2021.
•Operating costs that we refer to as “technology costs,” consisting of product development costs as well as components of costs of revenues and general and administrative costs as described below, increased 22.0% to $87.9 million compared with $72.1 million in the first quarter of 2021.
Impact of Covid-19 Pandemic
Given the impact of theThe global Covid-19 pandemic, on our business in 2020, we believe that certain comparisons of our operating results in 2021efforts to 2019 provide useful context for our 2021 results. Wecontain it and the resulting disruptions continue to have included supplemental tables comparing the operating results in 2021 to 2020widespread, rapidly evolving, and to 2019 (see “Supplemental Financial Information”), as well as discussion comparing the second quarter and first six months in 2021 to 2020 and 2019.
The Covid-19 pandemic impacted our business in various ways, includingunpredictable impacts on both our operating revenuesglobal society, economies, financial markets and operating expenses. Beginning in the first quarter of 2020, we experienced significant growth in the number of subscriptions to our digital news and other products, which we believe was attributable in part to an increase in traffic given the news
environment and as a result of the pandemic. More recently, we have seen these pandemic-related trends subside and we expect total net subscription additions in 2021 to be in the range of the number of total net subscription additions in 2019, though it remains difficult to predict with precision. Revenues from the single-copy and bulk sales of our print newspaper (which include our international edition and collectively represent less than 5% of our total subscription revenues) were adversely affected as a result of widespread business closures, increased remote working and reductions in travel. The worldwide economic slowdown caused by the pandemic also led to a significant declinepractices. See “Item 1A — Risk Factors” in our advertising revenues in 2020 as advertisers reduced their spending. More recently, we experienced increasing demandAnnual Report on Form 10-K for advertising with the recovery of the broader market. Our live events business was and continues to be adversely affected by the impacts of the Covid-19 pandemic.
In 2020 we incurred less media expense as we decreased marketing spend due to a heightened news cycle, lower print production and distribution costs due to less demandyear ended December 26, 2021, for print copies of the newspaper, lower costs related to our advertising business as a result of lower variable expenses in connection with lower advertising revenues and lower travel and entertainment costs as a result of the Covid-19 pandemic. More recently we have begun increasing some of our spending in these areas. We also incurred some additional expenses in response to the pandemic, including certain enhanced employee benefits; however these expenses have not yet been significant. We expect to incur additional costs as we prepare for our employees to return to our headquarters building and other offices, and may incur significant additional costs as circumstances evolve, including in connection with potential operational changes.
At this time, themore information. The full impact that the Covid-19 pandemic will have on our business, operations and financial results is uncertain. The extent to which the pandemic will continue to impact usuncertain and will depend on numerous evolving factors and future developments, including the scope and duration of the pandemic (including the extent of a resurgence);variants and resurgences; the effect of ongoing vaccination and mitigation efforts; the impact of the pandemic on economic conditions and the companies with which we do business; governmental, business, and other actions;including our advertisers; the status of travel restrictions; and changes in consumer behavior in response to the pandemic, among many other factors. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state, local or foreign authorities, or that we determine are appropriate. Please see “Item 1A — Risk Factors”
As a result of the global Covid-19 pandemic, the vast majority of our employees have worked remotely since March 2020. As we transition to hybrid work with employees working both from the office and remotely, we have invested and expect to continue to invest in our Annual Report on Form 10-K for the year ended December 27, 2020, for more information.Company Headquarters and other offices as well as in technological improvements.
RESULTS OF OPERATIONS
The following table presents our consolidated financial results:
| | | | For the Quarters Ended | | For the Six Months Ended | | | | For the Quarters Ended | | |
(In thousands) | (In thousands) | | June 27, 2021 | | June 28, 2020 | | % Change | | June 27, 2021 | | June 28, 2020 | | % Change | (In thousands) | | March 27, 2022 | | March 28, 2021 | | % Change | |
Revenues | Revenues | | | | | | | | | | | | | Revenues | | | | | | | |
Subscription | Subscription | | $ | 339,217 | | | $ | 293,189 | | | 15.7 | % | | $ | 668,301 | | | $ | 578,623 | | | 15.5 | % | Subscription | | $ | 371,979 | | | $ | 329,084 | | | 13.0 | % | |
Advertising | Advertising | | 112,774 | | | 67,760 | | | 66.4 | % | | 209,890 | | | 173,897 | | | 20.7 | % | Advertising | | 116,270 | | | 97,116 | | | 19.7 | % | |
Other | Other | | 46,506 | | | 42,801 | | | 8.7 | % | | 93,351 | | | 94,866 | | | (1.6) | % | Other | | 49,176 | | | 46,845 | | | 5.0 | % | |
Total revenues | Total revenues | | 498,497 | | | 403,750 | | | 23.5 | % | | 971,542 | | | 847,386 | | | 14.7 | % | Total revenues | | 537,425 | | | 473,045 | | | 13.6 | % | |
Operating costs | Operating costs | | Operating costs | | |
Cost of revenue (excluding depreciation and amortization) | Cost of revenue (excluding depreciation and amortization) | | 251,358 | | | 229,913 | | | 9.3 | % | | 502,355 | | | 473,397 | | | 6.1 | % | Cost of revenue (excluding depreciation and amortization) | | 281,365 | | | 250,997 | | | 12.1 | % | |
Sales and marketing | Sales and marketing | | 53,555 | | | 39,605 | | 35.2 | % | | 113,708 | | 113,389 | | | 0.3 | % | Sales and marketing | | 77,588 | | | 60,153 | | | 29.0 | % | |
Product development | Product development | | 39,699 | | | 30,983 | | | 28.1 | % | | 78,642 | | | 61,985 | | | 26.9 | % | Product development | | 47,433 | | | 38,943 | | | 21.8 | % | |
General and administrative | General and administrative | | 62,283 | | | 58,812 | | | 5.9 | % | | 118,860 | | | 111,673 | | | 6.4 | % | General and administrative | | 71,357 | | | 56,577 | | | 26.1 | % | |
Depreciation and amortization | Depreciation and amortization | | 14,486 | | | 15,631 | | | (7.3) | % | | 29,203 | | | 30,816 | | | (5.2) | % | Depreciation and amortization | | 18,686 | | | 14,717 | | | 27.0 | % | |
Total operating costs | Total operating costs | | 421,381 | | | 374,944 | | | 12.4 | % | | 842,768 | | | 791,260 | | | 6.5 | % | Total operating costs | | 496,429 | | | 421,387 | | | 17.8 | % | |
Acquisition-related costs | | Acquisition-related costs | | 34,712 | | | — | | | * | |
| Lease termination charge | | 3,831 | | | — | | | * | | 3,831 | | | — | | | * | |
Operating profit | Operating profit | | 73,285 | | | 28,806 | | | * | | 124,943 | | | 56,126 | | | * | Operating profit | | 6,284 | | | 51,658 | | | (87.8) | % | |
Other components of net periodic benefit costs | Other components of net periodic benefit costs | | 2,598 | | | 2,149 | | | 20.9 | % | | 5,197 | | | 4,463 | | | 16.4 | % | Other components of net periodic benefit costs | | 1,522 | | | 2,599 | | | (41.4) | % | |
| Interest income and other, net | Interest income and other, net | | 1,873 | | | 2,786 | | | (32.8) | % | | 3,384 | | | 16,640 | | | (79.7) | % | Interest income and other, net | | 1,075 | | | 1,511 | | | (28.9) | % | |
Income from continuing operations before income taxes | Income from continuing operations before income taxes | | 72,560 | | | 29,443 | | | * | | 123,130 | | | 68,303 | | | 80.3 | % | Income from continuing operations before income taxes | | 5,837 | | | 50,570 | | | (88.5) | % | |
Income tax expense | Income tax expense | | 18,243 | | | 5,781 | | | * | | 27,704 | | | 11,787 | | | * | Income tax expense | | 1,112 | | | 9,461 | | | (88.2) | % | |
| Net income | Net income | | 54,317 | | | 23,662 | | | * | | 95,426 | | | 56,516 | | | 68.8 | % | Net income | | 4,725 | | | 41,109 | | | (88.5) | % | |
| Net income attributable to The New York Times Company common stockholders | Net income attributable to The New York Times Company common stockholders | | $ | 54,317 | | | $ | 23,662 | | | * | | $ | 95,426 | | | $ | 56,516 | | | 68.8 | % | Net income attributable to The New York Times Company common stockholders | | $ | 4,725 | | | $ | 41,109 | | | (88.5) | % | |
* Represents a change equal to or in excess of 100% or not meaningful.
SUPPLEMENTAL FINANCIAL INFORMATION
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Second Quarter |
| | 2021 | | 2020 | | 2021 vs 2020 % Change | | 2019 | | 2021 vs 2019 % Change |
| | | | | | | | | | |
Revenues | | | | | | | | | | |
Digital | | $ | 190,145 | | | $ | 145,984 | | | 30.3 | % | | $ | 112,635 | | | 68.8 | % |
Print | | 149,072 | | | 147,205 | | | 1.3 | % | | 157,821 | | | (5.5) | % |
Subscription revenues | | 339,217 | | | 293,189 | | | 15.7 | % | | 270,456 | | | 25.4 | % |
Digital | | 70,995 | | | 39,531 | | | 79.6 | % | | 58,026 | | | 22.4 | % |
Print | | 41,779 | | | 28,229 | | | 48.0 | % | | 62,735 | | | (33.4) | % |
Advertising revenues | | 112,774 | | | 67,760 | | | 66.4 | % | | 120,761 | | | (6.6) | % |
Other revenues | | 46,506 | | | 42,801 | | | 8.7 | % | | 45,041 | | | 3.3 | % |
Total revenues | | 498,497 | | | 403,750 | | | 23.5 | % | | 436,258 | | | 14.3 | % |
Operating costs | | | | | | | | | | |
Cost of revenue (excluding depreciation and amortization) | | 251,358 | | | 229,913 | | | 9.3 | % | | 244,939 | | | 2.6 | % |
Sales and marketing | | 53,555 | | | 39,605 | | | 35.2 | % | | 62,280 | | | (14.0) | % |
Product development | | 39,699 | | | 30,983 | | | 28.1 | % | | 25,526 | | | 55.5 | % |
General and administrative | | 62,283 | | | 58,812 | | | 5.9 | % | | 50,400 | | | 23.6 | % |
Depreciation and amortization | | 14,486 | | | 15,631 | | | (7.3) | % | | 15,180 | | | (4.6) | % |
Total operating costs | | 421,381 | | | 374,944 | | | 12.4 | % | | 398,325 | | | 5.8 | % |
Lease termination charge | | 3,831 | | | — | | | * | | — | | | * |
Operating profit | | $ | 73,285 | | | $ | 28,806 | | | * | | $ | 37,933 | | | 93.2 | % |
| | | | | | | | | | |
* Represents a change equal to or in excess of 100% or not meaningful. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Six Months |
| | 2021 | | 2020 | | 2021 vs 2020 % Change | | 2019 | | 2021 vs 2019 % Change |
Revenues | | | | | | | | | | |
Digital | | $ | 369,745 | | | $ | 275,994 | | | 34.0 | % | | $ | 222,494 | | | 66.2 | % |
Print | | 298,556 | | | 302,629 | | | (1.3) | % | | 318,772 | | | (6.3) | % |
Subscription revenues | | 668,301 | | | 578,623 | | | 15.5 | % | | 541,266 | | | 23.5 | % |
Digital | | 130,491 | | | 90,689 | | | 43.9 | % | | 113,569 | | | 14.9 | % |
Print | | 79,399 | | | 83,208 | | | (4.6) | % | | 132,280 | | | (40.0) | % |
Advertising revenues | | 209,890 | | | 173,897 | | | 20.7 | % | | 245,849 | | | (14.6) | % |
Other revenues | | 93,351 | | | 94,866 | | | (1.6) | % | | 88,205 | | | 5.8 | % |
Total revenues | | 971,542 | | | 847,386 | | | 14.7 | % | | 875,320 | | | 11.0 | % |
Operating costs | | | | | | | | | | |
Cost of revenue (excluding depreciation and amortization) | | 502,355 | | | 473,397 | | | 6.1 | % | | 484,125 | | | 3.8 | % |
Sales and marketing | | 113,708 | | | 113,389 | | | 0.3 | % | | 137,094 | | | (17.1) | % |
Product development | | 78,642 | | | 61,985 | | | 26.9 | % | | 49,433 | | | 59.1 | % |
General and administrative | | 118,860 | | | 111,673 | | | 6.4 | % | | 102,039 | | | 16.5 | % |
Depreciation and amortization | | 29,203 | | | 30,816 | | | (5.2) | % | | 30,098 | | | (3.0) | % |
Total operating costs | | 842,768 | | | 791,260 | | | 6.5 | % | | 802,789 | | | 5.0 | % |
Lease termination charge | | 3,831 | | | — | | | * | | — | | | * |
Operating profit | | $ | 124,943 | | | $ | 56,126 | | | * | | $ | 72,531 | | | 72.3 | % |
| | | | | | | | | | |
* Represents a change equal to or in excess of 100% or not meaningful. |
Revenues
Subscription Revenues
Subscription revenues consist of revenues from subscriptions to our digital and print products (which include our news product, as well as The Athletic and our Games, Cooking, Audm and AudmWirecutter products), and single-copy and bulk sales of our print products (which represent less than 5% of these revenues). 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.
20212022 Compared with 20202021
Subscription revenues increased 15.7% in the second quarter and increased 15.5%13.0% in the first six monthsquarter of 20212022 compared with the same prior-year periods. The increase in the second quarter and first six months wasperiod, primarily due to year-over-year growth of 25.8% in the number of subscriptionssubscribers to the Company’s digital-only products as well asand a benefit from subscriptions graduating to higher prices from introductory promotional pricing. Subscription revenues also benefited from an increase inpricing, as well as the inclusion of subscription revenue from our domestic home delivery printThe Athletic. The increases in subscription products during both periods, primarily due to an increase in home delivery prices.However, for the first six months of 2021 compared with the same prior-year period, the increase attributable to higher home delivery subscription prices was more thanrevenue were slightly offset by a decrease in print subscription revenue primarily attributable to lower domestic home delivery revenue, which declined 2.2%, as well as lower single-copy revenue. There is no print subscription revenue generated from single-copyThe Athletic.
The Company ended the first quarter of 2022 with approximately 9,108,000 paid subscribers with approximately 10,390,000 paid subscriptions across its print and bulk sales asdigital products. Of the 9,108,000 subscribers, 8,328,000 were paid digital-only subscribers with 9,620,000 paid digital-only subscriptions. As a result of business closures, increased levelsthe acquisition of remote workingThe Athletic during the quarter, the Company added The Athletic’s approximately 1,101,000 subscribers and reductions in travel due to1,233,000 subscriptions as of the Covid-19 pandemic as well as ongoing secular trends.date of acquisition.
PaidThere was a net increase of 387,000 digital-only subscribers and 382,000 digital-only subscriptions totaled approximately 7,133,000 atcompared with the end of the secondfourth quarter of 2021 and a net increase of 142,0001,354,000 digital-only subscriptions compared with the end of the first quarter of 20212021. These net increases included approximately 16,000 net subscriber and a24,000 net increase of 1,463,000 compared with the end of the second quarter of 2020. We experienced significant growth in the number of subscriptions to our digital-only products in 2020, and we do not expect the 2020 growth rate to be sustainable or indicative of results for future periods. Net subscription additions for our digital-only products were modest into The Athletic since the second quarter of 2021, especially in comparison to the significant growth in the number of subscriptions we saw in the second quarter of 2020 at the beginning of the Covid-19 pandemic.acquisition. In the second quarter, which is traditionally our slowest quarter of the year for net digital subscription additions, we saw improvement in net additions each monthaddition, during the quarter, since a low in March. We expect total net subscription additions in 2021the Company expanded the terms of domestic home delivery print subscriptions to beinclude access to its Games product and canceled approximately 67,000 standalone Games subscriptions held by home delivery subscribers. This change reduced digital-only subscriptions by 67,000 in the range of the number of total net subscription additions in 2019, although it remains difficult to predict with precision.quarter, but had no impact on subscriber numbers.
Digital-only news product subscriptionsPrint domestic home delivery subscribers totaled approximately 5,334,000780,000 with 770,000 print subscriptions at the end of the second quarter of 2021, a 77,000 net increase compared with the end of the first quarter of 20212022, a net decrease of 15,000 subscribers and a 944,000 increase14,000 subscriptions compared with the end of the second quarter of 2020. Other product subscriptions (which include our Games, Cooking and Audm products) totaled approximately 1,799,000 at the end of the secondfourth quarter of 2021 an increaseand a net decrease of 65,00057,000 subscribers and 55,000 subscriptions compared with the end of the first quarter of 2021 and an increase of 519,000 subscriptions compared with the end of the second quarter of 2020.
Print domestic home delivery subscriptions totaled approximately 803,000 at the end of the second quarter of 2021, a net decrease of 22,000 compared with the end of the first quarter of 2021 and a net decrease of 37,000 compared with the end of the second quarter of 2020.
2021 Compared with 2019
Subscription revenues increased 25.4% in the second quarter and increased 23.5% in the first six months of 2021 compared with the same prior-year periods in 2019. The increase in the second quarter and first six months of 2021 was primarily due to year-over-year growth of 88.7% in the number of subscriptions to the Company’s digital-only products. These increases were partially offset by a decrease in print subscription revenue from single-copy and bulk sales as a result of business closures, increased levels of remote working and reductions in travel due to the Covid-19 pandemic as well as secular trends. Single-copy and bulk sales decreased 38.9% and 38.8% in the second quarter and the first six months, respectively.
The following table summarizes digital and print subscription revenues for the secondfirst quarters of 2022 and first six months2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | | | | | |
(In thousands) | | March 27, 2022 | | March 28, 2021 | | % Change | | | | | | |
Digital-only subscription revenues (1) | | $ | 226,763 | | | $ | 179,599 | | | 26.3 | % | | | | | | |
Print subscription revenues: | | | | | | | | | | | | |
Domestic home delivery subscription revenues (2) | | 131,391 | | | 134,395 | | | (2.2) | % | | | | | | |
Single-copy, NYT International and Other subscription revenues (3) | | 13,825 | | | 15,090 | | | (8.4) | % | | | | | | |
Subtotal print subscription revenues | | 145,216 | | | 149,485 | | | (2.9) | % | | | | | | |
Total subscription revenues | | $ | 371,979 | | | $ | 329,084 | | | 13.0 | % | | | | | | |
(1) Includes revenue from digital-only bundled and standalone subscriptions to the Company’s news product, as well as The Athletic and our Games, Cooking, Audm and Wirecutter products. |
(2) Domestic home delivery subscriptions include access to digital news, Games, Cooking and Wirecutter products. |
(3) NYT International is the international edition of our print newspaper. |
We offer a digital subscription package (or “bundle”) that includes access to our digital news, Games, Cooking and Wirecutter products. We also offer standalone digital subscriptions to our digital news product, as well as to The Athletic, and our Games, Cooking, Audm and Wirecutter products. The Company has set out below the number of 2021digital-only, print and 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | | | For the Six Months Ended | | |
(In thousands) | | June 27, 2021 | | June 28, 2020 | | % Change | | June 27, 2021 | | June 28, 2020 | | % Change |
Digital-only subscription revenues: | | | | | | | | | | | | |
News product subscription revenues(1) | | $ | 170,893 | | | $ | 132,922 | | | 28.6 | % | | $ | 332,181 | | | $ | 251,880 | | | 31.9 | % |
Other product subscription revenues(2) | | 19,252 | | | 13,062 | | | 47.4 | % | | 37,564 | | | 24,114 | | | 55.8 | % |
Subtotal digital-only subscription revenues | | 190,145 | | | 145,984 | | | 30.3 | % | | 369,745 | | | 275,994 | | | 34.0 | % |
Print subscription revenues: | | | | | | | | | | | | |
Domestic home delivery subscription revenues(3) | | 134,755 | | | 132,971 | | | 1.3 | % | | 269,150 | | | 266,708 | | | 0.9 | % |
Single-copy, NYT International and other subscription revenues(4) | | 14,317 | | | 14,234 | | | 0.6 | % | | 29,406 | | | 35,921 | | | (18.1) | % |
Subtotal print subscription revenues | | 149,072 | | | 147,205 | | | 1.3 | % | | 298,556 | | | 302,629 | | | (1.3) | % |
Total subscription revenues | | $ | 339,217 | | | $ | 293,189 | | | 15.7 | % | | $ | 668,301 | | | $ | 578,623 | | | 15.5 | % |
(1) Includes revenues from subscriptions to the Company’s news product. News product subscription packages that include access to the Company’s Games and Cooking products are also included in this category. |
(2) Includes revenues from standalone subscriptions to the Company’s Games, Cooking and Audm products. |
(3) Includes free access to some of the Company’s digital products. |
(4) NYT International is the international edition of our print newspaper. |
total subscribers to the Company’s products as well as certain additional metrics, including average revenue per subscriber. A digital-only subscriber is defined as a subscriber who has subscribed (and provided a valid method of payment) for the right to access one or more of the Company’s digital products.The following table summarizes digital and print subscriptionssubscribers as of the end of the secondfirst quarters of 2022 and 2021, and 2020:fourth quarter of 2021:
| | | | | | | | | | | | | | | | | | | | |
| | Quarters Ended | | |
(In thousands) | | June 27, 2021 | | June 28, 2020 | | % Change |
Digital-only subscriptions: | | | | | | |
News product subscriptions(1) | | 5,334 | | | 4,390 | | | 21.5 | % |
Other product subscriptions(2) | | 1,799 | | | 1,280 | | | 40.5 | % |
Subtotal digital-only subscriptions | | 7,133 | | | 5,670 | | | 25.8 | % |
Print subscriptions | | 803 | | | 840 | | | (4.4) | % |
Total subscriptions | | 7,936 | | | 6,510 | | | 21.9 | % |
(1) Includes subscriptions to the Company’s news product. News product subscription packages that include access to the Company’s Games and Cooking products are also included in this category. |
(2) Includes standalone subscriptions to the Company’s Games, Cooking and Audm products. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended |
| | March 27, 2022 | | March 28, 2021 | | % Change | | December 26, 2021 | | % Change |
Digital-only subscribers(1) | | 8,328 | | | 6,101 | | | 36.5 | % | | 6,840 | | | 21.8 | % |
Print subscribers(2) | | 780 | | | 837 | | | (6.8) | % | | 795 | | | (1.9) | % |
Total subscribers | | 9,108 | | | 6,938 | | | 31.3 | % | | 7,635 | | | 19.3 | % |
(1) Subscribers with paid digital-only subscriptions to one or more of the Company’s news, The Athletic, Games, Cooking and Wirecutter products. Subscribers with a paid domestic home-delivery print subscription to The New York Times are excluded. The number of paid digital-only subscribers from group education and group corporate subscriptions (which collectively represented approximately 5% of paid digital-only subscribers as of December 26, 2021) is derived using the value of the relevant contract and a discounted subscription rate. |
(2) Subscribers with a paid domestic home delivery or mail print subscription to The New York Times, which also includes access to digital news, Games, Cooking and Wirecutter products, or a paid print subscription to our Book Review or Large Type Weekly products. Book Review, Mail and Large Type Weekly subscribers are included in the count of subscribers but not subscriptions. |
The following table summarizes digital and print subscriptions(1) as of the end of the first quarters of 2022 and 2021, and the fourth quarter of 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended |
(In thousands) | | March 27, 2022 | | March 28, 2021 | | % Change | | December 26, 2021 | | % Change |
Digital-only subscriptions (2)(3) | | 9,620 | | | 7,033 | | | 36.8 | % | | 8,005 | | | 20.2 | % |
Print subscriptions (4) | | 770 | | | 825 | | | (6.7) | % | | 784 | | | (1.8) | % |
Total subscriptions | | 10,390 | | | 7,858 | | | 32.2 | % | | 8,789 | | | 18.2 | % |
(1) While the Company is moving toward an emphasis on individual subscriber growth rather than growth of total subscriptions, we expect to continue to report on the number of subscriptions at least through the fourth quarter of 2022. |
(2) Paid digital-only subscriptions to the Company’s news, The Athletic, Games, Cooking, Audm and Wirecutter products. Standalone subscriptions to these products are counted separately and bundle subscriptions are counted as one subscription. |
(3) The number of paid digital-only subscriptions includes estimated group corporate and group education subscriptions (which collectively represent approximately 5% of paid digital-only subscriptions as of December 26, 2021). We calculate this estimate using the value of the relevant contract and a discounted subscription rate. The actual number of users who have access to our products through group subscriptions is substantially higher. In the fourth quarter of 2021, we updated the discounted subscription rate used as part of this calculation in order to bring it in line with our current digital subscription pricing model. For comparison purposes, we recast digital-only subscriptions in prior periods using the updated methodology, and this resulted in approximately 42,000 additional group corporate and group education subscriptions in the first quarter of 2021. There is no impact to subscription revenue as a result of this change. |
(4) Paid domestic home-delivery print subscriptions to The New York Times, which also include access to digital news, Games, Cooking and Wirecutter products. Excludes subscriptions to our Book Review or Large Type Weekly products and subscriptions to The New York Times that are delivered by mail. |
The following table summarizes supplementary subscriber metrics as of the end of the first quarters of 2022 and 2021, and fourth quarter of 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended |
(In thousands except for ARPU) | | March 27, 2022 | | March 28, 2021 | | % Change | | December 26, 2021 | | % Change |
Digital-only subscriber ARPU(1) | | $ | 9.04 | | | $ | 9.15 | | | (1.2) | % | | $ | 9.55 | | | (5.3) | % |
Total multiproduct subscribers(2) | | 2,569 | | | 2,100 | | | 22.3 | % | | 2,351 | | | 9.3 | % |
Digital-only subscribers with News(3) | | 6,150 | | | 5,290 | | | 16.3 | % | | 5,880 | | | 4.6 | % |
Subscribers with The Athletic(4) | | 1,257 | | | N/A | | N/A | | N/A | | N/A |
(1) “Digital-only subscriber Average Revenue per User” or “Digital-only subscriber ARPU” is calculated by dividing the average monthly digital subscription revenue (calculated by dividing digital subscription revenue in the quarter by 3.25 to reflect a 28-day billing cycle) in the measurement period by the average number of digital subscribers during the period. |
(2) Subscribers with paid subscriptions that include access to two or more of the Company’s products, including through separate standalone subscriptions; a digital bundle; or a print home-delivery subscription (which includes access to our digital news, Games, Cooking and Wirecutter products). |
(3) Subscribers with a paid digital-only subscription that includes access to the Company’s digital news product. |
(4) Subscribers with a paid subscription that includes access to The Athletic. |
We believe that the significant growth over the last several years in subscriptions to our products demonstrates the success of our “subscription-first” strategy and the willingness of our readers to pay for high-quality journalism. The Company is increasing its emphasis on subscriber growth rather than growth of total subscriptions. The following charts illustrate the growth in net digital-only subscription additionssubscribers and corresponding subscription revenues as well as the relative stability of our print domestic home delivery subscription products since the launch of the digital pay model in 2011. products.
(1) Amounts may not add due to rounding.
(2)Print domestic home delivery subscriptions include free Includes access to some of our digital products.
(3) Includes Book Review, Mail and Large Type Weekly subscribers.
(4) Print Other includes single-copy, NYT International and other subscription revenues.revenues
Note: Revenues for 2012 and 2017 include the impact of an additional week.
Advertising Revenues
Advertising revenue is principally from advertisers (such as technology, financial and luxury goods companies) promoting products, services or brands on digital platforms in the form of display ads, audio and video, and in print, in the form of column-inch ads. Advertising revenue is primarily derived from offerings sold directly to marketers by our advertising sales teams. A smaller proportion of our total advertising revenues is generated through programmatic auctions run by third-party ad exchanges. Advertising revenue is primarily determined by the volume (e.g., impressions)impressions or column inches), rate and mix of advertisements. Digital advertising includes our core digital advertising business and other digital advertising. Our core digital advertising business includes direct-sold website, mobile application, podcast, email and video advertisements. Advertising revenue from The Athletic is primarily podcast revenue and therefore is reflected in this category. Direct-sold display advertising, a component of core digital advertising, includes offerings on websites and mobile applications sold directly to marketers by our advertising sales teams. Other digital advertising includes open-market programmatic advertising and creative services fees. Print advertising includes revenue from column-inch ads and classified advertising, including line-ads as well as preprinted advertising, also known as freestanding inserts.
The following table summarizes digital and print advertising revenues for the secondfirst quarters of 2022 and first six months of 2021 and 2020:2021:
| | | For the Quarters Ended | | For the Six Months Ended | | For the Quarters Ended | | |
(In thousands) | (In thousands) | | June 27, 2021 | | June 28, 2020 | | % Change | | June 27, 2021 | | June 28, 2020 | | % Change | (In thousands) | | March 27, 2022 | | March 28, 2021 | | % Change | |
Advertising revenues: | Advertising revenues: | | | | | | | | | | | Advertising revenues: | | | | | |
Digital | Digital | | $ | 70,995 | | | $ | 39,531 | | | 79.6 | % | | $ | 130,491 | | | $ | 90,689 | | | 43.9 | % | Digital | | $ | 67,014 | | | $ | 59,496 | | | 12.6 | % | |
Print | Print | | 41,779 | | | 28,229 | | | 48.0 | % | | 79,399 | | | 83,208 | | | (4.6) | % | Print | | 49,256 | | | 37,620 | | | 30.9 | % | |
Total advertising | Total advertising | | $ | 112,774 | | | $ | 67,760 | | | 66.4 | % | | $ | 209,890 | | | $ | 173,897 | | | 20.7 | % | Total advertising | | $ | 116,270 | | | $ | 97,116 | | | 19.7 | % | |
20212022 Compared with 20202021
Digital advertising revenues, which represented 63.0% of total advertising revenues in the second quarter of 2021, increased $31.5 million, or 79.6%, to $71.0 million compared with $39.5 million in the same prior-year period. The increase was primarily driven by higher direct-sold advertising, including traditional display and podcasts, as well as the impact of the comparison to weak digital advertising revenues in the prior year period caused by reduced advertiser spending during the start of the Covid-19 pandemic. Core digital advertising revenue increased $27.6 million due to growth in direct-sold display advertising and podcast advertising revenues. Direct-sold display impressions increased 77%, while the average rate grew 24%. Other digital advertising revenue increased $3.9 million, primarily due to a 78% increase in creative services fees, as well as a 12.3% increase in open-market programmatic advertising revenue. Programmatic impressions decreased by 47%, while the average rate increased 107%.
Digital advertising revenues, which represented 62.2%57.6% of total advertising revenues in the first six monthsquarter of 2021,2022, increased $39.8$7.5 million, or 43.9%12.6%, to $130.5$67.0 million compared with $90.7$59.5 million in the same prior-year period. The increase was primarily driven by higher direct-sold advertising, including traditional display and podcasts, as well as the impactperiod, of the comparison to weak digital advertising revenues in the prior year period caused by reduced advertiser spending during the start of the Covid-19 pandemic. Core digital advertising revenue increased $37.1 million due to growth in direct-sold display advertising revenue and podcast advertising revenues. Direct-sold display impressions increased 16%, while the average rate grew 31%. Other digital advertising revenue increased $2.7 million, primarily due to a 31% increase in creative services fees. Open-market programmatic advertising revenue was flat to prior year as programmatic impressions decreased by 39% offsetting the average rate increase of 63%.
Print advertising revenues, which represented 37.0% of total advertising revenues in the second quarter of 2021, increased $13.6$1.8 million, or 48.0%23.7%, to $41.8 million compared with $28.2 million inwas contributed by The Athletic following the same prior-year period. Print advertising revenues, which represented 37.8% of total advertising revenues in the first six months of 2021, declined $3.8 million, or 4.6%, to $79.4 million compared with $83.2 million in the same prior-year period. The increase in the second quarter of 2021 was primarily in the luxury, media and technology categories, largely due to the impact of the comparison to weak print advertising revenues in the second quarter of 2020 caused by reduced advertiser spending by businesses negatively impacted by the start of the Covid-19 pandemic. The increase in the second quarter of 2021 was partially offset by secular trends. The decline in the first six months of 2021 reflected reduced spending in the first quarter of 2021 on print advertising by businesses negatively impacted by the Covid-19 pandemic and secular trends, partially offset by higher print advertising revenues in the second quarter of 2021 due to the impact of the comparison to weak print advertising revenues in the second quarter of 2020. Decreases, primarily in the entertainment, travel and real estate categories were partially offset by an increase in the media category. We expect reduced advertising spending by these businesses, along with secular trends, to continue to adversely affect our print advertising revenues. Some of our print advertising revenues may not return to pre-pandemic levels once economic conditions improve.
2021 Compared with 2019
Digital advertising revenues for the second quarter of 2021 increased $13.0 million, or 22.4%, to $71.0 million compared with $58.0 million in the second quarter of 2019.acquisition. The increase was primarily driven by higher direct-sold advertising, including traditional display and podcasts. Core digital advertising revenue increased $18.5$10.3 million, which includes $1.8 million from The Athletic, due to growth in podcastdirect-sold display advertising revenues and direct-sold displaypodcast advertising revenues. Direct-sold display impressions increased 13%7%, while the average rate grew 24%19%. Other digital advertising revenue decreased $5.5$2.8 million, primarily due to the closure of our HelloSociety and Fake Love digital marketing agencies, partially offset by a 4.0% increase16% decrease in creative services fees, as well as a 14.3% decrease in open-market programmatic advertising revenue. Programmatic impressions decreased by 24%36%, while the average rate increased 31%.
Digital advertising revenues for the first six months of 2021 increased $16.9 million, or 14.9%, to $130.5 million compared with $113.6 million in the first six months of 2019. The increase was primarily driven by higher direct-sold advertising, including traditional display and podcasts. Core digital advertising revenue increased $26.5 million due to growth in podcast advertising revenues and direct-sold display advertising revenue. Direct-sold display impressions decreased 4%, while the average rate grew 25%. Other digital advertising revenue decreased $9.6 million, primarily due to the closure of our HelloSociety and Fake Love digital marketing agencies, partially offset by a 7.2% increase in open-market programmatic advertising revenue. Programmatic impressions decreased by 3%, while the average rate increased 10%32%.
Print advertising revenues, forwhich represented 42.4% of total advertising revenues in the secondfirst quarter of 2021 declined $20.92022, increased $11.6 million, or 33.4%30.9%, to $41.8$49.3 million compared with $62.7$37.6 million in the same period of 2019. Printprior-year period. There is no print advertising revenues forrevenue generated from The Athletic. The increase in the first six monthsquarter of 2021 declined $52.9 million, or 40.0%, to $79.4 million compared with $132.3 million2022 was primarily in the same period of 2019. The declines in both periods reflected reduced spending on print advertising by businesses negativelyentertainment and luxury categories, which were more severely impacted by the Covid-19 pandemic as well as continued secular trends.in the first quarter of 2021.
Other Revenues
Other revenues primarily consist of revenues from licensing, Wirecutter affiliate referrals, commercial printing, the leasing of floors in the Company Headquarters, commercial printing, retail commerce, television and film, our student subscription sponsorship program, and our live events business.business, and television and film.
20212022 Compared with 20202021
Other revenues increased 8.7% in the second quarter of 2021 and decreased 1.6%5.0% in the first six monthsquarter of 2021,2022, compared with the same prior-year periods. The increase in the second quarter of 2021 wasperiod, primarily as a result of higher Wirecutter affiliate referral revenues. The decrease in the first six months of 2021 was primarily a result of fewer television episodes as well as lower building rental revenue, live events revenue and commercial printing revenue partially offset byas we began printing several News Corporation publications in our College Point, N.Y., printing and distribution facility in mid-2021, and higher Wirecutter affiliate referral revenues.revenues mainly due to Wirecutter’s presence on our core news website (NYTimes.com) homepage resulting in increased views. These increases were partially offset by lower television series revenues as no new episodes aired in 2022 compared to 2021.
Building rental revenue from the leasing of floors in the Company Headquarters totaled $6.6$7.1 million and $7.3 million in the second quarters of 2021 and 2020, respectively, and $12.8 millionand $15.2$6.2 million in the first six monthsquarters of 2022 and 2021, and 2020, respectively.
2021 Compared with 2019
Other revenues increased 3.3% in the second quarter of 2021 and increased 5.8% in the first six months, compared with the same periods in 2019. The increase in the second quarter of 2021 was primarily a result of higher Wirecutter affiliate referral revenues and licensing revenue related to Facebook News, partially offset by fewer television episodes and lower live events and commercial printing revenue. The increase in the first six months of 2021 was primarily a result of higher Wirecutter affiliate referral revenues and licensing revenue related to Facebook News, partially offset by lower live events revenue, lower commercial printing revenue and fewer television episodes.
Operating Costs
Operating costs were as follows:
| | | For the Quarters Ended | | For the Six Months Ended | | | For the Quarters Ended | | |
(In thousands) | (In thousands) | | June 27, 2021 | | June 28, 2020 | | % Change | | June 27, 2021 | | June 28, 2020 | | % Change | (In thousands) | | March 27, 2022 | | March 28, 2021 | | % Change | |
Operating costs: | Operating costs: | | | | | | | | | | | | | Operating costs: | | | | | | | |
Cost of revenue (excluding depreciation and amortization)(1) | Cost of revenue (excluding depreciation and amortization)(1) | | $ | 251,358 | | | $ | 229,913 | | | 9.3 | % | | $ | 502,355 | | | $ | 473,397 | | | 6.1 | % | Cost of revenue (excluding depreciation and amortization)(1) | | $ | 281,365 | | | $ | 250,997 | | | 12.1 | % | |
Sales and marketing | Sales and marketing | | 53,555 | | | 39,605 | | | 35.2 | % | | 113,708 | | | 113,389 | | | 0.3 | % | Sales and marketing | | 77,588 | | | 60,153 | | | 29.0 | % | |
Product development(1) | Product development(1) | | 39,699 | | | 30,983 | | | 28.1 | % | | 78,642 | | | 61,985 | | | 26.9 | % | Product development(1) | | 47,433 | | | 38,943 | | | 21.8 | % | |
General and administrative(1) | General and administrative(1) | | 62,283 | | | 58,812 | | | 5.9 | % | | 118,860 | | | 111,673 | | | 6.4 | % | General and administrative(1) | | 71,357 | | | 56,577 | | | 26.1 | % | |
Depreciation and amortization | Depreciation and amortization | | 14,486 | | | 15,631 | | | (7.3) | % | | 29,203 | | | 30,816 | | | (5.2) | % | Depreciation and amortization | | 18,686 | | | 14,717 | | | 27.0 | % | |
Total operating costs | Total operating costs | | $ | 421,381 | | | $ | 374,944 | | | 12.4 | % | | $ | 842,768 | | | $ | 791,260 | | | 6.5 | % | Total operating costs | | $ | 496,429 | | | $ | 421,387 | | | 17.8 | % | |
(1)Technology costs, which include product development costs and certain components of cost of revenue and general and administrative costs as described below, increased 22.0% to $87.9 million compared with $72.1 million the first quarter of 2021. | | (1)Technology costs, which include product development costs and certain components of cost of revenue and general and administrative costs as described below, increased 22.0% to $87.9 million compared with $72.1 million the first quarter of 2021. | |
Cost of Revenue (excluding depreciation and amortization)
Cost of revenue includes all costs related to content creation, subscriber and advertiser servicing, and print production and distribution as well as infrastructure costs related to delivering digital content, which include all cloud and cloud-related costs as well as compensation for employees that enhance and maintain our platforms.that infrastructure.
20212022 Compared with 20202021
Cost of revenue increased in the secondfirst quarter of 20212022 by $21.4$30.4 million, or 9.3%12.1%, compared with the secondfirst quarter of 2020,2021. The increase is largely due to higher journalism costs of $17.9$22.1 million, higher subscriber servicing costs of $2.9$5.0 million, and higher advertising servicing costs of $2.8 million. The increases were partially offset by lower print production and distribution costs of $2.5 million. The increase in journalism costs was largely driven by growth in the number of employees who work in the newsroom and on our Games, Cooking, Audm and audio,Wirecutter products, as well as the inclusion of $10.8 million in journalism costs in connection with the production of audio content and a higher incentive compensation accrual.from The Athletic. The increase in subscriber servicing costs was primarily due to higher credit card processing fees and third-party commissions due to increased subscriptions. Advertising servicing costs increased primarily due to higher incentive compensation and higher outside services costs. The decreaseincrease in print production and distribution costs was largely due to lower outside printingan increase in newsprint pricing and distribution costs.
higher compensation and benefits. Technology costs in Cost of revenue, which include costs related to content delivery and subscriber technology, increased 12.3%to $24.5 million compared with $21.8 million in the first six months of 2021 by $29.0 million, or 6.1%, compared with the first six months of 2020, largely due to higher journalism costs of $27.1 million, higher subscriber servicing costs of $7.6 million, and higher digital content delivery costs of $4.2 million. The increases were partially offset by lower print production and distribution costs of $11.7 million. The increase in journalism costs was largely driven by growth in the number of employees in the newsroom, Games, Cooking and audio, costs in connection with the production of audio content and a higher incentive compensation accrual. This cost growth was partially offset by lower content creation costs as a result of fewer television episodes. The increase in subscriber servicing costs was primarily due to higher credit card processing fees and third-party commissions due to increased subscriptions. Digital content delivery costs increased due to a higher incentive compensation accrual and higher cloud storage costs. The decrease in print production and distribution costs was largely due to lower newsprint consumption and pricing, as well as lower outside printing and distribution costs.
2021 Compared with 2019
Cost of revenue increased in the second quarter of 2021 by $6.4 million, or 2.6%, compared with the second quarter of 2019, largely due to higher journalism costs of $19.8 million, higher subscriber servicing costs of $5.7 million, and higher digital content delivery costs of $5.3 million. The increases were partially offset by lower print production and distribution costs of $20.0 million and lower advertising servicing costs of $4.4 million. The increase in journalism costs was largely driven by growth in the number of employees in the newsroom, Games, Cooking and audio, costs in connection with the production of audio content and a higher incentive compensation accrual. The increase in subscriber servicing costs was primarily due to higher credit card processing fees and third-party commissions due to increased subscriptions. Digital content delivery costs increased due to an increase in the number of employees and higher cloud-related costs. The decrease in print production and distribution costs was largely due to lower distribution costs, lower newsprint consumption and pricing, and lower outside printing costs. Advertising servicing costs decreased primarily as a result of the closure of our HelloSociety and Fake Love digital marketing agencies, as well as lower volume of creative services campaigns and live events.2021.
Cost of revenue increased in the first six months of 2021 by $18.2 million, or 3.8%, compared with the first six months of 2019, largely due to higher journalism costs of $42.8 million, higher subscriber servicing costs of $11.8 million, and higher digital content delivery costs of $11.5 million. The increases were partially offset by lower print production and distribution costs of $40.0 million and lower advertising costs of $7.8 million. The increase in journalism costs was largely driven by growth in the number of employees in the newsroom, Games, Cooking and audio, costs in connection with the production of audio content and a higher incentive compensation accrual. The increase in subscriber servicing costs was primarily due to higher credit card processing fees and third-party commissions due to increased subscriptions. Digital content delivery costs increased due to growth in the number of employees and higher cloud storage costs. The decrease in print production and distribution costs was largely due to fewer print copies produced and lower newsprint pricing, as well as lower distribution costs and outside printing costs. Advertising servicing costs decreased primarily as a result of the closure of our HelloSociety and Fake Love digital marketing agencies as well as fewer live events.
Sales and Marketing
Sales and marketing includes costs related to the Company’s marketing efforts as well as advertising sales costs.
2021 Compared with 2020
Sales and marketing costs in the second quarter of 2021 increased by $14.0 million, or 35.2%, compared with the second quarter of 2020, primarily due to higher subscription-related media spending, which the Company had reduced during the start of the Covid-19 pandemic.
Sales and marketing costs in the first six months of 2021 remained relatively flat compared with the first six months of 2020. The increase in marketing costs resulting from higher subscription-related media Media expenses was partially offset by lower advertising sales costs.
Media expenses,is a component of sales and marketing costs that represents the cost to promote our subscription business, increased to $29.0 million in the second quarter of 2021 from $16.5 million in the second quarter of 2020 and increased to $64.9 million in the first six months of 2021 from $61.9 million in the first six months of 2020 as the Company increased its marketing spend.business.
20212022 Compared with 2019
Sales and marketing costs in the second quarter of 2021 decreased by $8.7 million, or 14.0%, compared with the second quarter of 2019, primarily as a result of the closure of our HelloSociety and Fake Love digital marketing agencies and lower media expenses.
Sales and marketing costs in the first six monthsquarter of 2021 decreased2022 increased by $23.4$17.4 million, or 17.1%29.0%, compared with the first six monthsquarter of 2019.2021. The decreaseincrease is primarily due to higher media expenses and the inclusion of $3.1 million in sales and marketing costs are primarily a result of the factors identified above.from The Athletic.
Media expenses decreasedincreased to $29.0 million in the second quarter of 2021 from $33.9 million in the second quarter of 2019 and decreased to $64.9$46.3 million in the first six monthsquarter of 20212022 from $78.7$35.9 million in the first six monthsquarter of 20192021 largely as the Company reduced itsa result of higher brand marketing spend during the Covid-19 pandemic.expenses.
Product Development
Product development includes costs associated with the Company’s investment intoin developing and enhancing new and existing product technology, including engineering, product development and data insights.
20212022 Compared with 20202021
Product development costs in the secondfirst quarter of 20212022 increased by $8.7$8.5 million, or 28.1%21.8%, compared with the secondfirst quarter of 2020,2021. The increase was largely due to growth in the number of digital product development employees in connection with digital subscription strategic initiatives as well as a higher incentive compensation accrual.
Productthe inclusion of $2.3 million in product development costs in the first six months of 2021 increased by $16.7 million, or 26.9%, compared with the first six months of 2020, largely due to the factors identified above.
2021 Compared with 2019
Productfrom The Athletic. All product development costs in the second quarter of 2021 increased by $14.2 million, or 55.5%, compared with the second quarter of 2019, largely due to growth in the number of digital product development employees to support our digital subscription strategic initiatives as well as a higher incentive compensation accrual.are technology costs.
Product development costs in the first six months of 2021 increased by $29.2 million, or 59.1%, compared with the first six months of 2019, largely due to the factors identified above.
General and Administrative Costs
General and administrative costs include general management, corporate enterprise technology, building operations, unallocated overhead costs, severance and multiemployer pension plan withdrawal costs.
2022 Compared with 20202021
General and administrative costs in the secondfirst quarter of 20212022 increased by $3.5$14.8 million, or 5.9%26.1%, compared with the secondfirst quarter of 2020,2021. The increase is primarily due to growth in the number of employees higher outside servicesas well as the inclusion of $1.7 million in general and a higher incentive compensation accrual, partially offset by severance expenseadministrative costs from The Athletic. Technology costs in the second quarter of 2020 compared with no expense in the second quarter of 2021.
General and administrative, which include costs related to enterprise technology and information security, increased 41.0% million to $16.0 million compared with $11.3 million in the first six months of 2021 increased by $7.2 million, or 6.4%, compared with the first six months of 2020, primarily due to a higher incentive compensation accrual, higher outside services and growth in the number of employees, partially offset by a severance charge in the second quarter of 2020, a favorable fair market value adjustment in 2021, and lower building operations and maintenance costs in 2021.
2021 Compared with 2019
General and administrative costs in the second quarter of 2021 increased by $11.9 million, or 23.6%, compared with the second quarter of 2019, primarily due to growth in the number of employees, mainly in the enterprise technology and human resources departments in support of employee growth in other areas, higher outside services and a higher incentive compensation accrual.
General and administrative costs in the first six months of 2021 increased by $16.8 million, or 16.5%, compared with the first six months of 2019, largely due to the factors identified above, partially offset by a favorable fair market value adjustment.
Depreciation and Amortization
20212022 Compared with 20202021
Depreciation and amortization costs in the secondfirst quarter and first six months of 2021 decreased $1.12022 increased $4.0 million, or 7.3%27.0%, and $1.6 million, or 5.2%, respectively, compared withto the same prior-year period.first quarter of 2021. The decrease in both periodsincrease is due to the acquisition of The Athletic, partially offset by lower depreciation of software assets.
2021 Compared with 2019
Depreciation and amortization costs in the second quarter and first six months of 2021 compared with the same periods in 2019 were flat.
See Note 7 of the Notes to the Condensed Consolidated Financial Statements for additional information regarding other items.
Segment Information
On February 1, 2022, we acquired The Athletic. For the first quarter of 2022, the results of The Athletic have been included in our Condensed Consolidated Financial Statements beginning February 1, 2022. Beginning in the first quarter of 2022, we have two reportable segments: The New York Times Group and The Athletic. Management, including our President and Chief Executive Officer (who is our Chief Operating Decision Maker), uses adjusted operating profit by segment (as defined below) in assessing performance and allocating resources. We include in our presentation revenues and adjusted operating costs (as defined below) to arrive at adjusted operating profit by segment. See “Non-GAAP Financial Measures” below for more information on adjusted operating costs and adjusted operating profit.
| | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | |
(In thousands) | | March 27, 2022 | | March 28, 2021 | | % Change |
Revenues | | | | | | |
The New York Times Group | | $ | 525,268 | | | $ | 473,045 | | | 11.0 | % |
The Athletic | | 12,157 | | | — | | | * |
Total revenues | | $ | 537,425 | | | $ | 473,045 | | | 13.6 | % |
Adjusted operating costs | | | | | | |
The New York Times Group | | $ | 457,543 | | | $ | 404,938 | | | 13.0 | % |
The Athletic | | 18,979 | | | — | | | * |
Total adjusted operating costs | | $ | 476,522 | | | $ | 404,938 | | | 17.7 | % |
Adjusted operating profit | | | | | | |
The New York Times Group | | $ | 67,725 | | | $ | 68,107 | | | (0.6) | % |
The Athletic | | (6,822) | | | — | | | * |
Total adjusted operating profit | | $ | 60,903 | | | $ | 68,107 | | | (10.6) | % |
* Represents a change equal to or in excess of 100% or not meaningful. |
| | | | | | | | | | | | | | | | | | | | |
Revenues detail by segment | | | | | | |
| | For the Quarters Ended | | |
(In thousands) | | March 27, 2022 | | March 28, 2021 | | % Change |
The New York Times Group | | | | | | |
Subscription | | $ | 361,602 | | | $ | 329,084 | | | 9.9 | % |
Advertising | | 114,490 | | | 97,116 | | | 17.9 | % |
Other | | 49,176 | | | 46,845 | | | 5.0 | % |
Total | | $ | 525,268 | | | $ | 473,045 | | | 11.0 | % |
The Athletic | | | | | | |
Subscription | | $ | 10,377 | | | $ | — | | | * |
Advertising | | 1,780 | | | — | | | * |
| | | | | | |
Total | | $ | 12,157 | | | $ | — | | | * |
The New York Times Company | | | | | | |
Subscription | | $ | 371,979 | | | $ | 329,084 | | | 13.0 | % |
Advertising | | 116,270 | | | 97,116 | | | 19.7 | % |
Other | | 49,176 | | | 46,845 | | | 5.0 | % |
Total | | $ | 537,425 | | | $ | 473,045 | | | 13.6 | % |
* Represents a change equal to or in excess of 100% or not meaningful. |
| | | | | | | | | | | | | | | | | | | | |
Adjusted operating costs (operating costs before depreciation and amortization, severance and multiemployer pension plan withdrawal costs) details by segment |
| | For the Quarters Ended | | |
(In thousands) | | March 27, 2022 | | March 28, 2021 | | % Change |
The New York Times Group | | | | | | |
Cost of revenue (excluding depreciation and amortization) | | $ | 269,476 | | | $ | 250,997 | | | 7.4 | % |
Sales and marketing | | 74,460 | | | 60,153 | | | 23.8 | % |
Product development | | 45,179 | | | 38,943 | | | 16.0 | % |
Adjusted general and administrative (1) | | 68,428 | | | 54,845 | | | 24.8 | % |
Total | | $ | 457,543 | | | $ | 404,938 | | | 13.0 | % |
The Athletic | | | | | | |
Cost of revenue (excluding depreciation and amortization) | | $ | 11,889 | | | $ | — | | | * |
Sales and marketing | | 3,128 | | | — | | | * |
Product development | | 2,254 | | | — | | | * |
Adjusted general and administrative | | 1,708 | | | — | | | * |
Total | | $ | 18,979 | | | $ | — | | | * |
The New York Times Company | | | | | | |
Cost of revenue (excluding depreciation and amortization) | | $ | 281,365 | | | $ | 250,997 | | | 12.1 | % |
Sales and marketing | | 77,588 | | | 60,153 | | | 29.0 | % |
Product development | | 47,433 | | | 38,943 | | | 21.8 | % |
Adjusted general and administrative (1) | | 70,136 | | | 54,845 | | | 27.9 | % |
Total | | $ | 476,522 | | | $ | 404,938 | | | 17.7 | % |
(1) Excludes multiemployer pension withdrawal costs of $1.2 million for the quarter ended March 27, 2022 and severance and multiemployer pension withdrawal costs of $0.4 million and $1.3 million, respectively, for the quarter ended March 28,2021. |
* Represents a change equal to or in excess of 100% or not meaningful. |
The New York Times Group
New York Times Group revenues grew 11.0% in the first quarter of 2022 to $525.3 million from $473.0 million in the first quarter of 2021. Subscription revenues increased 9.9% to $361.6 million from $329.1 million in the first quarter of 2021, primarily due to growth in subscription revenues from digital-only products. Advertising revenues increased 17.9% to $114.5 million from $97.1 million in the first quarter of 2021 due to growth in print and digital advertising revenues.
New York Times Group operating costs grew 13.0% in the first quarter of 2022 to $457.5 million from $404.9 million in the first quarter of 2021. The increase in costs were primarily related to growth in the number of employees and higher media expenses.
Adjusted operating profit decreased 0.6% to $67.7 million from $68.1 million in the prior year as higher revenues were more than offset by higher costs.
The Athletic
For the approximately two months in the first quarter of 2022 that the Company owned The Athletic, revenues totaled $12.2 million, primarily from subscription revenues.
The Athletic adjusted operating costs totaled $19.0 million for the period of the first quarter from February 1, 2022, largely from cost of revenue, which was primarily related to journalism costs.
The Athletic adjusted operating loss totaled $6.8 million for the period of the first quarter from February 1, 2022.
NON-OPERATING ITEMS
Other Components of Net Periodic Benefit Costs
See Note 9 of the Notes to the Condensed Consolidated Financial Statements for information regarding other components of net periodic benefit costs.
Interest Income and other, net
See Note 7 of the Notes to the Condensed Consolidated Financial Statements for information regarding interest income/(expense)income and other, net.
Income Taxes
See Note 10 of the Notes to the Condensed Consolidated Financial Statements for information regarding income taxes.
Non-GAAP Financial MeasuresNON-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 expressed as a percentage of revenues, adjusted operating profit margin; and
•operating costs before depreciation, amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs).
The special item in 2021the first quarter of 2022 consisted of:
•a $3.8$34.7 million chargeof pre-tax costs ($2.825.4 million or $0.02$0.15 per share after tax) in the second quarter resulting from the termination of a tenant’s lease in our headquarters building.
The special item in 2020 consisted of:
•a $10.1 million gain ($7.4 million after tax or $0.04 per share) in the first quarter related to a non-marketable equity investment transaction.the acquisition of The gain is comprisedAthletic. Acquisition-related costs primarily include expenses paid in connection with the acceleration of $2.5 million realized gain due to the partial sale of the investmentThe Athletic stock options, and a $7.6 million unrealized gain due to the mark to market of the remaining investment,legal, accounting, financial advisory and is included in Interest income and other, net in our Condensed Consolidated Statements of Operations.integration planning expenses.
There were no special items in 2019.the first quarter of 2021.
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.
Adjusted diluted earnings per share provides useful information in evaluating the Company’s period-to-period performance because it eliminates items that the Company does not consider to be indicative of earnings from ongoing operating activities. Adjusted operating profit (and adjusted operating profit margin) is useful in evaluating the ongoing performance of the Company’s 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. Total operating costs, excluding these items, provide investors with helpful supplemental information on the Company’s underlying operating costs that is used by management in its financial and operational decision-making.
Management considers special items, which may include impairment charges, pension settlement charges, acquisition-related costs and other items that arise from time to time, to be outside the ordinary course of our operations. Management believes that excluding these items provides a better understanding of the underlying trends in the Company’s operating performance and allows more accurate comparisons of the Company’s operating results to historical performance. In addition, management excludes severance costs, which may fluctuate significantly from quarter to quarter, because it believes these costs do not necessarily reflect expected future operating costs and do not contribute to a meaningful comparison of the Company’s operating results to historical performance.
Included in our non-GAAP financial measures are non-operating retirement costs which are primarily tied to financial market performance and changes in market interest rates and investment performance. Management considers non-operating retirement costs to be outside the performance of the business and believes that presenting adjusted diluted earnings per share from continuing operations excluding non-operating retirement costs and presenting adjusted operating results excluding multiemployer pension plan withdrawal costs, in addition to the Company’s GAAP diluted earnings per share from continuing
operations and GAAP operating results, provide increased transparency and a better understanding of the underlying trends in the Company’s operating business performance.
Reconciliations of 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) | 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) | 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 | | |
| | June 27, 2021 | | June 28, 2020 | | % Change | | June 27, 2021 | | June 28, 2020 | | % Change | | March 27, 2022 | | March 28, 2021 | | % Change | |
Diluted earnings per share from continuing operations | Diluted earnings per share from continuing operations | | $ | 0.32 | | | $ | 0.14 | | | * | | $ | 0.57 | | | $ | 0.34 | | | 67.6 | % | Diluted earnings per share from continuing operations | | $ | 0.03 | | | $ | 0.24 | | | (87.5) | % | |
Add: | Add: | | Add: | | |
Severance | | — | | | 0.04 | | | * | | — | | | 0.04 | | | * | |
| Non-operating retirement costs: | Non-operating retirement costs: | | Non-operating retirement costs: | | |
Multiemployer pension plan withdrawal costs | Multiemployer pension plan withdrawal costs | | 0.01 | | | 0.01 | | | — | | | 0.02 | | | 0.02 | | | — | | Multiemployer pension plan withdrawal costs | | 0.01 | | | 0.01 | | | — | | |
Other components of net periodic benefit costs | Other components of net periodic benefit costs | | 0.02 | | | 0.01 | | | * | | 0.03 | | | 0.03 | | | — | | Other components of net periodic benefit costs | | 0.01 | | | 0.02 | | | (50.0) | % | |
Special items: | Special items: | | Special items: | | |
Acquisition-related costs | | Acquisition-related costs | | 0.21 | | | — | | | * | |
| Gain from non-marketable equity security | | — | | | — | | | * | | — | | | (0.06) | | | * | |
Lease termination charge | | 0.02 | | | — | | | * | | 0.02 | | | — | | | * | |
| Income tax expense of adjustments | Income tax expense of adjustments | | (0.01) | | | (0.02) | | | (50.0) | % | | (0.02) | | | (0.01) | | | * | Income tax expense of adjustments | | (0.06) | | | (0.01) | | | * | |
Adjusted diluted earnings per share from continuing operations(1) | Adjusted diluted earnings per share from continuing operations(1) | | $ | 0.36 | | | $ | 0.18 | | | * | | $ | 0.62 | | | $ | 0.35 | | | 77.1 | % | Adjusted diluted earnings per share from continuing operations(1) | | $ | 0.19 | | | $ | 0.26 | | | (26.9) | % | |
(1)Amounts may not add due to rounding.
* Represents a change equal to or in excess of 100% or not meaningful.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit) |
| | | | | | | | | | |
| | For the Quarters Ended |
| | 2021 | | 2020 | | 2021 vs 2020 % Change | | 2019 | | 2021 vs 2019 % Change |
Operating profit | | $ | 73,285 | | | $ | 28,806 | | | * | | $ | 37,933 | | | 93.2 | % |
Add: | | | | | | | | | | |
Depreciation and amortization | | 14,486 | | | 15,631 | | | (7.3) | % | | 15,180 | | | (4.6) | % |
Severance | | — | | | 6,305 | | | * | | 672 | | | * |
Multiemployer pension plan withdrawal costs | | 1,301 | | | 1,400 | | | (7.1) | % | | 1,801 | | | (27.8) | % |
Special items: | | | | | | | | | | |
Lease termination charge | | 3,831 | | | — | | | * | | — | | | * |
Adjusted operating profit | | $ | 92,903 | | | $ | 52,142 | | | 78.2 | % | | $ | 55,586 | | | 67.1 | % |
| | | | | | | | | | |
* Represents a change equal to or in excess of 100% or not meaningful. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of operating costs before depreciation and amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs) |
| | | | | | | | | | |
| | For the Quarters Ended |
| | 2021 | | 2020 | | 2021 vs 2020 % Change | | 2019 | | 2021 vs 2019 % Change |
Operating costs | | $ | 421,381 | | | $ | 374,944 | | | 12.4 | % | | $ | 398,325 | | | 5.8 | % |
Less: | | | | | | | | | | |
Depreciation & amortization | | 14,486 | | | 15,631 | | | (7.3) | % | | 15,180 | | | (4.6) | % |
Severance | | — | | | 6,305 | | | * | | 672 | | | * |
Multiemployer pension plan withdrawal costs | | 1,301 | | | 1,400 | | | (7.1) | % | | 1,801 | | | (27.8) | % |
Adjusted operating costs | | $ | 405,594 | | | $ | 351,608 | | | 15.4 | % | | $ | 380,672 | | | 6.5 | % |
| | | | | | | | | | |
* Represents a change equal to or in excess of 100% or not meaningful. |
| Reconciliation of operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit) | Reconciliation of operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit) | Reconciliation of operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit) |
| | | For the Six Months Ended | | For the Quarters Ended |
| | 2021 | | 2020 | | 2021 vs 2020 % Change | | 2019 | | 2021 vs 2019 % Change | | March 27, 2022 | | March 28, 2021 | | % Change | |
Operating profit | Operating profit | | $ | 124,943 | | | $ | 56,126 | | | * | | $ | 72,531 | | | 72.3 | % | Operating profit | | $ | 6,284 | | | $ | 51,658 | | | (87.8) | % | |
Add: | Add: | | Add: | | |
Depreciation and amortization | Depreciation and amortization | | 29,203 | | | 30,816 | | | (5.2) | % | | 30,098 | | | (3.0) | % | Depreciation and amortization | | 18,686 | | | 14,717 | | | 27.0 | % | |
Severance | Severance | | 406 | | | 6,675 | | | (93.9) | % | | 2,075 | | | (80.4) | % | Severance | | — | | | 406 | | | * | |
Multiemployer pension plan withdrawal costs | Multiemployer pension plan withdrawal costs | | 2,627 | | | 2,823 | | | (6.9) | % | | 3,250 | | | (19.2) | % | Multiemployer pension plan withdrawal costs | | 1,221 | | | 1,326 | | | (7.9) | % | |
Special items: | Special items: | | Special items: | | |
Lease termination charge | | 3,831 | | | — | | | * | | — | | | * | |
| Acquisition-related costs | | Acquisition-related costs | | 34,712 | | | — | | | * | |
Adjusted operating profit | Adjusted operating profit | | $ | 161,010 | | | $ | 96,440 | | | 67.0 | % | | $ | 107,954 | | | 49.1 | % | Adjusted operating profit | | $ | 60,903 | | | $ | 68,107 | | | (10.6) | % | |
Divided by: | | Divided by: | | | | | | | |
Revenue | | Revenue | | 537,425 | | | 473,045 | | | 13.6 | % | |
Adjusted operating profit margin | | Adjusted operating profit margin | | 11.3 | % | | 14.4 | % | | (310) bps | |
| * Represents a change equal to or in excess of 100% or not meaningful. | * Represents a change equal to or in excess of 100% or not meaningful. | * Represents a change equal to or in excess of 100% or not meaningful. |
| Reconciliation of operating costs before depreciation and amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs) | Reconciliation of operating costs before depreciation and amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs) | Reconciliation of operating costs before depreciation and amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs) |
| | | For the Six Months Ended | | For the Quarters Ended |
| | 2021 | | 2020 | | 2021 vs 2020 % Change | | 2019 | | 2021 vs 2019 % Change | | March 27, 2022 | | March 28, 2021 | | % Change | |
Operating costs | Operating costs | | $ | 842,768 | | | $ | 791,260 | | | 6.5 | % | | $ | 802,789 | | | 5.0 | % | Operating costs | | $ | 496,429 | | | $ | 421,387 | | | 17.8 | % | |
Less: | Less: | | Less: | | |
Depreciation & amortization | | 29,203 | | | 30,816 | | | (5.2) | % | | 30,098 | | | (3.0) | % | |
Depreciation and amortization | | Depreciation and amortization | | 18,686 | | | 14,717 | | | 27.0 | % | |
Severance | Severance | | 406 | | | 6,675 | | | (93.9) | % | | 2,075 | | | (80.4) | % | Severance | | — | | | 406 | | | * | |
Multiemployer pension plan withdrawal costs | Multiemployer pension plan withdrawal costs | | 2,627 | | | 2,823 | | | (6.9) | % | | 3,250 | | | (19.2) | % | Multiemployer pension plan withdrawal costs | | 1,221 | | | 1,326 | | | (7.9) | % | |
Adjusted operating costs | Adjusted operating costs | | $ | 810,532 | | | $ | 750,946 | | | 7.9 | % | | $ | 767,366 | | | 5.6 | % | Adjusted operating costs | | $ | 476,522 | | | $ | 404,938 | | | 17.7 | % | |
| * Represents a change equal to or in excess of 100% or not meaningful. | * Represents a change equal to or in excess of 100% or not meaningful. | * Represents a change equal to or in excess of 100% or not meaningful. |
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. Although there is uncertainty related to the anticipated continued effect of the Covid-19 pandemic on our business (as referenced above and in “Item 1A — Risk Factors” in our Annual Report on Form 10-K for the year ended December 27, 2020), given the strength of our balance sheet and based on the information currently available to us, we do not expect the impact of the pandemic to have a material impact on our liquidity position. As of JuneMarch 27, 2021,2022, we had cash, cash equivalents and short- and long-term marketable securities of $946.6$474.8 million. Our cash and marketable securities balances between the end of 2020December 26, 2021, and JuneMarch 27, 2021, increased,2022, decreased primarily due to cash proceeds from operating activities, partially offset by dividend payments, capital expendituresconsideration paid for the acquisition of The Athletic and share-basedthe annual incentive compensation tax withholding.payments.
We have paid quarterly dividends on the Class A and Class B Common Stock each quarter since late 2013. In February 2021,2022, the Board of Directors approved an increase in the quarterly dividend to $0.07$0.09 per share, which was paid in April 2021. On June 30, 2021, the Board of Directors declared a quarterly dividend of $0.07 per share on the Class A and Class B Common Stock, which was paid in July 2021.2022. We currently expect to continue to pay comparable cash dividends in the future, although changes in our dividends will be considered by our Board of Directors in light of our earnings, capital requirements, financial condition and other factors considered relevant.
In February 2022, the Board of Directors approved a $150.0 million Class A stock repurchase program. The authorization provides that Class A shares may be purchased from time to time as market conditions warrant, through open market purchases, privately negotiated transactions or other means, including Rule 10b5-1 trading plans. We expect to repurchase shares primarily to offset the impact of dilution from our equity compensation program, but subject to market conditions and other factors, we may also make opportunistic repurchases to reduce share count. There is no expiration date with respect to this authorization. As of March 27, 2022, we repurchased 692,800 shares for approximately $29.0 million under this authorization.
Capital Resources
Sources and Uses of Cash
Cash flows (used in)/provided by/(used in) by category were as follows:
| | | For the Six Months Ended | | | For the Quarters Ended | |
(In thousands) | (In thousands) | | June 27, 2021 | | June 28, 2020 | | % Change | (In thousands) | | March 27, 2022 | | March 28, 2021 | | % Change |
Operating activities | Operating activities | | $ | 110,434 | | | $ | 118,590 | | | (6.9) | % | Operating activities | | $ | (14,659) | | | $ | 32,929 | | | (144.5) | % |
Investing activities | Investing activities | | $ | (46,332) | | | $ | (72,938) | | | (36.5) | % | Investing activities | | $ | (84,009) | | | $ | (26,208) | | | 220.5 | % |
Financing activities | Financing activities | | $ | (30,285) | | | $ | (28,192) | | | 7.4 | % | Financing activities | | $ | (51,922) | | | $ | (18,108) | | | 186.7 | % |
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 and income taxes.
Net cash provided by operating activities decreased in the first six monthsquarter of 20212022 compared with the same prior-year period primarily due to lower net income, higher cash collections frompayments made to settle accounts receivable,payable, accrued payroll and other liabilities, an increase in other assets and lower cash payments received from prepaid subscriptions, partially offset by higher net income adjusted for non-cash items and lower cash payments made to settlecollections from accounts payable, accrued payroll and other liabilities.receivable.
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 monthsquarter of 20212022 was primarily related to $33.9$515.3 million in consideration paid for acquisitions, net purchases of marketable securitiescash acquired, and $14.7$8.6 million in capital expenditures payments.payments, partially offset by $440.4 million net maturities of marketable securities.
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 finance lease obligations and share-based compensation tax withholding.
Net cash used in financing activities in the first six monthsquarter of 20212022 was primarily related to share repurchases of $29.0 million, dividend payments of $21.8$11.8 million and share-based compensation tax withholding payments of $10.9$9.3 million.
Restricted Cash
We were required to maintain $14.6$14.4 million of restricted cash as of JuneMarch 27, 2021,2022, and $15.9$14.3 million as of December 27, 2020,26, 2021, substantially all of which is set aside to collateralize workers’ compensation obligations.
Capital Expenditures
Capital expenditures totaled approximately $15$10 million and $17$7 million in the first six monthsquarter of 20212022 and 2020,2021, respectively. The decreaseincrease in capital expenditures in 2022 was primarily driven by lower expenditures relatedimprovements in the Company Headquarters which are intended to improvements ataddress growth in the number of employees and to enhance technologies that support our College Point, N.Y., printingtransition to hybrid work with employees working both from the office and distribution facility and lower investments in technology, partially offset by improvements at our newsroom bureaus and Company Headquarters.remotely. The cash payments related to capital expenditures totaled approximately $15$9 million and $22$6 million in the first six monthsquarters of 20212022 and 2020,2021, respectively.
Third-Party Financing
In September 2019, we entered into a $250 million five-year unsecured credit facility (the “Credit Facility”). Certain of our domestic subsidiaries have guaranteed our obligations under the Credit Facility. As of JuneMarch 27, 2021,2022, there were no outstanding borrowings under the Credit Facility and the Company was in compliance with the financial covenants contained in the Credit Facility.
CRITICAL ACCOUNTING ESTIMATES AND POLICIES
Our critical accounting policies are detailed in our Annual Report on Form 10-K for the year ended December 27, 2020.26, 2021. Other than as described in Note 2 of the Notes to the Condensed Consolidated Financial Statements, as of JuneMarch 27, 2021,2022, our critical accounting policies have not changed from December 27, 2020.
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 27, 2020. As of June 27, 2021, our contractual obligations and off-balance sheet arrangements have not changed materially from December 27, 2020.26, 2021.
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 within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Terms such as “aim,” “anticipate,” “believe,” “confidence,” “contemplate,” “continue,” “conviction,” “could,” “drive,” “estimate,” “expect,” “forecast,” “future,” “goal,” “guidance,” “intend,” “likely,” “may,” “might,” “objective,” “opportunity,” “optimistic,” “outlook,” “plan,” “position,” “potential,” “predict,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “would” or similar statements or variations of such words and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. Forward-looking statements are based upon our current expectations, estimates and assumptions and involve risks and uncertainties that change over time; actual results could differ materially from those predicted by such forward-looking statements. These risks and uncertainties include, but are not limited to: the impact of the Covid-19 pandemic; significant competition in all aspects of our business; our ability to grow the size and profitability of our subscriber base; our dependence on metrics that are subject to inherent challenges in measurement; our ability to improve and scale our technical and data infrastructure and respond and adapt to changes in technology and consumer behavior; our ability to continue to retain and grow our subscriber base; numerous factors that affect our advertising revenues, including economic conditions, market dynamics, audience fragmentation, evolving digital advertising trends and the evolution of our strategy; damage to our brand or reputation; the impact of the Covid-19 pandemic; economic, geopolitical and other risks associated with the international scope of our business and foreign operations; our ability to attract and maintain a highly skilledtalented and diverse workforce; the impact of labor negotiations and agreements; adverse results from litigation or governmental investigations; risks associated with the recent acquisition of The Athletic, including, among others, those related to our ability to realize the anticipated benefits of the acquisition, our ability to meet our publicly announced guidance about the impact of the acquisition, and the risks associated with its business and operations; the risks and challenges associated with investments we make in new and existing products and services;services, including The Athletic; risks associated with other acquisitions, divestitures, investments and other transactions; thepotential effects on our operating flexibility as a result of the fixed cost nature of significant portions of our expenses; the effects of the size and volatility of our pension plan obligations; liabilities that may result from our participation in multiemployer pension plans; the impact of labor negotiations and agreements; increases in the price of newsprint or significant disruptions in our newsprint supply chain or newspaper printing and distribution channels;channels or a significant increase in the costs to print and distribute our newspaper; security breaches and other network and information systems disruptions; our ability to comply with laws and regulations, including with respect to privacy, data protection and consumer marketing practices; payment processing risk; defects, delays or interruptions in the cloud-based hosting services we utilize; our ability to protect our intellectual property; claims of intellectual property infringement that we have been, and may be in the future, be subject to; the effects of restrictions on our operations as a result of the terms of our credit facility; our future access to capital markets and other financing options; and the concentration of control of our company due to our dual-class capital structure.
More information regarding these risks and uncertainties and other important factors that could cause actual results to differ materially from those in the forward-looking statements is set forth in “Item 1A — Risk Factors” in our Annual Report
on Form 10-K for the year ended December 27, 2020,26, 2021, and “Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations” of this Form 10-Q. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our Annual Report on Form 10-K for the year ended December 27, 2020,26, 2021, details our disclosures about market risk. As of JuneMarch 27, 2021,2022, there were no material changes in our market risks from December 27, 2020.26, 2021.
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 JuneMarch 27, 2021.2022. 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
During the second quarter of 2021, we completed the implementation of (i) a new cloud-based procure-to-pay system relating to our procurement suppliers, and (ii) a new cloud-based system for digital advertising billing. In connection with these systems implementations, we updated our internal control over financial reporting to accommodate the resulting changes to our existing controls, systems and procedures.
There were no other changes in our internal control over financial reporting during the quarter ended JuneMarch 27, 2021,2022, other than as described in following paragraph, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
On February 1, 2022, we acquired The Athletic. We are currently planning the integration of The Athletic into our operations and internal control processes and, pursuant to the SEC’s guidance that an assessment of a recently acquired business may be omitted from the scope of an assessment in the year of acquisition, the scope of our assessment of the effectiveness of our internal controls over financial reporting at December 31, 2022, will not include The Athletic.
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 generally have damage claims that are greatly in excess of the payments, if any, that we would be required to pay if we lost or settled the cases. Although the Company cannot predict the outcome of these matters, it is possible that an unfavorable outcome in one or more matters could be material to the Company’s consolidated results of operations or cash flows for an individual reporting period. However, based on currently available information, management does not believe that the ultimate resolution of these matters, individually or in the aggregate, is likely to have a material effect on the Company’s financial position.
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 27, 2020.26, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(c) Issuer Purchases of Equity Securities
In 2015,February 2022, the Board of Directors authorized up to $101.1approved a $150.0 million of repurchases of shares of the Company’s Class A Common Stock. As of June 27, 2021, repurchases under thisstock repurchase program. The authorization totaled $84.9 million (excluding commissions) and $16.2 million remained. Our Board of Directors has authorized us to purchaseprovides that Class A shares may be purchased from time to time as market conditions warrant, through open market purchases, privately negotiated transactions or other means, including Rule 10b5-1 trading plans. We expect to repurchase shares primarily to offset the impact of dilution from our equity compensation program, but subject to market conditions and other factors.factors, we may also make opportunistic repurchases to reduce share count. There is no expiration date with respect to this authorization. There have been no purchasesAs of March 27, 2022, repurchases under this authorization since 2016.totaled approximately $29.0 million (excluding commissions) and approximately $121.0 million remained.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Period | | Total numbers of shares of Class A Common Stock purchased | | Average price paid per share of Class A Common Stock | | Total number of shares of Class A Common Stock purchased as part of publicly announced plans or programs | | Maximum number (or approximate dollar value) of shares of Class A Common Stock that may yet be purchased under the plans or programs |
January 31, 2022 - February 27, 2022 (1) | | 600,000 | | | $ | 41.77 | | | 600,000 | | | $ | 124,938,000 | |
February 28, 2022 - March 27, 2022 | | 92,800 | | | $ | 42.70 | | | 92,800 | | | $ | 120,979,000 | |
Total for the first quarter of 2022 | | 692,800 | | | $ | 41.89 | | | 692,800 | | | $ | 120,979,000 | |
(1) Reflects repurchases under the authorization approved on February 1, 2022. |
Item 6. Exhibits
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Exhibit No. | | |
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2.1* | | |
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31.1 | | |
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31.2 | | |
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32.1 | | |
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32.2 | | |
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101.INS | | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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101.SCH | | Inline XBRL Taxonomy Extension Schema Document. |
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101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
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101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
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101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document. |
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101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
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104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
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*Certain identified information has been excluded from this exhibit (indicated by an asterisk above) because it is both (i) not material and (ii) is the type of information that the registrant treats as private or confidential. Information that was omitted has been noted in the exhibit with a placeholder identified by the mark “[***]”. |
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) |
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Date: | AugustMay 4, 20212022 | /s/ Roland A. Caputo |
| | Roland A. Caputo Executive Vice President and Chief Financial Officer (Principal Financial Officer) |