SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / PreliminaryNotice of 1996
Annual Meeting
and Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Sec.240.14a-11(c) or Sec.240.14a-12[LOGO]
THE NEW YORK TIMES COMPANY
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
THE NEW YORK TIMES COMPANY
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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PROXY STATEMENT
Notice of 1995
Annual Meeting
and Proxy Statement
["NYT" logo]
The New York Times Company
229 West 43d Street, New York, N. Y.NY 10036
(212)212 556-1234
["NYT" logo][LOGO] The New York Times Company
229 West 43d Street, New York, N. Y. 10036 (212) 556-1234
March 13, 199512, 1996
To Our Stockholders:
Our 19951996 Annual Meeting of Stockholders will be held on Tuesday, April 18,16,
at 9:0030 A.M., local time, at Town Hall, 123 West 43rd Street, New York, N.Y.
10036. I am pleased to note that this will be the Spartanburg Herald-Journal, 200 Herald-Journal
Boulevard, Spartanburg, South Carolina 29303.100th Annual Meeting of our
Company.
The accompanying Notice of Annual Meeting and Proxy Statement set forth the
business intended to be transacted. Time will be made available for a discussion
of these items as well as for other questions about the business affairs of the
Company. As usual, all stockholders will be sent a report of the meeting.
This year our meeting will be held in Spartanburg, South Carolina, home of
the Spartanburg Herald-Journal. By holding the meeting in Spartanburg, we
continue our program of rotating some meetings outside New York to areas where
the Company has significant business activities. A map showing you how to reach
the meeting site appears on the outside back cover of this Proxy Statement.
It is important that your shares be represented at the meeting, whether or
not you are personally able to attend. Accordingly, please sign, date and mail
the enclosed proxy card in the return envelope as promptly as possible. Your
cooperation in this regard will be very much appreciated.
Sincerely yours,
/s/ Arthur Ochs SulzbergerARTHUR OCHS SULZBERGER
ARTHUR OCHS SULZBERGER
Chairman
["NYT" logo][LOGO] The New York Times Company
229 West 43d Street, New York, N. Y. 10036 (212) 556-1234
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held April 18, 199516, 1996
TO THE HOLDERS OF CLASS A AND CLASS B COMMON STOCK OF
THE NEW YORK TIMES COMPANY:
The Annual Meeting of the holders of the Class A and Class B Common Stock of
The New York Times Company (the "Company") will be held at the Spartanburg
Herald-Journal, 200 Herald-Journal Boulevard, Spartanburg, South Carolina 29303,Town Hall, 123 West
43rd Street, New York, N.Y. 10036, on Tuesday, April 18, 1995,16, 1996, at 9:0030 A.M.,
local time, for the following purposes:
1. To elect a Board of 15 members;
2. To consider and act upon a proposal to approveamend the Company's 1991
Executive Cash Bonus Plan and 1991
Executive Stock Incentive Plan as
amended to preservereserve an additional 10,000,000
shares of Class A Common Stock for issuance thereunder pursuant to the
tax deductibilityexercise of certain compensation paid
thereunder;stock options;
3. To ratify the selection of Deloitte & Touche LLP, independent
certified public accountants, as auditors for the fiscal year ending
December 31, 1995;29, 1996; and
4. To transact such other business as may properly come before the
meeting.
Holders of the Class A and Class B Common Stock of record at the close of
business on February 27, 1995,26, 1996, are entitled to notice of and to vote at this
meeting as set forth in the Proxy Statement. Class A stockholders are entitled
to vote for the election of five of the 15 directors. Class A and Class B
stockholders, voting together as a single class, are entitled to vote on the
proposal to approveamend the Company's amended 1991 Executive Cash Bonus and 1991 Executive Stock Incentive Plans,Plan, and for the
ratification of the selection of Deloitte & Touche LLP as auditors for 1995.1996.
Class B stockholders are entitled to vote for the election of 10 of the 15
directors and on all other matters presented to the meeting.
New York, N.Y.
March 13, 199512, 1996
By Order of the Board of Directors
/s/ Laura J. Corwin
LAURA J. CORWIN
Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. THIS IS IMPORTANT FOR
THE PURPOSE OF INSURING A QUORUM AT THE MEETING.
["NYT" logo][LOGO] THE NEW YORK TIMES COMPANY
PROXY STATEMENT
TABLE OF CONTENTS
Page
Solicitation of Proxies............................................................... 1
Voting Securities of the Company.................................................. 1
Principal Holders of Common Stock................................................. 1
Security Ownership of Management.................................................. 4
The 1986 Trusts................................................................... 6
Globe Voting Trust and Jordan Voting Trust........................................ 7
Proposal Number 1: Election of Directors.............................................. 9
Class A Directors................................................................. 9
Class B Directors................................................................. 11
Interest of Directors in Certain Transactions of the Company...................... 14
Certain Information about the Board of Directors.................................. 14
Compensation of Directors; Liability and Reimbursement Insurance.................. 15
Compensation of Executive Officers.................................................... 17
Summary Compensation Table........................................................ 17
Option Grants in Last Fiscal Year................................................. 18
Aggregated Option Exercises in Last Fiscal Year, and FY-End
Option Values................................................................... 19
Pension Plan Table................................................................ 19
Performance Presentation.......................................................... 21
Compensation Committee Report..................................................... 21
Compensation Committee Interlocks and Insider Participation....................... 24
Proposal Number 2: Approval of Amended 1991 Executive Cash Bonus and 1991 Executive
Stock Incentive Plans................................................................. 24
Purpose of Amendments............................................................. 24
Summary of Plans.................................................................. 25
Material Changes Effected by the Amendments....................................... 27
New Benefits...................................................................... 28
Federal Income Tax Consequences................................................... 29
Amendments; Non-exclusivity....................................................... 30
Recommendation and Vote Required.................................................. 31
Proposal Number 3: Selection of Auditors.............................................. 31
Other Matters......................................................................... 32
Discretionary Authority to Vote Proxy............................................. 32
Annual Report; Annual Report on Form 10-K......................................... 32
Submission of Stockholder Proposals............................................... 32
Annex A: 1991 Executive Cash Bonus Plan As Proposed to be Amended
Annex B: 1991 Executive Stock Incentive Plan As Proposed to be Amended
Appendix: 1994Page
Solicitation of Proxies.............................................. 1
Voting Securities of the Company................................. 1
Principal Holders of Common Stock................................ 1
Security Ownership of Management................................. 4
The 1986 Trusts.................................................. 6
Globe Voting Trust............................................... 7
Proposal Number 1: Election of Directors............................. 8
Class A Directors................................................ 9
Class B Directors................................................ 10
Interest of Directors in Certain Transactions of the Company..... 13
Certain Information about Executive Officers..................... 13
Certain Information about the Board of Directors................. 14
Compensation of Directors; Liability and Reimbursement Insurance. 15
Compensation of Executive Officers................................... 16
Summary Compensation Table....................................... 16
Option Grants in Last Fiscal Year................................ 17
Aggregated Option Exercises in Last Fiscal Year, and FY-End
Option Values.................................................. 18
Pension Plan Table............................................... 18
Performance Presentation......................................... 20
Compensation Committee Report.................................... 21
Compensation Committee Interlocks and Insider Participation...... 23
Proposal Number 2: Amendment of 1991 Executive Stock Incentive Plan.. 23
Purpose of the Amendment......................................... 23
Description of the Stock Plan.................................... 23
Federal Income Tax Consequences.................................. 26
Amendments; Non-exclusivity...................................... 27
Recommendation and Vote Required................................. 28
Proposal Number 3: Selection of Auditors............................. 28
Other Matters........................................................ 29
Discretionary Authority to Vote Proxy............................ 29
Annual Report; Annual Report on Form 10-K........................ 29
Submission of Stockholder Proposals.............................. 29
Appendix: 1995 Financial Report
THE NEW YORK TIMES COMPANY
PROXY STATEMENT
19951996 ANNUAL MEETING OF STOCKHOLDERS
- --------------------------------------------------------------------------------
SOLICITATION OF
PROXIES
- --------------------------------------------------------------------------------
The enclosed proxy is solicited by the Board of Directors of the Company for
use at the Annual Meeting of Stockholders to be held April 18, 1995,16, 1996, and at any
adjournment or adjournments thereof. A proxy may be revoked by notice in writing
to the Secretary at any time prior to the exercise thereof or by execution of a
proxy bearing a later date. Each valid proxy received in time will be voted at
the meeting, and, if a choice is specified, it will be voted in accordance with
such specification. This Proxy Statement and the proxies solicited hereby are
being first sent or delivered to stockholders of the Company on or about March
13, 1995.12, 1996. The cost of solicitation of proxies, including the reimbursement to
banks and brokers for reasonable expenses of sending proxy material to their
principals, will be borne by the Company. The Company has engaged Georgeson &
Co., Inc. to assist in the solicitation of proxies from brokers, banks,
institutions and other fiduciaries by mail, telephone, telegraph and facsimile
for a fee of $6,000$7,500 plus out-of-pocket expenses. In addition, proxies may be
solicited by officers of the Company in person or by mail, telephone telegraph or
facsimile.
VOTING SECURITIES OF THE COMPANY
The Company has two classes of outstanding voting securities, the Class A
Common Stock, 10 cents par value, and the Class B Common Stock, 10 cents par
value. As of February 27, 1995,26, 1996, there were outstanding 97,454,01297,225,562 shares of
Class A Common Stock and 430,178428,916 shares of Class B Common Stock. Only holders of
record of the Class A or Class B Common Stock at the close of business on
February 27, 1995,26, 1996, are entitled to vote at the meeting.
Each share of stock is entitled to one vote. The Class A stockholders have
limited voting rights and are entitled to vote for the election of five of the
15 directors. Class A and Class B stockholders, voting together as a single
class, are entitled to vote on the proposal to approveamend the Company's amended
1991 Executive Cash Bonus and 1991
Executive Stock Incentive Plans,Plan, and for the ratification of the selection of
Deloitte & Touche LLP as auditors for the fiscal year ending December 31, 1995.29, 1996.
The Class B stockholders are entitled to vote for the election of 10 of the 15
directors and on all other matters presented to the meeting.
PRINCIPAL HOLDERS OF COMMON STOCK
The following table sets forth the only persons who, to the knowledge of
management, owned beneficially on February 27, 1995,26, 1996, more than 5% of the
outstanding shares of either Class A or Class B Common Stock:
NAME AND ADDRESS SHARES (%)
- ------------------------------------------------------- ----------------------------
CLASS A CLASS B
---------- -------
1986 Trusts(1,2)....................................... 3,694,050(4.2%) 369,405(85.6%)
229 West 43d Street
New York, NY
Marian S. Heiskell(1,2,3,4)............................ 6,528,039(6.7%) 370,890(85.9%NAME AND ADDRESS SHARES (%)
- ----------------------------------- ----------------------------
CLASS A CLASS B
---------- -------
1986 Trusts(1,2)................... 3,694,050(3.8%) 369,405(86.1%)
229 West 43d Street
New York, NY
Marian S. Heiskell(1,2,3,4)........ 6,392,459(6.5%) 370,890(86.5%)
229 West 43d Street
New York, NY
1
NAME AND ADDRESS SHARES (%)
- ------------------------------------------------------- ----------------------------
CLASS A CLASS B
---------- -------
Ruth S. Holmberg(1,2,3,5).............................. 7,169,386(7.3%) 370,590(85.8%)
117 Tenth Street
Chattanooga, TN
Judith P. Sulzberger(1,2,3,6).......................... 7,110,945(7.3%) 370,590(85.8%)
229 West 43d Street
New York, NY
Arthur Ochs Sulzberger(1,2,3,7)........................ 7,930,288(8.1%) 371,190(86%)
229 West 43d Street
New York, NY
Jordan Voting Trust(8)................................. 6,608,787(6.8%) 0
William O. Taylor, Robert A. Lawrence
and Roland D. Grimm, Trustees
c/o Boston Safe Deposit & Trust Co.
One Boston Place
Boston, MA 02108
William O. Taylor(8,9)................................. 11,565,684(11.9%) 0
135 Morrissey Boulevard
Boston, MA 02107
Robert A. Lawrence(8).................................. 6,627,785(6.8%) 0
Saltonstall & Co.
50 Congress Street
Boston, MA 02109
Roland D. Grimm(8)..................................... 6,614,508(6.8%) 0
P.O. Box 8680
St. Thomas, V.I. 00801
The Capital Group Companies, Inc.(10).................. 7,686,540(7.9%NAME AND ADDRESS SHARES (%)
- --------------------------------------- ----------------------------
CLASS A CLASS B
---------- -------
Ruth S. Holmberg(1,2,3,5).............. 7,136,216(7.3%) 370,590(86.4%)
117 Tenth Street
Chattanooga, TN
Judith P. Sulzberger(1,2,3,6).......... 7,082,235(7.3%) 370,590(86.4%)
229 West 43d Street
New York, NY
Arthur Ochs Sulzberger(1,2,3,7)........ 7,987,949(8.2%) 371,190(86.5%)
229 West 43d Street
New York, NY
Globe Voting Trust(8).................. 6,149,816(6.3%) 0
William O. Taylor, Charles H. Taylor,
Benjamin B. Taylor, Benjamin Beale Baker
and Nancy B. Soulette, Trustees
c/o Bingham Dana & Gould
150 Federal Street
Boston, MA 02110
William O. Taylor(8,9)................. 6,305,327(6.5%) 0
135 Morrissey Boulevard
Boston, MA 02107
Charles H. Taylor(8,10)................ 6,154,816(6.3%) 0
Globe Voting Trust
c/o Bingham Dana & Gould
150 Federal Street
Boston, MA 02110
Benjamin B. Taylor(8,11)............... 6,445,228(6.6%) 0
135 Morrissey Boulevard
Boston, MA 02107
Nancy B. Soulette(8,12)................ 6,149,835(6.3%) 0
Globe Voting Trust
c/o Bingham Dana & Gould
150 Federal Street
Boston, MA 02110
Benjamin Beale Baker(8,13)............. 6,149,816(6.3%) 0
Globe Voting Trust
c/o Bingham Dana & Gould
150 Federal Street
Boston, MA 02110
The Capital Group Companies, Inc.(14).. 6,013,250(6.2%) 0
333 South Hope Street
Los Angeles, CA 90071
- ------------
1. Each of Mrs. Heiskell, Mrs. Holmberg, Dr. Sulzberger and Mr. Sulzberger, as
trustees of the 1986 Trusts (as defineddescribed below in "The 1986 Trusts"), share
voting and investment power with respect to the shares owned by the 1986
Trusts; thus under current Securities and Exchange Commission ("SEC")
regulations, each may be deemed a beneficial owner of the shares held by
such 1986 Trusts. The shares held by the 1986 Trusts are therefore included
in the amounts listed in this table opposite the names of all four of the
foregoing persons. As a result of this presentation, there are substantial
duplications in the number of shares and percentages shown in the table.
2. Class B Common Stock is convertible into Class A Common Stock on a
share-for-share basis. Ownership of Class B Common Stock is therefore deemed
to be beneficial ownership of Class A Common Stock under current SEC regulations.
For purposes of the table of Class A ownership, it has been assumed that
each person listed therein as holding Class B Common Stock has converted
into Class A Common Stock all shares of Class B Common Stock of which that
person is deemed the beneficial owner. Thus all shares of Class B Common
Stock held by the 1986 Trusts and by Mrs. Heiskell, Mrs. Holmberg, Dr.
Sulzberger and Mr. Sulzberger have been included in the calculation of the
total amount of Class A Common Stock owned by each such person as well as in
the calculation of the total amount of Class B Common Stock
2
owned by each such person. As a result of this presentation, there are
substantial duplications in the number of shares and percentages shown in
the table.
3. The holdings of Class A Common Stock recordedreported for Mrs. Heiskell, Mrs.
Holmberg, Mr. Sulzberger and Dr. Sulzberger include 54,600 shares of Class A
Common Stock held by The Sulzberger Foundation, Inc., a private foundation
of which they are officers and directors. The holdings of Class A Common
Stock recorded for each of Mrs. Heiskell, Mrs. Holmberg and Dr. Sulzberger
include 4,0005,000 shares which could be acquired within 60 days under the
Company's Non-Employee Directors' Stock Option Plan.
4. In addition to the amounts of Class A and B Common Stock set forth in notes
1, 2 and 3, the holdings of Class A Common Stock recorded for Mrs. Heiskell
include 2,759,5012,622,921 shares of Class A Common Stock held directly and 14,403
shares of Class A Common Stock held by a trust of which Mrs. Heiskell is a
trustee, which was created by Mrs. Heiskell's mother for onea child of her
grandchildren.Mr.
Sulzberger.
5. In addition to the amounts of Class A and B Common Stock set forth in notes
1, 2 and 3, the holdings of Class A Common Stock recorded for Mrs. Holmberg
include 3,410,5113,376,341 shares of Class A Common
2
Stock held directly and 5,040
shares of Class A Common Stock held by three trusts of which Mrs. Holmberg
is a trustee, which were created by Mr. Holmberg for his children.
6. In addition to the amounts of Class A and Class B Common Stock set forth in
notes 1, 2 and 3, the holdings of Class A Common Stock recorded for Dr.
Sulzberger include 3,357,1103,327,400 shares of Class A Common Stock held directly.
7. In addition to the amounts of Class A and Class B Common Stock set forth in
notes 1, 2 and 3, the holdings of Class A Common Stock recordedreported for Mr.
Sulzberger include 3,239,3903,222,400 shares of Class A Common Stock held directly,
14,403 shares of Class A Common Stock held by a trust of which Mr.
Sulzberger is a trustee, which was created by his mother for a child of Mr.
Sulzberger, 750,000 shares of Class A Common Stock held by a trust created
by Mrs. Heiskell of which Mr. Sulzberger is the trustee and 176,060250,711 shares
of Class A Common Stock which could be acquired pursuant to options granted
under the Company's Executive Incentive Compensation Plan and the Company's
1991 Executive Stock Incentive Plan (the "Plans"). The holdings of Class A
Common Stock recorded for Mr. Sulzberger exclude 200,180 shares of Class A
Common Stock owned by his wife as her separate property. Mr. Sulzberger
disclaims beneficial ownership of such shares. Mr. Sulzberger also holds
59,27367,047 retirement units (right under the Plans to receive shares of Class A
Common Stock in ten annual installments upon retirement), which are excluded
from the amounts shown.
8. Each of Mr.Messrs. Taylor, Mr. LawrenceMs. Soulette and Mr. Grimm,Baker, as trustees of the JordanGlobe Voting
Trust (as described below in "Globe Voting Trust and Jordan Voting Trust"), share voting and investment power with
respect to the 6,608,7876,149,816 shares of Class A Common Stock held by the Jordan Trust (as definedGlobe
Voting Trust. Except as set forth below in "Globe Voting
Trustthis note 8 and Jordan Voting Trust").in notes 9-13,
Messrs. Taylor, LawrenceMs. Soulette and GrimmMr. Baker have no economic interest in
these shares and have no beneficial interest in the JordanGlobe Voting Trust.
Because Messrs. Taylor, LawrenceMs. Soulette and GrimmMr. Baker have the power to vote
these shares, SEC rules also require inclusion of such shares in the
Company's listing of each such person's beneficial ownership of Company
stock. As a result of this presentation, there are substantial duplications
in the number of shares and percentages shown in the table.
9. The shares in
the Jordan Voting Trust are subject to the Globe Stockholders Agreement (as
defined in "Globe Voting Trust and Jordan Voting Trust"). See "Globe Voting
Trust and Jordan Voting Trust." The sharesholdings reported for Mr. Lawrence include
17,998 shares held directly and 1,000 shares which could be acquired within
60 days under the Company's Non-Employee Directors' Stock Option Plan. The
shares reported for Mr. Grimm include 1,636 shares held directly and 4,085
shares which could be acquired pursuant to options granted under a stock
option plan of Affiliated Publications, Inc., former parent company of The
Boston Globe ("API"). These options were converted into options to purchase
Class A Common Stock upon the acquisition of API by the Company.
9. The holdings recorded for Mr.William O. Taylor include the following
181,406169,356 shares of Class A Common Stock in which Mr. Taylor has an economic
interest: (a) 82,45860,717 shares held directly, (b) 8,437 shares held by a trust
of which Mr. Taylor is a co-trustee and sole beneficiary, (c) 63,419 shares
held through ownership of units in the Globe Voting Trust (as defineddescribed
below in "Globe Voting
Trust and Jordan Voting Trust") by a trust of which Mr. Taylor is a
co-trustee and sole beneficiary, (d) 426 shares held through ownership of
units in the Globe Voting Trust by Mr. Taylor, (e) 630 shares held by Mr.
Taylor's wife, and (f) 11,79235,727 shares which could be acquired pursuant to
options granted under the Company's 1991 Executive Stock Incentive Plan and (g) 14,244 shares
which could be acquired pursuant to options granted under stock option plans
of API (options were converted into options to purchase Class A Common Stock
upon the acquisition of API by the Company). In addition, the holdings
recorded for Mr. Taylor include the 6,608,787 shares held by the Jordan
Voting Trust as described in note 8.Plan.
Finally, the holdings recorded for Mr. Taylor also include 4,775,49150,000 shares of
Class A Common Stock held through various trustsa trust (other than the JordanGlobe Voting
Trust) of which Mr. Taylor is co-trustee. Of these shares, 4,678,591 have been deposited with the Globe
Voting Trust. Mr. Taylor has no economic
interest in these shares and is not a beneficiary of any such trust with respect
to such shares. Because Mr. Taylor shares the power to vote, and in some
cases, to dispose of or direct the disposition of, these shares, SEC rules
require inclusion of such shares in the Company's listing of his beneficial
ownership of Company stock.
Of10. The holdings reported for Mr. Charles H. Taylor include the following
326,960 shares in which Mr. Taylor has an economic interest: (a) 5,000
shares held directly, (b) 73,560 shares held through ownership of units in
the Globe Voting Trust (as described below in "Globe Voting Trust") by Mr.
Taylor, and (c) 248,400 shares held through ownership of units in the Globe
Voting Trust by a trust of which Mr. Taylor is a co-trustee and a
co-beneficiary in certain limited situations. Mr. Taylor's holdings also
include 199,656 shares of Class A Common Stock recorded as beneficially owned by Mr.
Taylor, 8,949,939 shares, including 2,198,718 shares held through ownership of
units in the Globe Voting Trust are subjectby a trust of which Mr. Taylor is a
co-trustee. Mr. Taylor has no economic interest in these shares and is not a
beneficiary of such trust with respect to such shares. Because Mr. Taylor
shares the power to vote and, in some cases, to dispose of or direct the
disposition of the shares, SEC rules require inclusion of such shares in the
Company's listing of his beneficial ownership of Company stock.
11. The holdings reported for Mr. Benjamin B. Taylor include the following
262,749 shares in which Mr. Taylor has an economic interest: (a) 1,104
shares held directly, (b) 14,199 shares held by a trust of which
3
Mr. Taylor is sole trustee and sole beneficiary, (c) 194,312 shares held
through ownership of units in the Globe Stockholders Agreement. SeeVoting Trust (as described below in
"Globe Voting Trust") by a trust of which Mr. Taylor is a co-trustee and
sole beneficiary, (d) 5,343 shares held through ownership of units in the
Globe Voting Trust by Mr. Taylor as custodian for the benefit of his
children, (e) 1,338 shares held through ownership of units in the Globe
Voting Trust by a trust of which Mr. Taylor's wife is a co-trustee and Jordansole
beneficiary, (f) 12,853 shares which could be acquired pursuant to options
granted under the Company's 1991 Executive Stock Incentive Plan and (g)
33,600 shares which could be acquired pursuant to options granted under
stock option plans of Affiliated Publications, Inc., former parent company
of The Boston Globe ("API") (these options were converted into options to
purchase Class A Common Stock upon the acquisition of API by the Company).
Finally, Mr. Taylor's holdings include 233,656 shares of Class A Common
Stock held through two trusts (other than the Globe Voting Trust."
10.Trust) of which
Mr. Taylor is co-trustee. Mr. Taylor has no economic interest in these
shares and is not a beneficiary of either trust with respect to such shares.
Because Mr. Taylor shares the power to vote and, in some cases, to dispose
or direct the disposition of these shares, SEC rules require the inclusion
of such shares in the Company's listing of his beneficial ownership of
Company Stock.
12. The shares reported for Ms. Soulette include the following 92,219 shares in
which Ms. Soulette has an economic interest: (a) 19 shares held directly and
(b) 92,200 shares held through ownership of units in the Globe Voting Trust
by Ms. Soulette.
13. The shares reported for Mr. Baker include 276,657 shares in which Mr. Baker
has an economic interest, which shares are held through ownership of units
in the Globe Voting Trust by Mr. Baker.
14. According to information contained in its filing with the SEC pursuant to
Section 13(g) of the Securities Exchange Act of 1934, as amended, as of
December 31, 1994,1995, The Capital Group Companies, Inc. had investment power
over 7,686,5406,013,250 shares of Class A Common Stock through its subsidiaries,
Capital Guardian Trust Company (2,477,340(2,426,850 shares) and Capital Research and
Management Company (5,209,200(3,586,400 shares). According to such filing, such shares
were acquired in the ordinary course of business and were not acquired for
the purpose of and do not have the effect of changing or influencing the
control
3
of the Company. The Capital Group Companies, Inc. has advised the
Company that all such shares are owned by accounts under discretionary
investment management of such subsidiaries and that none of such accounts by
itself owns 5% or more of the outstanding Class A Common Stock.
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the beneficial ownership, reported to the Company
as of February 27, 1995,26, 1996, of Class A Common Stock, Class B Common Stock and 5
1/2% Cumulative Prior Preference Stock, including shares as to which a right to
acquire ownership exists (for example, by the exercise of stock options, or the
conversion of Class B Common Stock into Class A Common Stock) within the meaning
of Rule 13d-3(d)(1) under the Securities Exchange Act of 1934, as amended, of
each director and nominee, the chief executive officer and the four other most
highly compensated executive officers of the Company and all directors, nominees
and executive officers of the Company, as a group. A portion of the shares
reported below are held by the 1986 Trusts the Globe Voting Trust and the JordanGlobe Voting Trust, whose
trustees share voting and, in some cases, investment power with respect thereto.
See "1986 Trusts" and "Globe Voting Trust and Jordan Voting Trust."
5 1/2%
CUMULATIVE PRIOR
COMMON STOCK PREFERENCE STOCK
---------------------------- ----------------
CLASS A CLASS B
---------- -------
John F. Akers(1).................... 8,000(*9,000(*) 0 0
Director
Richard L. Gelb(1).................. 13,000(*14,000(*) 0 0
Director
Louis V. Gerstner, Jr.(2)........... 5,500(*6,500(*) 0 0
Director
David L. Gorham(3).................. 91,066(*76,800(*) 0 0
Senior Vice President and Deputy
Chief FinancialOperating Officer
Marian S. Heiskell(4,10)............ 6,528,039(6.7%Heiskell(4,9)............. 6,392,459(6.5%) 370,890(85.9%370,890(86.5%) 0
Director
A. Leon Higginbotham, Jr.(5)........ 2,200(*3,200(*) 0 0
Director
Ruth S. Holmberg(4,10).............. 7,169,386(7.3%) 370,590(85.8%) 698(3.9%)
Director
Robert A. Lawrence(6)............... 6,627,785(6.8%) 0 0
Director
Walter E. Mattson(7)................ 108,669(*) 0 0
Director
George B. Munroe(2)................. 5,000(*) 0 0
Director
Charles H. Price II(1).............. 5,000(*) 0 0
Director
Lance R. Primis(8).................. 141,605(*) 0 0
President
George L. Shinn(1).................. 6,000(*) 0 0
Director
Donald M. Stewart(1)................ 4,200(*) 0 0
Director
Arthur Ochs Sulzberger(4,10)........ 7,930,288(8.1%) 371,190(86%) 185(1%)
Chairman of the Board and Chief
Executive Officer
Arthur Ochs Sulzberger, Jr.(9,10)... 109,503(*) 480(*) 185(1%)
Publisher of The New York Times
4
5 1/2%
CUMULATIVE PRIOR
COMMON STOCK PREFERENCE STOCK
---------------------------- ----------------
CLASS A CLASS B
---------- -------
Ruth S. Holmberg(4,9)............... 7,136,216(7.3%) 370,590(86.4%) 698(4%)
Director
Robert A. Lawrence(6)............... 19,998(*) 0 0
Director
George B. Munroe(2)................. 6,000(*) 0 0
Director
Charles H. Price II(1).............. 6,000(*) 0 0
Director
Lance R. Primis(7).................. 175,063(*) 0 0
President and Chief Operating
Officer
George L. Shinn(1).................. 7,000(*) 0 0
Director
Donald M. Stewart(1)................ 7,275(*) 0 0
Director
Arthur Ochs Sulzberger(4,9)......... 7,987,949(8.2%) 371,190(86.5%) 185(1.1%)
Chairman of the Board and Chief
Executive Officer
Arthur Ochs Sulzberger, Jr.(8,9).... 102,653(*) 480(*) 180(1%)
Publisher of The New York Times
Judith P. Sulzberger(4,10).......... 7,110,945(7.3%Sulzberger(4,9)........... 7,082,235(7.3%) 370,590(85.8%370,590(86.4%) 185(1%185(1.1%)
Director
William O. Taylor(6)................ 11,565,684(11.9%Taylor(10)............... 6,305,327(6.5%) 0 0
Director, Publisher of The Boston
Globe and Chief Executive Officer
of Globe Newspaper Company
Cyrus R. Vance(1)................... 10,200(*11,200(*) 0 0
Director
All Directors, Nominees and
Executive Officers(10)Officers(9) (31
individuals)........................ 30,043,169(30.4%...................... 24,620,009(24.9%) 376,084(87%376,644(87.8%) 1,248(7%1,573(9%)
- ------------
* Less than 1%.
1. The amount reported for this director includes 5,000 shares of Class A
Common Stock which could be acquired within 60 days pursuant to options
under the Company's Non-Employee Directors' Stock Option Plan.
2. The amount reported for this director includes 4,000 shares of Class A
Common Stock which could be acquired within 60 days pursuant to options
under the Company's Non-Employee Directors' Stock Option Plan.
2. The amount reported for this director includes 3,000 shares of Class A
Common Stock which could be acquired within 60 days pursuant to options
under the Company's Non-Employee Directors' Stock Option Plan.
3. The amount reported for Mr. Gorham includes 13,22713,542 shares of Class A Common
Stock held directly, including 400 shares held by Mr. Gorham's children, the
beneficial ownership of which Mr. Gorham disclaims, and 77,83963,258 shares which
could be acquired within 60 days pursuant to options under the Company's
1991 Executive Stock Incentive Plan and Executive Incentive Compensation
Plan (the "Plans"). (see(See "Compensation of Executive Officers," table of
"Aggregated Option Exercises in Last Fiscal Year, and FY-End Option
Values.") Mr. Gorham also holds 2,6762,735 retirement units (right under the
Plans to receive shares of Class A Common Stock in ten annual installments
upon retirement), which are excluded from the amount shown.
4. See "Principal Holders of Common Stock" and "1986 Trusts" for a discussion
of this director's holdings.
5. The amount reported for Judge Higginbotham includes 2,0003,000 shares of Class A
Common Stock which could be acquired within 60 days pursuant to options
under the Company's Non-Employee Directors' Stock Option Plan.
6. See "Principal Holders of Common Stock"The shares reported for Mr. Lawrence include 17,998 shares held directly and
"Globe Voting Trust and Jordan
Voting Trust" for a discussion of this director's holdings.2,000 shares which could be acquired within 60 days under the Company's
Non-Employee Directors' Stock Option Plan.
7. The amount reported for Mr. MattsonPrimis includes 2128,289 shares of Class A Common
Stock held directly, 107,648 shares which could be acquired within 60 days
pursuant to options under the Company's Plans and 1,000 shares which could
be acquired within 60 days pursuant to options under the Company's Non-
Employee Directors' Stock Option Plan.
8. The amount reported for Mr. Primis includes 38,157 shares of Class A Common
Stock, including 800 shares held as custodian for Mr. Primis's
minor child, the beneficial ownership of which Mr. Primis disclaims, and
103,448146,774 shares which could be acquired within 60 days pursuant to options
(Footnotes continued on following page)
5
(Footnotes continued from preceding page)
under the Company's Plans (see "Compensation of Executive Officers," table
of "Aggregated Option Exercises in Last Fiscal Year, and FY-End Option
Values").
9.8. The amount reported for Mr. Sulzberger, Jr. includes 10,14418,843 shares of Class
A Common Stock held directly, of which 6,9999,703 shares are held jointly with
Mr. Sulzberger, Jr.'s wife; 5,3355,995 shares held by trusts of which Mr.
Sulzberger, Jr. is a trustee, which were created by Mr. Sulzberger, Jr.'s
cousin for the benefit of the latter's children and of which Mr. Sulzberger,
Jr. disclaims beneficial ownership;
93,54483,330 shares which could be acquired within 60 days pursuant to options
under the Company's Plans (see "Compensation of Executive Officers," table
of "Aggregated Option Exercises in Last Fiscal Year, and FY-End Option
Values"); and 480 shares which could be acquired upon conversion of Mr.
Sulzberger, Jr.'s 480 shares of Class B Common Stock. The holdings of Class
A Common Stock recorded for Mr. Sulzberger, Jr. exclude 8,080 shares held by
Mr. Sulzberger, Jr.'s wife as custodian for their minor children; Mr.
Sulzberger, Jr. disclaims beneficial ownership of these shares.
(Footnotes continued on following page)
5
(Footnotes continued from preceding page)
10.9. Class B Common Stock is convertible into Class A Common Stock on a
share-for-share basis. Ownership of Class B Common Stock is therefore deemed
to be beneficial ownership of Class A Common Stock under SEC regulations.
For purposes of the presentation of ownership of Class A Common Stock in
this table, it has been assumed that each director, nominee and executive
officer has converted into Class A Common Stock all shares of Class B Common
Stock of which that person is deemed the beneficial owner. Thus all shares
of Class B Common Stock held by the directors, nominees and executive
officers, including shares held by the 1986 Trusts, have been included in
the calculation of the total amount of Class A Common Stock owned by such
group as well as in the calculation of the total amount of Class B Common
Stock owned by such group.
10. See "Principal Holders of Common Stock" and "Globe Voting Trust" for a
discussion of Mr. Taylor's holdings.
The Company's directors and executive officers are required to file reports
with the SEC of changes in their ownership of Company stock. Based on its review
of such reports, the Company believes that all filing requirements were met by
its directors and executive officers during 19941995 except that Mr. Mattson
inadvertentlyThomas H. Nied, an
executive officer, filed athree late report on the crediting and reinvestment by the
Company of dividend equivalents payable on retirement units held in his account.
Retirement units are rights under the Company's Plans to receive Class A Common
Stock in ten annual installments upon retirement.reports respecting five transactions.
THE 1986 TRUSTS
Mrs. Heiskell, Mrs. Holmberg, Dr. Sulzberger, and Mr. Sulzberger (the
"grantors") (see "Principal Holders of Common Stock") have executed indentures
creating four separate trusts (the "1986 Trusts"), one for the benefit of each
of the grantors and his or her family. Each grantor transferred to the 1986
Trust for his or her family the shares of Class B Common Stock and a portion of
the Class A Common Stock that he or she inherited from Adolph S. Ochs.
The grantors are the initial trustees of the 1986 Trusts. Each of the 1986
Trusts will continue in existence until the expiration of 21 years after the
death of the survivor of all descendants of the mother of the grantors, Mrs.
Iphigene Ochs Sulzberger ("Mrs. Sulzberger") living on August 5, 1986. Each
Indenture of Trust is subject to the terms and provisions of a shareholders
agreement (the "Shareholders Agreement") among the grantors, their children and
the Company, which restricts the transfer of Class B Common Stock transferred to
the 1986 Trusts by requiring, prior to any sale or transfer, the offering of
those shares among the other family shareholders (including the 1986 Trusts) and
then to the Company at the Class A Common Stock market price then prevailing (or
if the Company is the purchaser, at the option of the selling shareholder, in
exchange for Class A Common Stock on a share-for-share basis), and the
conversion of such shares into Class A Common Stock if such purchase rights are
not exercised and the shares are to be transferred to a person or persons other
than family shareholders or the Company. There are certain exceptions for gifts
and other transfers within the family of Adolph S. Ochs provided that the
recipients become parties to the Shareholders Agreement.
In addition, the Shareholders Agreement provides that if the Company is a
party to a merger (other than a merger solely to change the Company's
jurisdiction of incorporation), consolidation or
6
plan of liquidation in which the Class B Common Stock is exchanged for cash,
stock, securities or any other property of the Company or of any other
corporation or entity, each signing shareholder will convert his or her shares
of Class B Common Stock into Class A Common Stock prior to the effective date of
such transaction so that a holder of such shares will receive the same cash,
stock or other consideration that a holder of Class A Common Stock would receive
in such a transaction. Except for the foregoing, each signing shareholder has
agreed not to convert any shares of Class B Common Stock received from a trust
created under the will of Adolph S. Ochs into Class A Common Stock. The
Shareholders Agreement will terminate upon the expiration of 21 years after the
death of the survivor of all descendants of Mrs. Sulzberger living on August 5,
1986. The trustees of the 1986 Trusts have also signed the Shareholders
Agreement and become parties thereto.
6
The trustees of each 1986 Trust, subject to the limited exceptions described
below, are directed to retain the Class B Common Stock held in each 1986 Trust
and not to sell, distribute or convert such shares into Class A Common Stock and
to vote such Class B Common Stock against any merger, sale of assets or other
transaction pursuant to which control of The New York Times passes from the
trustees unless they unanimously determine that the primary objective of the
1986 Trusts, which is to maintain the editorial independence and integrity of
The New York Times and to continue it as an independent newspaper, entirely
fearless, free of ulterior influence and unselfishly devoted to the public
welfare, can be achieved better by the sale, distribution or conversion of such
stock or by the implementation of such transaction. If upon such determination
any Class B Common Stock is distributed to the beneficiaries of the 1986 Trusts,
it must be distributed only to descendants of Mrs. Sulzberger, subject to the
provisions of the Shareholders Agreement. Similarly, any sale by the 1986 Trusts
of Class B Common Stock upon such determination can be made only in compliance
with the Shareholders Agreement.
The trustees of each 1986 Trust are granted various powers and rights,
including among others: (i) to vote all the shares of Class A and Class B Common
Stock held by such 1986 Trusts; (ii) to fill any vacancy in the office of
trustee; (iii) to remove any successor trustee; and (iv) to amend certain
provisions of the Trust Indenture, but not the provisions relating to retaining
the Class B Common Stock or the manner in which such shares may be distributed,
sold or converted. The trustees act by the affirmative vote of three trustees,
except that prior to any sale or distribution of Class B Common Stock outside of
the 1986 Trusts or conversion of Class B Common Stock or a vote to approve a
merger, sale of assets or other transaction pursuant to which control of The New
York Times passes from the trustees, the trustees must unanimously determine
that the primary purpose of the 1986 Trusts as described above is best achieved
by such distribution, sale, conversion or other transaction. Unanimity is also
required for the amendment of those provisions of the Trust Indenture which may
be amended. An original trustee may not be removed unless physically or mentally
incapable of discharging the duties of trustee.
Upon the termination of the 1986 Trusts at the end of the stated term
thereof, the shares of Class A and Class B Common Stock held by such trusts will
be distributed to the descendants then living of Mrs. Sulzberger.
GLOBE VOTING TRUST
AND JORDAN VOTING TRUST
The Globe Voting Trust was established on October 1, 1954, and amended on
October 1, 1993, the effective date of the Company's acquisition of API, the
parent company of The Boston Globe (the "API Acquisition"). UnitsPrior to January 16,
1996, another voting trust, the Jordan Voting Trust, beneficially owned
6,608,787 shares of Class A Common Stock, which had been received pursuant to
the API Acquisition by a trust created by one of the founders of The Boston
Globe for the benefit of his descendants. On January 16, 1996, the Jordan Voting
Trust terminated and certain beneficiaries thereof deposited with the Globe
Voting Trust 1,881,027 shares of Class A Common Stock received upon liquidation
of the Jordan Voting Trust. As a result, units in the Globe Voting Trust now
represent
4,742,4367
6,149,816 shares of Class A Common Stock received pursuant to the API
Acquisition, principally by descendants of one of the two founders of The Boston Globe
or by trusts for their benefit.
Subject to the
terms of the Globe Stockholders Agreement (as defined below), theThe trustees of the Globe Voting Trust have the sole power to exercise all
voting rights of stockholders with respect to shares of the Company's Class A
Common Stock deposited therein. Holders of Globe Voting Trust units, subject to
certain disposition restrictions contained in the Globe Voting Trust, have the
power to dispose, or to direct the disposition, of Globe Voting Trust Unitsunits or
the underlying shares of the Company's Class A Common Stock. The Globe Voting
Trust restricts the number of shares of Class A Common Stock subject thereto
that can be sold by any one person in a year, restricts sales to broker's
transactions and sales to the Company, and requires that priorthe trustees of the
Globe Voting Trust give notice to the saleCompany if any holder of Globe Voting
Trust units withdraws from the Globe Voting Trust more than 1,00010,000 shares in the
aggregate in any calendar year, such shares in excess of 1,000
must be offered to the Company at the prevailing market price.year. Such restrictions and requirements do not apply
to the sale or gift to another beneficiary of such trust or a descendant of one of the
two founders of The Boston Globe; however, in such case the transferee shall be
subject to the terms of the Globe Voting Trust. To the extent any such units are subject to the Globe Stockholders
Agreement, their disposition is further restricted as described below. The Globe Voting Trust
terminates on September 30, 2003. William O. Taylor is one of the five trustees
of the Globe Voting Trust.
7
The Jordan Voting Trust was established on January 29, 1987. Units in the
Jordan Voting Trust represent the 6,608,787 shares of Class A Common Stock
received pursuant to the API Acquisition by a trust created by one of the
founders of The Boston Globe for the benefit of his descendants (the "Jordan
Trust"). The trustees of the Jordan Voting Trust share all voting rights and
investment power with respect to the shares in this trust. However, all the
shares of Class A Common Stock in the Jordan Voting Trust are subject to the
terms of the Globe Stockholders Agreement. The Jordan Voting Trust and its
underlying trust, the Jordan Trust, terminate on January 16, 1996. The
beneficiaries of the Jordan Trust who receive shares of Class A Common Stock on
liquidation of the trust will be offered the opportunity to deposit such shares
with the Globe Voting Trust. William O. Taylor and Robert A. Lawrence are two of
the three trustees of the Jordan Voting Trust and the Jordan Trust.
Neither the Globe Voting Trust nor the Jordan Voting Trust is not the beneficial owner of any of the shares of
Class B Common Stock of the Company.
Pursuant to a Stockholders Agreement entered into in connection with the API
Acquisition (the "Globe Stockholders Agreement"), holders of Globe Voting Trust
Units representing 2,198,718 shares of Class A Common Stock (out of 4,742,436
shares held by the Globe Voting Trust) and the trustees of the Jordan Voting
Trust and the Jordan Trust have agreed (i) to vote (or cause to be voted) all
their shares of Class A Common Stock (8,795,199 shares in the aggregate) as
recommended by the Board of Directors of the Company, with certain exceptions
for certain dispositions of assets and charter and by-law amendments and (ii)
generally not to sell, transfer or offer to sell any such shares received
pursuant to the API Acquisition. These provisions of the Globe Stockholders
Agreement terminate on January 16, 1996. Management expects the trustees of the
Globe Voting Trust and the Jordan Voting Trust to vote the shares in these
trusts which are subject to the Globe Stockholders Agreement for the nominees
for directors of the Company listed below and for the other proposal described
in this proxy statement.
8
- --------------------------------------------------------------------------------
PROPOSAL NUMBER 1
ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
The persons named as proxies intend (unless authority is withheld) to vote
for the election as directors of the persons hereinafter named (the "Nominees"),
upon their nomination for such office at the Annual Meeting. Directors so
elected will hold office until the next Annual Meeting and until their
successors are elected and qualified.
The Certificate of Incorporation of the Company provides that Class A
stockholders have the right to vote for the election of 30% of the Board of
Directors, or the nearest larger whole number, if such percentage is not a whole
number. Accordingly, the Class A stockholders will elect five of the 15
directors, and Class B stockholders will elect 10 directors. Directors are
elected by a plurality of the votes cast.
The five Nominees for election as directors by the Class A stockholders are
Louis V. Gerstner, Jr., A. Leon Higginbotham, Jr., Robert A. Lawrence, Charles
H. Price II and Donald M. Stewart. The 10 Nominees for election as directors by
the Class B stockholders are John F. Akers, Richard L. Gelb, Marian S. Heiskell,
Ruth S. Holmberg, George B. Munroe, George L. Shinn, Arthur Ochs Sulzberger,
Judith P. Sulzberger, William O. Taylor and Cyrus R. Vance. Except as described
above in "Principal Holders of Common Stock" and "The 1986 Trusts," there are no
marriage, blood or adoption relationships among the Nominees. All of the
Nominees are currently directors of the Company and were elected at the Annual
Meeting of Stockholders held on April 19, 1994,18, 1995, for which proxies were
solicited. Walter E. Mattson, currently a director, has determined not to stand
for re-election. The Board of Directors has amended the by-laws to provide that
the size of the Board will be reduced to 15 members, effective April 18, 1995. Messrs. Taylor and Lawrence were elected directors by the Board in
October 1993, immediately following the consummation of the API Acquisition. Mr.
Taylor was formerly Chairman of the Board of API, and Mr. Lawrence was a
director of API. Their election to the Company's board was required by the
Agreement and Plan of Merger, dated as of June 11, 1993, as amended as of August
12, 1993, among the Company, its subsidiary, Sphere, Inc., and API (the "API
Merger Agreement"). The API Merger Agreement also requires the Company to cause
Messrs. Taylor and Lawrence to be nominees for director at least through the
Company's 1998 annual meeting. See "Interest of Directors in Certain
Transactions of the Company."
If any of the Nominees should become unavailable for election, all
uninstructed proxies will be voted for the election of such other person or
persons as may be designated by the Board, but the Board has no reason to
anticipate that this will occur. The following information is furnished with
respect to each of the Nominees and is based on information submitted by the
person named:
8
- --------------------------------------------------------------------------------
Name, Principal Occupation, and Other Information
- --------------------------------------------------------------------------------
CLASS A DIRECTORS
[PHOTO] LOUIS V. GERSTNER, JR.
Chairman, Director and Chief Executive Officer, International
[Photograph]
Business Machines Corporation ("IBM") (development,
manufacture and sale of advanced information-processing
products) from 1993
Chairman, Director and Chief Executive Officer, RJR Nabisco
Holdings Corp. from 1989 to 1993 (consumer products)
President, American Express Company (from 1985 to 1989)
(diversified financial and travel services)
Director of Bristol-Myers Squibb Company
Director Since: 1986
Committee Memberships: Finance (Chairman) and Compensation
Age: 53
9
- --------------------------------------------------------------------------------
Name, Principal Occupation, and Other Information
- --------------------------------------------------------------------------------54
[PHOTO] THE HONORABLE A. LEON HIGGINBOTHAM, JR.
Of counsel, Paul, Weiss, Rifkind, Wharton & Garrison (law
[Photograph]
firm) from 1993
Public Service Professor of Jurisprudence, Kennedy School of
Government,
Harvard University, from 1994
Senior Circuit Judge for the United States Court of Appeals,
Third Circuit (from 1991 to 1993); Chief Judge for the United
States Court of Appeals, Third Circuit (from 1990 to 1991);
Circuit Judge for the United States Court of Appeals, Third
Circuit (from 1977 to 1991)
Director Since: 1993
Committee Memberships: Audit and Employee Retirement Income
Security Act ("ERISA")
Age: 6768
[PHOTO] ROBERT A. LAWRENCE
Partner, Saltonstall & Co. from 1984 (family trust and
[Photograph]
investment office)
Director or Trustee of 12 funds managed by Metropolitan Life
Insurance Co., State Street Research and Management Co. and
affiliates
Director Since: 1993
Committee Membership: Compensation and ERISA
Age: 6869
9
- --------------------------------------------------------------------------------
Name, Principal Occupation, and Other Information
- --------------------------------------------------------------------------------
[PHOTO] THE HONORABLE CHARLES H. PRICE II
Chairman, Mercantile Bank of Kansas City from 1992, and
[Photograph]
Director, Mercantile Bancorp (bank holding company) from 1992
Chairman (from 1989 to 1992), President and Chief Executive
Officer (from 1990 to 1992), Ameribanc, Inc. (bank holding
company)
Director of Hanson PLC, Texaco Inc., Sprint Corporation and
British Airways PLCU.S. Industries, Inc.
United States Ambassador to the United Kingdom of Great
Britain and Northern Ireland from 1983 to 1989
Director Since: 1989
Committee Memberships: Compensation and Employee Stock
Purchase Plan ("ESPP")
Age: 63
10
- --------------------------------------------------------------------------------
Name, Principal Occupation, and Other Information
- --------------------------------------------------------------------------------64
[PHOTO] DONALD M. STEWART
President of The College Board from 1987 (association of high
[Photograph]
schools and colleges, sponsor of Scholastic Assessment Tests
and other academic activities)
Director of Principal Financial Group (Bankers Life of Iowa
Insurance
Company) and Campbell Soup Company, Trustee, Educational
Broadcasting Corporation (Thirteen/WNET-TV)
Director Since: 1986
Committee Memberships: ERISA (Chairman) and Audit
Age: 5657
CLASS B DIRECTORS
[PHOTO] JOHN F. AKERS
Consultant and
Director of various corporations
[Photograph]
Chairman (from 1986 to 1993), Director (from 1983 to 1993),
Chief Executive Officer (from 1985 to 1993), and President
(from 1983 to 1989), IBM
Director of PepsiCo, Inc., Springs Industries, Inc. and, Zurich
Insurance Company-U.S., Lehman Brothers Holdings, Inc. and
Hallmark Cards, Inc.
Director Since: 1985
Committee Memberships: Compensation and Finance
Age: 6061
10
- --------------------------------------------------------------------------------
Name, Principal Occupation, and Other Information
- --------------------------------------------------------------------------------
[PHOTO] RICHARD L. GELB
Consultant and Director of various corporations and
not-for-profit entities
Chairman Emeritus (from 1995), Chairman (from 1976)1976 to 1995),
President (from 1972 to 1976), Chief
[Photograph] Executive Officer (from
1972 to 1993) and Director (from 1960), Bristol-Myers Squibb
Company (a diversified healthcare company)
Director of New York Life Insurance Company and Bessemer
Securities Corporation
Director Since: 1974
Committee Memberships: Compensation (Chairman) and Finance
Age: 7071
[PHOTO] MARIAN S. HEISKELL
Chairman, The New 42nd Street, Inc.
[Photograph]
Director of various charitable organizations
Former Special Activities Director of the Company, Director of
various corporations from 1971 to 1991
Director Since: 1963
Committee Memberships: ESPP (Chairman) and CompensationFinance
Age: 76
11
- --------------------------------------------------------------------------------
Name, Principal Occupation, and Other Information
- --------------------------------------------------------------------------------77
[PHOTO] RUTH S. HOLMBERG
Chairman, Times Printing Company (The Chattanooga Times
[Photograph]
newspaper), from 1992
Publisher, The Chattanooga Times, from 1964 to 1992
Director Since: 1961
Committee Memberships: Finance and ERISA
Age: 7475
[PHOTO] GEORGE B. MUNROE
Director of various corporations and not-for-profit entities
[Photograph]
Consultant (from 1987 to 1990), Chairman (from 1975 to 1987),
Chief Executive Officer (from 1969 to 1987) and Director (from
1966 to 1994),
Phelps Dodge Corporation (copper mining, manufacturing and
specialty chemicals)
Director of New York Life Insurance Company and Santa Fe Pacific Gold Corporation
Director Since: 1988
Committee Membership: Audit (Chairman) and Finance
Age: 7374
11
- --------------------------------------------------------------------------------
Name, Principal Occupation, and Other Information
- --------------------------------------------------------------------------------
[PHOTO] GEORGE L. SHINN
Consultant and Corporate Director of various corporations
[Photograph]
Chairman of the Board and Chief Executive Officer (from 1976
to 1983) and Director (from 1976 to 1988), First Boston, Inc.
(international investment bank)
Trustee of 3638 funds of the Colonial Group of Mutual Funds
Director of Phelps Dodge Corporation
Director Since: 1978
Committee Memberships: Audit, ERISA and ESPP
Age: 7273
[PHOTO] ARTHUR OCHS SULZBERGER
Chairman and Chief Executive Officer of the Company from 1973
[Photograph]
Publisher, The New York Times, from 1963 to 1992
Director Since: 1959
Age: 69
12
- --------------------------------------------------------------------------------
Name, Principal Occupation, and Other Information
- --------------------------------------------------------------------------------70
[PHOTO] JUDITH P.
SULZBERGER
Physician, Columbia College of Physicians & Surgeons, from
[Photograph]
1992
Attending Physician, St. Luke's-Roosevelt Hospital Center,
Division of Allergy, Clinical Immunology and Infectious
Diseases, from 1986 to 1991
Director Since: 1974
Committee Memberships: ESPP and ERISA
Age: 7172
[PHOTO] WILLIAM O. TAYLOR
Publisher, The Boston Globe from 1978, Chairman and Chief
[Photograph]
Executive Officer, Globe Newspaper Company, from 1982
Chairman and Chief Executive Officer (from 1982 to 1993),
President (from 1992 to 1993) and Director (from 1972 to
1993), Affiliated Publications, Inc.
Director Since: 1993
Committee Membership: Finance
Age: 6263
[PHOTO] CYRUS R. VANCE
Partner, Simpson Thacher & Bartlett (law firm)
[Photograph]
Director Since: 1975 (resigned January 1977 to become
Secretary of State; rejoined Board June 1980)
Committee Memberships: Audit
Age: 77
1378
12
INTEREST OF DIRECTORS IN CERTAIN TRANSACTIONS OF THE COMPANY
1. In the ordinary course of business, the Company and its subsidiaries from
time to time engage in transactions with other corporations or financial
institutions whose officers or directors are also directors of the Company. Such
transactions are conducted on an arm's length basis and may not come to the
attention of the directors or officers of the Company or of the other
corporations or financial institutions involved.
During 1994, the Company
retained (a) Simpson Thacher & Bartlett, the law firm in which Mr. Vance is a
partner, in connection with certain post-closing matters arising from the
acquisition of API and (b) Paul, Weiss, Rifkind, Wharton & Garrison, the law
firm in which Judge Higginbotham is of counsel, in connection with a pending
litigation matter.
2. During 1994,1995, Arthur Ochs Sulzberger, Jr., Mr. Sulzberger's son, was
employed as Publisher of The New York Times; Stephen Golden, Mrs. Holmberg's
son, was employed as Vice President, Forest Products, Health, Safety and
Environmental Affairs, of the Company; Michael Golden, Mrs. Holmberg's son, was
employed as Executive Vice President, & General Manager, NYT Women's Magazines,
Executive Vice President, NYT Sports/Leisure Magazines, and as Vice
President and Publisher, Tennis magazine; Daniel Cohen, Dr. Sulzberger's son,
was employed as Group Director, Promotion,Advertising Sales, and Group Director,as Vice President,
Advertising Sales, both in the Advertising Department of The New York Times; and
Susan W. Dryfoos, Mrs. Heiskell's daughter, was employed as Director, Times
History Project.Productions. On January 1, 1996, Mr. Michael Golden became Vice
President, Operations Development, of the Company. With respect to services
performed for the Company in 1994,1995, Mr. Stephen Golden earned $185,000$200,000 and a
bonus of $168,600;$158,600; Mr. Michael Golden earned $212,500$230,000 and a bonus of $183,600;$45,598;
and Mr. Cohen earned $141,000$148,000 and a bonus of $50,400. In addition, Mr. Stephen
Golden and Mr. Michael Golden earned bonuses of $78,600$46,325 and $90,600$53,380
respectively, which represented payments under the Company's long-term bonus
program. See "Compensation of Executive Officers" for a description of Mr.
Sulzberger, Jr.'s compensation and "Compensation Committee Interlocks and
Insider Participation" for a description of Ms. Dryfoos's compensation.
3. On October 1, 1993, the Company completed the acquisition of API, the
parent company of The Boston Globe. Pursuant to the API Merger Agreement,
Messrs. Taylor and Lawrence were elected directors of the Company and named to
the Finance and Compensation Committees respectively. They will be included as
nominees for director at least through the 1998 annual meeting, provided they
are willing and able to serve.
The API Merger Agreement also provides Mr. Taylor (and his successors as
publisher of The Boston Globe) certain management and other rights (including
agreements relating to the composition of the board of directors, the management
and the continued separate existence of Globe Newspaper Company ("GNC"), the
Company's subsidiary that owns The Boston Globe). Mr. Taylor has an employment
agreement with GNC that provides that he will remain employed until December 31,
1998, at the salary (as adjusted in the ordinary course) and with the benefits
that he received prior to the merger. In addition, it provides that if his
employment ends as a result of a termination without cause, or as a result of
certain reasons specified therein, Mr. Taylor will become immediately vested in
all outstanding stock options, will become eligible for continued health
insurance coverage and outplacement services and will be entitled to receive the
larger of two salary settlement arrangements, one of which is the present value
of the sum of 125% of base salary and the target bonus for the remaining term of
the agreement, and the other of which is one dollar less than three times Mr.
Taylor's "base amount" as defined in Section 280G of the Internal Revenue Code
of 1986.
CERTAIN INFORMATION ABOUT EXECUTIVE OFFICERS
Diane P. Baker, the Company's Senior Vice President and Chief Financial
Officer, served as Chief Financial Officer of R. H. Macy & Co., Inc. ("Macy's")
from June 1990 to January 1995, as well as Senior Vice President-Finance from
June 1990 to April 1993 and Group Senior Vice President from April 1993 to
January 1995. Stuart Stoller, the Company's Vice President and Corporate
Controller, served in various corporate accounting positions at Macy's and its
predecessor company from 1980 through 1994, including Group Vice
President--Control and Accounting from August 1991 to November 1993 and Senior
Vice President--Control and Accounting from November 1993 to January 1995.
13
In January 1992, Macy's and substantially all of its subsidiaries filed
voluntary petitions for reorganization under chapter 11 ("Chapter 11") of the
United States Bankruptcy Code. A Chapter 11 plan of reorganization for Macy's
was confirmed and substantially consummated in December 1994.
CERTAIN INFORMATION ABOUT THE BOARD OF DIRECTORS
The Company has standing Audit, Compensation, Employee Retirement Income
Security Act ("ERISA"), Employee Stock Purchase Plan ("ESPP") and Finance
Committees. The Company does not have a standing nominating committee.
During 19941995 the Board of Directors had nine meetings. In addition, its
standing committees, Audit, Compensation, ERISA, ESPP and Finance, held a total
of 1619 meetings. All directors of the
14
Company attended 75% or more of the total
meetings of the Board and committees of the Board of which they are members.
In summary, the functions performed by these committees, their number of
meetings and memberships are as follows:
The Audit Committee selects the independent auditors for the Company
(subject to ratification by the stockholders), reviews the scope and results of
the annual audit, approves the services to be performed by the independent
auditors, reviews the independence of the auditors, reviews the performance and
fees of the independent auditors, reviews the adequacy of the system of internal
accounting controls and reviews the scope and results of internal auditing
procedures. The current members of the Audit Committee are George B. Munroe,
Chairman, A. Leon Higginbotham, Jr., George L. Shinn, Donald M. Stewart and
Cyrus R. Vance. The Committee held three meetings during 1994.1995.
The Compensation Committee adopts and oversees the administration of
compensation plans for executive officers and senior management of the Company,
determines awards granted senior management under such plans, approves
remuneration arrangements for senior management, including all executive
officers of the Company, and reviews the reasonableness of all such
compensation. The current members of the Compensation Committee are Richard L.
Gelb, Chairman, John F. Akers, Louis V. Gerstner, Jr., Marian S. Heiskell,
Robert A. Lawrence and
Charles H. Price II. As required by the API Merger Agreement, Mr. Lawrence was
made a member of the Compensation Committee in October 1993 upon his election to
the Board of Directors. The Committee held threefour meetings during 1994.1995.
The ERISA Committee appoints the members of the employee benefits committee
of the Company, appoints and reviews the performance of the trustees and
investment managers of the Company's pension plans and establishes and amends
the Company's employee welfare and pension benefit plans and related trusts. The
current members of the ERISA Committee are Donald M. Stewart, Chairman, A. Leon
Higginbotham, Jr., Ruth S. Holmberg, Robert A. Lawrence, George L. Shinn and
Judith P. Sulzberger. The Committee held two meetings in 1994.1995.
The ESPP Committee oversees the administration of the Employee Stock
Purchase Plan for eligible employees of the Company and its subsidiaries. In
that connection, the Committee has authority to adopt, administer and interpret
such rules and regulations concerning the ESPP and offerings thereunder as it
may deem advisable. The current members of the ESPP Committee are Marian S.
Heiskell, Chairman, Walter E. Mattson, Charles H. Price II, George L. Shinn and Judith P.
Sulzberger. The Committee held one meeting in 1994.1995.
The Finance Committee reviews the financial policies of the Company
including, without limitation, dividend policy, repurchase of the Company's
stock, short- and long-term financing, material acquisitions and dispositions
and capital expenditures. The current members of the Finance Committee are Louis
V. Gerstner, Jr., Chairman, John F. Akers, Richard L. Gelb, RuthMarian S. Holmberg,
Walter E. Mattson,Heiskell,
George B. Munroe and William O. Taylor. As required by the API Merger Agreement,
Mr. Taylor was made a member of the Finance Committee in October 1993 upon his
election to the Board of Directors. The Committee held sevennine meetings in 1994.1995.
14
COMPENSATION OF DIRECTORS; LIABILITY AND REIMBURSEMENT INSURANCE
Under the By-Laws, the directors do not receive a salary for their services,
but may receive an annual retainer and a fixed sum for attendance at Board and
committee meetings. Pursuant to resolutions of the Board, non-employee directors
receive an annual retainer of $25,000, payable in quarterly installments of
$6,250 and a fee of $1,000 for attendance at each Board and Committee meeting.
In addition, they are paid their expenses of attendance. For 19941995 the Company
paid $570,224$547,189 in the form of retainers, meeting fees and expenses of attendance.
In addition, in 1991 each non-employee director began receiving annually an
option to purchase 1,000 shares of the Company's Class
15
A Common Stock pursuant
to the Company's Non-Employee Directors' Stock Option Plan. Such options, which
are granted each year on the date of the Company's annual stockholders meeting
with an exercise price equal to the market value of the Class A Common Stock on
such date, become exercisable on the date of the next succeeding annual meeting
and remain exercisable for nine years thereafter.
Each director may participate in the Company's Matching Gifts Program,
pursuant to which the Company will match 150% of charitable contributions made
by such directors to colleges, schools, cultural or environmental organizations,
up to a maximum Company contribution of $4,500 per person per year.
The Company maintains life insurance on the life of each director who is not
also an employee of the Company in the amount of $100,000. The income required
by the Internal Revenue Service to be imputed in 19941995 to non-employee directors
because of the life insurance coverage was $7,560$7,200 in the aggregate. The Company
also maintains life insurance on the life of each non-employee director who
retired after 1991 in the amount of $25,000.
The Company has purchased directors' and officers' liability and
reimbursement insurance from the American Casualty Company of Reading,
Pennsylvania. The policy was purchased effective January 1, 1995,1996, for a period of one year.two years.
The combined limit of liability for the insurance is $25,000,000$50,000,000 for the
policy yeartwo-year term and the annualtotal cost to the Company is $269,063.
16$578,952. The insurers
providing the insurance are Columbia Casualty Company of Chicago, Illinois
($25,000,000), Gulf Insurance Company of St. Louis, Missouri ($15,000,000), and
Reliance Insurance Company of Philadelphia, Pennsylvania ($10,000,000).
15
- --------------------------------------------------------------------------------
COMPENSATION OF EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The following tables and discussion summarize the compensation of the chief
executive officer of the Company and each of the four other most highly
compensated executive officers of the Company for the fiscal year ended December
31, 1994.1995.
SUMMARY COMPENSATION TABLE
Long Term Compensation
---------------------------------------------------------------------
Annual Compensation Awards Payouts
------------------------------- ------------------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted
Annual Stock Stock LTIP All Other
Name and Principal Salary Bonus Compensation Awards Options Payouts Compensation
Name and Principal Position Year ($) ($) ($)(1) ($) (#)(2) ($)(3) ($)(4)
- ------------------------------------------------------- ---- ------- -------- ------------ ---------- ------- --------------------------- ------------
Arthur Ochs Sulzberger....Sulzberger....... 1995 555,000 822,200 0 0 75,840 198,220 4,500
Chairman and Chief 1994 535,000 822,200(5) 8,248 0 100,000 336,300(5) 4,500
Chairman and ChiefExecutive Officer 1993 515,000 384,560 0 0 92,571 0 5,896
Executive Officer 1992 497,500 588,350 0 0 47,187 0 5,722
Lance R. Primis...........Primis.............. 1995 460,000 665,800 5,855 0 48,827 149,345 4,500
President and Chief 1994 435,000 665,800 0 0 70,000 241,838 4,500
PresidentOperating Officer 1993 415,000 265,760 0 0 48,840 0 7,075
1992 373,000 305,725Arthur Ochs Sulzberger, Jr... 1995 428,000 510,200 0 0 34,289 0 4,820
Arthur Ochs Sulzberger,40,057 132,685 3,500
Publisher of The New 1994 408,000 510,200 0 0 48,573 225,150 3,500
Jr........................York Times 1993 390,000 194,089 0 0 40,094 0 2,500
William O. Taylor............ 1995 407,019 161,777 0 0 40,057 0 0
Publisher of The New 1992 373,140 361,200 0 0 29,344 0 2,500
York Times
William O. Taylor......... 1994 397,000 153,451 0 0 48,573 0 0
Publisher of TheBoston Globe(6) 1993 95,500 124,250 0 0 47,170 0 0
Boston Globe(6)
David L. Gorham...........Gorham.............. 1995 358,000 364,000 0 0 34,514 109,480 4,500
Senior Vice President 1994 330,000 353,400 3,300 0 33,920 185,700 4,500
Senior Vice PresidentDeputy Chief Operating 1993 310,000 259,390 0 0 27,811 0 7,075
Chief Financial Officer 1992 297,000 243,775 0 0 22,345 0 6,866
- ------------
1. Amounts shown with respect to Mr. Sulzberger and Mr. Gorham represent
reimbursement of the employee portion of the Medicare tax on the vested value
of accruals under the Company's non-qualified retirement plans. With respect
to Mr. Primis, such amount represents reimbursement for taxes related to
personal use of corporate aircraft.
2. The provisions of the stock options, among other things, allow an optionee
exercising an option to satisfy the exercise price and withholding tax
obligations by electing to have the Company withhold shares of stock
otherwise issuable under the option with a market value equal to such
obligations or by delivering to the Company shares of Class A Common Stock
with a market value equal to such obligations.
3. The last outstanding long-term incentive award cycle will endended in 1995. For
cycles ending after 1989 and before 1994, targets were not met under the plan
and therefore no payments were made under the plan for cycles ending in 1990,
1991, 1992 and 1993.
4. Amounts shown in column (i) represent amounts contributed by the Company as
50% matching contributions for the first 6% of earnings contributed by or on
behalf of the named individuals to the Company's Supplemental Retirement and
Investment Plan.
5. $395,000 of Mr. Sulzberger's bonus for 1994 and $136,300 of his LTIP payout
for 1994 consisted of 23,828 retirement units, the right under the Company's
1991 Executive Stock Incentive Plan to receive shares of the Company's Class
A Common Stock in ten equal annual installments commencing upon Mr.
Sulzberger's retirement. The retirement units are included in the table at
values of $22.5625 per unit (for 17,507 units) and $21.5625 per unit (for
6,321 units), the average prices of shares of the Company's Class A Common
Stock on the dates of grant.
6. The Company acquired Affiliated Publications, Inc., the owner of The Boston
Globe, on October 1, 1993; and Mr. Taylor became an executive officer of the
Company at that time. The information provided for 1993 only includes amounts
paid and options granted after such date.
1716
OPTION GRANTS IN LAST FISCAL YEAR
Grant Date
Individual Grants(1)(#) Value(2)
- --------------------------------------------------------------------------------------- -----------------
(a) (b) (c) (d) (e) (f)
% of Total
Options
Options Granted to Exercise or
Granted Employees in Base Price Expiration Grant Date
Name (#) Fiscal Year ($/SH) Date Present Value ($)
- ---------------------------------------- ------- ------------ ----------- ---------- -----------------
Arthur Ochs Sulzberger.................. 100,000 4.14 22.562575,840 3.73 29.75 12/16/2004 810,00021/2005 725,789
Lance R. Primis......................... 70,000 2.90 22.562548,827 2.40 29.75 12/16/2004 567,10021/2005 467,274
Arthur Ochs Sulzberger, Jr. ............ 48,573 2.01 22.562540,057 1.97 29.75 12/16/2004 393,44121/2005 383,345
William O. Taylor....................... 48,573 2.01 22.562540,057 1.97 29.75 12/16/2004 393,44121/2005 383,345
David L. Gorham......................... 33,920 1.41 22.562534,514 1.70 29.75 12/16/2004 274,75221/2005 330,299
- ------------
1. The options granted to the named individuals in 19941995 become exercisable in
installments of 25% of the original grant on each of the first through fourth
anniversaries of the grant date. All options are for Class A Common Stock and
have an exercise price equal to the market value of the stock on the grant
date. All options were granted under the Company's 1991 Executive Stock
Incentive Plan, the provisions of which, among other things, allow an
optionee exercising an option to satisfy the exercise price and withholding
tax obligations by electing to have the Company withhold shares of stock
otherwise issuable under the option with a market value equal to such
obligations or by delivering to the Company shares of Class A Common Stock
with a market value equal to such obligations.
2. In accordance with the rules of the SEC, "Grant Date Value" has been
calculated using the Black-Scholes model of option valuation, adjusted to
reflect an option term of 7.447.02 years, which represents the weighted average
(by number of options) over the past 10 years of the length of time between
the grant date of options under the Company's plans and their exercise date
for all option exercises by the named executive officers and five others who
were named executive officers during that period. The model also assumes: (a)
an interest rate that represents the interest rate on a U.S. Treasury Bond
with a maturity date corresponding to that of the adjusted option term of
7.447.02 years; (b) volatility calculated using weekly stock prices for the five
years (260 weeks) prior to the grant date; and (c) dividends for 19941995 at the
rate of $.56 per share, which was the total amount of dividends paid with
respect to a share of Class A Common Stock in 1994.1995. Based on this model, the
calculated value of the options on the December 16, 1994,21, 1995, grant date, was
determined to be $8.10$9.57 per option.
1817
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND FY-END OPTION VALUES(1)
(a) (b) (c-1) (c-2) (d) (e)
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
Shares Aggregate Annualized FY-End (#) FY-End ($)
Acquired Value Value Exercisable/ Exercisable/
Name On Exercise (#) Realized ($)(2) Realized ($)(3) Unexercisable(4) Unexercisable(5)
- ---------------------------------------------------- --------------- ------------- ------------- --------------- --------------- ---------------- ------------------
Arthur Ochs Sulzberger.....Sulzberger... 0 N/A N/A 176,060/207,734 120,967/31,261250,711/208,923 1,439,856/717,833
Lance R. Primis............ 4,398 25,151 2,515 103,448/132,199 87,172/17,901Primis.......... 3,380 16,372 1,637 146,774/134,320 856,746/478,707
Arthur Ochs Sulzberger,
Jr. ....................... 0 N/A N/A 93,544/102,464 91,787/19,440..................... 48,864 320,294 70,234 83,331/103,870 361,180/346,985
William O. Taylor(6)....... 20,932 208,945 49,400 26,036/83,951 115,156/0..... 14,244 223,767 53,305 35,728/100,072 159,463/330,990
David L. Gorham............ 0 N/A N/A 77,839/72,918 57,281/14,803Gorham.......... 42,566 303,065 64,885 63,258/79,447 263,234/243,728
- ------------
1. All options are for Class A Common Stock. Except as indicated in note 6, all
options were granted either under the Company's 1991 Executive Stock
Incentive Plan or the Company's Executive Incentive Compensation Plan, the
provisions of which, among other things, allow an optionee exercising an
option to satisfy the exercise price and withholding tax obligations by
electing to have the Company withhold shares of stock otherwise issuable
under the option with a market value equal to such obligations or by
delivering to the Company shares of Class A Common Stock with a market value
equal to such obligations.
2. Market value of underlying securities at exercise minus the exercise price.
3. Aggregate Value Realized upon exercise (column c-1) divided by the number of
years executive held applicable option before exercise.
4. Options granted to these executives under the Company's 1991 Executive Stock
Incentive Plan become exercisable in four equal installments over a period of
four years from the date of grant.
5. Market value of underlying securities at December 31, 19941995 ($22.125)29.625), minus
the option exercise price.
6. The options exercised by Mr. Taylor and all but 95,743 of the options held by
him were granted by API and converted to
options to acquire Class A Common Stock pursuant to the API Merger. Such
options allowallowed Mr. Taylor to satisfy the exercise price by delivering shares
of Class A Common Stock with a market value equal to the option exercise
price.
PENSION PLAN TABLE
The following table shows the annual estimated benefits payable under the
Company's defined benefit retirement plans upon retirement to employees in
specified covered compensation and years of credited service classifications.
The maximum annual benefit payable under the plans which cover the executive
officers (other than Mr. Taylor) is 50% of average annual covered compensation
for the five highest paid consecutive years out of the most recent 10 years. The
maximum annual benefit is payable with 20 years of credited service and is
prorated for less than 20 years. The highest amount of compensation shown in the
following table is approximately equal to 120% of the highest amount of covered
compensation of the most highly compensated person named in the Summary
Compensation Table above. The amount of estimated annual benefit is based
upon the assumption that the nonqualified supplemental executive retirement plan
will continue in force in its present form.
1918
Highest
Five Year Estimated Annual Pension For
Average Annual Representative Years of Credited
Compensation Service(1)
- --------------- ----------------------------------
10 15 20
-------- -------- --------
$ 500,000 $125,000 $187,500 $250,000
750,000 187,500 281,250 375,000
1,000,000 250,000 375,000 500,000
1,250,000 312,500 468,750 625,000
1,500,000 375,000 562,500 750,000
1,700,000 425,000 637,500 850,000
- ------------
1. The Company became obligated to continue retirement plans in which Mr. Taylor
and other Boston Globe executives participate when it acquired API in 1993.
The benefit under these plans is earned at a rate of 2% for each year of
service up to 35 years, except that each year of service over 25 is credited
as 75% of a year. The maximum annual benefit payable with at least 35 years
of credited service is 65% of average annual compensation for the five years
immediately preceding retirement, assuming employment by the Company until
age 62. Under the plan, Mr. Taylor is entitled to an annual retirement
benefit of 65% of his final average annual compensation.
The benefits described in the table above are calculated on a straight-life
annuity basis and are not subject to any reduction for Social Security or other
offset amounts.
For named executive officers (other than Mr. Taylor), annual covered
compensation for 19941995 is the sum of (i) the amount shown for 19941995 in column (c)
of the Summary Compensation Table above, (ii) the portion of the bonus earned
for 19941995 which was paid in 1994 (including the cash equivalent value of
retirement units awarded in lieu of cash)1995 plus the amount of such bonus which was deferred
by the executive, and (iii) the portion of the annual bonus earned for 19931994
which was paid in 1994.1995 (including the cash equivalent value of retirement units
awarded in lieu of cash). The Company generally pays more than 50% of the annual
bonus earned for a particular year in that year and pays the remainder early in
the following year.year; however, the bonus amounts payable as Annual Performance
Awards to Arthur Ochs Sulzberger, Lance R. Primis and Arthur Ochs Sulzberger,
Jr. for 1995 were paid by their terms in 1996. Annual covered compensation for
19941995 was $760,550 for Arthur Ochs Sulzberger; $584,836 for Lance R. Primis; and
$555,550 for Arthur Ochs Sulzberger, Jr. Annual covered compensation for 1995
under the plan in which Mr. Taylor participates includes the amount of 19941995
salary as shown in column (c) of the Summary Compensation Table plus the amount
of 19941995 bonus shown in column (d) of such Table.
The named executive officers had the following full years of credited
service as of December 31, 1994:1995: Arthur Ochs Sulzberger: 43;44; Lance R. Primis:
25;26; Arthur Ochs Sulzberger, Jr.: 16;17; William O. Taylor: 38;39; and David L. Gorham:
20.21.
Under another plan which the Company became obligated to continue when it
acquired API in 1993, Mr. Taylor is entitled to a payment at his termination of
employment equal to 40 weeks of his compensation at that time.
2019
PERFORMANCE PRESENTATION
The following graph shows the annual cumulative total shareholder return for
the five years ending December 31, 1994,1995, on an assumed investment of $100 on
December 31, 1989,1990, in the Company, the Standard & Poor's S&P 500 Stock Index and
an average returnindex of a peer group of communications companies. The peer group returns are
weighted by market capitalization at the beginning of each annual measurement period foryear. The peer group
is comprised of the common stocks of the Company and the following other
communications companies: Dow Jones & Company, Inc., Gannett Co., Inc.,
Knight-Ridder, Inc.,
Meredith Corporation, Media General, Inc., The Times Mirror Company, Tribune
Company and The Washington Post Company. Shareholder return is measured by
dividing (a) the sum of (i) the cumulative amount of dividends declared for the
measurement period, assuming monthly reinvestment of dividends and (ii) the
difference between the issuer's share price at the end and the beginning of the
measurement period by (b) the share price at the beginning of the measurement
period.
Meredith Corporation was included in the peer group used to construct the
Stock Performance Chart contained in the 1995 Proxy Statement, but has been
excluded from the peer group in this Proxy Statement. In 1994, the Company
divested its Women's Magazines Division and its U.K. golf publications, thereby
decreasing revenues derived from magazines. The Company believes that Meredith
Corporation is no longer comparable to the Company because over 75% of Meredith
Corporation's revenues are derived from magazines and related publishing. The
omission of Meredith Corporation from the 1996 Stock Performance Chart does not
have a material effect on the 1996 Stock Performance Chart.
STOCK PERFORMANCE COMPARISON BETWEEN S&P 500, THE NEW YORK TIMES
COMPANY'S CLASS A COMMON STOCK AND PEER GROUP COMMON STOCK
[Graph][GRAPH]
S&P 500 $100 $97 $126 $136 $150 $152$130 $140 $155 $157 $215
Peer Group $100 $79 $93 $104 $122 $114
NYT$118 $133 $155 $145 $185
NYTC $100 $80 $94 $107 $109 $94
12/31/89$117 $134 $136 $117 $160
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
20
COMPENSATION COMMITTEE REPORT
The Compensation Committee has furnished the following report on executive
compensation for inclusion in this proxy statement:
To the Stockholders of The New York Times Company:
In order to effectively serve the interests of the Company and its
stockholders, compensation for the Company's executive officers, including the
Chief Executive Officer, is designed to create incentives for high levels of
individual and Company performance and to reward such performance. Annual and
long-term bonuses are paid only if financial targets are achieved. These targets
are set by the Committee in advance in conjunction with its review of the
Company's strategic and operating plans. Annual bonuses for certain executive
officers may increase or decrease, depending on the achievement of strategic
goals set by senior management early in the year. The Committee grants stock
options as part of executive compensation because it views stock options as a
means of motivating superior performance and therefore grants stock options as
partdirectly linking the interests of
executive compensation.executives with those of stockholders. Stock options produce value for
executives only if the Company's stock price increases over the option price,
which is set at the market price on the date of grant.
21
In 1993,1994, the Committee, which consists solely of non-employee directors of
the Company, structured 1995 compensation for executive officers to consist of
salary, an annual bonus potential and stock options. As noted above, annual
bonus amounts actually paid were based largely on Companythe Company's financial
performance. A substantial share of total potential cash compensation for
executive officers depended on incentive bonus potentials and thus was tied to
Company performance. The more responsible the executive officer's position, the
greater the portion of potential total cash compensation that depended on
incentive bonus potentials.
Prior to the Committee's determination of salaries and annual cash bonus
potentials
and option grants for the Company's Chief Executive Officer and its executive officers,
management reported to the Committee on its review of survey data assembled by
outside compensation consultants. The data analyzed salaries,
annual bonus potentials and long-termtotal actual cash
compensation including option grants, for comparable executive positions at United States media
companies, including those companies in the peer group used in the graph showing
comparative stock performance. The companies surveyed had revenues ranging from
$250 million to $3.5 billion and$3.8 billion; the consultants' analysis took into account the
effect of revenue size on the compensation practices of individual companies.
The data was used to set target annual cash compensation for executive officers
slightly above the midrange of companies surveyed and to allocate a significant
portion of such compensation to performance-based annual bonus potentials.
Salaries for executive officers are reviewed annually and were set for 1995
in late 1994. Increases in salary range midpoints over 1994, including increases
for the named executive officers, were based on a review of the competitive
data. The 1995 salary midpoints for the Company's executive officers were
generally within the midrange of practices for media companies surveyed, taking
into account the Company's revenue size. In addition
to this competitive data,setting compensation for individual
executive officers, the Committee considers other factors in determining
compensation, such asconsidered individual performance, performance
of the executive's operating unit where applicable and the performance of the
Company as a whole.
Salaries for executive officers are reviewed annually and were set for 1994
in late 1993. Increases in salaries over 1993, including increases for the named
executive officers, were based on a review of the competitive data and the other
factors described above. The 1994 salary midpoints for the Company's executive
officers were generally set at the midrange for media companies surveyed, taking
into account the Company's revenue size. The Committee believes these salaries are appropriate in
light of salaries paid for comparable positions at other companies and the
individual performance of the executives.
Annual bonus potentials for 19941995 were set for executive officers in late
1993.1994. The amounts actually paid depended on the level of achievement of
financial
performance against targets which were also set by the Committee in late 1993.1994.
These financial targets were generallylargely based on operating earnings of the Company or of the
person's operating unit. For 1994, targets for annual
bonusesunit and were generally substantially exceeded by greater amounts than targets werefor 1995.
21
Although the long-term bonus plan was discontinued at the end of 1993, the
last cycle ended in 1993.1995. Long-term bonus potentials for the three-year cycle
that ended in 19941995 were set in late 1991.1992. Payment depended solely on the
achievement of a cumulative earnings per share target over the three yearthree-year
period. Targets for the three yearthree-year cycles ended in years from 1990 1991, 1992 andthrough 1993
were not met;met, and therefore no long
termlong-term bonuses were paid for these cycles.
However, the targettargets for the three-year cyclecycles that ended in 1995 and 1994 waswere
met; and therefore, consistent with the Company's policy of relating
compensation to performance, long-term bonuses were paid to participating
executive officers.
The long-term bonus plan was discontinued at
the end of 1993; the final remaining three-year cycle will end in 1995.
The number of stock options granted to each executive officer in 19941995
depended on the degree of responsibility of the executive officer's position. In
1993, the Committee replaced the discontinued long-term bonuses under the long
term incentive plan for executive officers with increased option grants. The
Committee believes these additional option grants will strengthen the ties
between the interests of executivesposition and those of stockholders, create additional
incentives for high levels of Company performance, and thus serve the interests
of stockholders more effectively than the long-term bonuses.
Stock option grants are made as dollar amounts which are divided by the
market price of the stock on the grant date. The size of the dollar amounts of
the grants
was based on a review of survey data supplied by outside compensation
consultants of stock option grants made to executives inat comparable positionssalary
levels at other media companies. TheIn order to attract, retain and motivate the
highest caliber of executives by offering a competitive combination of annual
and long-term compensation and to link a significant portion of executives'
total compensation to the interests of stockholders, the Company's grants were
generally made at the upper range of 22
the dollar amountspractices of grants made by media companies in the survey
data with
revenues ranging from approximately $250 million to $3.5 billion.data. All stock options have an exercise price equal to the market price of the
Class A Common Stock aton the timedate of grant. In order to assure the retention of
high level executives and to tie the compensation of those executives to the
creation of long-term value for stockholders, the Committee provided that these
stock options become exercisable in equal portions over a four-year period. The
number of options previously granted that remain outstanding was not considered
in making option grants in 1994.1995.
The Internal Revenue Code has set certain limitations on the deductibility
of compensation paid to a public company's five most highly compensated
executive officers. For 1994, noneIn 1995, stockholders of the compensation paid to the five
executive officers named in the Company's Summary Compensation Table is expected
to exceed the limitations set forth in the Internal Revenue Code because
portions of the compensation of several officers have been deferred either by
the Compensation Committee or by the election of the individual officer. To
preserve the full tax deductibility of compensation for such officers in future
years, the Committee has recommendedCompany approved amendments to
the Company's 1991 Executive Cash Bonus Plan and 1991 Executive Stock Incentive
Plan. The amendments have
been approvedPlan that will insure that compensation paid by the Company's Board of Directors and such amendedCompany to executive
officers pursuant to these plans are
being submittedwill be deductible by the Company for federal
income tax purposes. All compensation paid to the holdersCompany's executive officers
in 1995 was deductible by the Company in accordance with such provisions of the
Class A and Class B Common Stock at the
Annual Meeting for approval.
The annual bonus paid to Mr. Sulzberger for 1994 was substantially higher
than that paid in 1993. This increase occurred because (a) Mr. Sulzberger's
potential annual bonus for 1994 increased over that of 1993 and (b) earnings per
share targets set for executive officers whose annual bonuses are based on
Company earnings (rather than operating earnings of a particular operating unit)
were exceeded by a greater amount in 1994 than in 1993.Internal Revenue Code.
Like all executive officers participating in the long-term bonus plan, Mr.
Sulzberger received a payment for the three-year1993-1995 plan cycle ending in 1994 that represented 85%
of the maximum potential payment set for him for this cycle. His annual bonus
represented the maximum amount payable to him as a result of earnings that
substantially exceeded the target level set for 1995. Mr. Sulzberger's long-term
and
annual bonuses paidbonus for 1994the 1993-1995 plan cycle represented approximately 68%13% of his total
cash compensation for 1994 (exclusive1995, and his annual bonus for 1995 represented
approximately 52% of stock options); his total cash compensation for 1995. The sum of Mr.
Sulzberger's long-term bonus for 1994the 1993-1995 cycle and his annual bonus for
1995 represented approximately 20%65% of suchhis total cash compensation for the year.1995.
The Committee believes that Mr. Sulzberger's 19941995 compensation iswas
appropriate in light of his role in the Company's recent performance, which in
19941995 included significantly improved performance over 19931994 in most lines of
business and in earnings per share, as well as his role in achieving the financial and strategic
benefits of the saleexecution of the Company's
Women's Magazine Group and terminationstrategy, including reevaluation of the Company's minority interestbusiness portfolio, and his
role in a Canadian newsprint mill.restructuring the Company's senior management team.
Richard L. Gelb, Chairman
John F. Akers
Louis V. Gerstner, Jr.
Marian S. Heiskell
Robert A. Lawrence
Charles H. Price II
2322
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee are Richard L. Gelb,
Chairman, John F. Akers, Louis V. Gerstner, Jr., Marian S. Heiskell, Robert A. Lawrence and Charles
H. Price II. Mrs. Heiskell, who served on the Compensation Committee until April
18, 1995, is a sister of Arthur Ochs Sulzberger, Chairman and Chief Executive
Officer of the Company, and of Judith P. Sulzberger and Ruth S. Holmberg, each a
director of the Company. In addition, during 1994,1995, the Company employed Susan W.
Dryfoos, Mrs. Heiskell's daughter, as Director, Times History project.Productions. Ms.
Dryfoos earned $93,133$110,000 and a bonus of $34,200.$50,400. During the time she served on
the Compensation Committee in 1995, Mrs. Heiskell doesdid not participate in any
vote respecting the compensation of Mr. Sulzberger, Ms. Dryfoos or any other
member of her family.
- --------------------------------------------------------------------------------
PROPOSAL NUMBER 2
APPROVALAMENDMENT OF AMENDED 1991 EXECUTIVE CASH BONUS
AND 1991 EXECUTIVE STOCK INCENTIVE PLANSPLAN
- --------------------------------------------------------------------------------
PURPOSE OF AMENDMENTSTHE AMENDMENT
The Company is proposing amendments (the "Amendments") to amend the Company's 1991
Executive Cash Bonus Plan (the "Cash Plan") and 1991 Executive Stock Incentive Plan
(the "Stock Plan," andPlan") to authorize an additional 10,000,000 shares of Class A
Common Stock that may be issued under the Cash Plan and Stock Plan pursuant to the exercise of
stock options. No other amendments are being collectively
referred to asproposed for the "Plans" and individually as a "Plan") and that the Plans, as
so amended, be approved by the holders of the Class A and Class B Common Stock.Stock Plan. The
Board of Directors, acting on the recommendation of the Compensation Committee,
has approved this amendment, subject to stockholder approval.
When adopted in 1991, the Plans asStock Plan authorized the issuance of 10,000,000
shares of Class A Common Stock upon the exercise of options granted thereunder.
As of February 26, 1996, 556,683 shares have already been issued under the Stock
Plan and another 7,726,990 shares are reserved for issuance pursuant to
outstanding options. This leaves only 1,716,327 shares available for future
option grants under the Stock Plan. The Board believes the increased
authorization should provide sufficient shares for Stock Plan awards for several
years and make unlikely the need to request additional shares in the near
future.
The principal purpose of the Stock Plan is to provide incentives for
officers and key employees of the Company and its subsidiaries through granting
options under the Stock Plan, thereby stimulating their personal and active
interest in the Company's development and financial success and inducing them to
remain in the Company's employ.
DESCRIPTION OF THE STOCK PLAN
On February 21, 1991, the Board of Directors adopted the Stock Plan and on
April 16, 1991, the stockholders approved it. The Stock Plan was amended by the
Amendments subject to such
stockholder approval.
As discussed in more detail below, adoptionBoard of the Amendments does not
reflect a substantive change in the Company's current compensation policiesDirectors on April 13, 1993, December 15, 1994, and practices. Rather, the Amendments will incorporate into the Plans certain
provisions required under recently enacted tax legislation to insure that
compensation paidFebruary 16, 1995,
and by the Company pursuant to the Plans will be deductible by the
Company for federal income tax purposes.
Under the Omnibus Budget Reconciliation Act of 1993 (the "Act") and the
proposed regulations (the "Regulations") issued thereunder by the Internal
Revenue Service, a publicly held corporation, such as the Company, must satisfy
certain conditions in order to retain its federal income tax deduction for
compensation in excess of $1 million per year paid after January 1, 1994, to its
chief executive officer and the four other officers employed by such corporation
at the end of the year whose compensationstockholders on April 18, 1995.
The Stock Plan is required to be disclosed in its
annual proxy statement relating to the election of directors ("Affected
Officers"). The Plans, as amended by the Amendments, are intended to allow the
Company to continue to pay incentive compensation to its executives, consistent
with its current practice, while providing that such compensation satisfies the
Act's performance-related criteria and thus remains deductible.
Performance-related compensation is deductible under the Act if made as a result
of the attainment of one or more objective, pre-established performance goals
established by the corporation's compensation committee, provided a person with
knowledge of the relevant facts would be able to calculate the maximum amount
payable to any one executive under the plan. Options generally are deemed to be
performance-related compensation if certain criteria have been met by the plan
under which they are issued, including a cap on the number of options which may
be granted to any individual during a specified period. In addition, prior to
the payment of any awards, the plan must be approved by a vote of the
corporation's stockholders and, in the case of performance awards, the
corporation's compensation committee must certify that the performance standard
has been met.
24
SUMMARY OF PLANS
GENERAL
The following summary of the Plans and the Amendments does not purport to be
complete and is subject to, and qualified in its entirety by, reference to the
text of the Plans, as amended by the Amendments, set forth in Annexes A and B to
this Proxy Statement.
The Plans were approved by the Class A and B stockholders of the Company at
the 1991 annual meeting. The Plans are currently administered by the Compensation Committee of
the Board, (the "Compensation Committee"), which is
composed of: Richard L. Gelb, Chairman, John F. Akers, Louis V. Gerstner, Jr.,
Marian S. Heiskell, Robert A. Lawrence and Charles H. Price II. The Amendments
also provide that the Plans must be administered by a committee of "outside
directors" as defined in the Regulations. Each currenteach member of the
Compensation Committeewhich qualifies as an "outside director" (or is deemed to
qualify as such underdefined by
federal securities regulations and the Internal Revenue Service's transition rules)Code of 1986, as amended
(the "Code"), and such
Committee will continue to administeras required by the Plans.Plan.
Under the Plans,Stock Plan, the Compensation Committee may authorize incentive
compensation awards ("Awards") to "key employees." The Compensation Committee
may also grant "key employees"
options to purchase shares of Class A Common Stock ("Options") under the Stock Plan.. The Compensation
Committee may also authorize incentive compensation awards ("Awards") to "key
employees." A "key employee" is defined under each
of the PlansStock Plan as an employee of
(i) the Company, (ii) any of its 50% or more owned subsidiaries, or (iii)
(except with respect to incentive stock options which are limited to employees
of the foregoing) non-corporate entities in which the Company owns, directly or
indirectly, at least 40% of the equity interest, in each case who has principal
responsibility for, or contributes substantially to, the management efficiency,
editorial achievement or financial success of the Company, its subsidiaries or
such other entities. Directors who are not
employees of the Company are not eligible for participation in either of the
Plans. All executive officers and employee directors (21(18
individuals) and approximately
300313 additional employees are
23
eligible for grants of Options, and 1817 executive officers and employee directors
and 1214 additional employees are eligible to receive Awards under the Plans.Stock Plan.
Options. The aggregate amount of Awards that may be paid to all participants in each
Plan is limited to the dollar amount accrued and available for Awards under the
Plans. (For this purpose an Award under the Stock Plan is deemed to be in the
dollar amount equal to the market value of the shares of Class A Common Stock
underlying such Award on the date of grant.) Under the Plans, no accruals for
Awards may be made in any year unless cash dividends of at least 10 cents per
share on the Class A and Class B Common Stock of the Company have been declared.
The maximum aggregate amount that may be accrued for Awards under both plans is
4% of the sum of Pre-Tax Income plus Equity in Operations of the Forest Products
Group (as defined in the Plans). The Compensation Committee may in its
discretion make appropriate adjustments to the foregoing calculation to take
account of extraordinary or unusual events or transactions, changes in generally
accepted accounting principles and certain other circumstances. The maximum
amount available for Awards under the Plans is determined annually and reported
by the independent certified public accountants of the Company, subject to the
Compensation Committee's adjustments, if any, described above. At the discretion
of the Compensation Committee, the amount of the accrual for Awards not actually
awarded to participants in any year may be carried forward and be available for
Awards in a future year.
CASH PLAN
Under the Cash Plan, the Compensation Committee may award compensation
payable in cash as incentives to key employees of the Company. Cash Plan Awards
may be "Cash Awards," which are cash payments made immediately, in installments
or on a deferred date; "Performance Awards," which are entitlements to receive a
cash payment in an amount which depends on the financial performance of the
Company during a stated period of more than one year; or such other Awards as
the Compensation Committee may deem appropriate.
25
STOCK PLAN
Awards. Under the Stock Plan, the Compensation Committee may award "Stock
Grants," "Restricted Stock," "Retirement Units" or "Performance Awards" as
incentives to key employees of the Company. The maximum number of shares of the
Class A Common Stock available under the Stock Plan for Awards is 1,000,000
shares (of which 967,523 remain available as of February 27, 1995) subject to
adjustment in the case of a stock split, stock dividend, reclassification or
certain other events.
Stock Grants. Stock grants consist of a grant of shares of the Company's
Class A Common Stock. Such shares are transferred to the recipient at the
time of the Award or may at the discretion of the Compensation Committee be
deferred or paid in installments.
Restricted Stock. Restricted Stock Awards consist of a grant of shares
of the Company's Class A Common Stock, which are subject to forfeiture if
the recipient leaves the employ of the Company, other than upon death,
disability or retirement, during the restricted period specified in the
Award (which must be at least one year). The shares may not be sold, pledged
or otherwise transferred until the applicable restricted period of the Award
has lapsed. The recipient of restricted stock is entitled to enjoy all the
rights of a stockholder with regard to the shares of the award during the
restricted period, including the right to receive dividends on, and to vote,
the shares. The lapse of restrictions may be accelerated in the event of a
recipient's death, disability or retirement under Company retirement plans.
Retirement Units. Upon the award of Retirement Units, the participant's
Retirement Unit Account, which the Company maintains, is credited with that
number of shares of Class A Common Stock determined by dividing the dollar
amount of such Award by the market value of such shares on the date of
award. Upon such allocation, the Company reserves out of treasury stock the
same number of shares of Class A Common Stock. Upon a participant's death,
retirement or termination of employment, the Retirement Unit Account matures
and the participant receives, in ten approximately equal annual installments
(subject to the discretion of the Compensation Committee to accelerate or
defer distribution), shares of Class A Common Stock equal in the aggregate
to the number of Retirement Units credited to such participant's Retirement
Unit Account.
Performance Awards. A Performance Award entitles the participant to
receive Class A Common Stock, Options or cash in an amount which depends
upon the financial performance of the Company during a stated period of more
than one year.
Options. In addition to Awards, the Stock Plan provides for the granting of "incentive stock
options" as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code") and for the granting of
"non-qualified stock options" which do not meet the requirements of Section 422
of the Code. The Compensation Committee may grant either incentive stock options
or non-qualified stock options to key employees, who may include persons not
eligible for, or who do not receive, Awards under the Plans.Stock Plan. The maximum number of
shares of Class A Common Stock that may be issued under the Stock Plan pursuant
to Options, is
10,000,000 (of which 3,447,669 remain available as of February 27, 1995),it may be increased pursuant to the proposed amendment, is
subject to adjustment in the case of a stock split, stock dividend,
reclassification or certain other events. The Stock Plan also limits the number
of shares with respect to which Options may be granted to any key employee
during any calendar year to 200,000 (similarly subject to adjustment).
The exercise price of stock to be purchased under Optionsan Option granted pursuant to the Stock Plan is the
market value of the Class A Common Stock at the time the Option is granted,
except as noted below.below with respect to incentive stock options. As of February
27, 1995,26, 1996, the market value of the Class A Common Stock was $21.31$27.5625 (determined
as provided in the Stock Plan based on trading on such day on the American Stock
Exchange). The option price (plus any withholding tax) must be paid in full when
the Option is exercised. Payment of the purchase price may be made (i) in cash,
(ii) by delivering shares of Class A Common Stock, (iii) by electing to have the
Company retain Class A Common Stock which would otherwise be otherwise issued on exercise
of the
26
Option, or (iv) any combination of the foregoing forms and in such other
forms as the Compensation Committee may determine, all subject to such rules as
the Compensation Committee may adopt. In determining the number of shares of
Class A Common Stock necessary to be delivered to or retained by the Company,
such shares are valued at the market value at the time of exercise.
Each incentive stock option,Option, except as noted below and each non-qualifiedwith respect to incentive stock optionoptions,
must be exercised within ten years from the date granted. An Option may not be
exercised within one year of the grant (except in the case of retirement, death
or disability). Thereafter, Options become exercisable in such installments, if
any, as specified by the Compensation Committee at the time of grant. Upon
termination of active employment by reason of disability or retirement, or upon
an optionee's death, all options generally vest and remain in effect until their
expiration. Upon termination of employment for any other reason, the optionee
may exercise all exercisable Options for one year after such termination (but
not beyond the original expiration date).
With respect to incentive stock options, if the aggregate fair market value
(determined as of the date the Option is granted) of the shares for which any
optionee may for the first time exercise incentive stock options in any calendar
year exceeds $100,000, such excess incentive stock options are treated as
non-qualified stock options. In the case of incentive stock options that are
granted to an employee who owns, or is deemed by reason of the attribution rules
under Section 425(d) of the Code to own, more than 10% of the combined voting
power of all classes of the stock of the Company, the exercise price of such
Options must be at least 110% of the fair market value at the time the Options
are granted, and such Options must be exercised within five years from the date
granted.
The Stock Plan also contains provisions concerning the exercisability
of Options upon the optionee's retirement, disability, death or other
termination of employment.
The Stock Plan provides that each optionee will enter into an Option
Agreement with the Company providing, in addition to such other terms as the
Compensation Committee may deem advisable, that each optionee must remain in the
employ of the Company or one of its subsidiaries for one year before such
optionee will be entitled to exercise the Option (except in the case of
retirement, death or disability).
MATERIAL CHANGES EFFECTED BY THE AMENDMENTS
AnnualAwards. In addition to Option grants, under the Stock Plan, the Compensation
Committee may award "Stock Grants," "Restricted Stock," "Retirement Units,"
"Performance Awards" or, in certain cases, "Annual Performance Awards. UnderAwards" as
incentives to key employees of the amended Plans, subjectCompany. The aggregate amount of Awards that
may be paid to approval byall participants in the holdersStock Plan and the Company's 1991
24
Executive Cash Bonus Plan (the "Cash Plan;" and together with the Stock Plan,
the "Plans") is limited to 4% of the sum of Pre-Tax Income plus Equity in
Operations of the Forest Products Group (as defined in the Plans) for the year,
provided cash dividends of at least $.10 per share have been declared for such
year. At the discretion of the Compensation Committee, the amount of the accrual
for Awards not actually awarded to participants in any year may be carried
forward and be available for Awards in a future year. In addition the maximum
number of shares of the Class A and Class B Common Stock available under the Stock Plan for
Awards, which is unaffected by the proposed amendment, is 1,000,000 shares (of
which 965,686 remain available as of February 26, 1996) subject to adjustment in
additionthe case of a stock split, stock dividend, reclassification or certain other
events.
Stock Grants. Stock grants consist of grants of shares of the Company's
Class A Common Stock.
Restricted Stock. Restricted Stock Awards consist of a grant of shares
of the Company's Class A Common Stock, which are subject to forfeiture if
the recipient leaves the employ of the Company, other than upon death,
disability or retirement, during the restricted period specified in the
Award (which must be at least one year). The shares may not be sold, pledged
or otherwise transferred until the applicable restricted period of the Award
has lapsed.
Retirement Units. Upon the award of Retirement Units, the participant's
Retirement Unit Account, which the Company maintains, is credited with that
number of shares of Class A Common Stock determined by dividing the dollar
amount of such Award by the market value of a share on the date of award.
Upon a participant's death, retirement or termination of employment, the
Retirement Unit Account matures and the participant receives, in ten
approximately equal annual installments (subject to the Awards
presently provided thereunder,discretion of the
Compensation Committee will be able to make
"Annualaccelerate or defer distribution), shares of Class
A Common Stock equal in the aggregate to the number of Retirement Units
credited to such participant's Retirement Unit Account.
Performance Awards" under eitherAwards. A Performance Award entitles the Cash Planparticipant to
receive Class A Common Stock, Options or cash in an amount which depends
upon the Stock Plan.financial performance of the Company during a stated period of more
than one year.
Annual Performance Awards. Annual Performance Awards are available each
year only to Stock Plan participants who are designated by the Compensation
Committee as likely to be officers whose compensation is required to be
disclosed in the proxy statement for such year and whose annual salary and
bonus for such year are expected to exceed $1 million. Such Awards are
payable based upon the achievement of annual targets established by the
Compensation Committee prior to March 31 of the year
for which such Award may be earned (or prior to such later date as permitted by
the Regulations), under one orof more Performance Goals, as defined in the Plans,
as amended. An Annual Performance Award made under the Cash Planthat is, payable in
cash. An Annual Performance Award made under the Stock Plan is payable in shares
of Class A Common Stock, Restricted Stock, Retirement Units, cash, or any
combination thereof, as specified by the Compensation Committee.
The Performance Goals are defined as the
attainment of a target or targets based on one or more of the following:
earnings per share, net income, return on assets and return on stockholders'
equity of the Company, and operating profit of the Company or the
participant's group or area of employment. Under the terms of the Plans as amended by the Amendments,An Annual Performance Awards are available each year only to Plan participants who are
designatedAward is
payable in shares of Class A Common Stock, Restricted Stock, Retirement
Units, cash, or any combination thereof, as specified by the Compensation
Committee prior to March 31 of such year (or
prior to such later date as permitted by the Regulations) as likely to be
Affected Officers (i.e., officers whose compensation is required to be disclosed
in the proxy statement) for such year, and whose annual salary and bonus for
such year are expected to exceed $1 million. Compensation earned by an Affected
Officer under an Annual Performance Award would be exempt from the deductibility
limitation of the Act.
The Compensation Committee will determine each Plan participant eligible for
Annual Performance Awards, whether such participant's Annual Performance Award
will be made under the Stock Plan or the Cash Plan, the dollar amount of such
participant's potential Award, and the specific annual performance targets under
one or more Performance Goals prior to either March 31 of each calendar year (or
prior to such later date as permitted by the Regulations).Committee. No participant may receive an 27
Annual Performance Award under both
Plansthe Stock Plan and the Cash Plan in the same year, and no participant may
receive a Performance Award in any year in an amount in excess of
$1,500,000. For 1995, the Committee has determined that the participants
entitled toCompensation earned by a participant under an Annual Performance
Award is exempt from the deductibility limitation of Section 162(m) of the
Code.
Benefits. The Options and Awards that will be granted in the future under
the Stock Plan are not currently determinable. The following table sets forth
information respecting Options granted in 1995 under the Stock Plan for the
executive officers named in the Summary Compensation Table, all executive
officers as a group and all employees as a group. Non-executive directors are
ineligible for
25
participation in the Stock Plan. No Awards were granted under the Stock Plan in
1995. See "Compensation of Executive Officers."
NAME AND POSITION NUMBER OF OPTIONS(1)
- --------------------------------------------------------- --------------------
Arthur Ochs Sulzberger,
Chairman and Chief Executive Officer,Officer................... 75,840
Lance R. Primis,
President and Chief Operating Officer.................. 48,827
Arthur Ochs Sulzberger, Jr.,
Publisher of The New York Times.Times........................ 40,057
William O. Taylor,
Publisher of The paymentBoston Globe.......................... 40,057
David L. Gorham,
Senior Vice President and Deputy Chief Operating
Officer................................................ 34,514
All Executive Officers, as a group(2).................... 411,715
All Employees, as a group(3)............................. 2,034,438
- ------------
1. The Options have an exercise price of Annual
Performance Awards$29.75. The Options have a 10-year
term, but are subject to Messrs. Sulzberger and Primis will be made underearlier cancellation in certain circumstances where
the Stock
Plan and will be based upon the achievement of targeted earnings per share
performance; payment to Mr. Sulzberger, Jr. will be made under the Stock Plan
and will be based upon achievement of targeted operating profit at The New York
Times. See "New Benefits."
Payment of Annual Performance Awards under the Plans will be made as soon as
practicable after the Compensation Committee certifies that the Performance Goal
targets have been met, provided that if the Act and the Regulations permit, the
Compensation Committee may pay a portion of the Award earned for any year in
December of that year. Under the terms of the Plans as amendedoptionholder is no longer employed by the
Amendments, the Compensation Committee retains the discretion to pay an amount
pursuant to an Annual Performance Award that is less than the maximum amount
calculated pursuant to the Performance Goal for the year. In addition, the
amended Plans permit the Compensation Committee to defer the payment of all or a
portion of any Annual Performance Award.
Under the amended Plans, the Compensation Committee retains the authority to
award Cash and Performance Awards under the Cash Plan and Stock, Retirement
Unit, Restricted Stock, Performance and Other Awards under the Stock Plan to all
Plan participants, including the Affected Officers who receive Annual
Performance Awards, based upon the achievement of specified performance targets
for the Company or for the individual participants, the achievementone of strategic
or other qualitative goals established by the Compensation Committee, or such
other factors as the Compensation Committee deems appropriate. Such Awards paid
to executives while they are Affected Officers would be subject to the Act's
limitation on deductibility. Although Plan participants who receive Annual
Performance Awards remain eligible to receive such other Awards, it is the
intention of the Compensation Committee that Annual Performance Awards will
comprise all or a substantial majority of such participants' annual bonus
compensation.its
affiliates. The Compensation Committee does not intend that the availability
of Annual Performance Awards will result in a substantive change in its policies
and practices with respect to the amounts and terms of executive compensation.
Options. In order for compensation on exercise of Options to continue to be
deemed performance-related compensation, the amended Stock Plan limits the
number of shares with respect to which Options may be granted to any key
employee during any calendar year to 200,000 (subject to adjustment in the case
of a stock split, stock dividend, reclassification or certain other events). The
Compensation Committee intends to continue its current practices with respect to
the granting of Options.
NEW BENEFITS
The following table sets forth information respecting the Annual Performance
Awards payable for 1995 to the three named individuals. All other Plan
participants are ineligible for Annual Performance Awards in 1995. All Plan
participants, including the individuals named below, continue to be eligible
28
for other Awards and Options under the Plans as determined by the Compensation
Committeevest in accordance with the termsfollowing schedule: 25%
on December 21, 1996; 25% on December 21, 1997; 25% on December 21, 1998; and
25% on December 21, 1999. The optionholder must generally be employed for the
Options to vest, except that the Options will generally vest automatically
upon the retirement, death or disability of the Plans.
NAME AND POSITION ANNUAL PERFORMANCE AWARD(1)
- --------------------------------------------------- ---------------------------
Arthur Ochs Sulzberger
Chairman and Chief Executive Officer............. $ 411,100
Lance R. Primis
President........................................ $ 332,900
Arthur Ochs Sulzberger, Jr.
Publisher of The New York Times.................. $ 255,100
All Executive Officers, as a group(2).............. $ 999,100
- ------------
1. Amount of Annual Performance Award ifoptionholder.
2. 18 people, including the individual's Performance Goal
target for 1995 is achieved. The actual amount paid may vary from 0% to 200%
offive named executive officers.
3. 331 people, including the stated amount depending on the extent to which such performance
targets are partially met, or exceeded.
2. The three named individuals are the only executive officers eligible for
Annual Performance Awards in 1995.
It is not possible at the present time to indicate the number or positions
of employees who may be selected for Option grants under the Stock Plan, as
amended. During 1994, Options to purchase 2,413,568 shares of Class A Common
Stock were granted under the Stock Plan to 322 employees, including Options to
purchase 472,579 shares granted to 17 executive officers as a group. See the
Summary Compensation Table and Option Grants Table on pages 17 and 18 for
information relating to prior grants to named executive officers.
FEDERAL INCOME TAX CONSEQUENCES
Cash Awards. Awards underOptions. The grant of a non-qualified stock option or an incentive stock
option will not result in income for the Plans paidparticipant or in a deduction for the
Company.
The exercise of a non-qualified stock option will generally result in
compensation income for the participant and a deduction for the Company, in each
case measured by the difference between the option price and the fair market
value of the shares at the time of exercise.
The exercise of an incentive stock option will not result in income to the
participant if the participant (a) does not dispose of the shares within two
years after the date of grant or one year after exercise and (b) is an employee
of the Company from the date of the grant at least until three months before the
exercise or until one year before the exercise in the event of permanent and
total disability. If these requirements are met, the basis of the shares upon
later disposition, in the case of an exercise for cash, are taxablewill be the option
price. Any gain will be taxed to the participant as ordinary income inlong-term capital gain and
the year or years in whichCompany will not be entitled to a deduction. The excess of the awardmarket value
of the shares on the exercise date over the option price is paid
or made availablean item of tax
preference, potentially subject to the participant. Thealternative minimum tax. If the
participant disposes of the shares prior to the expiration of either of the
holding periods in (a) above, the participant will recognize compensation income
and the Company is usuallywill be entitled to a deduction equal to the lesser of (i) the
fair market value of the shares on the exercise date minus the option price, or
(ii) the amount realized on the disposition minus the option price. Any gain in
excess of the corresponding amount.compensation income portion will be treated as long-term or
short-term capital gain. If an optionee ceases to be an employee of the Company
and exercises his option after the expiration of the period described in (b)
above, the Option will be deemed a non-qualified stock option for tax purposes.
Stock Grants. An amount equal to the fair market value of a stock grant on
the date of award under the Stock Plan will be taxable to the participant as
ordinary income in the year or years in which
26
the award is paid or made available to the participant. The Company is usually
entitled to a deduction in the corresponding amount.
Restricted Stock. The grant of Restricted Stock will not result in income to
the participant or in a deduction for the Company for federal income tax
purposes, since the shares are subject to restrictions constituting a
"substantial risk of forfeiture" as defined in the Code. Unless the participant
elects to be taxed at the time he or she receives the shares, such participant
will generally realize taxable compensation income when the restrictions lapse.
The amount of such income will be the fair market value of the shares on the
date of such lapse of restrictions (or on the date of grant if the participant
elects to be taxed at that time). Dividends paid on the shares during the
restricted period will also be taxable compensation income to the participant
when received by the participant. The Company will be entitled to a tax
deduction to the extent, and at the time, that the participant realizes
compensation income.
Retirement Units. The distribution of Class A Common Stock (and any cash
distributions) upon the maturing of a Retirement Unit Account will be taxable to
the participant as ordinary income and deductible by the Company in the year
distributed, based upon the fair market value on the date of distribution.
Options. The grant of a non-qualified stock option or an incentive stock
option will not result in income for the participant or in a deduction for the
Company.
29
The exercise of a non-qualified stock option will generally result in
compensation income for the participant and a deduction for the Company, in each
case measured by the difference between the option price and the fair market
value of the shares at the time of exercise.
The exercise of an incentive stock option will not result in income to the
participant if the participant (a) does not dispose of the shares within two
years after the date of grant or one year after exercise and (b) is an employee
of the Company from the date of the grant until three months before the exercise
or until one year before the exercise in the event of permanent and total
disability. If these requirements are met, the basis of the shares upon later
disposition, in the case of an exercise for cash, will be the option price. Any
gain will be taxed to the participant as long-term capital gain and the Company
will not be entitled to a deduction. The excess of the market value of the
shares on the exercise date over the option price is an item of tax preference,
potentially subject to the alternative minimum tax. If the participant disposes
of the shares prior to the expiration of either of the holding periods in (a)
above, the participant will recognize compensation income and the Company will
be entitled to a deduction equal to the lesser of (i) the fair market value of
the shares on the exercise date minus the option price, or (ii) the amount
realized on the disposition minus the option price. Any gain in excess of the
compensation income portion will be treated as long-term or short-term capital
gain. If an optionee ceases to be an employee of the Company and exercises his
option after the expiration of the period described in (b) above, the Option
will be deemed a non-qualified stock option for tax purposes.
Withholding. When required by applicable law, the Company will withhold or
collect from the participant all amounts required to satisfy applicable
withholding taxes with respect to cash
Awards from amounts payable to the participant by the Company, unless the
participant provides the aggregate required amount in cash.Awards. Amounts due on the distribution of
stock or the exercise of an Option must be paid by the participant. In lieu of
cash, the participant may elect to provide such required amount by requesting
the Company to withhold from the shares being acquired shares having a fair
market value equal to such amount, or may deliver to the Company previously
acquired shares having such value.
The discussion set forth above does not purport to be a complete analysis of
all potential tax effects relevant to recipients of awardsAwards or Options, or to the
Company. It is based on federal income tax law, regulations and rulings as of
the date of this Proxy Statement, which are subject to change at any time.
AMENDMENTS; NON-EXCLUSIVITY
The Board may, in its discretion, amend the PlansStock Plan at any time;
provided, however, that no amendment that would materially affect the dividend
threshold requirement or the maximum permitted annual accrual for Awards under
the PlansStock Plan may be made unless such amendment is approved by the holders of a
majority of the outstanding shares of Class A and B Common Stock entitled to
vote on such amendment, voting as a single class. In addition, the Board may
make no change whichthat would prevent Incentive Stock Optionsincentive stock options granted under the
Stock Plan from being Incentive Stock Optionsincentive stock options without the consent of the
optionees concerned, and the Board may not make any amendment to the Stock Plan
whichthat (1) changes the class of persons eligible for Incentive Stock Options,incentive stock options, (2)
increases the total number of shares for which Options may be granted, or (3)
increases the total number of shares authorized for Stockstock Awards, without the
approval of the holders of a majority of the outstanding shares of Class A and
Class B Common Stock entitled to vote thereon, voting together as one class.
Participation in the PlansStock Plan is not exclusive and does not prevent the
Affected Officers, or any other Plan
participant from participating in any other compensation plan of the Company or
from receiving any other compensation from the Company.
The Compensation Committee believes that annual bonuses for the Affected
Officers are an important part of their overall compensation. If the Amendments
are not approved bystockholders approve this amendment to the stockholders, no Annual Performance AwardsStock Plan, 10,000,000
additional shares of Class A Common Stock of the Company will be madereserved for
issuance under the Plans; however,Stock Plan pursuant to the Compensation Committee will retain the right to
pay each Affected Officer otherwise eligible for such Annual Performance Award
30exercise of Options.
27
an annual bonus based on such criteria as may be established by the Committee.
In such event, a portion of such bonus may not be deductible by the Company for
federal income tax purposes.
RECOMMENDATION AND VOTE REQUIRED
The Board of Directors recommends a vote FOR the following resolution which
will be presented to the Annual Meeting:meeting:
RESOLVED, that the 1991 Executive Cash Bonus Plan
andSection 6(c) of the 1991 Executive
Stock Incentive Plan, asapproved by the stockholders of
this Company on April 16, 1991, amended by the Board
of Directors on April 13, 1993, December 15, 1994,
and February 16, 1995, and amended by the
stockholders on April 18, 1995, be, and it hereby is,
amended to increase the same hereby are, ratified,
confirmed and approved.
The approvalnumber of shares of Class A
Common Stock which may be issued under the Amended Plans will be voted on as one proposal.1991
Executive Stock Incentive Plan by an additional
10,000,000 shares.
The affirmative vote of the holders of a majority of the outstanding shares
of Class A and Class B Common Stock entitled to vote thereon, at the Annual Meeting, in
person or by proxy, voting together as
a singleone class, is required for approval of this resolution. As a result, abstentions andan
abstention or broker non-votesnon-vote will have the same effect as votesa vote against the
proposal.foregoing resolution.
- --------------------------------------------------------------------------------
PROPOSAL NUMBER 3
SELECTION OF AUDITORS
- --------------------------------------------------------------------------------
The Company has an Audit Committee of the Board of Directors, whose members
are appointed annually by the Board. The Audit Committee currently consists of
George B. Munroe, Chairman, A. Leon Higginbotham, Jr., George L. Shinn, Donald
M. Stewart and Cyrus R. Vance, none of whom is an employee of the Company.
The Audit Committee has selected the firm of Deloitte & Touche LLP,
independent certified public accountants, as auditors of the Company for the
fiscal year ending December 31, 1995,29, 1996, subject to ratification of such selection
by the Class A and Class B stockholders of the Company voting together as one
class. Deloitte & Touche LLP and its predecessor firm, Deloitte Haskins & Sells,
have audited the financial statements of the Company for many years.
The Company has been informed by Deloitte & Touche LLP that such firm has no
direct financial interest nor any material indirect financial interest in the
Company or any of its affiliated companies. Neither Deloitte & Touche LLP nor
its predecessor has had any connection during the past five years with the
Company or any of its affiliated companies in the capacity of promoter,
underwriter, voting trustee, director, officer or employee.
A representative of Deloitte & Touche LLP will be present at the Annual
Meeting and will be afforded the opportunity to make a statement if he decides
to do so. Such representative will also be available to respond to appropriate
questions from stockholders at the Annual Meeting.
The Board of Directors recommends a vote FOR the following resolution which
will be presented to the meeting:
RESOLVED, that the selection, by the Audit
Committee of the Board of Directors, of Deloitte &
Touche LLP, independent certified public accountants,
as auditors of the Company for the fiscal year ending
December 31, 1995,29, 1996, is hereby ratified, confirmed and
approved.
3128
The affirmative vote of the holders of a majority of the shares of Class A
and Class B Common Stock represented at the Annual Meeting, in person or by
proxy, voting together as one class, is required for approval of this
resolution. As a result, an abstention or a broker non-vote will have the same
effect as a vote against the foregoing resolution.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
DISCRETIONARY AUTHORITY TO VOTE PROXY
Management does not know of any other matters to be considered at the Annual
Meeting. If any other matters do properly come before the meeting, the Proxy
will be voted in respect thereof in accordance with the best judgment of the
persons authorized therein, and the discretionary authority to do so is included
in the Proxy.
ANNUAL REPORT; ANNUAL REPORT ON FORM 10-K
The Annual Report of the Company for the year 19941995 accompanies this Proxy
Statement. Audited financial statements for 19941995 are included in the Appendix to
this Proxy Statement.
Stockholders who would like a copy of the Company's 19941995 Annual Report on
Form 10-K as filed with the SEC may obtain it, free of charge, upon request to
the Secretary of the Company.
SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholders who intend to present proposals at the 19961997 Annual Meeting must
insure that such proposals are received by the Secretary of the Company not
later than November 14, 1995.12, 1996. Such proposals must meet the requirements of the
SEC to be eligible for inclusion in the Company's 19961997 proxy materials.
By Order of the Board of Directors.
/s/ Laura J. Corwin
LAURA J. CORWIN
Secretary
New York, N. Y.
March 13,12, 1996
29
Appendix
1995 32Financial Report
ANNEX A
THE NEW YORK TIMES COMPANY
1991 EXECUTIVE CASH BONUS PLAN
AS PROPOSED TO BE AMENDED
1. NAME1995 Consolidated Financial Statements
- -------------------------------------------------------------------------------
Contents Page
- -------------------------------------------------------------------------------
Financial Highlights F-1
Segment Information F-2
Management's Discussion and Analysis F-4
Consolidated Statements of Income F-9
Consolidated Balance Sheets F-10
Consolidated Statements of Cash Flows F-12
Consolidated Statements of Stockholders' Equity F-14
Notes to Consolidated Financial Statements F-15
Independent Auditors' Report F-27
Management's Responsibilities Report F-27
Market Information F-27
Quarterly Information F-28
Ten-Year Supplemental Financial Data F-29
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------------
Dollars in thousands except per share data Year Ended December 31
1995 1994 1993 1992 1991
--------------------------------------------------------------------------------------------------------------------------------
REVENUES AND INCOME
Revenues $ 2,409,403 $ 2,357,563 $ 2,019,654 $ 1,773,535 $ 1,703,101
Operating profit 228,580 211,242 126,581 88,408 93,639
Income before income taxes and equity in operations
of forest products group 214,641 383,953 101,206 8,525 63,053
Income (Loss) before equity
in operations of forest products group 121,809 210,085 57,975 (2,554) 41,293
Equity in operations of forest products group 14,051 3,264 (51,852) (8,718) 5,700
Income (Loss) before net cumulative effect
of accounting changes 135,860 213,349 6,123 (11,272) 46,993
Net cumulative effect of accounting changes -- -- -- (33,437) --
Net income (loss) 135,860 213,349 6,123 (44,709) 46,993
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION
Property, plant and equipment - net 1,276,066 1,158,751 1,112,024 902,755 966,593
Total assets 3,376,730 3,137,631 3,215,204 1,994,974 2,127,981
Long-term debt and capital lease obligations 637,873 523,196 460,063 206,911 213,487
Common stockholders' equity 1,610,349 1,543,539 1,598,883 999,630 1,073,442
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OF COMMON STOCK
Income (Loss) before net cumulative
effect of accounting changes 1.40 2.05 .07 (.14) .61
Net cumulative effect of accounting changes -- -- -- (.43) --
Net income (loss) 1.40 2.05 .07 (.57) .61
Dividends .56 .56 .56 .56 .56
Common stockholders' equity (end of year) 16.50 15.71 14.96 12.54 13.70
- ------------------------------------------------------------------------------------------------------------------------------------
KEY RATIOS (See notes below)
Operating profit to revenues 9% 9% 6% 5% 5%
Income before equity in operations
of forest products group to revenues 5% 5% 3% 2% 2%
Return on average stockholders' equity 8% 7% -- 2% 4%
Return on average total assets 4% 3% -- 1% 2%
Long-term debt and capital lease obligations
to total capitalization 28% 25% 22% 17% 17%
Current assets to current liabilities .89 .91 .89 1.08 .89
- ------------------------------------------------------------------------------------------------------------------------------------
EMPLOYEES 12,300 12,800 13,000 10,100 10,100
- ------------------------------------------------------------------------------------------------------------------------------------
In 1995, the Company sold small regional newspapers (see Note 2). The sales
resulted in a pre-tax gain of approximately $11.3 million ($5.0 million after
taxes or $.05 per share). These transactions are not reflected in the 1995
income amounts used in the applicable key ratio calculations presented above.
In 1994, the Company sold its Women's Magazines Division and U.K. golf
publications, and divested a minority interest in a Canadian paper mill
("Gaspesia") (see Note 2). As a result of these transactions, the Company
recorded a net pre-tax gain of approximately $200.9 million ($103.3 million
after taxes or $.99 per share). These transactions are not reflected in the 1994
income amounts used in the applicable key ratio calculations presented above.
Amounts for 1995 through 1993 include The Boston Globe since its acquisition on
October 1, 1993 (see Note 2).
For 1993, return on average stockholders' equity and return on average total
assets are less than 1 percent due to several factors which lowered net income
for the year (see Management's Discussion and Analysis on page F-6).
In 1992, the Company closed The Gwinnett (Ga.) Daily News and sold the residual
assets. The closing and related sale resulted in a pre-tax loss of $53.8 million
($37.1 million after taxes or $.47 per share). Net cumulative effect of
accounting changes reflects the 1992 adoption of the change in methods of
accounting for income taxes, postretirement benefits other than pensions and
postemployment benefits. The net cumulative effect and the Gwinnett transaction
are not reflected in the 1992 income amounts used in the applicable key ratio
calculations presented above.
F-1
SEGMENT INFORMATION
- --------------------------------------------------------------------------------
The Company has classified its business into the following segments and equity
interests:
NEWSPAPERS: The New York Times ("The Times"), The Boston Globe ("The Globe"), 21
regional newspapers, newspaper distributors, a one-half interest in the
International Herald Tribune S.A., a news service, a features syndicate,
TimesFax, licensing operations of The New York Times databases/microfilm and New
Ventures. New Ventures include projects developed in electronic media by The
Times and The Globe as well as various new media investments.
MAGAZINES: Numerous publications and New Ventures such as computerized systems
for golf tee time reservations and on-line magazine services, and related
activities in the sports/leisure field.
BROADCASTING: Six network-affiliated television stations and two radio stations.
FOREST PRODUCTS: Equity interests in a newsprint company and a partnership in a
supercalendered paper mill that together supply a portion of the Newspaper
Group's annual paper requirements.
- -----------------------------------------------------------------------------------------
Dollars in thousands Year Ended December 31
1995 1994 1993
- -----------------------------------------------------------------------------------------
REVENUES
Newspapers $ 2,161,356 $ 2,006,184 $ 1,563,281
Magazines 162,941 280,061 394,463
Broadcasting 85,106 71,318 61,910
- -----------------------------------------------------------------------------------------
Total $ 2,409,403 $ 2,357,563 $ 2,019,654
- -----------------------------------------------------------------------------------------
OPERATING PROFIT (LOSS)
Newspapers $ 208,465 $ 207,489 $ 125,597
Magazines 28,741 19,204 12,330
Broadcasting 18,943 13,626 8,138
Unallocated corporate expenses (27,569) (29,077) (19,484)
- -----------------------------------------------------------------------------------------
Total 228,580 211,242 126,581
Interest expense, net of interest income 25,230 28,162 25,375
Net gain on dispositions 11,291 200,873 --
- -----------------------------------------------------------------------------------------
Income before income taxes and equity
in operations of forest products group 214,641 383,953 101,206
Income taxes 92,832 173,868 43,231
- -----------------------------------------------------------------------------------------
Income before equity in
operations of forest products group 121,809 210,085 57,975
Equity in operations of forest products group 14,051 3,264 (51,852)
- -----------------------------------------------------------------------------------------
NET INCOME $ 135,860 $ 213,349 $ 6,123
- -----------------------------------------------------------------------------------------
See notes to consolidated financial statements.
F-2
SEGMENT INFORMATION
- -------------------------------------------------------------------------------
Dollars in thousands Year Ended December 31
1995 1994 1993
- -------------------------------------------------------------------------------
DEPRECIATION AND GENERAL PURPOSEAMORTIZATION
Newspapers $ 133,264 $ 135,767 $ 98,963
Magazines (7,000) 3,426 18,616
Broadcasting 11,519 10,113 10,725
Corporate 1,151 784 528
- -------------------------------------------------------------------------------
Total $ 138,934 $ 150,090 $ 128,832
- -------------------------------------------------------------------------------
CAPITAL EXPENDITURES
Newspapers $ 196,096 $ 188,222 $ 71,780
Magazines 736 906 3,059
Broadcasting 4,093 3,013 3,289
Corporate 11,130 794 1,491
- -------------------------------------------------------------------------------
Total $ 212,055 $ 192,935 $ 79,619
- -------------------------------------------------------------------------------
IDENTIFIABLE ASSETS AT DECEMBER 31
Newspapers $ 2,832,297 $ 2,732,953 $ 2,685,611
Magazines 99,525 91,797 247,723
Broadcasting 174,363 100,874 104,843
Corporate 168,576 126,574 101,007
Investment in forest products group 101,969 85,433 76,020
- -------------------------------------------------------------------------------
Total $ 3,376,730 $ 3,137,631 $ 3,215,204
- -------------------------------------------------------------------------------
See notes to consolidated financial statements.
Newspaper Group operating profit for 1995 and 1993 includes charges of $8.5
million and $35.4 million, respectively, for costs related to staff reductions.
Unallocated corporate expenses for 1995 includes a charge of $1.6 million for
similar staff reductions.
Magazine Group amounts for 1994 have been affected by the dispositions of the
Women's Magazines Division and the U.K. golf publications (see Note 2). The name1995
and 1994 amortization amounts include $10.0 million and $4.2 million,
respectively, of the income relating to a $40.0 million non-compete agreement,
associated with the disposition of the Women's Magazines Division, which is
being recognized straight-line over four years.
Newspaper Group amounts for 1995 and 1994 have been affected by the inclusion of
The Globe's operations for the entire year, while the 1993 amounts only include
its operations from the October 1, 1993 acquisition date (see Note 2).
Equity in operations of Forest Products Group and investment in Forest Products
Group for 1993 reflect an after-tax noncash charge of $47.0 million to write
down the Company's investment in Gaspesia.
F-3
MANAGEMENT'S DISCUSSION AND ANALYSIS
- -------------------------------------------------------------------------------
Advertising and circulation revenues accounted for approximately 69 percent and
23 percent of the Company's revenues in 1995. National and local economic
conditions influence the level of retail, national and classified advertising
generated in the markets served by the Company's business segments. Circulation
revenue is affected by competition from other forms of media available in the
Company's respective markets.
The cost of raw materials for the Company and the entire publishing industry
was adversely affected by the significant increases in newsprint and magazine
paper prices throughout 1995. The unfavorable impact of these increases is
expected to continue during 1996. However, it its unclear whether paper prices
will continue to rise in 1996.
Per share amounts in the following Management's Discussion and Analysis are
computed on an after-tax basis.
RESULTS OF OPERATIONS: 1995 Compared with 1994
In 1995, the Company reported net income of $135.9 million, or $1.40 per share,
compared with net income of $213.3 million, or $2.05 per share, in 1994.
Exclusive of special factors as described below, annual earnings from
ongoing operations would have been $1.41 per share in 1995, compared with $1.06
per share in 1994, an increase of 33 percent. The improvement in ongoing
operations in 1995's annual earnings was primarily due to higher revenues from
the Company's newspaper and broadcast properties and higher earnings from its
Forest Products Group.
Consolidated revenues for 1995 increased to $2.41 billion from $2.36 billion
in 1994. Excluding the revenues attributable to the operations divested during
1995 and 1994, annual revenues on a comparable basis were up 8 percent over
1994. The growth in revenues for the year was driven by strong revenues at the
newspaper and broadcast properties.
The Company's costs and expenses, excluding special factors, increased to
$2.17 billion from $2.15 billion in 1994. Excluding the costs and expenses
associated with the 1995 and 1994 divestitures, costs increased approximately 9
percent. The increase was primarily due to higher newsprint and magazine paper
prices and higher wages and benefits costs throughout the Company.
The Company's earnings for the year before interest, income taxes,
depreciation and amortization ("EBITDA"), excluding the net gains from the 1995
and 1994 divestitures, rose to $367.5 million from $361.3 million in the
comparable 1994 period.
Earnings for 1995 were affected by the following special factors:
- $10.1 million pre-tax charge ($.06 per share) for severance and
related costs resulting from work force reductions ("buyouts").
- $11.3 million pre-tax gain ($.05 per share) on the sales of small
regional newspapers.
Earnings for 1994 were affected by the following special factor:
- $200.9 million net pre-tax gain ($.99 per share) relating to the
divestitures of the Women's Magazines Division, U.K. golf publications
and a minority interest in Gaspesia Pulp & Paper Company Ltd.
("Gaspesia"), a Canadian newsprint mill.
Annual per share amounts were affected by the repurchase of the Company's
Class A Common Stock throughout 1994 and 1995. During 1995, $46.3 million was
expended to repurchase approximately 2.1 million shares. In 1994, approximately
$235.2 million was expended to repurchase 10.0 million shares.
Interest expense, net of interest income, declined to $25.2 million from
$28.2 million in 1994. The 1995 decline was due to higher levels of capitalized
interest in connection with new construction and a lower rate of interest on the
Company's outstanding debt, offset by higher debt balances.
Exclusive of taxes related to the 1995 and the 1994 divestitures, the annual
effective income tax rate for 1995 was 42.5 percent compared with 41.7 percent
in 1994. The 1995 tax rate includes the effects of a 1995 favorable state tax
ruling. The 1994 rate includes the utilization of capital loss carryforwards.
The following discussion provides additional information with respect to the
Company's traditional operations and new ventures.
- --------------------------------------------------------------------------------
NEWSPAPER GROUP: The table below shows the Newspaper Group's revenues, EBITDA
and operating profit split between newspapers/related businesses and new
ventures. The Newspapers category consists of: The New York Times ("The Times"),
The Boston Globe ("The Globe"), 21 Regional Newspapers, newspaper distributors,
a 50 percent interest in the International Herald Tribune, and Information
Services (previously included in the Broadcasting Group) which includes a news
service, a features syndicate, TimesFax and licensing operations of The New York
Times databases and microfilm. The New Ventures category consists of new
projects developed in electronic media by The Times and The Globe as well as
various new media investments such as Video News International and The Popcorn
Channel.
(Dollars in thousands) 1995 1994
- ------------------------------------------------------------------
REVENUES
Newspapers $2,160,399 $2,006,184
New Ventures 957 -
- ------------------------------------------------------------------
Total Revenues $2,161,356 $2,006,184
- ------------------------------------------------------------------
EBITDA
Newspapers $ 354,415 $ 343,256
New Ventures (12,686) -
- ------------------------------------------------------------------
Total EBITDA $ 341,729 $ 343,256
- ------------------------------------------------------------------
OPERATING PROFIT (LOSS)
Newspapers $ 221,566 $ 207,489
New Ventures (13,101) -
- ------------------------------------------------------------------
Total Operating Profit $ 208,465 $ 207,489
- ------------------------------------------------------------------
F-4
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
- --------------------------------------------------------------------------------
Excluding buyouts associated with the Group, operating profit in 1995 was
$217.0 million compared with $207.5 million in 1994. Revenues increased to $2.16
billion in 1995 from $2.01 billion in the prior year. Operating profit improved
despite a significant increase in newsprint prices over 1994. Increased
advertising and circulation rates and cost controls enabled the Group to
overcome a $76.2 million increase for the year in newsprint costs (net of
conservation programs).
Revenues increased approximately 8 percent for the year. The increase was
attributable to higher advertising rates and volume, higher circulation revenues
and database royalties. The Times experienced a 15 percent gain in circulation
revenues while The Globe recorded an 11 percent increase for the year. At the 21
Regional Newspapers, circulation revenue grew 7 percent for the year.
Average circulation on a comparable basis for the year was as follows:
Weekday Sunday
- ------------------------------------------------------------------
(Copies in thousands) 1995 % Change 1995 % Change
- ------------------------------------------------------------------
AVERAGE CIRCULATION
The New York Times 1,120.7 -1.9 1,712.6 -1.8
The Boston Globe 497.7 -1.3 789.3 -1.9
Regional Newspapers 753.7 -2.3 803.9 -1.6
- ------------------------------------------------------------------
The average circulation decline is partly attributable to the increase in
newsstand and home delivery prices and a decrease in distribution to
selected outlying areas.
Advertising volume on a comparable basis for the year was as follows:
- ------------------------------------------------------------------
(Inches in thousands) 1995 % Change
- ------------------------------------------------------------------
ADVERTISING VOLUME (EXCLUDING PREPRINTS)
The New York Times 3,831.2 +2.6
The Boston Globe 2,946.9 +2.2
Regional Newspapers 15,525.1 +1.1
- ------------------------------------------------------------------
Advertising volume at The Times increased 2.6 percent over 1994. Zoned and
national advertising categories increased 14.6 percent and 1.3 percent,
respectively, while retail and classified advertising experienced decreases of
3.8 percent and 2.8 percent, respectively.
At The Globe, advertising volume for the year increased 2.2 percent over
1994. Advertising increased in all categories except retail, which declined 2.1
percent. Advertising volume for the 21 Regional Newspapers increased 1.1 percent
over 1994. Classified advertising increased 8.0 percent, while the retail
category decreased 2.1 percent.
MAGAZINE GROUP: The Magazine Group is comprised of a number of publications, New
Ventures such as computerized systems for golf tee time reservations and on-line
magazine services, and related activities in the sports/leisure field. The
revenues for the Group include a $40.0 million non-compete agreement, associated
with the divestiture of the Women's Magazine Division, which is being recognized
straight-line over four years.
- ------------------------------------------------------------------
(Dollars in thousands) 1995 1994
- ------------------------------------------------------------------
REVENUES
Sports/Leisure Magazines $152,819 $144,777
New Ventures 122 -
Non-Compete 10,000 4,167
1994 Divested Magazines - 131,117
- ------------------------------------------------------------------
Total Revenues $162,941 $280,061
- ------------------------------------------------------------------
EBITDA
Sports/Leisure Magazines $ 22,876 $ 21,611
New Ventures (1,135) -
1994 Divested Magazines - 1,019
- ------------------------------------------------------------------
Total EBITDA $ 21,741 $ 22,630
- ------------------------------------------------------------------
OPERATING PROFIT (LOSS)
Sports/Leisure Magazines $ 19,971 $ 19,439
New Ventures (1,230) -
Non-Compete 10,000 4,167
1994 Divested Magazines - (4,402)
- ------------------------------------------------------------------
Total Operating Profit $ 28,741 $ 19,204
- ------------------------------------------------------------------
Operating profit for the Group was $28.7 million in 1995, compared with
$19.2 million in 1994, on revenues of $162.9 million and $280.1 million,
respectively. The decrease in revenues for the year was primarily due to the
revenues attributable to the Women's Magazines Division and the U.K. golf
publications, which were sold in the third quarter of 1994.
Excluding the operations of the 1994 divested magazines and the non-compete
income, revenues for 1995 increased approximately 6 percent due to higher
advertising revenues at Golf Digest and Golf World USA offset, in part, by
sluggish advertising at Tennis magazine. Operating profit for the Sports/Leisure
Magazines increased slightly due to improved revenues offset by higher paper
prices and subscription costs.
Advertising pages as reported to Publisher's Information Bureau ("PIB") for
Golf Digest decreased 1.3 percent to 1,304 pages and for Tennis decreased 12.9
percent to 717 pages.
THE BROADCASTING GROUP: The Broadcasting Group consists of six network-
affiliated television stations and two radio stations.
(Dollars in thousands) 1995 1994
- ------------------------------------------------------------------
Revenues $85,106 $71,318
- ------------------------------------------------------------------
EBITDA $30,462 $23,739
- ------------------------------------------------------------------
Operating Profit $18,943 $13,626
- ------------------------------------------------------------------
The Broadcasting Group's operating profit increased 39 percent over 1994.
The Group's operating profit was $18.9 million in 1995, compared with $13.6
million in 1994, on revenues of $85.1 million and $71.3 million, respectively.
Increased results for the year were due to higher local advertising revenues,
higher network compensation and the added operations of WTKR-TV, Norfolk, Va.,
which was acquired in June 1995.
FOREST PRODUCTS GROUP: Equity in operations of the Forest Products Group
(an after-tax amount) was $14.1 million in 1995 compared with $3.3 million in
1994. The 1995 improvement resulted principally from higher paper sales prices.
F-5
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS: 1994 COMPARED WITH 1993
In 1994, the Company reported net income of $213.3 million, or $2.05 per share,
compared with $6.1 million, or $.07 per share, in 1993.
Exclusive of the special factors described below, annual earnings would have
been $1.06 per share in 1994 compared with $.91 per share in 1993. Operating
profit for 1994, after excluding the special factors, rose to $211.2 million
from $163.1 million in 1993. The improvement in ongoing operations in 1994's
annual earnings was due to higher revenues at The Times, Regional Newspapers and
Broadcasting and the inclusion of The Globe's operations for the entire year
compared with one quarter in 1993.
Revenues for 1994 increased to $2.36 billion from $2.02 billion in 1993. The
1994 annual revenues included The Globe for an entire year, but the Women's
Magazines and U.K. golf publications only through the first six months. Annual
revenues for 1993 included an entire year of revenues from the magazines sold in
1994, but only the fourth-quarter revenues from The Globe. On a comparable
basis, excluding revenues attributable to The Globe and the magazines sold, 1994
annual revenues increased by approximately 6 percent over 1993. The growth in
1994 revenues was due to higher revenues in the Newspaper and Broadcasting
Groups.
The Company's costs and expenses after excluding special factors increased
to $2.15 billion from $1.86 billion in 1993. The increase was due to the
inclusion of The Globe's operations and acquisition amortization expense for the
entire year, as well as higher wages and benefits costs throughout the Company
offset, in part, by the reduction in expenses associated with the magazines
sold.
Earnings for 1994 were affected by the following special factor:
- $200.9 million net pre-tax gain ($.99 per share) relating to the
divestitures of the Women's Magazines Division, U.K. golf publications
and a minority interest in Gaspesia.
Earnings for 1993 were affected by the following special factors:
- $47.0 million after-tax charge ($.56 per share) against equity in
operations of the Forest Products Group to write down the Company's
investment in Gaspesia.
- $35.4 million pre-tax charges ($.23 per share) for severance and
related costs resulting from staff reductions at The Times.
- $4.4 million unfavorable tax adjustment ($.05 per share) due to a
federal corporate income tax rate increase which required the
remeasurement of deferred tax balances.
- $3.7 million pre-tax costs ($.02 per share) due to a severe snowstorm
that disrupted delivery of The Times.
- $2.6 million pre-tax gain ($.02 per share) on the sale of assets.
Excluding the net gain from the dispositions, EBITDA rose significantly to
$361.3 million in 1994 from $255.4 million in 1993. The increase was due to
improved operating results and the inclusion of The Globe's operations for an
entire year in 1994.
Interest expense, net of interest income, rose to $28.2 million in 1994 from
$25.4 million in 1993. The increase was a result of higher borrowings in
connection with stock repurchases and the October 1993 acquisition of The Globe.
Exclusive of the taxes related to the 1994 magazine sales and the
disposition of Gaspesia, the Company's effective income tax rate for 1994 was
41.7 percent compared with 42.7 percent in 1993. The rates in both years reflect
the utilization of capital tax loss carryforwards.
A discussion of the Company's financial performance follows:
NEWSPAPER GROUP:
(Dollars in thousands) 1994 1993
- ------------------------------------------------------------------
Revenues $2,006,184 $1,563,281
- ------------------------------------------------------------------
EBITDA $ 343,256 $ 224,560
- ------------------------------------------------------------------
Operating Profit $ 207,489 $ 125,597
- ------------------------------------------------------------------
Operating profit of the Newspaper Group, adjusted for special factors, in
1994 was $207.5 million compared with $162.1 million in 1993. Revenues increased
to $2.01 billion in 1994 from $1.56 billion in the prior year. The improvements
in 1994 revenues and operating profit were due to a combination of higher
advertising and circulation rates, increased advertising volume, and the
inclusion of the operations of The Globe for an entire year. The Group was
affected by higher newsprint prices in the fourth quarter of 1994, as a result
of increased demand for newsprint in the market. These prices increased in 1995.
Average circulation for 1994 throughout the Newspaper Group was adversely
affected by newsstand and home delivery price increases. Average circulation on
a comparable basis for the year was as follows:
Weekday Sunday
- ------------------------------------------------------------------
(Copies in thousands) 1994 % Change 1994 % Change
- ------------------------------------------------------------------
AVERAGE CIRCULATION
The New York Times 1,142.8 -3.1 1,743.9 -2.1
The Boston Globe 504.5 - 804.8 -1.2
Regional Newspapers 843.5 -0.9 851.4 -0.3
Advertising volume on a comparable basis for the year was as follows:
- ------------------------------------------------------------------
(Inches in thousands) 1994 % Change
- ------------------------------------------------------------------
ADVERTISING VOLUME (EXCLUDING PREPRINTS)
The New York Times 3,733.6 +3.5
The Boston Globe 2,884.2 +5.3
Regional Newspapers 17,086.8 +4.3
- ------------------------------------------------------------------
Advertising volume at The Times increased 3.5 percent. National, classified
and zoned advertising categories experienced increases of 2.1 percent, 4.1
percent and 8.3 percent, respectively. However, retail advertising decreased by
1.1 percent.
At The Globe, advertising volume for the year 1994 increased 5.3 percent
over 1993. Advertising increased in all categories, especially classified which
was up 8.6 percent over 1993.
F-6
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
- --------------------------------------------------------------------------------
At the 28 regional newspapers that were in the Group for the entire 1994 and
1993 periods (two weekly newspapers were sold at the end of 1993), advertising
volume increased 4.3 percent. Advertising increased in all categories over 1993.
MAGAZINE GROUP:
(Dollars in thousands) 1994 1993
- ------------------------------------------------------------------
REVENUES
Sports/Leisure Magazines $144,777 $146,306
Non-Compete 4,167 -
1994 Divested Magazines 131,117 $248,157
- ------------------------------------------------------------------
Total Revenues $280,061 $394,463
- ------------------------------------------------------------------
EBITDA
Sports/Leisure Magazines $ 21,611 $ 26,364
1994 Divested Magazines 1,019 4,582
- ------------------------------------------------------------------
Total EBITDA $ 22,630 $ 30,946
- ------------------------------------------------------------------
OPERATING PROFIT (LOSS)
Sports/Leisure Magazines $ 19,439 $ 22,780
Non-Compete 4,167 -
1994 Divested Magazines (4,402) (10,450)
- ------------------------------------------------------------------
Total Operating Profit $ 19,204 $ 12,330
- ------------------------------------------------------------------
Operating profit for the Magazine Group was $19.2 million in 1994, compared
with $12.3 million in 1993, on revenues of $280.1 million and $394.5 million,
respectively. The decrease in revenues for the year was primarily due to the
lack of revenues attributable to the Women's Magazines Division and the U.K.
golf publications, which were sold in the third quarter of 1994.
In connection with the sale of the Women's Magazines Division, the Company
entered into a four-year non-compete agreement for which it received $40.0
million. This amount is being recognized as income, on a straight-line basis,
over a four- year period commencing with the closing of the sale on July 26,
1994. The 1994 revenues for the Group included $4.2 million relating to this
agreement.
Excluding the 1993 and 1994 operations of the Women's Magazines Division,
the U.K. golf publications and the non-compete income arising from the Women's
sale in 1994, both the revenues and the operating profit of the Sports/Leisure
Magazines for 1994 were down from the comparable period in 1993. This was due
primarily to softness in advertising at Golf Digest and Tennis magazines and
higher subscription promotion costs.
Advertising pages as reported to Publisher's Information Bureau for Golf
Digest decreased 2 percent from 1993 to 1,321 pages and for Tennis increased 4
percent from 1993 to 823 pages.
BROADCASTING GROUP:
(Dollars in thousands) 1994 1993
- ------------------------------------------------------------------
Revenues $71,318 $61,910
- ------------------------------------------------------------------
EBITDA $23,739 $18,863
- ------------------------------------------------------------------
Operating Profit $13,626 $ 8,138
- ------------------------------------------------------------------
The Broadcasting Group's operating profit was $13.6 million in 1994,
compared with $8.1 million in 1993 on revenues of $71.3 million and $61.9
million, respectively. Higher national and local advertising revenues at the
television stations accounted for the improved operating results.
FOREST PRODUCTS GROUP: Equity in operations of the Forest Products Group (an
after-tax amount) was $3.3 million in 1994, compared with a loss of $4.9 million
in 1993, when adjusted for the Gaspesia write-down. The 1994 improvements
resulted from the Company no longer needing to record its share of operating
losses for Gaspesia as a result of the 1993 write-down. In addition, higher
sales prices improved the Group's operating results during the second half of
the year and this favorable trend continued into 1995.
- --------------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities in 1995 of $295.2 million and the
incremental proceeds from the debt offering (see below) were used primarily to
modernize facilities and equipment, to fund acquisitions, to pay dividends to
stockholders and to repurchase shares of the Company's Class A Common Stock. The
ratio of current assets to current liabilities was .89 at December 31, 1995,
compared with .91 at December 31, 1994, and long-term debt and capital lease
obligations as a percentage of total capitalization was 28 percent at December
31, 1995, compared with 25 percent at December 31, 1994.
FINANCING: In March 1995, the Company completed a public offering of $400.0
million of unsecured notes and debentures. The offering consisted of ten-year
notes aggregating $250.0 million maturing March 15, 2005 at an annual rate of
7.625% (the "Notes") and 30-year debentures aggregating $150.0 million maturing
March 15, 2025 at an annual rate of 8.25% (the "Debentures"), (collectively
referred to herein as the "Offering"). The Debentures are callable after ten
years. Interest is payable semi-annually on March 15 and September 15 on both
the Notes and the Debentures.
The net proceeds from the Offering were used to repay the principal balance
of the $162.3 million 11.85% Notes due March 31, 1995, $50.0 million of 9.34%
Notes due July 15, 1995 and indebtedness outstanding under the Company's
commercial paper program. The remaining net proceeds were used for general
corporate purposes. Accordingly, at December 31, 1994, the 11.85% Notes due
March 31, 1995, the 9.34% Notes due July 15, 1995 and the amounts outstanding
under the Company's commercial paper facility were classified as long-term debt
as they were expected to be refinanced on a long-term basis under the Offering.
The Company has established a $200.0 million commercial paper program,
which is supported by the Company's revolving credit and term loan agreements.
Borrowings are in the form of
F-7
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONCLUDED)
- -------------------------------------------------------------------------------
unsecured notes sold at a discount with maturities ranging up to 270 days.
There were no borrowings outstanding under the commercial paper program at
December 31, 1995.
In addition to the commercial paper program, the Company has several
established sources for future liquidity purposes, including several revolving
credit and term loan agreements. At December 31, 1995, $170.0 million was
available for borrowing by the Company under these agreements.
In connection with the divestiture of a jointly-owned affiliate, Spruce
Falls Power and Paper Company Limited, the Company has fulfilled its commitment
to lend $26.5 million in 1994 to the new owners of the mill. Under the terms of
the loan, the five-year repayment period is not scheduled to commence until
December 1997. The Company expects the former affiliate to fulfill its
contractual obligation as stipulated in the loan agreement.
At December 31, 1995, approximately $17.5 million remains from charges
associated with staff reductions. The remaining cash outflows associated with
these charges are expected to occur over the next three years as a result of the
timing of certain union pension and welfare fund contributions. The Company does
not anticipate that its ongoing business operations will be affected by this
reduction of staff and expects to fund these charges through
internally-generated funds.
STOCK REPURCHASE PROGRAM: During the first quarter of 1995, the Company spent
the remainder of the $100.0 million authorized pursuant to a stock repurchase
program announced in October 1994. In February 1995, the Board of Directors
authorized expenditures of up to an additional $50.0 million. Under the program,
purchases may be made from time to time either in the open market or through
private transactions. The number of shares that may be purchased in market
transactions may be limited as a result of The Globe transaction. Purchases may
be suspended from time to time or discontinued.
In 1995, $46.3 million was expended under the two programs to repurchase
approximately 2.1 million shares. To date, approximately $18.0 million remains
from the 1995 authorization.
CAPITAL EXPENDITURES: In July 1994, the Company's Board of Directors approved
the construction of a new production and distribution facility in College Point,
New York, for the production of The Times. The Company estimates that the cost
of the new facility will be approximately $315.0 million, exclusive of
capitalized interest currently projected to be $35.0 million. Construction began
in August 1994 and completion is expected in the middle of 1997. While the new
facility will replace The Times's Manhattan production and distribution
facility, business and news operations will remain at the Manhattan building. No
write-down is anticipated as a result of the discontinuance of production at the
Manhattan facility.
The Company currently estimates that, inclusive of the College Point
facility, capital expenditures for 1996 will range from $275.0 million to $325.0
million.
The Company believes that cash generated from its operations and the
availability of funds from external sources should be adequate to cover planned
capital expenditures, dividend payments to stockholders and other cash
requirements.
NEW ACCOUNTING PRONOUNCEMENTS: In March 1995, the Financial Accounting Standards
Board ("FASB"), issued Statement of Financial Accounting Standards ("SFAS") No.
121, Accounting for Impairment of Long-Lived Assets ("SFAS 121"). SFAS 121 will
require a review for impairment of long-lived assets and certain identifiable
intangible assets to be held and used, whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. This statement is effective for the Company's 1996 financial
statements. The Company does not believe operating results will be materially
affected upon the adoption of SFAS 121.
In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation ("SFAS 123"). This statement is effective for the Company's 1996
financial statements. SFAS 123 encourages companies to account for stock
compensation awards based on their fair value at the date they are granted. The
resulting compensation cost would be shown as an expense on the income
statement. Companies choosing not to apply the new accounting method are
permitted to continue following current accounting requirements, however, they
will be required to disclose in the notes to the financial statements the effect
on net income and earnings per share had the new accounting method been applied.
The Company anticipates that it will continue to apply current accounting
requirements upon adoption of this planstandard.
F-8
CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------------
Dollars and shares in thousands except per share data
Year Ended December 31
1995 1994 1993
- ---------------------------------------------------------------------------------------
REVENUES
Advertising $ 1,672,598 $ 1,656,999 $ 1,399,042
Circulation 551,985 545,854 473,971
Other 184,820 154,710 146,641
- ---------------------------------------------------------------------------------------
Total 2,409,403 2,357,563 2,019,654
- ---------------------------------------------------------------------------------------
COSTS AND EXPENSES
Production costs
Raw materials 368,152 304,360 280,531
Wages and benefits 537,159 529,701 437,528
Other 399,107 428,663 418,554
- ---------------------------------------------------------------------------------------
Total 1,304,418 1,262,724 1,136,613
Selling, general and
administrative expenses 876,405 883,597 756,460
- ---------------------------------------------------------------------------------------
Total 2,180,823 2,146,321 1,893,073
- ---------------------------------------------------------------------------------------
OPERATING PROFIT 228,580 211,242 126,581
Interest expense, net of interest income 25,230 28,162 25,375
Net gain on dispositions 11,291 200,873 --
- ---------------------------------------------------------------------------------------
Income before income taxes and equity
in operations of forest products group 214,641 383,953 101,206
Income taxes 92,832 173,868 43,231
- ---------------------------------------------------------------------------------------
Income before equity in operations
of forest products group 121,809 210,085 57,975
Equity in operations of forest products group 14,051 3,264 (51,852)
- ---------------------------------------------------------------------------------------
NET INCOME $ 135,860 $ 213,349 $ 6,123
- ---------------------------------------------------------------------------------------
Average number of common shares outstanding 96,854 104,070 84,459
- ---------------------------------------------------------------------------------------
Per share of common stock
Net income $ 1.40 $ 2.05 $ .07
Dividends .56 .56 .56
- ---------------------------------------------------------------------------------------
See notes to consolidated financial statements.
F-9
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
December 31
1995 1994
- --------------------------------------------------------------------------------
ASSETS Dollars in thousands
- --------------------------------------------------------------------------------
CURRENT ASSETS
Cash and short-term investments
(at cost which approximates market:
1995, $56,891,000; 1994, $14,255,000) $ 91,442 $ 41,419
Accounts receivable (net of allowances:
1995, $25,865,000; 1994, $28,157,000) 277,974 247,750
Inventories 42,844 30,545
Deferred subscription costs 10,333 10,659
Other current assets 40,042 81,401
- --------------------------------------------------------------------------------
Total current assets 462,635 411,774
- --------------------------------------------------------------------------------
INVESTMENT IN FOREST PRODUCTS GROUP 101,969 85,433
- --------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT (at cost)
Land 65,188 62,945
Buildings, building equipment and improvements 649,131 629,152
Equipment 956,890 908,630
Construction and equipment installations in progress 345,721 218,041
- --------------------------------------------------------------------------------
Total 2,016,930 1,818,768
Less accumulated depreciation 740,864 660,017
- --------------------------------------------------------------------------------
Total property, plant and equipment - net 1,276,066 1,158,751
- --------------------------------------------------------------------------------
INTANGIBLE ASSETS ACQUIRED
Costs in excess of net assets acquired 1,383,687 1,391,250
Other intangible assets acquired 218,646 160,747
- --------------------------------------------------------------------------------
Total 1,602,333 1,551,997
Less accumulated amortization 207,489 172,531
- --------------------------------------------------------------------------------
Total intangible assets acquired - net 1,394,844 1,379,466
- --------------------------------------------------------------------------------
MISCELLANEOUS ASSETS 141,216 102,207
- --------------------------------------------------------------------------------
Total $3,376,730 $3,137,631
- --------------------------------------------------------------------------------
See notes to consolidated financial statements.
F-10
- ----------------------------------------------------------------------------------------------------------------------
December 31
1995 1994
- -----------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY Dollars in thousands
- -----------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Accounts payable $ 156,722 $ 121,504
Accrued payroll 74,560 67,012
Accrued expenses 200,576 182,338
Unexpired subscriptions 81,919 77,697
Current portion of capital lease obligations 3,139 2,681
- -----------------------------------------------------------------------------------------------------------------------
Total current liabilities 516,916 451,232
- -----------------------------------------------------------------------------------------------------------------------
OTHER LIABILITIES
Long-term debt 589,193 473,530
Capital lease obligations 48,680 49,666
Deferred income taxes 168,715 176,588
Other 441,124 441,323
- -----------------------------------------------------------------------------------------------------------------------
Total other liabilities 1,247,712 1,141,107
- -----------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
5 1/2 percent cumulative prior preference stock of $100 par value - authorized
110,000 shares; outstanding: 1995 and 1994, 17,530 shares 1,753 1,753
Serial preferred stock of $1 par value - authorized 200,000 shares - none issued -- --
Common stock of $.10 par value
Class A - authorized 200,000,000 shares; issued: 1995, 108,950,897 shares;
1994, 108,052,347 shares (including treasury shares: 1995, 11,775,295; 1994, 10,242,381) 10,895 10,805
Class B, convertible - authorized 600,000 shares; issued: 1995, 568,919 shares;
1994, 570,121 (including treasury shares: 1995 and 1994, 139,943) 57 57
Additional capital 618,570 597,860
Earnings reinvested in the business 1,262,022 1,179,715
Common stock held in treasury, at cost (281,195) (244,898)
- -----------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,612,102 1,545,292
- -----------------------------------------------------------------------------------------------------------------------
Total $ 3,376,730 $ 3,137,631
- -----------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements.
F-11
CONSOLIDATED STATEMENTS OF CASH FLOWS
- ----------------------------------------------------------------------------------------------------------------------
Dollars in thousands Year Ended December 31
1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------
CASH PROVIDED (USED):
OPERATING ACTIVITIES
Net income $ 135,860 $ 213,349 $ 6,123
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation 102,271 104,624 89,274
Amortization - net 36,663 45,466 39,558
Equity in operations of forest products group - net (20,064) (3,240) 52,311
Cash distributions and dividends from forest products group 4,330 8,224 --
Net gain on dispositions (11,291) (200,873) --
Proceeds from non-compete agreement -- 40,000 --
Deferred income taxes (9,225) (33,732) (37,901)
Increase in receivables - net (32,762) (18,573) (21,636)
(Increase) Decrease in inventories (12,723) (4,035) 10,799
Decrease (Increase) in deferred subscription costs and other current assets 51,939 (17,820) 4,749
Increase (Decrease) in accounts payable 28,200 17,481 (41,429)
Increase (Decrease) in accrued payroll and accrued expenses 45,275 (6,359) 64,823
Increase in unexpired subscriptions 4,832 18,027 11,196
Other - net (28,140) 19,046 15,491
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 295,165 181,585 193,358
- ----------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Net proceeds from sale of BPI Communications, L.P. -- 55,367 --
Net proceeds from dispositions 27,536 243,776 --
Businesses acquired, net of cash acquired (71,214) -- (134,384)
Additions to property, plant and equipment (200,688) (186,203) (75,738)
Purchases of marketable securities (39,370) (88,358) (65,077)
Proceeds from sales of marketable securities 39,370 88,358 65,077
Other investing proceeds 8,610 7,725 944
Other investing payments (17,873) (8,505) (16,986)
- ----------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by investing activities (253,629) 112,160 (226,164)
- ----------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Short-term borrowing - net -- (1,935) 62,340
Long-term obligations
Increase 400,000 -- 200,000
Reduction (278,244) (5,113) (5,510)
Capital shares
Issuance 1,908 2,577 1,829
Repurchase (49,987) (232,815) (255,222)
Dividends paid to stockholders (54,291) (58,287) (47,076)
Other financing (payments) proceeds (10,899) 1,189 --
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 8,487 (294,384) (43,639)
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in Cash and short-term investments 50,023 (639) (76,445)
Cash and short-term investments at the beginning of the year 41,419 42,058 118,503
- ----------------------------------------------------------------------------------------------------------------------
Cash and short-term investments at the end of the year $ 91,442 $ 41,419 $ 42,058
- ----------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements and supplemental disclosures to
consolidated statements of cash flows.
F-12
SUPPLEMENTAL DISCLOSURES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------------------
Dollars in thousands Year Ended December 31
1995 1994 1993
- ------------------------------------------------------------------------------------------
NONCASH INVESTING AND FINANCING TRANSACTIONS
Capital lease assets and obligations incurred $ 2,495 $ 5,990 $ 338
========== =========== ===========
Businesses acquired
Fair value of assets acquired 72,610 1,257,029
Liabilities assumed (1,396) (229,000)
Liabilities incurred, net of payments -- (18,744)
Common stock issued -- (874,901)
---------- -----------
Net cash paid $ 71,214 $ 134,384
========== ===========
Issuance of common shares $ 20,569 $ 21,723 $ 18,188
========== =========== ===========
CASH FLOW INFORMATION
Cash payments during the year for
Interest (net of amount capitalized) $ 29,277 $ 36,320 $ 26,861
========== =========== ===========
Income taxes $ 86,851 $ 220,973 $ 55,327
========== =========== ===========
- ------------------------------------------------------------------------------------------
For 1994, the increase in income taxes paid (and corresponding decrease in net
cash provided by operating activities) is in large part due to an increase in
estimated income tax payments of approximately $113,500,000 related to the net
gain on dispositions in 1994. Under Statement of Financial Accounting Standards
No. 95, "Statement of Cash Flows," all income tax payments are included in
determining net cash flow from operating activities, but the net cash proceeds
received from the dispositions are reported as an investing cash inflow.
F-13
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------------------------------------------
Dollars in thousands
except per share data Capital Stock
--------------------------------------
5 1/2 % Class A Class B Common
Preference Common Common Earnings Stock
-------------------------------------- Reinvested Held in
Additional in the Treasury,
Capital Business at cost
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, JANUARY 1, 1993 $1,784 $8,805 $57 $164,928 $1,065,347 $(239,507)
- ----------------------------------------------------------------------------------------------------------------------------------
Net income 6,123
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends, preference - $5.50 per share (98)
Dividends, common - $.56 per share (47,003)
- ----------------------------------------------------------------------------------------------------------------------------------
Issuance of shares:
The Globe acquisition - 36,397,313 Class A shares 1,940 432,624 440,337
Retirement units, etc. - 10,877 Class A shares
from treasury 123 339
Employee stock purchase plan - 819,166
Class A shares (2,612) 20,329
Stock options - 185,611 Class A shares 23 4,695 (934)
Stock conversions - 180 shares - -
- ----------------------------------------------------------------------------------------------------------------------------------
Purchase of company stock: 10,260,900 Class A shares (255,222)
- ----------------------------------------------------------------------------------------------------------------------------------
Foreign currency translation (1,411)
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1993 1,784 10,768 57 599,758 1,022,958 (34,658)
- ----------------------------------------------------------------------------------------------------------------------------------
Net income 213,349
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends, preference - $5.50 per share (97)
Dividends, common - $.56 per share (58,190)
- ----------------------------------------------------------------------------------------------------------------------------------
Issuance of shares:
Retirement units, etc. - 10,889 Class A shares
from treasury (128) 271
Employee stock purchase plan - 1,191,323
Class A shares 2 (7,237) 29,119
Stock options - 223,700 Class A shares 35 6,928 (3,385)
Stock conversions - 1,503 shares - -
- ----------------------------------------------------------------------------------------------------------------------------------
Purchase of company stock:
10,043,900 Class A shares (236,245)
307 5 1/2 percent preference shares (31) 10
Proceeds from the sale of put options 1,189
Equity put option obligations (2,660)
- ----------------------------------------------------------------------------------------------------------------------------------
Foreign currency translation 1,695
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1994 1,753 10,805 57 597,860 1,179,715 (244,898)
- ----------------------------------------------------------------------------------------------------------------------------------
Net income 135,860
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends, preference - $5.50 per share (96)
Dividends, common - $.56 per share (54,195)
- ----------------------------------------------------------------------------------------------------------------------------------
Issuance of shares:
Retirement units, etc. - 21,421 Class A shares
from treasury (308) 533
Employee stock purchase plan - 1,100,348
Class A shares 1 (4,852) 26,023
Stock options - 297,569 Class A shares 89 22,925 (16,317)
Stock conversions - 1,202 shares
- ----------------------------------------------------------------------------------------------------------------------------------
Purchase of company stock: 2,054,904 Class A shares (46,536)
Proceeds from the sale of put options 285
Fulfilled equity put option obligations 2,660
- ----------------------------------------------------------------------------------------------------------------------------------
Foreign currency translation 738
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1995 $1,753 $10,895 $57 $618,570 $1,262,022 $(281,195)
- ----------------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements.
F-14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS. The New York Times Company 1991 Executive Cash
Bonus Plan (hereinafter calledand all subsidiaries (the
"Company"), is engaged in diversified activities in the "Plan").communications field.
The purposeCompany's principal businesses are newspapers, magazines and broadcasting.
The Company also has equity interests in a Canadian newsprint company and a
supercalendered paper manufacturing partnership. The Company's major source of
revenue is advertising from its newspaper business. The newspapers operate in
the Northeast, Southeast and California markets.
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the
accounts of the PlanCompany after elimination of intercompany items.
FISCAL YEAR. The Company changed its fiscal
year-end to the last Sunday in December, beginning with the fiscal year ending
December 29, 1996.
INVENTORIES. Inventories are stated at the lower of cost or current market
value. Inventory cost generally is to enablebased on the Company (as hereinafter defined) to retainlast-in, first-out ("LIFO")
method for newsprint and attract executives who
enhance its traditionmagazine paper and contribute to its success by their ability, ingenuity
and industry, and to enable them to participate in the long-term success and
growth of the Company.
2. DEFINITIONS
(a) "Awards"--has the meaning specified in Section 4 hereof.
(b) "Board"--means the Board of Directors of the Company.
(c) "Committee"--means the Committee referred to in Section 3 of the Plan.
If at any time no Committee shall be in office then the functions of the
Committee specified in the Plan shall be exercised by the non-employee members
of the Board.
(d) "Company"--means The New York Times Company, a corporation organized
under the laws of the State of New York (or any successor corporation), and its
subsidiaries (as hereinafter defined) andfirst-in, first-out ("FIFO")
method for other non-corporate entities in which
it owns directly or indirectly 40% or more of the equity interests. A
"subsidiary" means any corporationinventories.
INVESTMENTS. Investments in which the Company possesses directly or
indirectly 50% orhas at least a 20 percent but not
more than 50 percent interest are accounted for under the equity method.
PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment is stated at cost,
and depreciation is computed by the straight-line method over estimated service
lives. The Company capitalizes interest costs as part of the combined voting powercost of
all classesconstructing major facilities and equipment.
INTANGIBLE ASSETS ACQUIRED. Costs in excess of stock.
(e) "Consolidated Statementnet assets acquired consist of
Income"--meansexcess costs of businesses acquired over values assigned to their net tangible
assets and other intangible assets. The Company evaluates periodically whether
there has been a permanent impairment in any of its intangible assets, inclusive
of goodwill. The major factors which are considered in such valuation include
the consolidated statementcash flow and any contemplated long-term strategies which might affect the
viability of income (or any comparable statement, however designated) of the Company, auditedsuch business. The excess costs which arose from acquisitions after
October 31, 1970 are being amortized by the independent certified public accountantsstraight-line method principally
over 40 years. The remaining portion of the Company and containedsuch excess, which arose from
acquisitions before November 1, 1970 (approximately $13,000,000), is not being
amortized since in the Company's annual reportopinion of management there has been no diminution in
value. Other intangible assets acquired consist principally of advertiser and
subscriber relationships which are being amortized over the remaining lives,
ranging from 5 to stockholders or proxy statement.
(f) "Equity in Operations40 years. The general policy of Forest Products Group"--means5 to 40 years relates to all
intangible assets with the amount
designated as Equity in Operationslife of 5 years used for various software licenses
and lives of 40 years used for mastheads on various acquired properties.
SUBSCRIPTION REVENUES AND COSTS. Proceeds from subscriptions and related costs,
principally agency commissions, are deferred at the Forest Products Group for the
applicable yeartime of sale and shown separatelyare
included in the Consolidated StatementStatements of Income for
such year.
(g) "Participant"--meanson a key employeepro rata basis over the
terms of the Company who is selected by
the Committee to participate in any partsubscriptions.
FOREIGN CURRENCY TRANSLATION. The assets and liabilities of the Plan from among persons who in
the judgment of the Committeeforeign companies
are key employees of the Company. In general, key
employees are those employees who have principal responsibility for, or who
contribute substantially to, the management efficiency, editorial achievement or
financial success of the Company.
(h) "Pre-Tax Income"--means income before income taxes and Equity in
Operations of Forest Products Group, as shown in the Consolidated Statement of
Income for the applicable year, but before the amount of any provision for
Awards under the Plan and awards under the Stock Plan for such year.
(i) "Stock Plan"--means the Company's 1991 Executive Stock Incentive Plan.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board or the Committee appointed by it
and composed of two or more directors who are not employees of the Company. The
Committee shall be constituted so as to enable the Plan to comply with the
administration requirements of Section 162(m)(4)(C) of the
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Internal Revenue Code of 1986, as amended. The Committee shall servetranslated at the pleasureyear-end exchange rates. Results of operations are
translated at the Boardaverage rates of exchange in effect during the year. The
resultant translation adjustment is included as a component of stockholders'
equity.
EARNINGS PER SHARE. Earnings per share is computed after preference dividends
and shall have such powers as the Board may from time to
time confer upon it.
PART I
AWARDS
4. FORM OF AWARDS
The Plan is designed to provide incentives for key employees of the Company
by the making of awards of supplemental compensation ("Awards"). The Committee,
subject to the terms and conditions hereof, may make Awards to a Participant in
any one, or in any combination, of the following forms:
(a) Cash Awards as provided in Part IA of the Plan ("Cash Awards");
(b) Annual Performance Awards as provided in Part IB of the Plan
("Annual Performance Awards"); and
(c) Performance Awards ("Performance Awards") or other forms of Awards
as provided in Part IC of the Plan.
Awards may be made to a Participant whether or not he or she receives an
award or option under the Stock Plan. Cash Awards, Performance Awards and other
forms of Awards pursuant to Part IC will be based on a Participant's performance
in those areas for which the Participant is directly responsible. Performance
for this purpose may be measured by the achievement of specific management goals
such as, but not limited to, an increase in earnings or the operating cash flow
of the Company, outstanding initiative or achievement in any department of the
Company, or any other standards specified by the Committee. Annual Performance
Awards will be based exclusively on the criteria set forth in Part IB.
No Award under the Plan is payable in common stock or preferred stock of the
Company.
5. MAXIMUM AMOUNT AVAILABLE FOR THE ACCRUAL OF AWARDS FOR ANY YEAR
(a) No accrual for Awards shall be made hereunder (or under the Stock Plan)
for any year unless cash dividends of not less than ten cents ($.10) per share
(as adjusted as hereafter provided) have been declared on the outstanding Class
A and Class B Common Stock of the Company during such year. If at any time the
Company shall take any action, whether by stock dividend, stock split,
combination of shares, or otherwise, which results in an increase or decrease in
theweighted average number of shares of Class A and/or Class B Common Stock theretofore issued
and outstanding, or the Company reclassifies or otherwise changes its issued and
outstanding Class A and/or Class B Common Stock (other than in par value) or the
Company and one or more corporations merge and the Company is the surviving
corporation of such merger, then the Committee shall make an equitable
adjustment to the provisions of this Section 5(a) to take account of such event.
(b) In the event that the above condition is met for any year during the
continuance of this Plan, the maximum aggregate amount that may be accrued for
Awards under the Plan and the Stock Plan for such year shall be 4% of the sum
of: (1) Pre-Tax Income plus (2) Equity in Operations of Forest Products Group.
The Committee, in its sole discretion, may make adjustments in Pre-Tax Income
and Equity in Operations of Forest Products Group to take account of
extraordinary, unusual or infrequently occurring events and transactions,
changes in accounting principles that substantially affect the foregoing, or
such other circumstances as the Committee may determine warrant such adjustment.
(c) As soon as feasible after the close of each year, the independent
certified public accountants of the Company shall determine and report the
maximum amount that may be accrued for Awards for such year under the formula
described in Section 5(b), subject to the second sentence of such Section.
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(d) If amounts are accrued in any year under the formula described in this
Section 5 and are not awarded in full in such year under the Plan and the Stock
Plan, such unawarded amounts may, in the discretion of the Committee, be carried
forward and be available for Awards under this Plan and under the Stock Plan in
any future year without regard to the provisions of Sections 5(a) or (b) of the
Plan applicable to Awards made in such year.
(e) Awards under the Plan for any year may not exceed the sum of (i) the
amount accrued for such year under Section 5(b) above plus (ii) unawarded
accrued amounts carried forward from previous years under Section 5(d) above
plus (iii) amounts that may become available for Awards pursuant to the last
sentence of Section 7(c) hereof, minus (x) the amount of interest equivalents
allocated during such year pursuant to Section 10(b) hereof, and minus (y) the
amount of awards made for such year under the Stock Plan valued as set forth in
Section 13(e) of the Stock Plan (and any interest or dividend equivalents
allocated during such year pursuant to Sections 15(c), 24 and 27A thereof).
6. DETERMINATION OF AWARDS AND PARTICIPANTS
(a) As promptly as practicable after the end of each year, the Committee may
make Awards (other than Annual Performance Awards, which are to be made
exclusively as set forth in Part IB) for such year and determine the amounts to
be carried forward for Awards in future years. The Committee may also, in its
discretion, make Awards (other than Annual Performance Awards, which are to be
made exclusively as set forth in Part IB) prior to the end of the year based on
amounts available under clauses (ii) and (iii) of Section 5(e) and reasonable
estimates of the accrual for the year in question.
(b) The Committee shall have absolute discretion to determine the key
employees who are to receive Awards (other than Annual Performance Awards, which
are to be made exclusively as set forth in Part IB) under the Plan for any year
and to determine the amount of such Awards based on such criteria and factors as
the Committee in its sole discretion may determine, such as the Company's
operating cash flow and overall financial performance. Recommendations as to the
key employees who are to receive Awards (including Annual Performance Awards)
under the Plan for any year and to the amount and form of such Awards shall,
however, be made to the Committee by the chief executive officer of the Company.
The fact that an employee is selected as eligible for an Award shall not mean,
however, that such employee will necessarily receive an Award.
(c) A person whose employment terminates during the year or who is granted a
leave of absence during the year may, in the discretion of the Committee and
under such rules as the Committee may from time to time prescribe, be given an
Award with respect to the period of such person's service during such year.
7. METHOD AND TIME OF PAYMENT OF AWARDS
(a) Awards shall be paid in full as soon as practicable after the Award is
made; provided, however, that payment of Annual Performance Awards shall be
subject to the provisions of Part IB; and provided further, that the payment of
any or all Awards may be deferred, divided into annual installments, or made
subject to such other conditions as the Committee in its sole discretion may
authorize under such rules and regulations as may be adopted from time to time
by the Committee.
(b) The Committee's rules and regulations may include procedures by which a
Participant expresses a preference to the Committee as to the form of Award or
method of payment of an Award but the final determination as to the form and the
terms and conditions of any Award shall rest solely with the Committee.
(c) Awards deferred under the Plan shall become payable to the Participant
or, in the event of the Participant's death, as specified in Section 13 hereof,
in such manner, at such time or times (which may be either before or after
termination of service), and subject to such conditions as the Committee in its
sole discretion shall determine. In any year the Committee shall have the
discretion to set aside, for
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payment in such year or any future year, interest on any deferred Award;
provided, however, that the total amount of such interest shall be deducted from
the maximum amount available for Awards under Section 5 of the Plan. Any
forfeited deferred Awards shall be carried forward and be available for Awards
in any future year without regard to the provisions of Sections 5(a) or (b) of
the Plan.
8. INDIVIDUAL AGREEMENTS
(a) The Committee may in its discretion require that each Participant
receiving an Award enter into an agreement with the Company which shall contain
such terms and conditions as the Committee may in its discretion request.
(b) The Committee may cancel any unexpired, unpaid or deferred Award at any
time if the Participant is not in compliance with all applicable provisions of
the agreement referred to above, if any, and the Plan.
9. STATUS OF PARTICIPANTS
No Participant in the Plan shall have any interest in any specific assets of
the Company by reason of the fact that deferred Awards are to be recorded as
being held for such Participant's account to be paid in installments in the
future. The interest of all Participants shall derive from and be determined
solely by the terms and provisions of the Plan set forth herein.
PART IA
CASH AWARDS
10. DETERMINATION OF CASH AWARDS
(a) Each year the Committee shall designate those key employees of the
Company who shall receive Cash Awards under this part of the Plan. Cash Awards
may be paid immediately, in installments or on a deferred date, as the
Committee, in its discretion, may provide.
(b) If the Committee determines that some portion of a Cash Award to a
Participant shall be treated as a deferred Cash Award and be payable in annual
or other periodic installments, the Participant will be notified in writing when
such deferred Cash Award shall be paid and over what period of time. In each
year the Committee shall have discretion to provide for the payment of an amount
equivalent to interest, at such rate or rates fixed by the Committee, on any
deferred Cash Award. Any amounts provided for pursuant to the preceding sentence
shall become payable in such manner, at such time or times, and subject to such
conditions as the Committee shall in its sole discretion determine; provided,
however, that the total amount of such interest shall be deducted from the
maximum amount available for Awards under the formula described in Section 5 of
the Plan.
PART IB
ANNUAL PERFORMANCE AWARDS
11. DETERMINATION OF ANNUAL PERFORMANCE AWARDS
(a) General. Each year the Committee may make Annual Performance Awards
under this part of the Plan; provided that no Participant may be eligible to
receive an Annual Performance Award hereunder and under the Stock Plan in the
same year.
(b) Certain Definitions. For the purposes of this Part IB, the following
terms shall have the meanings specified:
A-4
"Affected Officers" shall mean those executive officers of the Company
whose compensation is required to be disclosed in the Company's annual proxy
statement relating to the election of directors.
"Code Section 162(m)" shall mean Section 162(m) of the Internal Revenue
Code of 1986, as amended (or any successor provision), and "Regulations"
shall mean the regulations promulgated thereunder, as from time to time in
effect.
"Eligible Participants" shall have the meaning set forth in subsection
(c) below.
"Performance Adjustment" means, for any year, a factor ranging from 0%
to 200%, based upon the achievement of Performance Goal Targets established
by the Committee, that, when multiplied by an Eligible Participant's Target
Award, determines the amount of such Eligible Participant's Annual
Performance Award for such year.
"Performance Goal" means, for any year, the business criteria selected
by the Committee to measure the performance during such year of the Company
(or of a division, subsidiary or group thereof) from one or more of the
following:
(i) earnings per share of the Company for the year;
(ii) net income of the Company for the year;
(iii) return on assets of the Company for the year (net income of the
Company for the year divided by average total assets during such year);
(iv) return on stockholders' equity of the Company for the year (net
income of the Company for the year divided by average stockholders'
equity during such year); and
(v) operating profit of the Company or of a division, subsidiary or
group thereof for the year.
"Performance Goal Target" means, for any Performance Goal, the levels of
performance during a year under such Performance Goal established by the
Committee to determine the Performance Adjustment to an Eligible
Participant's Target Award for such year.
"Target Award" means, for any year, with respect to an Eligible
Participant, the dollar amount set by the Committee that, when multiplied by
the applicable Performance Adjustment, determines such Eligible
Participant's Annual Performance Award.
(c) Eligibility. Annual Performance Awards are available each year only to
Plan Participants who are designated by the Committee, prior to March 31 of such
year (or prior to such later date as permitted by Code Section 162(m) and the
Regulations), as likely to be Affected Officers for such year, whose annual
salary and bonus for such year are expected to exceed $1,000,000 and who are not
designated by the Committee as eligible for an Annual Performance Award under
the Stock Plan for such year ("Eligible Participants").
(d) Determination of Annual Performance Awards. Prior to March 31 of each
year (or prior to such later date as permitted by Code Section 162(m) and the
Regulations), the Committee will determine the Eligible Participants for such
year, will designate those Eligible Participants who will be entitled to earn an
Annual Performance Award for such year under this Plan, and will establish for
each such Eligible Participant for such year: (i) a Target Award, (ii) one or
more Performance Goals, and (iii) for each such Performance Goal, a Performance
Goal Target, the method by which achievement thereof will be measured and a
schedule of Performance Adjustment factors corresponding to varying levels of
Performance Goal Target achievement. In the event more than one Performance Goal
is established for any Eligible Participant, the Committee shall at the same
time establish the weighting of each such Performance Goal in determining such
Eligible Participant's Annual Performance Award.
A-5
Notwithstanding anything in this Part IB to the contrary, the Annual Performance
Award payable to any Eligible Participant in any year may not exceed $1.5
million.
(e) Payment of Annual Performance Awards. Subject to subsection (f) below,
Annual Performance Awards will be paid in cash as soon as practicable after the
end of the year to which it relates and after the Committee certifies the extent
to which the Performance Goal Target or Targets under the Performance Goal or
Goals have been met or exceeded. If permitted by the Regulations and Code
Section 162(m), the Committee may determine to pay a portion of an Annual
Performance Award in December of the year to which it relates. The Committee may
not increase the amount of an Annual Performance Award that would otherwise be
payable upon achievement of the Performance Target or Targets, but it may reduce
any Eligible Participant's Annual Performance Award in its discretion. Subject
to Section 6(c) above, no Annual Performance Award will be payable to any
Eligible Participant who is not an employee of the Company on the last day of
the year to which such Annual Performance Award relates.
(f) Deferral of Annual Performance Awards. If the Committee determines that
some portion of an Annual Performance Award to an Eligible Participant shall be
treated as a deferred Annual Performance Award and be payable in annual or other
periodic installments, the Eligible Participant will be notified in writing when
such deferred Annual Performance Award shall be paid and over what period of
time. In each year the Committee shall have discretion to provide for the
payment of an amount equivalent to interest, at such rate or rates fixed by the
Committee, on any deferred Annual Performance Award. Any amounts provided for
pursuant to the preceding sentence shall become payable in such a manner, at
such time or times, and subject to such conditions as the Committee shall in its
sole discretion determine; provided, however, that the total amount of such
interest shall be deducted from the maximum amount available for Awards under
the formula described in Section 5 of the Plan.
(g) Code Section 162(m). It is the intent of the Company that Annual
Performance Awards satisfy, and this Part IB be interpreted in a manner that
satisfies, the applicable requirements of Code Section 162(m) and the
Regulations so that the Company's tax deduction for Annual Performance Awards to
Affected Officers is not disallowed in whole or in part by operation of Code
Section 162(m). If any provision of this Plan or of any Annual Performance Award
would otherwise frustrate or conflict with such intent, that provision shall be
interpreted and deemed amended so as to avoid such conflict. To the extent of
any irreconcilable conflict with such intent, such provision shall be deemed
void as applicable to Eligible Participants.
PART IC
PERFORMANCE AND OTHER AWARDS
12. DETERMINATION OF PERFORMANCE AND OTHER AWARDS
(a) Each year the Committee in its sole discretion may authorize other forms
of Awards such as, but not limited to, Performance Awards, if the Committee
deems it appropriate to do so in order to further the purposes of the Plan.
(b) A "Performance Award" shall mean an Award which entitles the Participant
to receive cash or other compensation, or any combination thereof, in an amount
which depends upon the financial performance of the Company during a stated
period of more than one year. Performance for this purpose may be measured by
the growth in book value of the common stock of the Company, an increase in per
share earnings of the Company, an increase in operating cash flow or any other
indicators specified by the Committee. The Committee shall also fix the period
during which such performance is to be measured, the value of a Performance
Award for purposes of providing for the
A-6
accrual pursuant to Section 5 of the Plan and the form of payment to be made in
respect of the Performance Award.
PART II
GENERAL PROVISIONS
13. NON-ALIENATION OF BENEFITS
Except as herein specifically provided, no right or unpaid benefit under
this Plan shall be subject to alienation, assignment, pledge or charge and any
attempt to alienate, assign, pledge or charge the same shall be void. If any
Participant or person entitled to the benefits hereunder should attempt to
alienate, assign, pledge or charge any benefit hereunder, then such benefit
shall, in the discretion or the Committee, cease. Notwithstanding the foregoing,
rights and benefits hereunder shall pass by will or the laws of descent and
distribution in the following order: (i) to beneficiaries so designated by the
Participant; if none, then (ii) to a legal representative of the Participant; if
none, then (iii) to the persons entitled thereto as determined by a court of
competent jurisdiction. Awards so passing shall be made at such times and in
such manner as if the Participant were living.
14. WITHHOLDING OR DEDUCTION FOR TAXES
If at any time specified herein for the making of any payment to any
Participant or beneficiary, any law or regulation of any governmental authority
having jurisdiction in the premises shall require the Company to withhold, or to
make any deduction for, any taxes or take any other action in connection with
the payment then to be made, such payment shall be deferred until such
withholding or deduction shall have been provided for by the Participant or
beneficiary, or other appropriate action shall have been taken.
15. ADMINISTRATION EXPENSES
The entire expense of administering this Plan shall be borne by the Company.
16. GENERAL CONDITIONS
(a) The Board in its discretion may from time to time amend, suspend or
terminate any or all of the provisions of this Plan, provided that the Board may
not make any amendment which materially affects the provisions of Sections 5(a)
or (b) of the Plan without the consent and approval of the holders of a majority
of the outstanding shares of Class A and Class B
Common Stock outstanding during each year. The effect of shares issuable under
the Company's Incentive Plans (see Note 11), including stock options, is not
material and therefore is excluded from the computation.
CASH AND SHORT-TERM INVESTMENTS. For purposes of the Consolidated Statements of
Cash Flows, the Company considers all highly liquid debt instruments purchased
with maturities of three months or less to be cash equivalents. The Company has
overdraft positions at certain banks as a result of outstanding checks, which
have been reclassified to accounts payable.
DERIVATIVES. The Company had interest rate swap agreements with major
financial institutions that were used to manage exposure to fluctuations in
interest rates. The Company was exposed to credit losses in the event of
nonperformance by the counterparties to its interest rate swap agreements.
As of December 31, 1995, the Company did not have any derivative financial
instruments.
USE OF ESTIMATES. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements. Actual results could differ from these estimates.
NEW ACCOUNTING PRONOUNCEMENTS. In March 1995, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 121, Accounting for Impairment of Long-Lived Assets ("SFAS
121"). SFAS 121 will require a review for impairment of long-lived assets
and certain identifiable intangible assets to be held and used, whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. This statement is effective for the Company's
1996 financial statements. The Company does not believe operating results
will be materially affected upon the adoption of SFAS 121.
In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation ("SFAS 123"). This statement is effective for the Company's 1996
financial statements. SFAS 123 encourages companies to account for stock
compensation awards based on their fair value at the date they are granted. The
resulting compensation cost would be shown as an expense on the income
statement. Companies choosing not to apply the new accounting method are
permitted to continue following current accounting requirements, however, they
will be required to disclose in the notes to the financial statements the effect
on net income and earnings per share had the new accounting method been applied.
The Company anticipates that it will continue to apply current accounting
requirements upon adoption of this standard.
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2. ACQUISITIONS/DIVESTITURES
In June 1995, the Company acquired WTKR-TV in Norfolk, Virginia. The acquisition
was accounted for as a purchase. The aggregate net cost of the acquisition was
$71,214,000 which was paid in cash. The purchase resulted in increases in other
intangible assets of approximately $57,705,000 (which consist of a network
affiliation agreement, FCC licenses and other intangible assets); property,
plant and equipment of $13,841,000, and other assets of $1,064,000. Net
liabilities assumed as a result of the transaction totaled approximately
$1,396,000. This acquisition will not have a material impact on the future
operations of the Company.
In the third quarter of 1995, the Company completed the sales of six small
regional newspapers: The Daily Commercial (Leesburg, FL); The Daily Corinthian
(Corinth, MS), The Messenger (Madisonville, KY), The Lenoir News-Topic (Lenoir,
NC), The State Gazette (Dyersburg, TN) and The Banner-Independent (Booneville,
MS). The sales resulted in a net pre-tax gain of approximately $11,300,000
($5,000,000 after taxes, or $.05 per share). In May 1995, the Company sold The
York County Coast Star (Kennebunk, ME). The sale did not have a material effect
on the Company's consolidated financial statements. These dispositions will not
have a material impact on the future operations of the Company.
In December 1994, the Company divested its minority interest in Gaspesia
Pulp & Paper Company Ltd. ("Gaspesia"), a Canadian newsprint mill. The Company's
49 percent interest was transferred to Abitibi-Price, Inc., the majority owner.
In connection with the transfer, a pre-tax charge of approximately $3,100,000
($.02 per share) was recorded. In 1993, the Company wrote down its investment in
Gaspesia by $47,000,000 ($.56 per share) to reflect its net realizable value.
In July and August 1994, the Company completed the sales of its Women's
Magazines Division and U.K. golf publications, respectively. These transactions
resulted in a pre-tax gain of approximately $204,000,000 ($1.01 per share). In
connection with the sale of the Women's Magazines Division, the Company entered
into a four-year non-compete agreement, for which it received $40,000,000. This
amount is being recognized as operating income, on a straight-line basis, over a
four-year period commencing with the closing of the sale on July 26, 1994.
The divestitures of the Women's Magazines Division, U.K. golf publications
and the minority interest in Gaspesia resulted in a net pre-tax gain of $200.9
million ($103.3 million after taxes or $.99 per share).
On October 1, 1993, pursuant to an Agreement and Plan of Merger dated June
11, 1993, as amended as of August 12, 1993 (the "Agreement"), a wholly-owned
subsidiary of the Company entitledwas merged with Affiliated Publications, Inc., the
parent company of The Boston Globe ("The Globe"), which became a wholly-owned
subsidiary of the Company.
The transaction was accounted for as a purchase and, accordingly, The
Globe's operations have been included in the Company's consolidated financial
statements beginning October 1, 1993, the date the transaction closed. The
acquisition had a net cost of approximately $1,028,000,000. Under the Merger
Agreement the Company exchanged cash of approximately $160,000,000 for 15
percent of The Globe's common stock with the remainder of the consideration paid
by the exchange of approximately 36,400,000 shares of the Company's Class A
Common Stock valued at $24.03 per share. The purchase resulted in increases in
costs in excess of net assets acquired of approximately $850,000,000 (which is
being amortized by the straight-line method over 40 years); other intangible
assets acquired of $161,000,000 (which consist principally of advertiser and
subscriber relationships which are being amortized by the straight-line method
over an average period of 33 years); and property, plant and equipment of
$246,000,000. Net liabilities assumed as a result of the transaction totaled
approximately $229,000,000.
Pro forma operating results for the year ended December 31, 1993, had The
Globe transaction occurred at the beginning of that period are as follows:
revenues of $2,335,985,000; net income of $1,178,000; and net income per share
of $.01.
Pro forma operating results for the year ended December 31, 1994, had the
magazines sales occurred as of January 1, 1994 were as follows: revenues of
$2,231,942,000; net income of $115,518,000; and net income per share of $1.11.
Pro forma operating results for the year ended December 31, 1993, had the
magazine sales and The Globe transaction occurred at the beginning of that
period were as follows: revenues of $2,097,828,000; net income of $14,009,000;
and net income per share of $.13.
The above pro forma results are not necessarily indicative of the combined
results that would have occurred had the sales and the merger taken place as of
the beginning of the periods provided, nor necessarily indicative of results
that may be achieved in the future. The gain on the sales is not included in the
above pro forma operating results.
In February 1994, the sale of BPI Communications, L.P., a partnership in
which the Company acquired a one-third interest through the 1993 acquisition of
The Globe, was completed. The Company received approximately $55,000,000 in 1994
from the sale. For financial reporting purposes, no gain or loss was recognized
on the sale.
On December 31, 1993, the Company sold two weekly newspapers and recognized
a pre-tax gain of $2,600,000, or $.02 per share, on the transaction.
In connection with the divestiture of a newsprint mill in 1991, the Company
made a loan commitment of up to vote thereon, voting together$26,500,000 to the new owners of the mill. At
December 31, 1994, the commitment was fully funded. Interest on the outstanding
balance is payable quarterly at annual rates ranging from 4 to 10 percent.
Commencing in December 1997, the borrowings outstanding at December 1996 are
payable annually over a five-year period in 20 percent increments. The Company
expects the obligation to be satisfied as stipulated in the loan commitment.
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3. INVESTMENT IN FOREST PRODUCTS GROUP
The Company has equity interests in a Canadian newsprint company, Donohue
Malbaie, Inc. ("Malbaie"), and in a partnership operating a supercalendered
paper mill in Maine, Madison Paper Industries ("Madison"). The equity interest
in Malbaie represents a 49 percent ownership interest.
The Company and Myllykoski Oy, a Finnish paper manufacturing company, are
partners through subsidiary companies in Madison. The partners' interests in the
net assets of Madison at any time will depend on their capital accounts, as
defined, at such time. Through an 80 percent-owned subsidiary, the Company's
share of Madison's profits and losses is 40 percent.
In December 1994, the Company divested its minority interest in Gaspesia,
which was written down to its net realizable value in 1993 (see Note 2).
Loans to Madison by the 80 percent-owned subsidiary of the Company totaled
$1,882,000, $1,523,000, and $1,279,000 in 1995, 1994 and 1993, respectively. No
contributions were made to Madison in 1995, 1994 or 1993.
The Company received distributions from Malbaie of $4,330,000 and
$8,224,000 in 1995 and 1994, respectively. No distributions were received from
Malbaie in 1993. The Company's share of undistributed earnings of Malbaie
aggregated approximately $9,200,000 and $4,882,000 at December 31, 1995 and
1994, respectively.
No loans or contributions were made to Malbaie in 1995, 1994 or 1993.
Condensed combined balance sheets of the Forest Products Group are as
follows:
- ------------------------------------------------------------------
Condensed Combined Balance Sheets
of Forest Products Group
Dollars in thousands
- ------------------------------------------------------------------
December 31 1995 1994
- ------------------------------------------------------------------
Current assets $ 94,934 $ 66,280
Less current liabilities 88,129 33,027
- ------------------------------------------------------------------
Working capital 6,805 33,253
Fixed assets, net 234,240 236,961
Long-term debt (771) (62,355)
Deferred income taxes and other (106,667) (103,756)
- ------------------------------------------------------------------
Net assets $ 133,607 $ 104,103
- ------------------------------------------------------------------
The current portion of debt of the Forest Products Group of $46,678,000 is
included in current liabilities. At December 31, 1995, long-term debt of the
Forest Products Group matures as follows: 1997, $526,000; 1998, $152,000; and
1999, $93,000. The Forest Products Group's debt is not guaranteed by the
Company.
Condensed combined statements of operations of the Forest Products Group,
which exclude the operations of Gaspesia subsequent to the write-down at
December 31, 1993, are as follows:
- -------------------------------------------------------------------
Condensed Combined Statements of Operations
of Forest Products Group
Dollars in thousands
- -------------------------------------------------------------------
Year Ended December 31 1995 1994 1993
- -------------------------------------------------------------------
Net sales and other income $ 268,377 $ 189,805 $ 254,324
Costs and expenses 216,342 180,860 269,845
- -------------------------------------------------------------------
Income (Loss) before taxes 52,035 8,945 (15,521)
Income tax expense (benefit) 7,969 1,136 (2,700)
- -------------------------------------------------------------------
Net income (loss) $ 44,066 $ 7,809 $ (12,821)
- -------------------------------------------------------------------
The condensed combined financial information of the Forest Products Group
excludes the income tax effects attributable to Madison. Such tax effects (see
Note 6) have been included in the Company's consolidated financial statements.
Adjustments from translating certain balance sheet accounts, principally
of the Canadian newsprint companies, for each of the three years in the period
ended December 31, 1995, are set forth in the Consolidated Statements of
Stockholders' Equity.
The cumulative translation adjustment (included in earnings reinvested in
the business) decreased stockholders' equity by $195,000 and $933,000 at
December 31, 1995 and 1994, respectively. Upon the disposition of Gaspesia in
1994, stockholders' equity was increased by $3,000,000, net of tax, to reflect
the cumulative translation adjustment related to Gaspesia.
During 1995, 1994 and 1993, the Company's Newspaper Group purchased
newsprint and supercalendered paper from the Forest Products Group (including
Gaspesia through the disposal date) at competitive prices. Such purchases
aggregated approximately $59,000,000, $107,000,000 and $102,000,000,
respectively.
- -------------------------------------------------------------------------------
4. INVENTORIES
Inventories as shown in the accompanying Consolidated Balance Sheets are
composed of the following:
- -----------------------------------------------------------------
Dollars in thousands
- -----------------------------------------------------------------
December 31 1995 1994
- -----------------------------------------------------------------
Newsprint and magazine paper $36,965 $24,783
Work-in-process, etc. 5,879 5,762
- -----------------------------------------------------------------
Total $42,844 $30,545
- -----------------------------------------------------------------
Utilization of the LIFO method reduced inventories as calculated on the FIFO
method by approximately $11,731,000 and $2,694,000 at December 31, 1995 and
1994, respectively.
F-17
- --------------------------------------------------------------------------------
5. VOLUNTARY STAFF REDUCTIONS AND UNION NEGOTIATIONS
In 1995 the Company recorded pre-tax charges of approximately $10,100,000,
or $.06 per share, for work force reductions at The Times, The Globe and
corporate headquarters. In 1993 the Company recorded pre-tax charges of
$35,400,000, or $.23 per share, for severance and related costs resulting from
anticipated white-collar staff reductions (approximately $30,000,000) and
voluntary early retirements from the composing room (approximately $5,400,000)
at The Times.
At December 31, 1995 and 1994, approximately $17,472,000 and $22,563,000,
respectively, are included in accrued expenses in the accompanying Consolidated
Balance Sheets, which represents the unpaid balance of the pre-tax charges. The
Company has committed the remaining funds. The remaining cash flows associated
with these charges are expected to be paid over the next three years due to the
timing of certain union pension and welfare fund contributions.
- --------------------------------------------------------------------------------
6. INCOME TAXES
Income tax expense for each of the years presented is determined in accordance
with Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes ("SFAS 109").
Income tax expense as shown in the Consolidated Statements of Operations is
composed of the following:
- -------------------------------------------------------------------
Dollars in thousands 1995 1994 1993
- -------------------------------------------------------------------
Current tax expense
Federal $105,999 $159,779 $60,178
State, local, foreign 1,970 49,651 17,612
- -------------------------------------------------------------------
107,969 209,430 77,790
- -------------------------------------------------------------------
Deferred tax expense
Federal (22,483) (20,955) (26,982)
State, local, foreign 12,493 (13,088) (8,919)
- -------------------------------------------------------------------
(9,990) (34,043) (35,901)
- -------------------------------------------------------------------
Income tax expense from
continuing operations 97,979 175,387 41,889
Less income tax expense (benefit)
related to equity in operations 5,147 1,519 (1,342)
- -------------------------------------------------------------------
Income tax expense $ 92,832 $173,868 $43,231
- -------------------------------------------------------------------
Tax expense in 1995 was reduced by $10,986,000 as a result of a favorable
state tax ruling and federal, state and local tax refunds. A further reduction
of $4,339,000 ($6,676,000 before federal tax effect) in 1995 tax expense relates
to a reduction in the valuation allowance attributable to state and local
capital and net operating loss tax benefits. The remaining decrease in the
valuation reserve is due principally to the expiration of net operating loss tax
benefits and does not affect income tax expense.
Tax expense in 1994 was reduced by approximately $10,000,000 and $3,000,000,
respectively, relating to a decrease in valuation allowance and recognition of
federal capital loss tax benefits. The decrease in valuation allowance is
associated with federal capital loss tax benefits. An increase in valuation
allowance associated with state and local capital loss carryforward tax benefits
added approximately $688,000 (net of federal tax benefit) to 1994 tax expense.
Tax expense in 1993 was reduced by $6,317,000. The reduction was due to a
decrease in the valuation allowance of $4,390,000 related to federal capital
loss carryforwards, and benefits associated with state and local operating loss
carryforwards net of federal tax effect. Adjustment of the Company's deferred
tax balances for the one class. The foregoing provisions
shall not be construedpercent rate increase provided in the Tax Reform Act
of 1993 added $4,359,000 to preventdeferred tax expense, inclusive of $600,000 of
expense reported in equity in operations of the Committee from exercising its discretion,
or to limit such discretion, to adjustForest Products Group.
In accordance with the provisions of Sections 5(a)SFAS 109, approximately $1,600,000 of
additional reduction in valuation allowance, which was established against
acquired deferred tax assets, was recorded as a reduction of goodwill in 1993.
No such amounts affected 1995 or 1994 tax expense.
Income tax benefits credited directly to stockholders' equity totaled
$837,000, $2,434,000 and (b)
hereof as expressly permitted thereby or otherwise to exercise any discretion$3,595,000 during 1995, 1994 and 1993, respectively.
Foreign taxes included in income tax expense in 1994 of $4,979,000 were
principally attributable to the extent expressly authorized hereunder.
(b) Nothing containeddisposition of the Company's U.K. golf
publications. Foreign taxes included in income tax expense in 1995 and 1993
were not significant.
Equity in operations of the Forest Products Group (see Note 3) includes the
income tax effects of the Company's interest in Madison and its equity in the
Plan shall prohibitoperations of the Canadian newsprint companies. Of such amounts, tax expense of
$850,000 in 1995, and tax benefits of $117,000 in 1994 and $585,000 in 1993 are
applicable to the Canadian newsprint companies. Deferred taxes attributable to
the Company's interest in Madison were an expense of $273,000 in 1995, a benefit
of $(39,000) in 1994, and expense of $1,562,000 in 1993. These deferred taxes
result principally from differences between depreciation used for financial
reporting and that used for tax reporting. The Company's consolidated federal
income tax returns include the income tax effects of its interest in Madison.
F-18
The reasons for the variance between the effective tax rate on income before
income taxes and equity in operations of the Forest Products Group and the
federal statutory rate (exclusive of the net gain on dispositions in 1995 and
1994) are as follows:
- ---------------------------------------------------------------------------------------------------
Year Ended December 31 1995 1994 1993
- ---------------------------------------------------------------------------------------------------
% of % of % of
Dollars in thousands Amount Pretax Amount Pretax Amount Pretax
- ---------------------------------------------------------------------------------------------------
Tax at federal statutory rate $71,173 35.0% $ 64,078 35.0% $35,422 35.0%
Increase (decrease) resulting from
State and local taxes - net 8,090 4.0 5,177 2.8 6,883 6.8
Capital loss tax benefits - - (10,000) (5.4) (6,875) (6.8)
Amortization of nondeductible
intangible assets acquired 11,061 5.4 11,139 6.1 5,602 5.5
Change in enacted tax rate - - - - 3,759 3.7
Other - net (3,826) (1.9) 5,920 3.2 (1,560) (1.5)
- ---------------------------------------------------------------------------------------------------
Subtotal 86,498 42.5% 76,314 41.7% 43,231 42.7%
- ---------------------------------------------------------------------------------------------------
Dispositions 6,334 97,554 -
- ---------------------------------------------------------------------------------------------------
Income tax expense $92,832 $173,868 $43,231
- ---------------------------------------------------------------------------------------------------
Federal income taxes payable (refundable) totaled $8,725,000 and $(28,109,000)
as of December 31, 1995 and 1994, respectively. Current income taxes payable are
included in accrued expenses while refundable amounts are included in other
current assets. The components of the net deferred tax liabilities recognized on
the respective Consolidated Balance Sheets are as follows:
- -----------------------------------------------------------------
Dollars in thousands
December 31 1995 1994
- -----------------------------------------------------------------
Deferred Tax Assets
Intangible assets acquired $ 5,941 $ 10,425
Accrued state and local taxes 17,033 14,996
Postretirement and
postemployment benefits 86,822 81,707
Other accrued employee benefits
and compensation 93,777 89,569
Allowance for doubtful
accounts 13,411 13,113
Tax loss carryforwards 8,571 20,260
Deferred Income 29,811 35,040
Other 10,550 4,578
- -----------------------------------------------------------------
Total deferred tax assets 265,916 269,688
Valuation allowance (10,724) (19,774)
- -----------------------------------------------------------------
Net deferred tax assets $255,192 $249,914
- -----------------------------------------------------------------
- ------------------------------------------------------------------
Dollars in thousands
December 31 1995 1994
- ------------------------------------------------------------------
Deferred Tax Liabilities
Property, plant and equipment $134,613 $121,617
Tax certificate 113,238 125,664
Nontaxable acquisition 123,880 125,782
Deferred subscription
expenses 8,013 8,627
Safe harbor tax lease 18,975 19,717
Unremitted earnings 1,238 833
Investment in Forest Products
Group 13,382 13,324
Other 1,084 2,641
- ------------------------------------------------------------------
Total deferred tax liabilities 414,423 418,205
- ------------------------------------------------------------------
Net deferred tax assets (255,192) (249,914)
- ------------------------------------------------------------------
Net deferred tax liability 159,231 168,291
- ------------------------------------------------------------------
Less amounts included in:
Other current assets (10,559) (9,296)
Accrued expenses 1,075 999
- ------------------------------------------------------------------
Deferred income taxes $168,715 $176,588
- ------------------------------------------------------------------
At December 31, 1995, tax loss carryforwards include only state and local
tax loss benefits. The benefits are primarily attributable to tax operating
losses. Such loss carryforwards expire in accordance with provisions of
applicable tax laws and have remaining lives ranging from 1 to 13 years. The
remaining $8,571,000 of operating loss carryforwards will expire in years
through 2008.
In 1989, the Federal Communications Commission granted the Company from
establishing incentive compensation arrangements in addition to this Plan and
the Stock Plan. Payments made under any such separate arrangements shall not be
included in or considered a part of the maximum amount available for Awards
under the Plan and Stock Plan and shall not be charged against the amount
available for Awards under the Plan and Stock Plan for any year. In the
discretion of the Committee, employees shall be eligible to participate in such
other arrangements, as well as the Plan and Stock Plan, in the same year.
(c) Nothing in this Plan shall be deemed to limit in any way the right of
the Company to terminate a Participant's employment with the Company at any
time.
A-7
(d) The Committee may promulgate rules and regulations relating to the
administration and interpretation of, and procedures under, the Plan. Any
decision or action taken by the Company, the Board or the Committee arising out
of ortax
certificate in connection with the construction, administration, interpretationsale of its cable television system. This
certificate permitted the Company to defer income taxes on the gain on the
transaction and effectpay such taxes over a number of years. Under the provisions of
the Plan shall be conclusiveInternal Revenue Code, this is accomplished through a reduction in the tax
bases of various assets which results in lower tax depreciation and
binding uponamortization deductions in subsequent years. As a result, $10,994,000,
$10,508,000, and $10,820,000 of income taxes that were deferred became currently
payable in 1995, 1994 and 1993, respectively.
Federal income tax returns for all Participantsyears through 1989 have been examined by the
Internal Revenue Service and any
person claiming under or through any Participant.
(e) No memberthe respective tax years have been closed by
statute. Examinations of the Board ortax returns for the years 1990 through 1992 are in
process. Management is of the Committee shallopinion that any assessments resulting from these
examinations will not have a material effect on the consolidated financial
statements.
F-19
- --------------------------------------------------------------------------------
7. DEBT
Long-Term Debt consists of the following:
- ------------------------------------------------------------------
Dollars in thousands
- ------------------------------------------------------------------
December 31 1995 1994
- ------------------------------------------------------------------
5.50% to 5.77% Senior Notes due $200,000 $200,000
1998-2000 (a)
7.625% Notes due 2005, net of unamortized 244,041 -
debt issuance costs of $5,959 in 1995;
effective interest rate 7.996% (b)
8.25% Debentures due 2025 (due 2005 at 145,152 -
option of Company), net of unamortized
debt issuance costs of $4,848 in 1995;
effective interest rate 8.553% (b)
11.85% Notes, discounted, due 1995 net of - 161,789
unamortized discount of $511 in 1994 (c)
9.34% Notes due 1995, including - 51,336
unamortized premium of $1,336 in 1994;
effective interest rate 4.25% (c)
Commercial Paper (d) - 60,405
- ------------------------------------------------------------------
Total Notes, Debentures and Other 589,193 473,530
- ------------------------------------------------------------------
Less: Current Portion - -
- ------------------------------------------------------------------
Total Long-Term Debt $589,193 $473,530
- ------------------------------------------------------------------
(a) In October 1993, the Company issued senior notes totaling $200,000,000
to an insurance company with interest payable semi-annually. Five-year notes
totaling $100,000,000 were issued at an annual rate of 5.50 percent, and the
remaining $100,000,000 were issued as six and one-half year notes at an annual
rate of 5.77 percent.
(b) In March 1995, the Company completed a public offering of $400,000,000
of unsecured notes and debentures. The offering consisted of ten-year notes
aggregating $250,000,000 maturing March 15, 2005 at an annual rate of 7.625%
(the "Notes") and 30-year debentures aggregating $150,000,000 maturing March 15,
2025 at an annual rate of 8.25% (the "Debentures"), (collectively referred to
herein as the "Offering"). The Debentures are callable after ten years. Interest
is payable semi-annually on March 15 and September 15 on both the Notes and
Debentures.
The net proceeds from the Offering were used to repay the principal balance
of the $162,300,000 11.85% Notes due March 31, 1995, $50,000,000 of 9.34% Notes
due July 15, 1995 and indebtedness outstanding under the Company's commercial
paper program. The remaining net proceeds were used for general corporate
purposes. Accordingly, at December 31, 1994, the 11.85% Notes due March 31,
1995, the 9.34% Notes due July 15, 1995 and the amounts outstanding under the
Company's commercial paper program were classified as long-term debt as they
were refinanced on a long-term basis under the Offering.
(c) In connection with the 1985 acquisition of certain newspapers, the
Company issued 10-year notes with an aggregate stated value of $162,300,000
which were discounted at an annual interest rate of 11.85 percent for financial
reporting purposes. Interest on certain of the notes was payable semi-annually.
In connection with the 1993 acquisition of The Globe (see Note 2), the
Company assumed $50,000,000 of 9.34 percent fixed-rate notes maturing July 1995,
which had been valued for financial reporting purposes using a discount rate of
4.25 percent. Interest on the notes was payable semi-annually.
(d) In December 1994, the Company established a $200,000,000 commercial
paper program. Borrowings are in the form of unsecured notes sold at a discount
with maturities ranging up to 270 days. There were no borrowings outstanding
under the commercial paper program at December 31, 1995. The $60,700,000 in
aggregate face value of such notes outstanding at December 31, 1994 were issued
at a weighted average annual interest rate of 6.06 percent. The outstanding
commercial paper is supported by the Company's revolving credit and term loan
agreements.
Based on borrowing rates currently available for debt with similar terms and
average maturities, the fair value of long-term debt, excluding the current
portion, was $647,900,000 and $455,100,000 at December 31, 1995 and 1994,
respectively.
- --------------------------------------------------------------------------------
The Company has a $93,300,000 revolving credit and term loan agreement with
a group of banks, which, as amended, terminates in October 1998. At such time,
the outstanding borrowings would be liablepayable semi-annually in equal installments
over one year. At the Company's discretion, this facility may be converted into
term loans at any time. The agreement provides for an annual commitment fee of
0.11 percent on the unused commitment.
The Company also has a $46,700,000 revolving credit agreement with the same
group of banks, which expires in October 1996. The agreement provides for an
annual commitment fee of 0.06 percent on the unused commitment.
The agreements permit borrowings which bear interest, at the Company's
option, (i) for domestic borrowings: based on the certificates of deposit rate,
the Federal Funds rate, a prime rate or a quoted rate; or (ii) for Eurodollar
borrowings: based on the LIBOR rate. Borrowings under these agreements may be
prepaid without penalty.
The Company has a $20,000,000 revolving credit and term loan agreement with
a bank and its affiliate, which as amended, terminates in December 1999. At such
time, the outstanding borrowings would be payable semi-annually in equal
installments over one year. At the Company's discretion, this facility may be
converted into term loans at any acttime. The agreement provides for an annual
commitment fee of 0.09 percent on the unused commitment. The Company also has
entered into a $10,000,000 revolving credit agreement with the same bank and its
affiliate that expires November 1996, at which time, any outstanding borrowings
would be payable. The agreement provides for an annual commitment fee of 0.06
percent on the unused commitment.
The agreements permit borrowings which bear interest, at the Company's
option, (i) for domestic borrowings: based on the certificates of deposit rate,
a prime rate or action, whethera quoted rate; or (ii) for Eurodollar borrowings: based on the
LIBOR rate. Borrowings
F-20
under these agreements may be prepaid without penalty.
No borrowings under any of commissionthe above agreements were outstanding during
1995 and 1994.
Certain of the agreements also include provisions which require, among other
matters, specified levels of stockholders' equity. At December 31, 1995,
approximately $862,000,000 of stockholders' equity was unrestricted.
Short-term debt is comprised of the current portion of capital lease
obligations. There were no outstanding notes payable at December 31, 1995 and
1994.
The aggregate amount of maturities of long-term debt over the next five
years are as follows: 1996, none; 1997, none; 1998, $100,000,000; 1999, none;
2000, $100,000,000; and $400,000,000 thereafter.
Interest expense, net of capitalized interest and interest income, as shown
in the accompanying Consolidated Statements of Income consists of the following:
- -----------------------------------------------------------------
Dollars in thousands
- -----------------------------------------------------------------
December 31, 1995 1994 1993
- -----------------------------------------------------------------
Interest expense $ 48,751 $39,823 $30,900
Capitalized interest (15,177) (4,943) (1,351)
Interest income (8,344) (6,718) (4,174)
- -----------------------------------------------------------------
Net $ 25,230 $28,162 $25,375
- -----------------------------------------------------------------
- --------------------------------------------------------------------------------
8. LEASE COMMITMENTS
OPERATING LEASES:
Such lease commitments are primarily for office space and equipment. Certain
office space leases provide for adjustments relating to changes in real estate
taxes and other operating expenses.
Rental expense amounted to $27,699,000 in 1995, $26,559,000 in 1994, and
$24,744,000 in 1993. The approximate minimum rental commitments under
noncancelable leases (exclusive of minimum sublease rentals of $152,000) at
December 31, 1995 were as follows: 1996, $17,454,000; 1997, $14,390,000; 1998,
$12,334,000; 1999, $9,919,000; 2000, $6,798,000 and $24,529,000 thereafter.
CAPITAL LEASES:
In 1993, the Company and the City of New York executed a long-term lease
agreement and related agreements, under which the Company is leasing 31 acres of
City-owned land in College Point, New York, on which The Times is building a
state-of-the-art printing and distribution facility. Conditions stipulated under
the lease were met in 1994 and, accordingly, a capital lease of $5,000,000 was
recorded at such time. The lease will continue for 25 years after the start of
construction with an option to ultimately purchase the property. Under the terms
of the agreement, The Times would receive various tax and energy cost
reductions.
The Company also has a long-term lease for a building and site in Edison,
New Jersey. The lease provides the Company with certain early cancellation
rights, as well as renewal and purchase options. For financial reporting
purposes, the lease has been classified as a capital lease; accordingly, an
asset of approximately $57,000,000 (included in buildings, building equipment
and improvements at December 31, 1995 and 1994) has been recorded.
The following is a schedule of future minimum lease payments under all
capitalized leases together with the present value of the net minimum lease
payments as of December 31, 1995:
- --------------------------------------------------------------------
Dollars in thousands
- --------------------------------------------------------------------
Year Ended December 31 Amount
- --------------------------------------------------------------------
1996 $ 7,433
1997 7,337
1998 7,386
1999 7,288
2000 7,140
Later years 57,108
- --------------------------------------------------------------------
Total minimum lease payments 93,692
Less: amount representing interest 41,873
- --------------------------------------------------------------------
Present value of net minimum
lease payments including current
maturities of $3,139 $51,819
- --------------------------------------------------------------------
F-21
- --------------------------------------------------------------------------------
9. PENSION PLANS
The Company sponsors several pension plans and makes contributions to several
others in connection with collective bargaining agreements, including a joint
Company-union plan and a number of joint industry-union plans. These plans cover
substantially all employees.
The Company-sponsored pension plans provide participating employees with
retirement benefits in accordance with benefit provision formulas which are
based on years of service and final average or omission, takencareer pay and, where applicable,
employee contribu-tions. Funding is based on an evaluation and review of the
assets, liabilities and requirements of each plan. Retirement benefits are also
provided under supplemental unfunded pension plans.
Net periodic pension cost was $25,688,000 in 1995, $32,730,000 in 1994 and
$16,461,000 in 1993. The components of net periodic pension cost are:
- -------------------------------------------------------------------
Dollars in thousands
- -------------------------------------------------------------------
Year Ended December 31 1995 1994 1993
- -------------------------------------------------------------------
Service cost $ 16,413 $ 19,194 $ 14,075
Interest cost 41,859 38,933 26,675
Actual (return) loss on plan assets (74,904) 2,942 (38,907)
Curtailment loss - 1,887 -
Net amortization and
deferral 42,320 (30,226) 14,618
- -------------------------------------------------------------------
Net periodic pension cost $ 25,688 $ 32,730 $ 16,461
- -------------------------------------------------------------------
Due to the sale of the Women's Magazines Division, the Company recognized a
curtailment loss in 1994 (see Note 2). Accordingly, net periodic pension cost
relating to certain plans was remeasured at July 1994, using an increased
discount rate of 8.0 percent.
Assumptions used in the actuarial computations were:
- -------------------------------------------------------------------
Year Ended December 31 1995 1994 1993
- -------------------------------------------------------------------
Discount rate 7.25% 8.25% 7.00%
Rate of increase in
compensation levels 5.50% 5.50% 5.50%
Expected long-term rate of
return on assets 8.75% 8.75% 8.75%
- -------------------------------------------------------------------
In connection with collective bargaining agreements, the Company contributes to
several other pension plans including a joint Company-union plan and a number of
joint industry-union plans. Contributions are determined as a function of hours
worked or period earnings. Pension cost for these plans was $20,679,000 in 1995,
$19,535,000 in 1994 and $17,970,000 in 1993.
The funded status of the Company's plans which were valued at September 30, 1995
and 1994 is as follows:
- -------------------------------------------------------------------
Plans Whose Plans Whose
Assets Exceed Accumulated
December 31, 1995 Accumulated Benefits
Dollars in thousands Benefits Exceed Assets
- -------------------------------------------------------------------
Actuarial present value of benefit
obligation:
Vested benefit obligation $234,139 $256,239
- -------------------------------------------------------------------
Accumulated benefit obligation $239,507 $264,219
- -------------------------------------------------------------------
Projected benefit obligation $297,317 $331,039
Plan assets at fair value 269,633 178,539
- -------------------------------------------------------------------
Projected benefit obligation
in excess of plan assets 27,684 152,500
Unrecognized net (losses) gains (28,150) (23,770)
Unrecognized prior service cost 6,131 (9,945)
Unrecognized transition obligation (1,645) (1,274)
Fourth-quarter contribution, net (1,365) (8,986)
Adjustment required to recognize
additional minimum liability - 2,384
- -------------------------------------------------------------------
Recorded pension liability $ 2,655 $110,909
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Plans Whose Plans Whose
Assets Exceed Accumulated
December 31, 1994 Accumulated Benefits
Dollars in thousands Benefits Exceed Assets
- -------------------------------------------------------------------
Actuarial present value of benefit obligation:
Vested benefit obligation $187,656 $207,104
- -------------------------------------------------------------------
Accumulated benefit obligation $193,129 $212,519
- -------------------------------------------------------------------
Projected benefit obligation $238,574 $263,044
Plan assets at fair value 231,236 144,200
- -------------------------------------------------------------------
Projected benefit obligation
in excess of plan assets 7,338 118,844
Unrecognized net (losses) gains (12,337) 11,269
Unrecognized prior service cost 6,567 (10,814)
Unrecognized transition obligation (2,038) (1,517)
Fourth-quarter contribution, net (2,483) (7,891)
- -------------------------------------------------------------------
Recorded pension (asset) liability $ (2,953) $109,891
- -------------------------------------------------------------------
Plan assets, which were valued as of September 30, 1995 and 1994, consist of
money market investments, investments in marketable fixed income and equity
securities, an investment in a diversified real estate equity fund and
investments in group annuity insurance contracts.
The additional minimum liability relating to the unfunded status of these
plans is included in other liabilities on the Consolidated Balance Sheets as of
December 31, 1995 and miscellaneous assets includes a related intangible asset
of an equal amount. No such liability was required as of December 31, 1994.
F-22
- --------------------------------------------------------------------------------
10. POSTRETIREMENT BENEFITS OTHER THAN
PENSIONS AND POSTEMPLOYMENT BENEFITS
The Company provides health and life insurance benefits to retired employees
(and their eligible dependents) who are not covered by any other member or by
any officer, agent orcollective bargaining
agreements if the employee normeets specified age and service requirements.
In accordance with SFAS No. 106, Employers' Accounting for anything done or omittedPostretirement
Benefits Other Than Pensions, the Company accrues the costs of such benefits
during the employee's active years of service.
Net periodic postretirement cost was $7,842,000 in 1995, $12,419,000 in 1994
and $10,809,000 in 1993, respectively. The decrease in 1995 cost was a result of
a plan amendment which was adopted to be done by
such Director exceptreduce benefits for participants retiring
after January 1, 1995. The effect on the accumulated postretirement benefit
obligation is a reduction of $16,736,000. This amount is being amortized over a
period of approximately nine years beginning in circumstances involving actual bad faith.
17. TRANSITION
Upon the effectiveness1995. The components of this
cost are as follows:
- ----------------------------------------------------------------
Dollars in thousands 1995 1994 1993
- ----------------------------------------------------------------
Service cost for benefits
earned during the period $ 2,820 $ 4,629 $ 3,955
Interest cost on accumulated
postretirement obligation 8,142 9,376 6,854
Net amortization and deferral (3,120) (102) -
Curtailment gain (See Note 2) - (1,484) -
- ----------------------------------------------------------------
Net periodic postretirement cost $ 7,842 $12,419 $10,809
- ----------------------------------------------------------------
The Company's policy is to fund the above-mentioned payments as claims and
premiums are paid.
The following table sets forth the amounts included in Accrued Expenses and
Other Liabilities on the Consolidated Balance Sheets at December 31, 1995 and
1994, based on valuation dates of September 30 in each year.
- ----------------------------------------------------------------
Dollars in thousands
- ----------------------------------------------------------------
December 31 1995 1994
- ----------------------------------------------------------------
Accumulated postretirement
benefit obligation
Retirees $ 55,954 $ 49,595
Fully eligible active plan 19,870 26,894
participants
Other active plan participants 44,965 45,017
- ----------------------------------------------------------------
Total 120,789 121,506
Unrecognized net gains 16,536 26,287
Unrecognized prior service cost 13,597 -
Fourth-quarter benefit
payments (544) (1,035)
- ----------------------------------------------------------------
Total accrued postretirement
benefit liability 150,378 146,758
Current portion included in
accrued expenses 4,400 4,400
- ----------------------------------------------------------------
Long-term accrued postretirement
benefit liability $145,978 $142,358
- ----------------------------------------------------------------
Increasing the assumed health care cost trend rates by one percentage point
in each year and holding all other assumptions constant would increase the
accumulated postretirement benefit obligation as of December 31, 1995 by
$16,706,000 and increase the net periodic postretirement benefit cost for 1995
by $1,785,000.
For 1995, the accumulated postretirement benefit obligation was determined
using a discount rate of 7.25 percent, an estimated increase in compensation
levels of 5.5 percent and a health care cost trend rate of between 11.0 percent
and 9.25 percent in the first year, grading down to 5.0 percent in the year
2008.
For 1994, the accumulated postretirement benefit obligation was determined
using a discount rate of 8.25 percent, an estimated increase in compensation
levels of 5.5 percent and a health care cost trend rate of between 12.0 percent
and 10.0 percent in the first year grading down to 5.0 percent in the year 2008.
In connection with collective bargaining agreements, the Company contributes
to several welfare plans including a joint Company-union plan and a number of
joint industry-union plans. Contributions are determined as a function of hours
worked or period earnings. Portions of these contributions, which cannot be
disaggregated, related to postretirement benefits for plan participants. Total
contributions to these welfare funds were approximately $26,034,000, $25,460,000
and $18,000,000 in 1995, 1994 and 1993, respectively.
In accordance with SFAS No. 112, Employers' Accounting for Postemployment
Benefits, the Company accrues the cost of certain benefits provided to former
or inactive employees, after employment but before retirement, such as
workers' compensation, disability benefits and health care continuation coverage
during the employees' active years of service.
F-23
- --------------------------------------------------------------------------------
11. EXECUTIVE AND NON-EMPLOYEE DIRECTORS' INCENTIVE PLAN
Under the Company's 1991 Executive Stock Incentive Plan and 1991 Executive Cash
Bonus Plan (together the "1991 Executive Plans"), the Board of Directors may
authorize incentive compensation awards and grant stock options to key employees
of the Company. Awards may be granted in cash, restricted and unrestricted
shares of the Company's Class A Common Stock, Retirement Units or such other
forms as the Board of Directors deems appropriate. Under the 1991 Executive
Plans, stock options of up to 10,000,000 shares of Class A Common Stock may be
granted and stock awards of up to 1,000,000 shares of Class A Common Stock may
be made. In adopting the 1991 Executive Plans, shares previously available for
issuance of retirement units and stock options under prior plans are no longer
available for future awards.
Retirement Units are payable in Class A Common Stock over a period of 10
years following retirement.
Stock options currently outstanding were granted under the Company's 1984
Stock Option Plan and the 1991 Executive Plans. The Plans provide for granting
of both incentive and non-qualified stock options principally at an option price
per share of 100 percent of the fair market value of the Class A Common Stock Plan, such plans replacedon
the date of grant. These options have terms of five or ten years, and become
exercisable in annual periods ranging from one year to four years from the date
of grant. Payment upon exercise of an option may be made in cash, with
previously-acquired shares, with shares (valued at fair market value) which
would be otherwise issued on the exercise of the option or any combination
thereof.
Under the Company's Executive Incentive CompensationNon-Employee Directors' Stock Option Plan ("EICP"(the
"Directors' Plan"), except thatnon-qualified options with ten-year terms are granted
annually to each non-employee director of the EICP shall continueCompany. Each annual grant allows
the director to govern options and awardspurchase from the Company up to 1,000 shares of restricted stock outstandingClass A Common
Stock at the fair market value of such shares at the date of grant. Options for
an aggregate of 250,000 shares of Class A Common Stock may be granted under the
EICP. No further awards will be made underDirectors' Plan.
Outstanding stock options granted to key employees of The Globe to purchase
its Series A and/or Series B Common Stock prior to the EICP, and all amounts
accruedmerger have been
converted to stock options to purchase the Company's Class A Common Stock. The
former Globe stock options were converted at a ratio of 0.6 shares of Class A
Common for awards undereach share of Globe stock as determined by the EICP and unawardedmerger agreement. All
of these stock options became exercisable as of the acquisition date.
Changes in stock options for each of the three years in the period ended
December 31, 1995 were carried forward and made
available for Awards under the Plan and awards under the Stock Plan.
18. EFFECTIVE DATES
The Plan became effective for periods beginning afteras follows:
----------------------------------------------------------------
Dollars in thousands Option Price
except per share data Shares Per Share ($) Total
----------------------------------------------------------------
Options outstanding
January 1, 1991 upon1993 4,880,616 13.96 to 38.87 $115,935
Granted 1,909,080 26.50 to 30.68 50,641
Globe stock option
conversion 958,654 6.89 to 22.50 14,381
Exercised (346,334) 6.89 to 26.75 (6,333)
Terminations (41,175) 20.00 to 36.43 (1,116)
----------------------------------------------------------------
Options outstanding
December 31, 1993 7,360,841 6.89 to 38.87 173,508
Granted 2,426,376 22.56 to 26.18 54,807
Exercised (378,392) 6.89 to 26.75 (6,634)
Terminations (127,037) 11.45 to 36.43 (3,174)
----------------------------------------------------------------
Options outstanding
December 31, 1994 9,281,788 6.89 to 38.87 218,507
Granted 2,047,438 23.18 to 29.75 60,826
Exercised (909,622) 6.89 to 26.75 (18,741)
Terminations (412,379) 11.45 to 36.43 (11,009)
----------------------------------------------------------------
Options outstanding
December 31, 1995 10,007,225 10.31 to 38.87 $249,583
----------------------------------------------------------------
Options which became
exercisable during
1993 1,803,174 6.89 to 28.88 $35,098
1994 761,221 20.00 to 30.68 19,021
1995 1,285,288 20.00 to 26.50 30,667
----------------------------------------------------------------
Options exercisable
at December 31,
1993 4,673,663 6.89 to 38.87 $104,789
1994 4,953,313 6.89 to 38.87 114,260
1995 5,272,657 10.31 to 38.87 124,603
----------------------------------------------------------------
F-24
- --------------------------------------------------------------------------------
12. CAPITAL STOCK
The 5 1/2 percent cumulative prior preference stock, which is redeemable at the
approval by the holders of a majorityoption of the outstandingCompany on 30-day's notice at par plus accrued dividends, is
entitled to an annual dividend of $5.50 payable quarterly.
The serial preferred stock is subordinate to the 5 1/2 percent cumulative
prior preference stock. The Board of Directors is authorized to set the
distinguishing characteristics of each series prior to issuance, including the
granting of limited or full voting rights; however, the consideration received
must be at least $100 per share. No shares of serial preferred stock have been
issued.
The Class A and Class B Common Stock are entitled to equal participation in
the event of liquidation and in dividend declarations. The Class B Common Stock
is convertible at the holders' option on a share-for-share basis into Class A
shares. As provided for in the Certificate of Incorporation, the Class A Common
Stock has limited voting rights, including the right to elect five of the
fifteen directors of the Board, and the Class A and Class B Common Stock have
the right to vote together on reservations of Company stock for stock options
and other stock-related plans, on the ratification of the selection of
independent certified public accountants and, in certain circumstances, on
acquisitions of the stock or assets of other companies. Otherwise, except as
provided by the laws of the State of New York, all voting power is vested solely
and exclusively in the holders of the Class B Common Stock.
At the April 1994 annual meeting of the Company's Class A and B Common
Stockholders, an amendment to the Employee Stock Purchase Plan was approved to
reserve an additional 6,000,000 shares of Class A Common Stock for sale under
the Plan.
At a special meeting of shareholders in September 1993, an amendment of the
Company's Restated Certificate of Incorporation was approved to increase the
total number of authorized shares of Class A Common Stock to 200,000,000 shares,
thereby increasing the Company's overall total number of authorized shares of
capital stock of The New York Times Company to 200,910,000 shares.
Under a stock repurchase program which commenced in June 1993 and expired at
the close of The Globe transaction on October 1, 1993, the Company repurchased
approximately 10,231,000 shares of its Class A Common Stock at an average price
of $24.87 per share.
The Company spent $150,000,000 authorized under its previous stock
repurchase program announced in October 1993. In October 1994, the Company
announced authorized expenditures of up to $100,000,000 for repurchases of its
Class A Common Stock. Under the two programs, the Company has repurchased
approximately 10,074,000 shares of its Class A Common Stock at an average
effective price of $23.42 per share. Had the stock repurchases, under both
programs, occurred as of January 1, 1994, earnings per share for the year 1994
would have been $2.12, an increase of $.07 per share.
During the first quarter of 1995, the remainder of the October 1994
$100,000,000 authorization was spent to repurchase approximately 639,000 shares
of Class A Common Stock at an average price of $22.08. In February 1995 the
Company's Board of Directors authorized additional expenditures of up to
$50,000,000. As of February 26, 1996, the Company repurchased approximately
1,415,000 shares of its Class A Common Stock at an average price of $22.84 per
share under this program. Under the program, purchases may be made from time to
time either in the open market or through private transactions. The number of
shares that may be purchased in market transactions may be limited as a result
of The Globe transaction. Purchases may be suspended from time to time or
discontinued. The remaining amount of this authorization is approximately
$18,000,000. Had the 1995 stock repurchases occurred as of January 1, 1995,
earnings per share for the year 1995 would have been $1.41, an increase of $.01
per share.
In addition to the Company's stock repurchase program, in 1994 the Company
began to sell equity put options in a series of private placements that entitle
the holder, upon exercise, to sell shares of Class A Common Stock to the Company
at a specified price. In 1995 and 1994, put options for 300,000 and 1,210,000
shares were issued for $285,000 and $1,189,000 in premiums, respectively, which
have been accounted for as a part of additional capital. As of December 31, 1995
all put options issued in 1995 have expired. Put options for 120,000 shares that
were outstanding at December 31, 1994 have been exercised or expired and the
amount of $2,660,000 that was recorded in other liabilities has been reclassed
to additional capital as of December 31, 1995. Premiums received in 1995 from
put options reduced the average price of shares repurchased during 1995 to
$22.51 per share from $22.65 per share; premiums received in 1994 reduced the
average price of shares repurchased during 1994 to $23.42 per share from $23.53
per share.
Under the 1996 Offering of the Employee Stock Purchase Plan, eligible
employees may purchase Class A Common Stock through payroll deductions during
1996 at the lower of $23.85 per share (85 percent of the average market price on
November 1, 1995) or 85 percent of the average market price on December 30,
1996. Shares of Class A Common Stock reserved for issuance at December 31, 1995
and 1994 were as follows:
-----------------------------------------------------------------
December 31 1995 1994
-----------------------------------------------------------------
Retirement Units Outstanding 197,000 221,021
Stock Awards Available 965,686 973,844
Stock Options
Outstanding 10,007,225 9,281,788
Available 1,888,961 3,646,047
Employee Stock
Purchase Plan
Available 4,702,248 5,802,596
Voluntary Conversion of
Class B Common Stock
Available 568,919 570,121
-----------------------------------------------------------------
Total 18,330,039 20,495,417
-----------------------------------------------------------------
F-25
- --------------------------------------------------------------------------------
13. SEGMENTS
The Company's segment and related information is included on pages 2 and 3 of
this Appendix. The information for the years 1995, 1994 and 1993 appearing
therein is presented on a basis consistent with, and is an integral part of, the
consolidated financial statements. Revenues from individual customers, revenues
between business segments and revenues, operating profit and identifiable assets
of foreign operations are not significant.
- --------------------------------------------------------------------------------
14. COMMITMENTS AND CONTINGENT LIABILITIES
In July 1994, the Company's Board of Directors approved the construction of the
new facility in College Point which will allow for later news deadlines and
provide color and inserting capability for The Times's daily newspaper. The cost
of the new facility, excluding capitalized interest currently projected to be
$35,000,000, is estimated to be $315,000,000. As of December 31, 1995, the
Company has spent approximately $176,600,000 excluding capitalized interest.
The Company is presently engaged in additional projects to modernize and
improve other production facilities. As of December 31, 1995, the Company has
committed $123,200,000 and spent approximately $50,000,000 for these additional
projects.
There are various legal actions that have arisen in the ordinary course of
business and are now pending against the Company. Such actions are usually for
amounts greatly in excess of the payments, if any, that the Company may be
required to make. It is the opinion of management after reviewing such actions
with legal counsel to the Company that the ultimate liability which might result
from such actions would not have a material adverse effect on the consolidated
financial statements.
- --------------------------------------------------------------------------------
15. RECLASSIFICATIONS
For comparability, certain 1993 and 1994 amounts have been reclassified to
conform with the 1995 presentation.
INDEPENDENT AUDITORS' REPORT BOARD OF DIRECTORS AND STOCKHOLDERS OF
THE NEW YORK TIMES COMPANY:
We have audited the accompanying consolidated balance sheets of The New York
Times Company as of December 31, 1995 and 1994, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended December 31, 1995. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of The New York Times Company as
of December 31, 1995 and 1994, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.
/s/Deloitte & Touche LLP
- ------------------------
Deloitte & Touche LLP
New York, New York
February 7, 1996
MANAGEMENT'S RESPONSIBILITIES REPORT
The Company's consolidated financial statements were prepared by management who
is responsible for their integrity and objectivity. The consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles and, as such, include amounts based on management's best estimates
and judgments.
Management is further responsible for maintaining a system of internal
accounting control, designed to provide reasonable assurance that the Company's
assets are adequately safeguarded and that the accounting records reflect
transactions executed in accordance with management's authorization. The system
of internal control is continually reviewed for its effectiveness and is
augmented by written policies and procedures, the careful selection and training
of qualified personnel and a program of internal audit.
The consolidated financial statements were audited by Deloitte & Touche LLP,
independent auditors. Their audit was conducted in accordance with generally
accepted auditing standards and their report is shown on this page.
The Audit Committee of the Board of Directors, which is composed solely of
independent directors, meets regularly with the independent auditors, internal
auditors and management to discuss specific accounting, financial reporting and
internal control matters. Both the independent auditors and the internal
auditors have full and free access to the Audit Committee. Each year the Audit
Committee selects, subject to ratification by stockholders, the firm which is to
perform audit and other related work for the Company.
- --------------------------------------------------------------------------------
MARKET INFORMATION
- --------------------------------------------------------------------------------
The Class A Common Stock is listed on the American Stock Exchange. The Class B
convertible Common Stock and the 5 1/2 percent cumulative prior preference stock
are unlisted and are not actively traded. Dividends on the preference stock were
paid at the quarterly rate of $1.375 per share during each of the two years.
The approximate number of security holders of record as of January 31, 1996
was as follows: Class A Common Stock: 16,111; Class B Common Stock: 41; 5 1/2
percent cumulative prior preference stock: 61.
The market price range of Class A Common Stock in 1995 and 1994 is as follows:
-------------------------------------------------------------------
Quarter Ended 1995 1994
-------------------------------------------------------------------
High Low High Low
March 31 $23.50 $20.12 $29.50 $25.75
June 30 24.50 21.62 27.62 23.00
September 30 29.25 22.62 25.00 21.62
December 31 30.87 27.12 24.62 21.25
Year 30.87 20.12 29.50 21.25
-------------------------------------------------------------------
F-27
QUARTERLY INFORMATION (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
Dollars and shares in millions First Quarter Second Quarter Third Quarter Fourth Quarter Year
except per share data 1995 1994 1995 1994 1995 1994 1995 1994 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
Revenues $ 571.2 $ 589.5 $ 610.4 $ 635.5 $ 572.7 $ 527.2 $ 655.1 $ 605.4 $ 2,409.4 $ 2,357.6
- -----------------------------------------------------------------------------------------------------------------------------------
Costs and Expenses
Production costs:
Raw materials 80.0 78.4 85.7 80.4 90.5 66.0 111.9 79.6 368.1 304.4
Wages and benefits 131.4 132.1 133.6 133.7 135.1 129.8 137.1 134.1 537.2 529.7
Other 96.2 112.9 97.6 117.6 97.2 96.2 108.1 102.0 399.1 428.7
- -----------------------------------------------------------------------------------------------------------------------------------
Total 307.6 323.4 316.9 331.7 322.8 292.0 357.1 315.7 1,304.4 1,262.8
Selling, general and
administrative expenses 206.0 223.0 211.9 230.4 209.7 201.9 248.8 228.3 876.4 883.6
- -----------------------------------------------------------------------------------------------------------------------------------
Total 513.6 546.4 528.8 562.1 532.5 493.9 605.9 544.0 2,180.8 2,146.4
- -----------------------------------------------------------------------------------------------------------------------------------
Operating profit 57.6 43.1 81.6 73.4 40.2 33.3 49.2 61.4 228.6 211.2
Interest expense, net 7.3 8.7 6.7 8.0 5.6 6.2 5.6 5.3 25.2 28.2
Net gain (loss) on dispositions - - - - 11.3 204.0 - (3.1) 11.3 200.9
Income taxes 24.5 16.7 34.2 31.4 18.0 112.0 16.1 13.8 92.8 173.9
- -----------------------------------------------------------------------------------------------------------------------------------
Income before
equity in operations of
forest products group 25.8 17.7 40.7 34.0 27.9 119.1 27.5 39.2 121.9 210.0
Equity in operations of
forest products group 1.6 - 2.6 0.3 4.3 1.5 5.5 1.5 14.0 3.3
- -----------------------------------------------------------------------------------------------------------------------------------
Net income $ 27.4 $ 17.7 $ 43.3 $ 34.3 $ 32.2 $ 120.6 $ 33.0 $ 40.7 $ 135.9 $ 213.3
- -----------------------------------------------------------------------------------------------------------------------------------
Average number of common
shares outstanding 97.8 106.9 96.8 106.3 96.3 104.3 96.5 98.8 96.9 104.1
Per share of common stock
Net income $ .28 $ .17 $ .45 $ .32 $ .33 $ 1.16 $ .34 $ .41 $ 1.40 $ 2.05
Dividends .14 .14 .14 .14 .14 .14 .14 .14 .56 .56
- -----------------------------------------------------------------------------------------------------------------------------------
The 1994 quarters do not equal the respective year-end amounts for earnings
per share due to the weighted average number of shares outstanding used in the
computations for the respective periods. Per share amounts for the respective
quarters and years have been computed using the average number of common shares
outstanding as presented in the table above.
Annual and quarterly per share amounts are affected by the timing of share
issuances and repurchases. During 1994, approximately $235.2 million was
expended to repurchase 10.0 million shares.
The Company's largest source of revenues is advertising, which influences
the pattern of the Company's quarterly consolidated revenues and is seasonal in
nature. Traditionally, second-quarter and fourth-quarter advertising volume is
higher than that in the first quarter. Advertising volume tends to be lower in
the third quarter primarily because of the summer slow-down in many areas of
economic activity.
The cost of raw materials for the Company and the entire publishing industry
has been adversely affected by the significant increases in newsprint and
magazine paper prices throughout 1995. The unfavorable impact of these increases
is expected to continue during 1996. Quarterly trends are also affected by the
overall economy and economic conditions that may exist in specific markets
served by each of the Company's business segments.
Third-quarter 1995 includes a $11.3 million pre-tax gain ($.05 per share)
from the sales of small regional newspapers.
Fourth-quarter 1995 includes a $10.1 million pre-tax charge ($.06 per
share) for severance and related costs for work force reductions.
Third-quarter 1994 includes a $204.0 million pre-tax gain ($.99 per share)
from the sales of the Women's Magazines Division and U.K. golf publications.
Fourth-quarter 1994 includes a $3.1 million loss ($.02 per share) on the
disposition of Gaspesia.
F-28
TEN-YEAR SUPPLEMENTAL FINANCIAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Dollars and shares in millions Year Ended December 31
except per share data 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- ------------------------------------------------------------------------------------------------------------------------------------
Revenues and Income
Revenues $2,409 $2,358 $2,020 $1,774 $1,703 $1,777 $1,769 $1,700 $1,642 $1,524
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Profit 229 211 127 88 94 130 169 251 284 266
- ------------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from continuing
operations before equity
in forest products group 122 210 58 (2) 41 61 84 132 138 110
Equity in operations of
forest products group 14 3 (52) (9) 6 4 (16) 29 18 20
- ------------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from continuing
operations 136 213 6 (11) 47 65 68 161 156 130
Discontinued operations - - - - - - 199 7 4 2
Net cumulative effect of
accounting changes - - - (34) - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) 136 213 6 (45) 47 65 267 168 160 132
- ------------------------------------------------------------------------------------------------------------------------------------
Balance Sheet
Total assets 3,377 3,138 3,215 1,995 2,128 2,150 2,188 1,915 1,712 1,405
Long-term debt
and capital lease obligations 638 523 460 207 213 319 337 378 391 217
Common stockholders' equity 1,610 1,544 1,599 1,000 1,073 1,056 1,064 873 823 705
- ------------------------------------------------------------------------------------------------------------------------------------
Per share of Common Stock
Continuing operations 1.40 2.05 .07 (.14) .61 .85 .87 2.00 1.91 1.60
Discontinued operations - - - - - - 2.52 .08 .05 .03
Net cumulative effect of
accounting changes - - - (.43) - - - - - -
Net income (loss) 1.40 2.05 .07 (.57) .61 .85 3.39 2.08 1.96 1.63
Dividends .56 .56 .56 .56 .56 .54 .50 .46 .40 .33
Common stockholders'
equity (end of year) 16.50 15.71 14.96 12.54 13.70 13.68 13.63 11.02 10.04 8.59
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding (end of year)
Class A and Class B Common 97.6 98.2 106.9 79.7 78.4 77.2 78.1 79.2 82.0 82.0
- ------------------------------------------------------------------------------------------------------------------------------------
Market Price (end of year) 29.62 22.12 26.25 26.37 23.62 20.62 26.37 26.87 31.00 35.50
- ------------------------------------------------------------------------------------------------------------------------------------
1995 - Results included: a net pre-tax gain of $11.3 million ($.05 per share)
from the sales of small regional newspapers; $10.1 million pre-tax charge ($.06
per share) for work force reductions.
1994 - Results included: a net pre-tax gain of $200.9 million ($.99 per share)
from the sales of the Women's Magazines Division and U.K. golf publications
and the disposition of Gaspesia.
1993 - Results included: a pre-tax $3.7 million ($.02 per share) rate
adjustments due to a severe snowstorm; $4.4 million ($.05 per share) of
additional tax expense for remeasurement of deferred tax balances due to the
enactment of the Tax Act; $1.2 million ($.02 per share) of additional tax
expense due to the Tax Act which increased the federal corporate income tax
rate; a $2.6 million pre-tax gain ($.02 per share) on the sale of assets; $35.4
million of pre-tax charges ($.23 per share) for staff reductions at The Times;
an after-tax noncash charge of $47.0 million ($.56 per share) against equity in
operations to write down the Company's investment in Gaspesia to its net
realizable value.
1992 - Results included: $53.8 million pre-tax loss ($.47 per share) on the
closing of The Gwinnett (Ga.) Daily News; a $3.1 million pre-tax gain ($.02 per
share) from the sales of assets; a $28.0 million pre-tax charge ($.20 per share)
for voluntary union staff reductions at The Times; $21.4 million pre-tax ($.15
per share) for labor disruptions and training and start-up costs at Edison. Net
cumulative effect of accounting changes reflects the 1992 adoption of the change
in methods of accounting for income taxes, postretirement benefits other than
pensions and postemployment benefits.
1991 - Results included: a $20.0 million pre-tax charge ($.15 per share) for
voluntary union staff reductions at The Times; the reversal of a provision for
income taxes of $10.0 million ($.13 per share) for a favorable tax settlement.
1989 - Results included: an after-tax gain of $193.3 million ($2.46 per share)
from the sale of the Company's cable television operations, of which the gain
and results of operations through the 1989 sale date are included as
discontinued operations; a $30.0 million pre-tax charge ($.22 per share) for
voluntary union staff reductions at The Times; an after-tax charge of $27.2
million ($.35 per share) for a valuation reserve against the Company's
investment in the Forest Products Group.
1986 - Results included: an interest charge of $8.5 million ($.05 per share)
which relates to a court decision arising from the Company's 1981 acquisition of
two cable television systems.
F-29
[X] Please mark your
votes as in this
example.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is given, this proxy will be voted FOR the
election of Class A directors and FOR proposals 2 and 3.
- -------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposals 1, 2 and 3.
- -------------------------------------------------------------------------------
1. Election of Class FOR WITHHELD
A Directors [ ] [ ]
(see reverse)
For, except vote withheld from the following nominee(s)
____________________________________________________________
2. Approval of Amended 1991 Executive Stock Incentive Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Ratification of selection of Deloitte & Touche LLP
as auditors
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
- -------------------------------------------------------------------------------
This proxy is solicited on behalf of the Board of Directors for the Annual
Meeting on April 16, 1996.
Your signature on the proxy is your acknowledgment of receipt of the Notice
of Meeting and Proxy Statement, both dated March 12, 1996.
The signer hereby revokes all proxies heretofore given by the signer to
vote at said meeting or at any adjournments thereof.
Change of
address on [ ]
Reverse Side
SIGNATURE(S) DATE
--------------------------------- ---------------------
NOTE: Please sign as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If signing as a corporation,
please give full corporate name by authorized officer.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
CLASS A
[LOGO] THE NEW YORK TIMES COMPANY
Proxy Solicited on Behalf of the Board of Directors of
the Company entitledfor Annual Meeting on April 16, 1996
The undersigned hereby constitutes and appoints Arthur Ochs Sulzberger,
Laura J. Corwin and Solomon B. Watson IV, and each of them, as proxies
P with full power of substitution in each, to represent the undersigned at
R the Annual Meeting of Stockholders of THE NEW YORK TIMES COMPANY to be held
O at 9:30 A.M., local time, at Town Hall, 123 West 43rd Street, New York, New
X York 10036, on Tuesday, April 16, 1996, or at any adjournments thereof, and
Y to vote thereonon all matters coming before said meeting including the proposals
indicated on the reverse side hereof.
Election of Class A Directors. Nominees:
Louis V. Gerstner, Jr., A. Leon Higginbotham, Jr., Robert A. Lawrence,
Charles H. Price II,
Donald M. Stewart
Change of Address
--------------------------------
--------------------------------
--------------------------------
--------------------------------
(If you have written in the above space, please mark the corresponding box
on the reverse side of this card)
You are encouraged to specify your choices by marking the appropriate
boxes--SEE REVERSE SIDE--but you need not mark any boxes if you wish to vote
in accordance with the Board of Directors' recommendations. Your shares
cannot be voted unless you sign and return this card.
--------------
SEE REVERSE
SIDE
--------------
- -------------------------------------------------------------------------------
[X] Please mark your
votes as in this
example.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is given, this proxy will be voted FOR the
election of Class B directors and FOR proposals 2 and 3.
- -------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposals 1, 2 and 3.
- -------------------------------------------------------------------------------
1. Election of Class FOR WITHHELD
B Directors [ ] [ ]
(see reverse)
For, except vote withheld from the following nominee(s)
____________________________________________________________
2. Approval of Amended 1991 Executive Stock Incentive Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Ratification of selection of Deloitte & Touche LLP
as auditors
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
- -------------------------------------------------------------------------------
This proxy is solicited on behalf of the Board of Directors for the Annual
Meeting on April 16, 1996.
Your signature on the proxy is your acknowledgment of receipt of the Notice
of Meeting and Proxy Statement, both dated March 12, 1996.
The signer hereby revokes all proxies heretofore given by the signer to
vote at said meeting or at any adjournments thereof.
Change of
address on [ ]
Reverse Side
SIGNATURE(S) DATE
---------------------------------- ----------------------
NOTE: Please sign as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If signing as a corporation,
please give full corporate name by authorized officer.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
CLASS B
[LOGO] THE NEW YORK TIMES COMPANY
Proxy Solicited on Behalf of the Board of Directors of
the Company for Annual Meeting on April 16, 1996
The undersigned hereby constitutes and appoints Arthur Ochs Sulzberger,
Laura J. Corwin and Solomon B. Watson IV, and each of them, as proxies
P with full power of substitution in each, to represent the undersigned at
R the Annual Meeting of Stockholders of THE NEW YORK TIMES COMPANY to be held
O at 9:30 A.M., local time, at Town Hall, 123 West 43rd Street, New York, New
X York 10036, on Tuesday, April 16, 1996, or at any adjournments thereof, and
Y to vote on all matters coming before said meeting including the proposals
indicated on the reverse side hereof.
Election of Class B Directors. Nominees:
John F. Akers, Richard L. Gelb, Marian S. Heiskell, Ruth S. Holmberg,
George B. Munroe, George L. Shinn, Arthur Ochs Sulzberger, Judith P.
Sulzberger, William O. Taylor, Cyrus R. Vance
Change of Address
-------------------------------
-------------------------------
-------------------------------
-------------------------------
(If you have written in the above space, please mark the corresponding box
on the reverse side of this card)
You are encouraged to specify your choices by marking the appropriate
boxes--SEE REVERSE SIDE--but you need not mark any boxes if you wish to vote
in accordance with the Board of Directors' recommendations. Your shares
cannot be voted unless you sign and return this card.
---------------
SEE REVERSE
SIDE
---------------
- -------------------------------------------------------------------------------
[FRONT]
SECRETARY'S OFFICE NO POSTAGE
NECESSARY
BUSINESS REPLY MAIL IF MAILED
FIRST CLASS MAIL PERMIT NO 289 NEW YORK, NY IN THE
UNITED STATES
POSTAGE WILL BE PAID BY ADDRESSEE
THE NEW YORK TIMES COMPANY
229 WEST 43RD STREET
NEW YORK, NY 10109 - 0225
[REVERSE]
Please return this card / / I plan to attend the Meeting*
only if you plan to attend.
- --------------------------
THE NEW YORK TIMES COMPANY Please type or print clearly.
ANNUAL MEETING OF STOCKHOLDERS
9:30 A.M., TUESDAY, APRIL 16, 1996
---------------------------------------
Name of Stockholder
TOWN HALL
123 WEST 43RD STREET ---------------------------------------
NEW YORK, NEW YORK 10036 Street Address
---------------------------------------
City State Zip
*To facilitate counting, please forward
[LOGO] your proxy to the Transfer Agent even if
you are planning to attend. You can
always revoke it at the 1991
Annual Meeting, in person or by proxy, voting together as a single class. No
Awards may be granted under the Plan after December 31, 2000, or such earlier
expiration date as may be designated by resolution of the Board.
A-8meeting if you
wish.
ANNEX B
THE NEW YORK TIMES COMPANY
1991 EXECUTIVE STOCK INCENTIVE PLAN
AS PROPOSED TO BE AMENDED
1. NAME AND GENERAL PURPOSE
The name of this plan is The New York Times Company 1991 Executive Stock
Incentive Plan (hereinafter called the "Plan"). The purpose of the Plan is to
enable the Company (as hereinafter defined) to retain and attract executives who
enhance its tradition and contribute to its success by their ability, ingenuity
and industry, and to enable them to participate in the long-term success and
growth of the Company.
2. DEFINITIONS
(a) "Awards"--has the meaning specified in Section 12 hereof.
(b) "Board"--means the Board of Directors of the Company.
(c) "Cash Plan"--means the Company's 1991 Executive Cash Bonus Plan.
(d) "Code"--means the Internal Revenue Code of 1986, as amended.
(e) "Committee"--means the Committee referred to in Section 3 of the Plan.
If at any time no Committee shall be in office then the functions of the
Committee specified in the Plan shall be exercised by those members of the Board
who are Disinterested Persons.
(f) "Common Stock"--means shares of the Class A Common Stock of the Company.
(g) "Company"--means The New York Times Company, a corporation organized
under the laws of the State of New York (or any successor corporation), and its
subsidiaries (as hereinafter defined) and other non-corporate entities in which
it owns directly or indirectly 40% or more of the equity interests. A
"subsidiary" means any corporation in which the Company possesses directly or
indirectly 50% or more of the combined voting power of all classes of stock.
(h) "Consolidated Statement of Income"--means the consolidated statement of
income (or any comparable statement, however designated) of the Company, audited
by the independent certified public accountants of the Company and contained in
the Company's annual report to stockholders or proxy statement.
(i) "Disability"--means total disability as defined under the Company's long
term disability plan, whether or not the Participant is covered by such plan, as
determined by the Committee.
(j) "Disinterested Person"--means any Director of the Company who at the
time of acting is a "disinterested person" under Rule 16b-3 or any successor
rule ("Rule 16b-3") under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
(k) "Equity in Operations of Forest Products Group"--means the amount
designated as Equity in Operations of the Forest Products Group for the
applicable year and shown separately in the Consolidated Statement of Income for
such year.
(l) "Fair Market Value"--means the arithmetic mean of the highest and lowest
sales prices of the Common Stock as reported in the Consolidated Transactions of
the American Stock Exchange ("AMSE") (or such other national securities exchange
on which the Common Stock may be listed at the time of determination, and if the
Common Stock is listed on more than one exchange, then on the one located in New
York or if the Common Stock is listed only on the National Association of
Securities Dealers Automated Quotations System ("NASDAQ"), then on such system)
on the date of the grant or other date on which the Common Stock is to be valued
hereunder. If no sale shall have been made on the B-1
AMSE, such other exchange or
the NASDAQ on such date or if the Common Stock is not then listed on any
exchange or on the NASDAQ, Fair Market Value shall be determined by the
Committee in accordance with Treasury Regulations applicable to incentive stock
options.
(m) "Participant"--means a key employee of the Company who is selected by
the Committee to participate in any one or more parts of the Plan from among
persons who in the judgment of the Committee are key employees of the Company.
In general, key employees are those employees who have principal responsibility
for, or who contribute substantially to, the management efficiency, editorial
achievement or financial success of the Company.
(n) "Pre-Tax Income"--means income before income taxes and Equity in
Operations of Forest Products Group, as shown in the Consolidated Statement of
Income for the applicable year, but before the amount of any provision for
Awards under the Plan and awards under the Cash Plan for such year.
(o) "Retirement"--means retirement as defined by the terms of "The New York
Times Companies Pension Plan" which became effective December 31, 1988, or any
successor retirement plan, whether or not the Participant is a member of such
retirement plan, and, in the case of employees of Affiliated Publications, Inc.,
or any subsidiary thereof, who are not subject to the reporting requirements of
Section 16 of the Exchange Act with respect to Common Stock and who retire under
the terms of the Globe Newspaper Company Retirement Plan, which became effective
January 1, 1994 (the "Globe Pension Plan") or any successor retirement plan,
"Retirement" shall also mean retirement as defined by the terms of the Globe
Pension Plan or any successor plan.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board or the Committee appointed by it
and composed of two or more directors all of whom shall be Disinterested
Persons. The membership of the Committee shall be constituted so as to comply at
all times with the applicable requirements of Rule 16b-3, and with the
administration requirements of Section 162(m)(4)(C) of the Code. The Committee
shall serve at the pleasure of the Board and shall have such powers as the Board
may from time to time confer upon it.
4. OPTIONS AND AWARDS UNDER THE PLAN
Options, which include "Non-Qualified Options" and "Incentive Stock Options"
or combinations thereof, are rights to purchase Common Stock of the Company.
Non-Qualified Options and Incentive Stock Options are subject to the terms,
conditions and restrictions provided in Part I of the Plan.
Awards under the Plan may include one or more of the following types, either
alone or in any combination thereof: (i) "Stock Awards," (ii) "Restricted Stock
Awards," (iii) "Retirement Unit Awards," (iv) "Annual Performance Awards," (v)
"Performance Awards" or "Other Awards."
Stock Awards are granted under Part IIA of the Plan. Restricted Stock Awards
are granted under Part IIB of the Plan. Retirement Unit Awards are granted under
Part IIC of the Plan. Annual Performance Awards are granted under Part IID of
the Plan. Performance Awards or Other Awards are granted under Part IIE of the
Plan. Awards are subject to the terms, conditions and restrictions provided in
the respective subparts of Part II of the Plan. Annual Performance Awards will
be based exclusively on the criteria set forth in Section 27A.
B-2
PART I STOCK OPTIONS.OPTIONS
5. PURPOSE
The purpose of the Stock Option portion of the Plan is to provide an added
incentive for effective service and high levels of performance to participating
key employees of the Company by affording them an opportunity, under the terms
of the Plan, to acquire Common Stock and thereby to increase their proprietary
interest in the continued progress and success of the Company.
2
6. DETERMINATION OF OPTIONEES; SHARES SUBJECT TO OPTIONS
(a) The Committee may grant options to purchase Common Stock ("Options") to
key employees of the Company in such amounts as the Committee may determine,
subject to the conditions and limitations set forth in the Plan. Options may be
granted in combination with Awards made under the Plan, and Options may be
granted to any Participant whether or not he or she was eligible for, or
received, an Award.
(b) The number of shares of Common Stock with respect to which Options may
be granted to any key employee during any calendar year shall not exceed 200,000
(subject to adjustment as provided in Sections 28 and 29 hereof).
(c) There may be issued under the Plan pursuant to the exercise of Options,
an aggregate of not more than 10,000,00020,000,000 shares of Common Stock, subject to
adjustment as provided in Sections 28 and 29 hereof. Shares of Common Stock
issued pursuant to Options may be either authorized but unissued shares,
treasury shares, reacquired shares, or any combination thereof. Any shares
subject to an Option which expires without being exercised shall be available
for issuance under new Options.
7. OPTION PRICE
The exercise price of Common Stock subject to Options granted pursuant to
the Plan shall be the Fair Market Value thereof at the time the Option is
granted. If a Participant owns or is deemed to be the owner of, by reason of the
attribution rules under Section 425(d) of the Code, more than 10% of the
combined voting power of all classes of the stock of the Company or any
subsidiary of the Company and an Option granted to such Participant is intended
to qualify as an Incentive Stock Option within the meaning of Section 422 of the
Code, the option price shall be no less than 110% of the Fair Market Value of
the Common Stock on the date the Option is granted.
8. PAYMENT OF OPTION PRICE
The purchase price is to be paid in full when the Option is exercised and
stock certificates will be delivered only against such payment. Such purchase
price may be paid in such form as the Committee may determine. Payment of the
option price may be made (i) in cash, (ii) by delivering a properly executed
exercise notice to the Company together with a copy of irrevocable instructions
to a broker to deliver promptly to the Company the amount of sale or loan
proceeds to pay the purchase price, (iii) by delivering to the Company shares of
Common Stock previously owned, (iv) by electing to have the Company retain
Common Stock which would be otherwise issued on exercise of the Option, or (v)
any combination of the foregoing forms, all subject to the approval of the
Committee and to such rules as the Committee may adopt. In determining the
number of shares of Common Stock necessary to be delivered to or retained by the
Company, such Common Stock shall be valued at Fair Market Value.
9. TYPES OF STOCK OPTIONS
(a) Options granted under the Plan may be two types, an incentive stock
option ("Incentive Stock Option") and a non-qualified stock option
("Non-Qualified Option"). It is intended that Incentive Stock Options granted
hereunder shall constitute incentive stock options within the meaning of Section
422 of the Code. Anything in the Plan to the contrary notwithstanding, (i) no
provision of this Plan B-3
relating to Incentive Stock Options shall be interpreted,
amended or altered, nor shall any discretion or authority granted under the Plan
be so exercised, so as to disqualify either the Plan or any Incentive Stock
Option granted under such provisions of the Code, and (ii) no Option designated
by the Committee as a Non-Qualified Option shall constitute an Incentive Stock
Option. In furtherance of the foregoing and not by way of limitation, no
Incentive Stock Option shall be granted to a Participant who is not an employee
of The New York Times Company or one of its subsidiaries.
3
(b) If the aggregate Fair Market Value of the Common Stock (determined as of
the date of grant) for which any optionee may for the first time exercise
Incentive Stock Options in any calendar year under the Plan and any other stock
option plan of the Company, considered in the aggregate, exceeds $100,000, such
excess Incentive Stock Options will be treated as Non-Qualified Options.
10. TERMS OF STOCK OPTIONS
(a) Each Option will be for a term of not more than ten years from the date
of grant, except that if a Participant owns or is deemed to be the owner of, by
reason of the attribution rules of Section 425(d) of the Code, more than 10% of
the combined voting power of all classes of stock of the Company or any
subsidiary of the Company and an Incentive Stock Option is granted to such
Participant, the term of such Option shall be no more than five years from the
date of grant.
(b) An Option may not be exercised within one year after the date of grant
except in the case of the death of the optionee or upon termination of active
employment with the Company by reason of the Disability or Retirement of the
optionee during such period (but subject to the provisions of Section 18 hereof
with respect to any optionee subject to the reporting requirements of Section 16
of the Exchange Act). Thereafter, an Option shall be exercisable in such
installments, if any, as the Committee may specify, and shall be exercisable
during the optionee's lifetime only by the optionee (or, if the optionee is
disabled, by any guardian or other legal representative appointed to represent
him or her) and, except as provided in subsections (c) and (d) below, shall not
be exercisable by the optionee unless at the time of exercise such optionee is
an employee of the Company.
(c) Upon termination of active employment with the Company by reason of
Disability or Retirement, an optionee (or, if the optionee is disabled, any
guardian or legal representative appointed to represent him or her) may exercise
all Options otherwise exercisable by him or her at the time of such termination
of employment (subject to the provisions of subsection (e) below) until the
expiration thereof. In the event an optionee dies while employed by the Company
or after termination of employment by reason of Disability or Retirement, the
person who acquired the right to exercise his or her Options by reason of the
death of the optionee, as provided in Section 30 hereof, may exercise such
Options otherwise exercisable at the time of death (subject to the provisions of
subsection (e) below) at any time until the expiration thereof.
(d) Upon termination of employment with the Company for any reason other
than death, Retirement or Disability, the optionee may exercise all Options
otherwise exercisable by him or her at the time of such termination of
employment for an additional one year after such termination of employment. In
the event such optionee dies within such one-year period, the person who
acquired the right to exercise his or her Options by reason of the death of the
optionee, as provided in Section 30 hereof, may exercise such Options at any
time within the period of the greater of (i) the remainder of the one-year
period described in the foregoing sentence, or (ii) three months from the date
of the optionee's death. For purposes of this Section 10(d), in the event that
any optionee, who is not subject to the reporting requirements of Section 16 of
the Exchange Act with respect to Common Stock, is rehired by the Company within
one year of such optionee's termination of employment with the Company, such
optionee shall be deemed not to have terminated employment for purposes of
determining the expiration date of all unexpired non-qualified stock options
held by such individual on the date of rehire, with the effect that such options
shall continue to be exercisable at any time until the expiration thereof
(subject to the terms thereof and the provisions of this Section 10).
B-4
(e) Notwithstanding any of the foregoing, no Option shall be exercisable in
whole or in part after the expiration date provided in the Option. In the event
of the death of the optionee while employed by the Company, or the Disability or
Retirement of the optionee, the Committee shall have the discretion to provide
for the acceleration of the exercisability of Options exercisable over a period
of time, or alternatively, to provide for all or any part of such Options to
continue to become exercisable in such installments as originally specified by
the Committee, or such revised installments as specified by the
4
Committee at the time of termination of employment (but in no event beyond the
original expiration date), in either case subject to such conditions as
determined by the Committee in its discretion (but in all cases subject to the
provisions of Section 18 hereof with respect to any optionee subject to the
reporting requirements of Section 16 of the Exchange Act). No Option shall be
transferable otherwise than by will or by the laws of descent and distribution.
11. OPTION AGREEMENTS
In consideration of any Options granted to a Participant under the Plan,
such Participant shall enter into an Option Agreement with the Company
providing, in addition to such other terms as the Committee may deem advisable,
that the optionee must remain in the employ of the Company for one year before
such optionee will be entitled to exercise the Option, except as provided in
Section 10 hereof with respect to death, Disability and Retirement, and
specifying the installments, if any, in which such Option shall become
exercisable.
PART II AWARDS.AWARDS
12. FORM OF AWARDS
The Award portion of the Plan is designed to provide incentives for key
employees of the Company by the making of awards of supplemental compensation
("Awards"). The Committee, subject to the terms and conditions hereof, may make
Awards to a Participant in any one, or in any combination, of the following
forms:
(a) Common Stock as provided in Part IIA of the Plan ("Stock Awards");
(b) Restricted Stock as provided in Part IIB of the Plan ("Restricted
Stock Awards");
(c) Retirement Units as provided in Part IIC of the Plan ("Retirement
Unit Awards");
and
(d) Annual Performance Awards as provided in Part IID of the Plan
("Annual Performance Awards"); and
(e) Performance Awards ("Performance Awards") or other forms of Awards
("Other Awards"), as provided in Part IIE of the Plan.
Awards may be made to a Participant whether or not he or she is receiving an
Option grant under Part I of the Plan for the year and whether or not he or she
receives an award under the Cash Plan.
Awards will be based on a Participant's performance in those areas for which
the Participant is directly responsible. Performance for this purpose may be
measured by the achievement of specific management goals such as, but not
limited to, an increase in earnings or the operating cash flow of the Company,
outstanding initiative or achievement in any department of the Company, or any
other standards specified by the Committee. Annual Performance Awards will be
based exclusively on the criteria set forth in Section 27A.
13. MAXIMUM AMOUNT AVAILABLE FOR THE ACCRUAL OF AWARDS UNDER PART II OF THE PLAN
FOR ANY YEAR
(a) No accrual for Awards shall be made hereunder (or under the Cash Plan)
for any year unless cash dividends of not less than ten cents ($.10) per share
(subject to adjustment as provided in Sections B-5
28 and 29 hereof) have been
declared on the outstanding Class A and Class B Common Stock of the Company
during such year.
(b) In the event that the above condition is met for any year during the
continuance of this Plan, the maximum aggregate amount that may be accrued for
Awards under the Plan and the Cash Plan for such year shall be 4% of the sum of:
(1) Pre-Tax Income plus (2) Equity in Operations of Forest Products Group. The
Committee, in its sole discretion, may make adjustments in Pre-Tax Income and
5
Equity in Operations of Forest Products Group to take account of extraordinary,
unusual or infrequently occurring events and transactions, changes in accounting
principles that substantially affect the foregoing, or such other circumstances
as the Committee may determine warrant such adjustment.
(c) As soon as feasible after the close of each year, the independent
certified public accountants of the Company shall report the maximum amount that
may be accrued for Awards for such year under the formula described in Section
13(b), subject to the second sentence of such Section.
(d) If amounts are accrued in any year under the formula described in this
Section 13 and are not awarded in full in such year under the Plan and the Cash
Plan, such unawarded amounts may, in the discretion of the Committee, be carried
forward and be available for Awards under the Plan and under the Cash Plan in
any future year without regard to the provisions of Sections 13(a) or (b) of the
Plan applicable to Awards made in such year.
(e) Awards under the Plan for any year may not exceed the sum of (i) the
amount accrued for such year under Section 13(b) above plus (ii) unawarded
accrued amounts carried forward from previous years under Section 13(d) above
plus (iii) amounts that may become available for Awards pursuant to the last
sentence of Sections 15(c) and 27A hereof, minus (x) the amount of interest or
dividend equivalents set aside during such year pursuant to Sections 15(c) and
27A hereof and the amount of dividend equivalents allocated to Retirement Unit
Accounts during such year pursuant to Section 24 hereof, and minus (y) the
amount of awards made for such year under the Cash Plan (and any interest
equivalents allocated during such year pursuant to Section 10(b), 11(f) and
12(b) thereof). For this purpose, the amount of Awards of Common Stock under the
Plan shall be based on the Fair Market Value of the Common Stock subject to
Awards as of the date of grant of such Awards.
(f) Subject to Sections 28 and 29 hereof, the aggregate number of shares of
Common Stock for which Stock, Restricted Stock, Retirement Units, Annual
Performance Awards, and Performance and Other Awards may be made under the Plan
shall not exceed 1,000,000 shares, which shall be treasury shares reserved for
issuance of Awards under the Plan. Shares of Common Stock subject to, but not
issued under, any deferred Award which has been discontinued by the Committee
pursuant to the provisions hereof or any Restricted Stock which is forfeited by
any Participant shall again be available for Awards under the Plan.
14. DETERMINATION OF AWARDS AND PARTICIPANTS
(a) As promptly as practicable after the end of each year, the Committee may
make Awards (other than Annual Performance Awards, which are to be made
exclusively as set forth in Section 27A) for such year and determine the amounts
to be carried forward for Awards in future years. The Committee may also, in its
discretion, make Awards (other than Annual Performance Awards, which are to be
made exclusively as set forth in Section 27A) prior to the end of the year based
on the amounts available under clauses (ii) and (iii) of Section 13(e) and
reasonable estimates of the accrual for the year in question.
(b) The Committee shall have absolute discretion to determine the key
employees who are to receive Awards (other than Annual Performance Awards, which
are to be made exclusively as set forth in Section 27A) under the Plan for any
year and to determine the amount of such Awards based on such criteria and
factors as the Committee in its sole discretion may determine, such as the
Company's operating cash flow and overall financial performance. Recommendations
as to the key employees who B-6
are to receive Awards (including Annual Performance
Awards) under the Plan for any year and as to the amount and form of such Awards
shall, however, be made to the Committee by the chief executive officer of the
Company. The fact that an employee is selected as eligible for an Award shall
not mean, however, that such employee will necessarily receive an Award.
(c) A person whose employment terminates during the year or who is granted a
leave of absence during the year may, in the discretion of the Committee and
under such rules as the Committee may
6
from time to time prescribe, be given an Award with respect to the period of
such person's service during such year.
15. METHOD AND TIME OF PAYMENT OF AWARDS
(a) Awards shall be paid in full as soon as practicable after the Award is
made; provided, however, that the payment of Annual Performance Awards shall be
subject to the provisions of Section 27A, and further provided that the payment
of any or all Awards may be deferred, divided into annual installments, or made
subject to such other conditions as the Committee in its sole discretion may
authorize under such rules and regulations as may be adopted from time to time
by the Committee.
(b) The Committee's rules and regulations may include procedures by which a
Participant expresses a preference to the Committee as to the form of Award or
method of payment of an Award but the final determination as to the form and the
terms and conditions of any Award shall rest solely with the Committee.
(c) Awards deferred under the Plan shall become payable to the Participant
or, in the event of the Participant's death, as specified in Section 30 hereof,
in such manner, at such time or times (which may be either before or after
Retirement or other termination of service), and subject to such conditions as
the Committee in its sole discretion shall determine. In any year the Committee
shall have the discretion to set aside, for payment in such year or any future
year, interest on any deferred Award payable partly in cash, and amounts
equivalent to dividends on any deferred Award payable wholly or partly in stock;
provided, however, that the total amount of such interest and dividend
equivalents shall be deducted from the maximum amount available for Awards under
Section 13(e) of the Plan. Any forfeited deferred Awards (including any
forfeited stock at its Award value) shall be carried forward and be available
for Awards in any future year without regard to the provisions of Sections 13(a)
or (b) of the Plan.
16. INDIVIDUAL AGREEMENTS
(a) The Committee may in its discretion require that each Participant
receiving an Award enter into an agreement with the Company which shall contain
such terms and conditions as the Committee in its discretion may require.
(b) The Committee may cancel any unexpired, unpaid or deferred Award at any
time if the Participant is not in compliance with all applicable provisions of
the agreement referred to above, if any, and the Plan.
17. STATUS OF PARTICIPANTS
No Participant in this Plan shall be deemed to be a stockholder of the
Company, or to have any interest in any stock or any specific assets of the
Company by reason of the fact that deferred Stock Awards, Retirement Unit
Awards, Annual Performance Awards, Performance Awards, Other Awards or dollar
credits are to be recorded as being held for such Participant's account to be
paid in installments in the future. The interest of all Participants shall
derive from and be determined solely by the terms and provisions of the Plan set
forth herein.
B-7
18. DISPOSITION OF STOCK RECEIVED UNDER AN AWARD; SECTION 16(B).
In the case of any Participant subject to the reporting requirements of
Section 16 of the Exchange Act, no shares of Common Stock received pursuant to
any Award under the Plan or upon the exercise of any "derivative security" (as
defined in the rules promulgated under Section 16 of the Exchange Act) received
under the Plan may be sold, assigned, pledged or otherwise transferred for the
period of time after the date of such Award or receipt of such derivative
security as is specified in Rule 16b-3.
7
PART IIA STOCK AWARDS.AWARDS
19. DETERMINATION OF STOCK AWARDS
(a) Each year the Committee shall designate those key employees of the
Company who shall receive Stock Awards under this part of the Plan. Stock Awards
are made in the form of grants of Common Stock, which may be delivered
immediately, in installments or on a deferred date, as the Committee, in its
discretion, may provide.
(b) If the Committee determines that some portion of a Stock Award to a
Participant shall be treated as a deferred Stock Award and payable in annual or
other periodic installments, then the Participant will be notified in writing
when such deferred Stock Awards shall be paid and over what period of time. As
soon as feasible after the granting of such a Stock Award, there shall be
reserved out of the treasury shares of the Company, a number (which may include
a fraction) of shares of Common Stock equal to the number of shares of Common
Stock so awarded. In each year at the discretion of the Committee there may also
be allocated or credited to each Participant a dollar amount equal to the cash
dividends declared and paid by the Company on its Common Stock which the
Participant would have received had such Participant been the owner of the
number of shares of any Common Stock deferred for future payment. Any amounts
provided for pursuant to the preceding sentence shall become payable in such
manner, at such time or times, and subject to such conditions (which may include
provision for an amount equivalent to interest on such dividend equivalents at
rates fixed by the Committee) as the Committee in its sole discretion shall
determine; provided, however, that the total value of such dividend equivalents
(and any interest thereon) shall be deducted from the amount available for
Awards under the provisions of Section 13(e) of the Plan. The Committee in its
discretion may make appropriate equitable adjustments to such deferred Stock
Award to account for any dividends of property (other than cash) declared and
paid by the Company on its Common Stock, or to account for any other event
described in Sections 28 and 29 hereof.
PART IIB RESTRICTED STOCK AWARDS.AWARDS
20. DETERMINATION OF RESTRICTED STOCK AWARDS
Each year the Committee shall designate the key employees of the Company who
shall receive Restricted Stock Awards. Shares awarded under this part of the
Plan, while subject to the restrictions hereinafter set forth, are referred to
as "Restricted Stock".
21. TERMS OF RESTRICTED STOCK AWARDS
Any Award of Restricted Stock shall be subject to the following terms and
conditions and to any other terms and conditions not inconsistent with the Plan
as shall be prescribed by the Committee in its sole discretion and which may be
contained in the agreement, if any, referred to in Section 16 above (or in any
amendment thereto):
(a) Delivery of Restricted Stock. Unless otherwise determined by the
Committee, the Company shall transfer treasury shares to each Participant to
whom an Award of Restricted Stock has been made equal to the number of
shares of Restricted Stock specified in the Award, and hold the certificates
representing such shares of Restricted Stock for the Participant for the
period of time during which such shares shall remain subject to the
restrictions set forth in the Award (the B-8
"Restricted Period"). Shares of
Restricted Stock may not be sold, assigned, transferred, pledged,
hypothecated or otherwise encumbered by a Participant during the Restricted
Period, except as hereinafter provided. Except for the restrictions set
forth herein and unless otherwise determined by the Committee, a Participant
shall have all the rights of a stockholder with respect to the shares of
Restricted Stock comprising his or her Award, including, but not limited to,
the right to vote and the right to receive dividends (which if in shares of
Common Stock shall be Restricted Stock under the same terms and conditions).
8
(b) Lapse of Restricted Period. The Restricted Period shall commence
upon the date of the Award (which unless otherwise specified by the
Committee shall be the date the Restricted Stock is transferred to the
Participant) and, unless sooner terminated as otherwise provided herein,
shall continue for such period of time as specified by the Committee in the
Award, which shall in no event be less than one year, and thereafter shall
lapse in such installments, if any, as provided by the Committee in the
Award.
(c) Legend. Each certificate issued in respect of shares of Restricted
Stock transferred or issued to a Participant under an Award shall be
registered in the name of the Participant and shall bear the following (or a
similar) legend:
"THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE
SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN THE NEW YORK
TIMES COMPANY 1991 EXECUTIVE STOCK INCENTIVE PLAN (THE "PLAN")
APPLICABLE TO RESTRICTED STOCK AND TO THE RESTRICTED STOCK
AGREEMENT DATED (THE "AGREEMENT"), AND MAY NOT BE
SOLD, PLEDGED, TRANSFERRED, ASSIGNED, HYPOTHECATED, OR OTHERWISE
DISPOSED OF OR ENCUMBERED IN ANY MANNER DURING THE RESTRICTED
PERIOD SPECIFIED IN SUCH AGREEMENT. COPIES OF SUCH PLAN AND
AGREEMENT ARE ON FILE WITH THE SECRETARY OF THE COMPANY."
(d) Death or Disability. Unless the Committee shall otherwise determine
in the Award (and subject to Section 18 hereof), if a Participant ceases to
be employed by the Company by reason of death or Disability, the Restricted
Period covering all shares of Restricted Stock transferred or issued to such
Participant under the Plan shall immediately lapse.
(e) Retirement. Unless the Committee shall otherwise determine in the
Award (and subject to the provisions of Section 18 hereof), the Restricted
Period covering all shares of Restricted Stock transferred to a Participant
under the Plan shall immediately lapse upon such Participant's Retirement,
whether early or not.
(f) Termination of Employment. Unless the Committee shall otherwise
determine in the Award or otherwise determine at or after the date of grant,
if a Participant ceases to be employed by the Company other than due to a
condition described in Sections 21(d) or (e) above, all shares of Restricted
Stock owned by such Participant for which the Restricted Period has not
lapsed shall revert back to the Company upon such termination. Authorized
leave of absence or absence in military service shall constitute employment
for the purposes of this Section 21(f). Whether absence in government
service may constitute employment for the purposes of the Plan shall be
conclusively determined by the Committee.
(g) Waiver of Forfeiture Provisions. The Committee, in its sole and
absolute discretion (but subject to the provisions of Section 18 hereof),
may waive the forfeiture provisions in respect of all or some of the
Restricted Stock awarded to a Participant.
(h) Issuance of New Certificates. Upon the lapse of the Restricted
Period with respect to any shares of Restricted Stock, such shares shall no
longer be subject to the restrictions imposed in the B-9
Award and shall no
longer be considered Restricted Stock for the purposes of the Award and the
Plan, and the Company shall issue new share certificates respecting such
shares registered in the name of the Participant without the legend
described in Section 21(c) in exchange for those previously issued.
9
PART IIC RETIREMENT UNIT AWARDS.AWARDS
22. DETERMINATION OF RETIREMENT UNIT AWARDS
Each year the Committee shall designate those key employees of the Company
who shall receive Retirement Unit Awards under the Plan. The Company shall
create and maintain appropriate records of account for each Participant which
shall be designated as the Participant's Retirement Unit Account.
23. CREDITS TO RETIREMENT UNIT ACCOUNTS
The Committee shall allocate to each Participant selected to receive a
Retirement Unit Award for that year such dollar amount as the Committee shall
determine, taking into account the value of the Participant's services to the
Company. Such dollar amount shall thereupon be converted into Retirement Units
or fractions of Units and credited to each such Participant's Retirement Unit
Account in a number equal to the quotient obtained by dividing such allocated
dollar amount by the Fair Market Value of one share of Common Stock as of the
date the allocation is made.
24. DIVIDEND CREDITS
At the discretion of the Committee there may also be allocated in each year
to each Participant a dollar amount equal to the cash dividends declared and
paid by the Company on the Common Stock which the Participant would have
received had such Participant been the owner of the number of shares of Common
Stock equal to the number of the whole Retirement Units (but not fractional
Units) credited to the Participant's Retirement Unit Account; provided, however,
that the total value of such dividend equivalents shall be deducted from the
amount available for Awards under Section 13 of the Plan. The dollar amounts
allocated shall be converted into and credited to the Participants'Participant's Retirement
Unit Accounts as Retirement Units or fractions thereof as set forth in Section
23 above as of the date on which such dividends were paid by the Company. No
interest shall be paid on the dollar amount so allocated to the Retirement Unit
Account of any Participant. The Committee in its discretion may make appropriate
equitable adjustments to such Retirement Unit Accounts to account for any
dividends of property (other than cash) declared and paid by the Company on its
Common Stock, or to account for any other event described in Sections 28 and 29
hereof.
25. RESERVATION OF STOCK AND ACCOUNTING RECORDS
The Company shall keep records of the Participant's Retirement Unit
Accounts. At the time of any allocation to a Participant's account under
Sections 23 or 24 hereof, there shall be reserved out of treasury shares of the
Company a number (which may include a fraction) of shares of Common Stock equal
to the number of Units or fraction thereof so allocated.
26. MATURITY AND PAYMENT AFTER MATURITY
(a) The Retirement Unit Account of each Participant shall mature upon such
Participant's death, Retirement or other termination of employment.
(b) After maturity, the Company shall deliver to the Participant (or in the
event of the death of the Participant, as specified in Section 30 hereof) in ten
approximately equal annual installments, shares of Common Stock equal in the
aggregate to the number of Retirement Units credited to the Participant's
Retirement Unit Account. Any fraction of a Unit credited to the Participant's
account at maturity shall be paid in cash with the first installment, the
fractional Unit being converted into cash at B-10
the Fair Market Value of the Common
Stock on such first payment date. The first such installment shall be paid
within 90 days after maturity. However, the Committee in its discretion at or
any time after maturity may, with the consent of the Participant (or the
beneficiary of a deceased Participant as specified in Section 30 hereof), (i)
defer the commencement of such distribution or defer any installment, (ii)
deliver full payment of the shares of Common Stock equal to the aggregate number
of Retirement Units credited to the Participant's Retirement Unit Account and
the dollar amount credited
10
thereto, or (iii) reduce or increase the number of annual installments in which
the payments are to be made.
(c) So long as Retirement Units remain credited to the Retirement Unit
Account of a Participant subsequent to maturity, such account shall be credited
with the dollar amount allocated to the account as dividends as provided for in
Section 24 hereof. Any dollar amount so credited may be paid in cash with the
next succeeding annual installment made under Section 26(b) above, or in such
manner, at such time or times, and subject to such conditions as the Committee
in its sole discretion shall determine; provided, however, that in the case of
any dollar amount credited to an account after maturity in respect of a dividend
declared prior to maturity, such dollar amounts shall be converted to Retirement
Units as of the date of payment and the remaining installments of Common Stock
shall be increased accordingly.
PART IID ANNUAL PERFORMANCE AWARDS.AWARDS
27A. DETERMINATION OF ANNUAL PERFORMANCE AWARDS
(a) General. Each year the Committee may make Annual Performance Awards
under this part of the Plan; provided that no Participant may be eligible to
receive an Annual Performance Award hereunder and under the Cash Plan in the
same year,
(b) Certain Definitions. For the purposes of this Section 27A, the following
terms shall have the meanings specified:
"Affected Officers" shall mean those executive officers of the Company
whose compensation is required to be disclosed in the Company's annual proxy
statement relating to the election of directors.
"Code Section 162(m)" shall mean Section 162(m) of the Code (or any
successor provision), and "Regulations" shall mean the regulations
promulgated thereunder, as from time to time in effect.
"Eligible Participants" shall have the meaning set forth in subsection
(c) below.
"Performance Adjustment" means, for any year, a factor ranging from 0%
to 200%, based upon the achievement of Performance Goal Targets established
by the Committee, that, when multiplied by an Eligible Participant's Target
Award, determines the amount of such Eligible Participant's Annual
Performance Award for such year.
B-11
"Performance Goal" means, for any year, the business criteria selected
by the Committee to measure the performance during such year of the Company
(or of a division, subsidiary or group thereof) from one or more of the
following:
(i) earnings per share of the Company for the year;
(ii) net income of the Company for the year;
(iii) return on assets of the Company for the year (net income of the
Company for the year divided by average total assets during such year);
(iv) return on stockholders' equity of the Company for the year (net
income of the Company for the year divided by average stockholders'
equity during such year); and
(v) operating profit of the Company or of a division, subsidiary or
group thereof for the year.
11
"Performance Goal Target" means, for any Performance Goal, the levels of
performance during a year under such Performance Goal established by the
Committee to determine the Performance Adjustment to an Eligible
Participant's Target Award for such year.
"Target Award" means, for any year, with respect to an Eligible
Participant, the dollar amount set by the Committee that, when multiplied by
the applicable Performance Adjustment, determines the dollar amount of such
Eligible Participant's Annual Performance Award.
(c) Eligibility. Annual Performance Awards are available each year only to
Plan Participants who are designated by the Committee, prior to March 31 of such
year (or prior to such later date as permitted by Code Section 162(m) and the
Regulations), as likely to be Affected Officers for such year, whose annual
salary and bonus for such year are expected to exceed $1,000,000 and who are not
designated by the Committee as eligible for an annual performance award under
the Cash Plan for such year ("Eligible Participants").
(d) Determination of Annual Performance Awards. Prior to March 31 of each
year (or prior to such later date as permitted by Code Section 162(m) and the
Regulations), the Committee will determine the Eligible Participants for such
year, will designate those Eligible Participants who will be entitled to earn an
Annual Performance Award for such year under this Plan, and will establish for
each such Eligible Participant for such year: (i) a Target Award, (ii) one or
more Performance Goals, and (iii) for each such Performance Goal, a Performance
Goal Target, the method by which achievement thereof will be measured and a
schedule of Performance Adjustment factors corresponding to varying levels of
Performance Goal Target achievement. In the event more than one Performance Goal
is established for any Eligible Participant, the Committee shall at the same
time establish the weighting of each such Performance Goal in determining such
Eligible Participant's Annual Performance Award. Notwithstanding anything in
this Section 27A to the contrary, the Annual Performance Award payable to any
Eligible Participant in any year may not exceed $1.5 million.
(e) Payment of Annual Performance Awards. Subject to subsection (f) below,
Annual Performance Awards will be paid as soon as practicable after the end of
the year to which it relates and after the Committee certifies the extent to
which the Performance Goal Target or Targets under the Performance Goal or Goals
have been met or exceeded. In the discretion of the Committee, an Annual
Performance Award may be paid in cash, shares of Common Stock, shares of
Restricted Stock (subject to the provisions of Section 21 hereof), Retirement
Units (subject to the provisions of Sections 23-26 hereof) or any combination
thereof. For this purpose, shares of Common Stock shall be valued at Fair Market
Value, and Restricted Stock and Retirement Units shall be deemed to have a value
equal to the Fair Market Value of the underlying Common Stock, in each case as
of the date of the Committee's determination to pay such Annual Performance
Award in such form or forms. If permitted by the Regulations and Code Section
162(m), the Committee may determine to pay a portion of aan Annual
B-12
Performance
Award in December of the year to which it relates. The Committee may not
increase the amount of aan Annual Performance Award that would otherwise be
payable upon achievement of the Performance Target or Targets, but it may reduce
any Eligible Participant's Annual Performance Award in its discretion. Subject
to Section 14(c) above, no Annual Performance Award will be payable to any
Eligible Participant who is not an employee of the Company on the last day of
the year to which such Annual Performance Award relates.
(f) Deferral of Annual Performance Awards. If the Committee determines that
some portion of aan Annual Performance Award to an Eligible Participant shall be
treated as a deferred Annual Performance Award and be payable in annual or other
periodic installments, the Eligible Participant will be notified in writing when
such deferred Annual Performance Award shall be paid and over what period of
time. A deferred Award in the form of shares of Common Stock shall be subject to
the provisions of Section 19 (b) hereof. In the case of a deferred Award in the
form of cash, in each year the Committee shall have the discretion to provide
for the payment of an amount equivalent to interest, at such rate or rates fixed
by the Committee, on such deferred cash Annual Performance Award. Any amounts
12
provided for pursuant to the preceding sentence shall become payable in such a
manner, at such time or times, and subject to such conditions as the Committee
shall in its sole discretion determine; provided, however, that the total amount
of such interest shall be deducted from the maximum amount available for Awards
under the formula described in Section 13 of the Plan.
(g) Code Section 162(m). It is the intent of the Company that Annual
Performance Awards satisfy, and this Section 27A be interpreted in a manner that
satisfies, the applicable requirements of Code Section 162(m) and the
Regulations so that the Company's tax deduction for Annual Performance Awards to
Affected Officers is not disallowed in whole or in part by operation of Code
Section 162(m). If any provision of this Plan or of any Annual Performance Award
would otherwise frustrate or conflict with such intent, that provision shall be
interpreted and deemed amended so as to avoid such conflict. To the extent of
any irreconcilable conflict with such intent, such provision shall be deemed
void as applicable to Eligible Participants.
PART IIE PERFORMANCE OR OTHER AWARDS.AWARDS
27. DETERMINATION OF PERFORMANCE AND OTHER AWARDS
(a) Each year the Committee in its sole discretion may authorize other forms
of Awards such as, but not limited to, Performance Awards, if the Committee
deems it appropriate to do so in order to further the purposes of the Plan.
(b) A "Performance Award" shall mean an Award which entitles the Participant
to receive Common Stock, Restricted Stock, Retirement Units, Options under Part
I of the Plan or other compensation (which may include cash), or any combination
thereof, in an amount which depends upon the financial performance of the
Company during a stated period of more than one year. Performance for this
purpose may be measured by the growth in book value of the Common Stock, an
increase in per share earnings of the Company, an increase in operating cash
flow, or any other indicators specified by the Committee. The Committee shall
also fix the period during which such performance is to be measured, the value
of a Performance Award for purposes of providing for the accrual pursuant to
Section 13 of the Plan and the form of payment to be made in respect of the
Performance Award.
PART III GENERAL PROVISIONS.PROVISIONS
28. STOCK DIVIDEND OR STOCK SPLIT
If at any time the Company shall take any action whether by stock dividend,
stock split, combination of shares, or otherwise, which results in a
proportionate increase or decrease in the number of shares of Common Stock
theretofore issued and outstanding, (i) the number of shares of Common
B-13
Stock
then subject to deferred Awards, credited to Retirement Unit Accounts (matured
or unmatured) or set aside for Performance or Other Awards, (ii) the number of
outstanding Options, the number of shares of Common Stock for which such Options
are exercisable and the exercise price thereof, (iii) the number of shares of
Common Stock reserved for Awards, (iv) the number of shares of Common Stock
reserved for Options, and (v) the maximum number of shares with respect to which
Options may be granted to any key employee in any calendar year under Section
6(b), shall be increased or decreased in the same proportion. The Committee
shall make an appropriate equitable adjustment to the provisions of Section
13(a) to take account of such increase or decrease in issued and outstanding
shares. The Committee in its discretion may make appropriate equitable
adjustments respecting deferred Stock Awards, Retirement Units, Annual
Performance Awards, Performance or Other Awards and outstanding Options to take
account of a dividend by the Company of property other than cash. All such
adjustments shall be made by the Committee whose determination shall be
conclusive and binding upon all Participants and any person claiming under or
through any Participant.
13
29. RECLASSIFICATION OR MERGER
If at any time the Company reclassifies or otherwise changes its issued and
outstanding Common Stock (other than in par value) or the Company and one or
more corporations merge and the Company is the surviving corporation of such
merger, then each Stock Award, Retirement Unit (matured or unmatured), Annual
Performance Award, Performance or Other Award which at the time of such
reclassification or merger is credited as a Stock Award, Retirement Unit, Annual
Performance Award, Performance or Other Award shall thereafter be deemed to be
the equivalent of (and all Units thereafter credited to a Retirement Unit
Account shall be computed with reference to), and outstanding Options shall be
exercisable for, the shares of stock or other securities of the Company which
pursuant to the terms of such reclassification or merger are issued with respect
to each share of Common Stock. The Committee shall also make an appropriate
equitable adjustment to the provisions of Sections 6(b) and 13(a) to take
account of such event. All such adjustments shall be made by the Committee whose
determination shall be conclusive and binding upon all Participants and any
person claiming under or through any Participant.
30. NON-ALIENATION OF BENEFITS
Except as herein specifically provided, no right or unpaid benefit under
this Plan shall be subject to alienation, assignment, pledge or charge and any
attempt to alienate, assign, pledge or charge the same shall be void. If any
Participant or person entitled to the benefits hereunder should attempt to
alienate, assign, pledge or charge any benefit hereunder, then such benefit
shall, in the discretion of the Committee, cease. Notwithstanding the foregoing,
rights and benefits hereunder shall pass by will or the laws of descent and
distribution in the following order: (i) to beneficiaries so designated by the
Participant; if none, then (ii) to a legal representative of the Participant; if
none, then (iii) to the persons entitled thereto as determined by a court of
competent jurisdiction. Awards so passing shall be made at such times and in
such manner as if the Participant were living.
31. WITHHOLDING OR DEDUCTION FOR TAXES
If at any time specified herein for the making of any payment or delivery of
any Common Stock to any Participant or beneficiary, any law or regulation of any
governmental authority having jurisdiction in the premises shall require the
Company to withhold, or to make any deduction for, any taxes or take any other
action in connection with the payment or delivery then to be made, such payment
or delivery shall be deferred until such withholding or deduction shall have
been provided for by the Participant or beneficiary, or other appropriate action
shall have been taken. Subject to the provisions of Rule 16b-3 and the consent
of the Committee for persons subject to Section 16 of the Exchange Act, the
Participant or beneficiary may satisfy the obligation for such withholding or
deduction in whole or in part by electing to deliver shares of Common Stock
already owned or to have the Company retain from the B-14
distribution shares of
Common Stock, in each case having a Fair Market Value equal to the amount to be
withheld or deducted.
32. ADMINISTRATION EXPENSES
The entire expense of administering this Plan shall be borne by the Company.
33. GENERAL CONDITIONS
(a) The Board in its discretion may from time to time amend, suspend or
terminate any or all of the provisions of this Plan, provided that no change may
be made which would prevent Incentive Stock Options granted under the Plan from
being Incentive Stock Options as described therein without the consent of the
optionees concerned, and further provided that the Board may not make any
amendment which (1) changes the class of persons eligible for Incentive Stock
Options, or (2) increases the total number of shares for which Options may be
granted under Section 6(b), or (3) materially affects the
14
provisions of Sections 13(a) or (b) of the Plan, or (4) increases the total
number of shares authorized under Section 13(f) for which Awards may be granted,
without the consent and approval of the holders of a majority of the outstanding
shares of Class A and Class B Common Stock of the Company entitled to vote
thereon, voting together as one class. The foregoing provisions shall not be
construed to prevent the Committee from exercising its discretion, or to limit
such discretion, to increase the total number of shares for which Options may be
granted under Section 6(b) or the total number of shares authorized under
Section 13(f) for which Awards may be granted, as expressly permitted by
Sections 28 and 29 hereof, or to adjust the provisions of Sections 13(a) and (b)
hereof as expressly permitted by Sections 13(b), 28 and 29 hereof, or otherwise
to exercise any discretion to the extent expressly authorized hereunder.
(b) Nothing contained in the Plan shall prohibit the Company from
establishing incentive compensation arrangements in addition to this Plan and
the Cash Plan. Payments made under any such separate arrangements shall not be
included in or considered a part of the maximum dollar amount available for
Awards under the Plan and Cash Plan, or number of shares available for Awards or
Options under the Plan, and shall not be charged against the dollar or share
amounts available for Awards under the Plan and Cash Plan or Options under the
Plan. In the discretion of the Committee, employees shall be eligible to
participate in such other arrangements, as well as the Plan and Cash Plan, in
the same year.
(c) Nothing in this Plan shall be deemed to limit in any way the right of
the Company to terminate a Participant's employment with the Company at any
time.
(d) The Committee may promulgate rules and regulations relating to the
administration and interpretation of, and procedures under, the Plan. Any
decision or action taken by the Company, the Board or the Committee arising out
of or in connection with the construction, administration, interpretation and
effect of the Plan shall be conclusive and binding upon all Participants and any
person claiming under or through any Participant.
(e) No member of the Board or of the Committee shall be liable for any act
or action, whether of commission or omission, taken by any other member or by
any officer, agent or employee, nor for anything done or omitted to be done by
such Director except in circumstances involving actual bad faith.
(f) Notwithstanding any other provision of this Plan, the Company shall not
be obligated to make any Award, issue any shares of Common Stock, or grant any
Option with respect thereto, unless it is advised by counsel of its selection
that it may do so without violation of the applicable Federal and State laws
pertaining to the issuance of securities, and may require any stock so issued to
bear a legend, may give its transfer agent instructions, and may take such other
steps, as in its judgment are reasonably required to prevent any such violation.
B-15
(g) It is the intent of the Company that the Plan comply in all respects
with Rule 16b-3, that any ambiguities or inconsistencies in construction of the
Plan be interpreted to give effect to such intention and that if any provision
of the Plan is found not to be in compliance with Rule 16b-3, such provision
shall be deemed null and void to the extent required to permit the Plan to
comply with Rule 16b-3. The Board may adopt rules and regulations under, and
amend, the Plan in furtherance of the intent of the foregoing.
34. TRANSITION
Upon the effectiveness of this Plan, as provided below, and the Cash Plan,
such plans replaced the Company's Executive Incentive Compensation Plan
("EICP"), except that the EICP shall continue to govern options and awards of
restricted stock outstanding under the EICP. No further awards will be made
under the EICP, and all amounts accrued for awards under the EICP and unawarded
were carried forward and made available for Awards under the Plan and awards
under the Cash Plan. All
15
unmatured and matured but undistributed retirement units and all performance
awards respecting current performance cycles awarded under the EICP became
Retirement Units and Performance Awards hereunder and any payments or
distributions in respect thereof shall be made hereunder; provided, however,
that the number of shares of Common Stock available for Awards pursuant to
Section 13(f) hereof shall not be reduced by the number of such retirement units
previously awarded under the EICP and paid subsequently under the Plan.
35. EFFECTIVE DATES
The Plan became effective for periods beginning after January 1, 1991 upon
approval by the holders of a majority of the outstanding shares of Class A and
Class B Common Stock of the Company entitled to vote thereon at the 1991 Annual
Meeting of Stockholders, in person or by proxy, voting together as a single
class. No Options may be granted or Awards made under the Plan after December
31, 2000, or such earlier expiration date as may be designated by resolution of
the Board.
B-16
APPENDIX
1994 FINANCIAL REPORT
THE NEW YORK TIMES COMPANY
1994 Consolidated Financial Statements
- --------------------------------------------------------------------------------
Contents Page
- --------------------------------------------------------------------------------
Financial Highlights .............................................. F-1
Segment Information ............................................... F-2
Management's Discussion and Analysis .............................. F-4
Consolidated Statements of Operations ............................. F-9
Consolidated Balance Sheets ....................................... F-10
Consolidated Statements of Cash Flows ............................. F-12
Consolidated Statements of Stockholders' Equity ................... F-14
Notes to Consolidated Financial Statements ........................ F-15
Independent Auditors' Report ...................................... F-27
Management's Responsibilities Report .............................. F-27
Market Information ................................................ F-27
Quarterly Information ............................................. F-28
Ten-Year Supplemental Financial Data .............................. F-29
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Dollars in thousands except per Year Ended December 31
share data
1994 1993 1992
- --------------------------------------------------------------------------------
REVENUES AND INCOME
Revenues $ 2,357,563 $ 2,019,654 $ 1,773,535
Operating profit 211,242 126,581 88,408
Income before income taxes and
equity in operations of forest
products group 383,953 101,206 8,525
Income (Loss) before equity
in operations of forest
products group 210,085 57,975 (2,554)
Equity in operations of
forest products group 3,264 (51,852) (8,718)
Income (Loss) before net
cumulative effect of
accounting changes 213,349 6,123 (11,272)
Net cumulative effect of
accounting changes -- -- (33,437)
Net income (loss) 213,349 6,123 (44,709)
- --------------------------------------------------------------------------------
FINANCIAL POSITION
Property, plant and
equipment - net 1,158,751 1,112,024 902,755
Total assets 3,137,631 3,215,204 1,994,974
Long-term debt and capital
lease obligations 523,196 460,063 206,911
Common stockholders' equity 1,543,539 1,598,883 999,630
- --------------------------------------------------------------------------------
PER SHARE OF COMMON STOCK
Income (Loss) before net
cumulative effect of accounting
changes 2.05 .07 (.14)
Net cumulative effect of
accounting changes -- -- (.43)
Net income (loss) 2.05 .07 (.57)
Dividends .56 .56 .56
Common stockholders' equity
(end of year) 15.71 14.96 12.54
- --------------------------------------------------------------------------------
KEY RATIOS (See notes below)
Operating profit to revenues 9% 6% 5%
Income before equity in operations
of forest products group to revenues 5% 3% 2%
Return on average stockholders' equity 7% -- 2%
Return on average total assets 3% -- 1%
Long-term debt and capital lease
obligations to total capitalization 25% 22% 17%
Current assets to current liabilities .91 .89 1.08
- --------------------------------------------------------------------------------
EMPLOYEES 12,800 13,000 10,100
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Dollars in thousands except per share data Year Ended December 31
1991 1990
- --------------------------------------------------------------------------------
REVENUES AND INCOME
Revenues $ 1,703,101 $ 1,776,761
Operating profit 93,639 129,779
Income before income taxes and equity in
operations of forest products group 63,053 110,190
Income (Loss) before equity
in operations of forest products group 41,293 60,871
Equity in operations of forest products group 5,700 3,965
Income (Loss) before net cumulative effect
of accounting changes 46,993 64,836
Net cumulative effect of accounting changes -- --
Net income (loss) 46,993 64,836
- --------------------------------------------------------------------------------
FINANCIAL POSITION
Property, plant and equipment - net 966,593 1,013,430
Total assets 2,127,981 2,149,623
Long-term debt and capital lease obligations 213,487 319,449
Common stockholders' equity 1,073,442 1,055,785
- --------------------------------------------------------------------------------
PER SHARE OF COMMON STOCK
Income (Loss) before net cumulative
effect of accounting changes .61 .85
Net cumulative effect of accounting changes -- --
Net income (loss) .61 .85
Dividends .56 .54
Common stockholders' equity (end of year) 13.70 13.68
- --------------------------------------------------------------------------------
KEY RATIOS (See notes below)
Operating profit to revenues 5% 7%
Income before equity in operations
of forest products group to revenues 2% 3%
Return on average stockholders' equity 4% 6%
Return on average total assets 2% 3%
Long-term debt and capital lease obligations
to total capitalization 17% 23%
Current assets to current liabilities .89 .81
- --------------------------------------------------------------------------------
EMPLOYEES 10,100 10,400
- --------------------------------------------------------------------------------
In 1994, the Company sold its Women's Magazines Division and U.K. golf
publications, and divested a minority interest in a Canadian paper mill
("Gaspesia") (see Note 2). As a result of these transactions, the Company
recorded a net pre-tax gain of approximately $200.9 million ($103.3 million
after taxes or $.99 per share). These transactions are not reflected in the 1994
income amounts used in the applicable key ratio calculations presented above.
Amounts for 1993 were affected by the October 1, 1993 acquisition of The Boston
Globe (see Note 2).
For 1993, return on average stockholders' equity and return on average total
assets are less than 1 percent due to several factors which lowered net income
for the year. See Management's Discussion and Analysis on page F-4.
In September 1992, the Company closed The Gwinnett (Ga.) Daily News and sold the
residual assets. The closing and related sale resulted in a pre-tax loss of
$53.8 million ($37.1 million after taxes or $.47 per share). This transaction is
not reflected in the 1992 income amounts used in the applicable key ratio
calculations presented above.
Net cumulative effect of accounting changes reflects the 1992 adoption of the
change in methods of accounting for income taxes, postretirement benefits other
than pensions and postemployment benefits. The net cumulative effect is not
reflected in the 1992 income amounts used in the applicable key ratio
calculations presented above.
F-1
SEGMENT INFORMATION
- ------------------------------------------------------------------------------
The Company has classified its business into the following segments and equity
interests:
NEWSPAPERS: The New York Times, The Boston Globe, 28 regional newspapers,
newspaper wholesalers and a one-half interest in the International Herald
Tribune S.A.
MAGAZINES: Numerous publications and related activities in the
sports/leisure field.
BROADCASTING/INFORMATION SERVICES: Five network-affiliated television stations,
two radio stations, a news service, a features syndicate, TimesFax and licensing
operations of The New York Times databases and microfilm.
FOREST PRODUCTS: Equity interests in a newsprint company and a partnership in a
supercalendered paper mill that together supply a portion of the Newspaper
Group's annual paper requirements.
- ------------------------------------------------------------------------------
Dollars in thousands Year Ended December 31
1994 1993 1992
- ------------------------------------------------------------------------------
REVENUES
Newspapers $1,968,252 $1,537,934 $1,306,952
Magazines 280,061 394,463 386,120
Broadcasting/Information services 109,250 87,257 80,463
- -------------------------------------------------------------------------------
Total $2,357,563 $2,019,654 $1,773,535
- -------------------------------------------------------------------------------
OPERATING PROFIT (LOSS)
Newspapers $ 196,067 $ 114,332 $ 81,173
Magazines 19,204 12,330 9,929
Broadcasting/Information services 25,048 19,403 14,766
Unallocated corporate expenses (29,077) (19,484) (17,460)
- -------------------------------------------------------------------------------
Total 211,242 126,581 88,408
Interest expense, net of
interest income 28,162 25,375 26,115
Net gain (loss) on dispositions 200,873 -- (53,768)
- -------------------------------------------------------------------------------
Income before income taxes
and equity in operations of
forest products group 383,953 101,206 8,525
Income taxes 173,868 43,231 11,079
- -------------------------------------------------------------------------------
Income (Loss) before equity in
operations of forest products
group 210,085 57,975 (2,554)
Equity in operations of forest
products group 3,264 (51,852) (8,718)
- -------------------------------------------------------------------------------
INCOME (LOSS) BEFORE
NET CUMULATIVE
EFFECT OF ACCOUNTING CHANGES $ 213,349 $ 6,123 $ (11,272)
- -------------------------------------------------------------------------------
See notes to consolidated financial statements.
F-2
SEGMENT INFORMATION
- ------------------------------------------------------------------------------
Dollars in thousands Year Ended December 31
1994 1993 1992
- ------------------------------------------------------------------------------
DEPRECIATION AND AMORTIZATION
Newspapers $ 135,507 $ 98,957 $ 74,495
Magazines 7,593 18,616 20,628
Broadcasting/Information services 10,373 10,731 12,424
Corporate 784 528 385
- ------------------------------------------------------------------------------
Total $ 154,257 $ 128,832 $ 107,932
- ------------------------------------------------------------------------------
CAPITAL EXPENDITURES
Newspapers $ 185,616 $ 71,746 $ 42,675
Magazines 906 3,059 1,888
Broadcasting/Information services 5,619 3,323 1,863
Corporate 794 1,491 903
- ------------------------------------------------------------------------------
Total $ 192,935 $ 79,619 $ 47,329
- ------------------------------------------------------------------------------
IDENTIFIABLE ASSETS AT DECEMBER 31
Newspapers $2,717,945 $2,676,779 $1,321,667
Magazines 91,797 247,723 255,777
Broadcasting/Information services 115,882 113,675 117,679
Corporate 126,574 101,007 160,459
Investment in forest products group 85,433 76,020 139,392
- ------------------------------------------------------------------------------
Total $3,137,631 $3,215,204 $1,994,974
- ------------------------------------------------------------------------------
See notes to consolidated financial statements.
Magazine Group amounts for 1994 have been affected by the dispositions of the
Women's Magazines Division and the U.K. golf publications (see Note 2).
Newspaper Group amounts for 1994 have been affected by the inclusion of The
Boston Globe's operations for the entire year, while the 1993 amounts only
include its operations from the October 1, 1993 acquisition date (see Note 2).
Newspaper Group operating profit for 1993 and 1992 includes charges of $35.4
million and $28.0 million, respectively, for costs related to staff reductions
at The New York Times newspaper.
Equity in operations of Forest Products Group and investment in Forest Products
Group for 1993 reflect an after-tax noncash charge of $47.0 million to write
down the Company's investment in Gaspesia.
Newspaper Group operating results for 1992 were negatively affected by $21.4
million for labor disruptions and training and start-up costs related to the new
production and distribution facility located in Edison, New Jersey ("Edison")
for The New York Times newspaper.
F-3
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
Per share amounts in the following Management's Discussion and Analysis are
computed on an after-tax basis.
RESULTS OF OPERATIONS: 1994 COMPARED WITH 1993
In 1994, the Company reported net income of $213.3 million, or $2.05 per share,
compared with $6.1 million, or $.07 per share, in 1993.
Exclusive of the special factors described in detail below, annual earnings
would have been $1.06 per share in 1994 compared with $.91 per share in 1993.
Operating profit for 1994, after excluding the special factors, rose to $211.2
million from $163.1 million in 1993. The improvement in ongoing operations in
1994's annual earnings was due to higher revenues at The New York Times,
Regional Newspapers and Broadcasting and the inclusion of The Boston Globe's
("The Globe") operations for the entire year compared with one quarter in 1993.
Revenues for 1994 increased to $2.36 billion from $2.02 billion in 1993. The
1994 annual revenues included The Globe for an entire year, but the Women's
Magazines and U.K. golf publications only through the first six months. Annual
revenues for 1993 included an entire year of revenues from the magazines sold in
1994, but only the fourth-quarter revenues from The Globe. On a comparable
basis, excluding revenues attributable to The Globe and the magazines sold, 1994
annual revenues increased by approximately 6 percent over 1993. The growth in
1994 revenues was due to higher revenues in the Newspaper Group and
Broadcasting.
The Company's costs and expenses after excluding special factors increased to
$2.15 billion from $1.86 billion in 1993. The increase was due to the inclusion
of The Globe's operations and acquisition amortization expense for the entire
year, as well as higher wages and benefits costs throughout the Company offset,
in part, by the reduction in expenses associated with the magazines sold.
Earnings for 1994 were affected by the following special factors:
- $200.9 million net pre-tax gain ($.99 per share) relating to the
divestitures of the Women's Magazines Division, U.K. golf publications
and a minority interest in Gaspesia Pulp & Paper Company Ltd.
("Gaspesia"), a Canadian newsprint mill.
Earnings for 1993 were affected by the following special factors:
- $47.0 million after-tax charge ($.56 per share) against equity in
operations of the Forest Products Group to write down the Company's
investment in Gaspesia.
- $35.4 million pre-tax charges ($.23 per share) for severance and related
costs resulting from staff reductions at The New York Times newspaper
("The Times").
- $4.4 million unfavorable tax adjustment ($.05 per share) due to a
federal corporate income tax rate increase which required the
remeasurement of deferred tax balances.
- $3.7 million pre-tax costs ($.02 per share) due to a severe snowstorm
that disrupted delivery of The Times.
- $2.6 million pre-tax gain ($.02 per share) on the sale of assets.
Operating profit before depreciation, amortization, interest and income
taxes, excluding the net proceeds from the 1994 dispositions, rose significantly
to $365.5 million in 1994 from $255.4 million in 1993. The increase was due to
improved operating results and the inclusion of The Globe's operations for an
entire year in 1994.
Interest expense, net of interest income, rose to $28.2 million in 1994 from
$25.4 million in 1993. The increase was a result of higher borrowings in
connection with stock repurchases and the October 1993 acquisition of The Globe.
Exclusive of the taxes related to the 1994 magazine sales and the disposition
of Gaspesia, the Company's effective income tax rate for 1994 was 41.7 percent
compared with 42.7 percent in 1993. The rates in both years reflect the
utilization of capital tax loss carryforwards.
A discussion of the Company's financial performance, exclusive of the special
factors noted above, follows:
Operating profit of the Newspaper Group in 1994 was $196.1 million compared
with $150.8 million in 1993. Revenues increased to $1.97 billion in 1994 from
$1.54 billion in the prior year. The improvements in 1994 revenues and operating
profit were due to a combination of higher advertising and circulation rates,
increased advertising volume, and the inclusion of the operations of The Globe
for an entire year. The Group was affected by higher newsprint prices in the
fourth quarter of 1994, as a result of increased demand for newsprint in the
market. These price increases are expected to continue into 1995 and will have
an adverse impact on the Group's future operating results.
Advertising volume at The Times increased 3.5 percent over 1993 to 3.7
million inches. National, classified and zoned advertising categories
experienced increases of 2.1 percent, 4.1 percent and 8.3 percent, respectively.
However, retail advertising decreased by 1.1 percent. Circulation of The Times
for the year ended December 31, 1994 was 1,142,800 copies weekdays, down 36,200
copies. Sunday circulation for the year was 1,743,900 copies, down 37,300 copies
from the prior year.
At The Globe, advertising volume for the year 1994 increased 5.3 percent over
1993 to 2.9 million inches. Advertising increased in all categories, especially
classified which was up 8.6 percent over 1993. Circulation of The Globe for the
year ended December 31, 1994 was 504,500 copies weekdays, approximately equal to
the 1993 period, and 804,800 copies Sundays, down 9,700 copies.
At the 28 regional newspapers that were in the Group for the entire 1994 and
1993 periods (two weekly newspapers were sold at the end of 1993), advertising
volume increased 4.3 percent to 17.1 million inches. Advertising increased in
all categories over 1993. Circulation for the daily regional newspapers for the
year ended December 31, 1994 was 843,500 copies weekdays, down 7,500 copies, and
851,400 copies Sundays, down 2,300 copies. Circulation for the year was 53,100
copies, down 2,400 copies for the non-dailies.
Average circulation for 1994 throughout the Newspaper Group was adversely
affected by newsstand and home delivery price increases.
F-4
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
- --------------------------------------------------------------------------------
Operating profit for the Magazine Group was $19.2 million in 1994, compared
with $12.3 million in 1993, on revenues of $280.1 million and $394.5 million,
respectively. The decrease in revenues for the year was primarily due to the
lack of revenues attributable to the Women's Magazines Division and the U.K.
golf publications, which were sold in the third quarter of 1994.
In connection with the sale of the Women's Magazines Division, the Company
entered into a four-year non-compete agreement for which it received $40.0
million. This amount is being recognized as income, on a straight-line basis,
over a four-year period commencing with the closing of the sale on July 26,
1994. The 1994 revenues for the Group included $4.2 million relating to this
agreement.
Excluding the 1993 and 1994 operations of the Women's Magazines Division, the
U.K. golf publications and the non-compete income arising from the Women's sale
in 1994, both the revenues and the operating profit of the Sports/Leisure
Magazines for 1994 were down somewhat from the comparable period in 1993. This
was due primarily to softness in advertising at Golf Digest and Tennis magazines
and higher subscription promotion costs.
Advertising pages as reported to Publisher's Information Bureau ("PIB") for
Golf Digest decreased 2 percent from 1993 to 1,321 pages and for Tennis
increased 4 percent from 1993 to 823 pages.
The Broadcasting/Information Services Group's operating profit was $25.0
million in 1994, compared with $19.4 million in 1993 on revenues of $109.3
million and $87.3 million, respectively. Higher national and local advertising
revenues at the television stations accounted for the improved operating
results.
Equity in operations of the Forest Products Group (an after-tax amount) was
$3.3 million in 1994, compared with a loss of $4.9 million in 1993. The 1994
improvements resulted from the Company no longer needing to record its share of
operating losses for Gaspesia as a result of the 1993 write-down. In addition,
higher sales prices improved the Group's operating results during the second
half of the year and this favorable trend should continue into 1995.
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS: 1993 COMPARED WITH 1992
In 1993, the Company reported net income of $6.1 million, or $.07 per
share, compared with a net loss of $44.7 million, or $.57 per share, in 1992.
Earnings for 1993 were affected by the following factors:
- $47.0 million after-tax charge ($.56 per share) against equity in
operations of the Forest Products Group to write down the Company's
investment in Gaspesia to its net realizable value.
- $35.4 million pre-tax charge ($.23 per share) to cover severance and
related costs resulting from anticipated white-collar staff reductions,
and voluntary early retirements from the composing room at The New York
Times newspaper.
- $2.6 million pre-tax gain ($.02 per share) on the sale of assets.
- $1.2 million tax expense ($.02 per share) due to the enactment of the
Omnibus Budget Reconciliation Act of 1993 ("Tax Act") which increased
the federal corporate income tax rate from 34 percent to 35 percent
retroactively to January 1, 1993.
- $4.4 million tax expense ($.05 per share) due to the Tax Act, which
affected the deductibility of certain costs and caused the Company to
remeasure its year-end 1992 deferred tax balances to reflect the higher
tax rate.
- $3.7 million pre-tax ($.02 per share) in unfavorable advertising and
circulation rate adjustments due to a severe snowstorm in March that
disrupted delivery of The Times.
Earnings for 1992 were affected by the following factors:
- $33.4 million after-tax charge ($.43 per share) for the adoption as of
January 1, 1992, of three mandated non-cash accounting changes related
to income taxes, postretirement benefits and postemployment benefits.
- $3.1 million pre-tax gain ($.02 per share) on the sales of assets.
- $28.0 million pre-tax charge ($.20 per share) to cover severance and
related costs for production unions at The Times.
- $53.8 million pre-tax loss ($.47 per share) due to the closing of The
Gwinnett (Ga.) Daily News, the sale of its residual assets and its 1992
operations.
- $10.4 million pre-tax ($.07 per share) for training and start-up costs
related to The Times's new production and distribution facility located
in Edison, N.J. ("Edison").
- $11.0 million pre-tax ($.08 per share) due to labor disruptions arising
from a dispute between independent distributors of The Times and its
Drivers' Union.
Exclusive of the factors described above for the 1993 and 1992 periods,
earnings would have been $.93 per share in 1993 compared with $.66 per share in
1992.
Consolidated revenues for 1993 increased to $2.02 billion from $1.77 billion
in 1992, due principally to the October 1, 1993 acquisition of The Boston Globe,
the June 1992 acquisition of two wholesale newspaper distribution businesses and
higher advertising and circulation revenues. Costs and expenses after excluding
special items increased to $1.86 billion from $1.64 billion in 1992. The
increase was due principally to the October 1993 Globe acquisition, the June
1992 wholesale distribution business acquisition and higher newsprint,
depreciation, and payroll and benefit costs.
Operating profit after excluding the special factors rose to $163.1 million
from $134.7 million in 1992 due principally to higher advertising and
circulation revenues in the Newspaper
F-5
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
- --------------------------------------------------------------------------------
Group, which included the operations of The Globe subsequent to October 1, 1993
and a strong performance by the Company's television stations, which was
partially offset by higher newsprint prices and increased depreciation.
Interest expense, net of interest income, declined to $25.4 million in 1993
from $26.1 million in 1992. Lower levels of borrowings through the first half of
1993 were partly offset by increased borrowings in connection with the Company's
stock repurchase program (Note 12) and the utilization of cash balances in
connection with the October 1, 1993 acquisition of The Globe.
The Company's effective income tax rate for 1993 was 42.7 percent compared
with 44.5 percent in 1992, exclusive of the effect of the Gwinnett transaction.
The lower rate is due principally to the recognition of capital loss
carryforwards and state operating loss carryforwards, which were partially
offset by the negative impact of the Tax Act.
A discussion of the operating results of the Company's segments and equity
interests follows:
Exclusive of the special pre-tax items ($36.5 million in 1993 and $47.9
million in 1992), operating profit of the Newspaper Group was $150.8 million
compared with $129.1 million in 1992 on revenues of $1.54 billion and $1.31
billion, respectively. Improvements in revenues were due to higher advertising
and circulation rates, principally at The Times, the June 1992 acquisition of
two wholesale newspaper distribution businesses and the October 1, 1993
acquisition of The Globe. The higher operating profit resulted principally from
the inclusion of the results of The Globe since the October 1, 1993
acquisition date, higher advertising and circulation revenues, cost controls
throughout the Group and cost savings related to Edison, which were partly
offset by advertising weakness at the Company's two California regional
newspapers, increased depreciation and start-up and redesign costs related to
certain sections of The Times.
Advertising linage at The Times increased 1.0 percent over 1992 to 77.8
million lines. Retail advertising rose 4.9 percent over 1992 while national and
classified advertising declined 2.4 percent and 4.1 percent, respectively.
Circulation of The Times for the year ended December 31, 1993 was 1,179,000
copies weekdays, approximately equal to the 1992 period. Sunday circulation of
1,781,200 copies reached a record high, up 17,100 copies over the prior year.
At The Globe, full-run advertising volume for the year 1993 increased 4.0
percent over 1992 to 2.5 million inches. Retail and classified advertising
increased 9.9 percent and 2.6 percent, respectively, over 1992, but national
advertising declined 1.6 percent. Circulation of The Globe for the year ended
December 31, 1993 was 504,600 copies weekdays, down 3,300 copies, and 814,500
copies Sundays, up 2,700 copies.
At the 30 regional newspapers that were in the Group for the entire 1993 and
1992 periods (two weekly newspapers were sold at the end of 1993), advertising
volume increased 3.9 percent to 35.2 million inches. The 1993 amount includes a
significantly higher volume of advertising inserts. Circulation for the daily
regional newspapers for the year ended December 31, 1993 was 851,000 copies
weekdays, up 4,500 copies, and 853,700 copies Sundays, up 9,200 copies.
Circulation for the non-dailies was 72,700 copies, down 500 copies.
The Magazine Group's operating profit was $12.3 million in 1993 compared with
$9.9 million in 1992 on revenues of $394.5 million and $386.1 million,
respectively. Exclusive of the amortization costs associated with the
acquisitions of McCall's and Golf World (U.S.), the Group's operating profit was
$25.4 million in both years. Results for 1993 were adversely affected by an
August 1993 lawsuit settlement of $1.5 million. In addition, continuing softness
in the consumer packaged goods category in the women's magazines field to
affected the Group adversely in 1994.
Advertising pages as reported to PIB for Golf Digest increased 1 percent from
1992 to 1,344 pages; for Tennis increased 4 percent from 1992 to 795 pages; for
Family Circle decreased 9 percent from 1992 to 1,570 pages; and for McCall's
decreased 5 percent from 1992 to 1,138 pages.
The Broadcasting/Information Services Group operating profit was $19.4
million compared with $14.8 million in 1992 on revenues of $87.3 million and
$80.5 million, respectively. Higher local advertising revenues at the Company's
television stations accounted for the improved results.
Exclusive of the $47.0 million noncash charge to write down the Company's
investment in Gaspesia, equity in operations (an after-tax amount) of the Forest
Products Group was a loss of $4.9 million compared with a loss of $8.7 million
in 1992. The 1993 results were adversely affected by $0.6 million resulting from
the impact of the Tax Act. Lower newsprint discounts and a favorable Canadian
exchange rate accounted for the improved results. Higher newsprint discounts,
which were effective October 1, 1993, negatively affected the Group during the
fourth quarter and into 1994.
All of the Company's paper mills were affected by pricing difficulties in
1993. Newsprint prices showed some strengthening during the second and third
quarters, but they resumed their decline in October and were at their lowest
point at year-end. This trend continued into the first quarter of 1994 as prices
fell further in January, where they remained stable until mid-1994. Newsprint
prices began to increase in the third and fourth quarters of 1994.
The Forest Products Group write-down resulted from the softening of paper
prices due to continuing oversupply, as well as high costs and required
regulatory environmental expenditures (estimated to be $25.0 million) at
Gaspesia. In measuring the write-down, the Company projected the future cash
flows of the mills, including the required capital expenditures, and determined
that the value of Gaspesia's cash flows was less than the carrying value of the
Company's investment. Due in part to this write-down, the Company reported an
improvement in 1994's equity in operations, since it was not required to record
its interest in the operations of Gaspesia.
F-6
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
- --------------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities of $181.6 million was used
primarily to repurchase shares of the Company's Class A Common Stock, to
modernize facilities and equipment, and to pay dividends to stockholders. The
decrease in net cash provided by operating activities from 1993 is due primarily
to an increase in estimated income taxes paid which were associated with the
gains on the sales of the magazines in 1994. Exclusive of the estimated taxes
paid related to the magazine sales, the net cash provided by operating
activities would have been $295.1 million. The ratio of current assets to
current liabilities was .91 at December 31, 1994, compared with .89 at December
31, 1993, and long-term debt and capital lease obligations as a percentage of
total capitalization was 25 percent at December 31, 1994, compared with 22
percent at December 31, 1993.
In 1994, the Company fully expended all of the $150.0 million authorized
under the stock repurchase program announced in October 1993. In October 1994,
the Company announced additional authorized expenditures of up to $100.0 million
for repurchases of its Class A Common Stock. Under these programs, purchases may
be made from time to time either in the open market or through private
transactions. The number of shares that may be purchased in market transactions
may be limited as a result of The Globe transaction. Purchases may be suspended
from time to time or discontinued. Through December 31, 1994, under the two
programs, the Company has repurchased approximately 10,074,000 shares of its
Class A Common Stock at an average effective price of $23.42 per share.
In January 1995, the Company repurchased approximately 397,000 shares of its
Class A Common Stock at an average effective price of $22.32 per share under the
$100.0 million authorization. The Company has expended substantially all of this
authorization. In February 1995, the Company's Board of Directors authorized
additional expenditures of up to $50.0 million for repurchases of its Class A
Common Stock.
In July 1994, the Company's Board of Directors approved the construction of a
new production and distribution facility in College Point, New York, for the
production of The Times. The Company estimates that the cost of the new facility
will be approximately $315.0 million, exclusive of capitalized interest
currently projected to be $45.0 million. Construction began in August 1994 and
completion is expected in the second half of 1997. While the new facility will
replace The Times's Manhattan production and distribution facility, business and
news operations will remain at the Manhattan building. No write-down is
anticipated as a result of the discontinuance of production at the Manhattan
facility.
The Company currently estimates that, exclusive of the College Point
facility, capital expenditures for 1995 will range from $120.0 million to $150.0
million.
In February 1994, the sale of a partnership (BPI Communications, L.P.) in
which the Company had a one-third interest was completed. In 1994, the Company
received approximately $55.0 million, which was primarily utilized to repay
notes payable.
During the 1994 third quarter, the Company completed the sale of its Women's
Magazines Division and U.K. golf publications (See Note 2). The net after-tax
proceeds, including transaction costs and payments received under a non-compete
agreement, totaling approximately $160.0 million, were used for general
corporate purposes, including the repayment of debt and the repurchase of the
Company's Class A Common Stock.
In connection with the 1991 divestiture of a jointly-owned affiliate, Spruce
Falls Power and Paper Company Limited, the Company has fulfilled its commitment
to lend up to $26.5 million (C$30.0 million) to the new owners of the mill.
Under the terms of the loan, the five-year repayment period is not scheduled to
commence until December 1997. The Company expects the former affiliate to
fulfill its contractual obligation as stipulated in the loan agreement.
In connection with the 1993 charges totaling $35.4 million for staff
reductions (see Note 3), approximately $16.5 million has been disbursed. The
Company has committed the remaining funds. As a result of the timing of certain
union pension and welfare fund contributions, the remaining cash outflows
associated with these charges are expected to occur over the next two years. The
Company does not anticipate that its ongoing business operations will be
affected by this reduction of staff and expects to fund these charges through
internally generated funds.
In May 1993, the Financial Accounting Standards Board ("FASB") issued
Statement No. 114 - Accounting by Creditors for Impairment of a Loan ("SFAS
114"). SFAS 114 requires that impaired loans be measured based on the present
value of expected future cash flows discounted at the loans' effective interest
rate. In October 1994, the FASB issued Statement No. 118 - Accounting by
Creditors for Impairment of a Loan-Income Recognition and Disclosures ("SFAS
118"). SFAS 118 amends SFAS 114 and allows a creditor to use existing methods
for recognizing interest income on an impaired loan. These statements are
effective for fiscal years ended after December 15, 1994. The Company does not
believe operations will be affected by the adoption of SFAS 114 and SFAS 118.
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. The Company has an
interest rate swap agreement with a major financial institution to manage
interest costs on $50.0 million of notes due in July 1995. The swap agreement
converted a 9.34 percent fixed interest rate to an effective interest rate of
7.73 percent in 1994.
The Company has on file a shelf registration with the Securities and Exchange
Commission that permits the issuance of up to $400.0 million of unsecured senior
debt securities. The Company intends to use the net proceeds from the sale of
any of these securities for general corporate purposes, which may include
repayment of debt and possible future acquisitions.
In December 1994, the Company entered into forward interest rate swaps to
hedge against interest rate increases for the period prior to the issuance of
debt. Gains or losses on these transactions are deferred and amortized as an
adjustment to interest expense
F-7
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONCLUDED)
- --------------------------------------------------------------------------------
commencing with the issuance of debt. At December 31, 1994, the Company had
hedged approximately $20.0 million of anticipated first-quarter borrowings. The
carrying value of such swap agreements approximated the year-end fair value and,
accordingly, no deferred gains or losses were recorded. Subsequent to year-end,
the Company entered into forward interest rate swaps which hedged an additional
$130.0 million of first-quarter anticipated borrowings. In total, these swaps
fix the ten-year treasury rate used to determine the Company's interest rate at
7.8 percent on $150 million of anticipated borrowings.
In December 1994, the Company established a $200.0 million commercial paper
program. Borrowings are in the form of unsecured notes sold at a discount with
maturities of up to 270 days. As of December 31, 1994, $60.7 million of such
notes were outstanding.
In addition to cash provided from operating activities, the Company has
several established sources for future liquidity purposes, including several
revolving credit and term loan agreements. At December 31, 1994, $170.0 million
was available for borrowing by the Company under these agreements.
These revolving credit and term loan agreements and the unsecured senior debt
securities available under the shelf registration allow for the Company's
classification of $273.5 million of debt as long-term. The Company intends to
refinance these obligations on a long-term basis through the issuance of debt.
The Company anticipates that during 1995, cash for operating, investing and
financing activities will continue to come from a combination of
internally generated funds and external financing.
F-8
CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
Dollars and shares in thousands
except per share data Year Ended December 31
1994 1993 1992
- --------------------------------------------------------------------------------
REVENUES
Advertising $1,656,999 $1,399,042 $1,254,764
Circulation 545,854 473,971 419,454
Other 154,710 146,641 99,317
- --------------------------------------------------------------------------------
Total 2,357,563 2,019,654 1,773,535
- --------------------------------------------------------------------------------
COSTS AND EXPENSES
Production costs
Raw materials 304,360 280,531 250,575
Wages and benefits 529,701 437,528 388,403
Other 428,663 418,554 365,651
- --------------------------------------------------------------------------------
Total 1,262,724 1,136,613 1,004,629
Selling, general and administrative
expenses 883,597 756,460 680,498
- --------------------------------------------------------------------------------
Total 2,146,321 1,893,073 1,685,127
- --------------------------------------------------------------------------------
OPERATING PROFIT 211,242 126,581 88,408
Interest expense, net of interest
income 28,162 25,375 26,115
Net gain (loss) on dispositions 200,873 -- (53,768)
- --------------------------------------------------------------------------------
Income before income taxes and equity
in operations of forest products
group 383,953 101,206 8,525
Income taxes 173,868 43,231 11,079
- --------------------------------------------------------------------------------
Income (Loss) before equity in
operations of forest products group 210,085 57,975 (2,554)
Equity in operations of forest
products group 3,264 (51,852) (8,718)
- --------------------------------------------------------------------------------
Income (Loss) before net cumulative
effect of accounting changes 213,349 6,123 (11,272)
Net cumulative effect of accounting
changes -- -- (33,437)
- --------------------------------------------------------------------------------
NET INCOME (LOSS) $ 213,349 $ 6,123 $ (44,709)
- --------------------------------------------------------------------------------
Average number of common shares
outstanding 104,070 84,459 78,534
Per share of common stock
Income (Loss) before net cumulative
effect of accounting changes $ 2.05 $ .07 $ (.14)
Net cumulative effect of
accounting changes -- -- (.43)
Net income (loss) 2.05 .07 (.57)
Dividends .56 .56 .56
- --------------------------------------------------------------------------------
See notes to consolidated financial statements.
F-9
CONSOLIDATED BALANCE SHEETS
- -------------------------------------------------------------------------------
December 31
1994 1993
- -------------------------------------------------------------------------------
ASSETS Dollars in thousand
- -------------------------------------------------------------------------------
CURRENT ASSETS
Cash and short-term investments (at cost which
approximates market:
1994, $14,255,000; 1993, $27,744,000) $ 41,419 $ 42,058
Accounts receivable (net of allowances:
1994, $28,157,000; 1993, $43,507,000) 247,750 264,218
Inventories 30,545 47,271
Deferred subscription costs 10,659 32,597
Other current assets 81,401 107,009
- -------------------------------------------------------------------------------
Total current assets 411,774 493,153
- -------------------------------------------------------------------------------
INVESTMENT IN FOREST PRODUCTS GROUP 85,433 76,020
- -------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT (at cost)
Land 62,945 65,839
Buildings, building equipment and improvements 629,152 650,186
Equipment 908,630 874,479
Construction and equipment installations
in progress 218,041 93,007
- -------------------------------------------------------------------------------
Total 1,818,768 1,683,511
Less accumulated depreciation 660,017 571,487
- -------------------------------------------------------------------------------
Total property, plant and equipment - net 1,158,751 1,112,024
- -------------------------------------------------------------------------------
INTANGIBLE ASSETS ACQUIRED
Costs in excess of net assets acquired 1,391,250 1,383,582
Other intangible assets acquired 160,747 227,377
- -------------------------------------------------------------------------------
Total 1,551,997 1,610,959
Less accumulated amortization 172,531 190,006
- -------------------------------------------------------------------------------
Total intangible assets acquired - net 1,379,466 1,420,953
- -------------------------------------------------------------------------------
MISCELLANEOUS ASSETS 102,207 113,054
- -------------------------------------------------------------------------------
Total $3,137,631 $3,215,204
- -------------------------------------------------------------------------------
See notes to consolidated financial statements.
F-10
- ------------------------------------------------------------------------------
December 31
1994 1993
- ------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY Dollars in thousands
- -------------------------------------------------------------------------------
CURRENT LIABILITIES
Accounts and notes payable $121,504 $177,742
Payrolls 67,012 71,256
Accrued expenses 182,338 171,515
Unexpired subscriptions 77,697 130,627
Current portion of capital lease
obligations 2,681 2,590
- -------------------------------------------------------------------------------
Total current liabilities 451,232 553,730
- -------------------------------------------------------------------------------
OTHER LIABILITIES
Long-term debt 473,530 413,581
Capital lease obligations 49,666 46,482
Deferred income taxes 176,588 196,875
Other 441,323 403,869
- -------------------------------------------------------------------------------
Total other liabilities 1,141,107 1,060,807
- -------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
5 1/2 percent cumulative prior preference stock
of $100 par value - authorized
110,000 shares; outstanding: 1994, 17,530
shares and 1993, 17,837 shares 1,753 1,784
Serial preferred stock of $1 par value -
authorized 200,000 shares - none issued -- --
Common stock of $.10 par value
Class A - authorized 200,000,000 shares; issued:
1994, 108,052,347 shares; 1993, 107,678,024
shares (including treasury shares: 1994,
10,242,381; 1993, 1,251,573) 10,805 10,768
Class B, convertible - authorized 600,000
shares; issued: 1994, 570,121 shares;
1993, 571,624 (including treasury shares:
1994 and 1993, 139,943) 57 57
Additional capital 597,860 599,758
Earnings reinvested in the business 1,179,715 1,022,958
Common stock held in treasury, at cost (244,898) (34,658)
- -------------------------------------------------------------------------------
Total stockholders' equity 1,545,292 1,600,667
- -------------------------------------------------------------------------------
Total $3,137,631 $3,215,204
- --------------------------------------------------------------------------------
See notes to consolidated financial statements.
F-11
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
Dollars in thousands Year Ended December 31
1994 1993 1992
- --------------------------------------------------------------------------------
CASH PROVIDED (USED):
OPERATING ACTIVITIES
Income (Loss) before net cumulative effect
of accounting changes $213,349 $6,123 $(11,272)
Adjustments to reconcile income (loss)
before net cumulative effect of accounting
changes to net cash provided by operating
activities
Depreciation 104,624 89,274 69,880
Amortization 49,633 39,558 38,052
Equity in operations of forest
products group - net (3,240) 52,311 943
Cash distributions and dividends from
forest products group 8,224 -- 6,775
Net (gain) loss on dispositions (200,873) -- 53,768
Proceeds from non-compete agreement 40,000 -- --
Deferred income taxes (33,732) (37,901) (18,216)
(Increase) Decrease in receivables - net (18,573) (21,636) 430
(Increase) Decrease in inventories (4,035) 10,799 (10,707)
(Increase) Decrease in deferred subscription
costs and other current assets (17,820) 4,749 1,078
Increase (Decrease) in accounts payable 17,481 (41,429) 15,216
(Decrease) Increase in payrolls and
accrued expenses (6,359) 64,823 5,405
Increase in unexpired subscriptions 18,027 11,196 4,342
Other - net 14,879 15,491 290
- --------------------------------------------------------------------------------
Net cash provided by operating activities 181,585 193,358 155,984
- --------------------------------------------------------------------------------
INVESTING ACTIVITIES
Net proceeds on sale of BPI Communications,
L.P. 55,367 -- --
Net proceeds from dispositions 243,776 -- 68,000
Businesses acquired, net of cash acquired -- (134,384) (23,091)
Additions to property, plant and equipment (186,203) (75,738) (47,068)
Purchases of marketable securities (88,358) (65,077) --
Proceeds from sales of marketable securities 88,358 65,077 --
Other investing proceeds 7,725 944 4,985
Other investing payments (8,505) (16,986) (8,629)
- --------------------------------------------------------------------------------
Net cash provided by (used in) investing
activities 112,160 (226,164) (5,803)
- --------------------------------------------------------------------------------
FINANCING ACTIVITIES
Short-term borrowing - net (1,935) 62,340 --
Long-term obligations
Increase -- 200,000 --
Reduction (5,113) (5,510) (63,847)
Capital shares
Issuance 2,577 1,829 1,906
Repurchase (232,815) (255,222) --
Dividends paid to stockholders (58,287) (47,076) (54,935)
Other financing proceeds 1,189 -- --
- --------------------------------------------------------------------------------
Net cash used in financing activities (294,384) (43,639) (116,876)
- --------------------------------------------------------------------------------
Net (decrease) increase in Cash and
short-term investments (639) (76,445) 33,305
Cash and short-term investments at
the beginning of the year 42,058 118,503 85,198
- --------------------------------------------------------------------------------
Cash and short-term investments at
the end of the year $ 41,419 $ 42,058 $ 118,503
- --------------------------------------------------------------------------------
See notes to consolidated financial statements and supplemental
disclosures to consolidated statements of cash flows.
F-12
SUPPLEMENTAL DISCLOSURES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
Dollars in thousands Year Ended December 31
1994 1993 1992
- --------------------------------------------------------------------------------
NONCASH INVESTING AND FINANCING
TRANSACTIONS
Capital lease assets and
obligations incurred $ 5,990 $ 338 $ 668
=========== =========== ==========
Businesses acquired
Fair value of assets acquired $1,257,029 $34,462
Liabilities assumed (229,000) (11,371)
Liabilities incurred, net of
payments (18,744) --
Common stock issued (874,901) --
----------- -----------
Net cash paid $134,384 $23,091
=========== ===========
Issuance of common shares $21,723 $18,188 $17,965
=========== =========== ===========
CASH FLOW INFORMATION
Cash payments during the
year for
Interest (net of amount
capitalized) $36,320 $26,861 $28,486
=========== =========== ===========
Income taxes $220,973 $55,327 $36,776
=========== =========== ===========
- --------------------------------------------------------------------------------
The increase in income taxes paid (and corresponding decrease in net cash
provided by operating activities) is in large part due to an increase in
estimated income tax payments of approximately $113,500,000 related to the net
gain on dispositions in 1994. Under Financial Accounting Standards Board
("FASB") Statement No. 95, "Statement of Cash Flows," all income tax payments
are included in determining net cash flow from operating activities, but the net
cash received from the dispositions must be reported as an investing cash flow.
F-13
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------
Dollars in thousands
except per share data Capital Stock
------------------------------------ Common
5 1/2 % Class A Class B Earnings Stock
Preference Common Common Reinvested Held in
------------------------------------ Additional in the Treasury,
Capital Business at cost
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, JANUARY 1, 1992 $1,784 $8,770 $57 $178,080 $1,158,977 $(272,442)
- ------------------------------------------------------------------------------------------------------------------------------------
Net loss (44,709)
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends, preference - $5.50 per share (98)
Dividends, common - $.56 per share (43,987)
- ------------------------------------------------------------------------------------------------------------------------------------
Issuance of shares:
Retirement units, etc. - 19,576 Class A
shares from treasury (491) 524
Employee stock purchase plan - 1,069,743
Class A shares 1 (16,432) 34,311
Stock options - 252,435 Class A shares 34 3,771 (1,900)
Stock conversions - 600 shares -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Foreign currency translation (4,836)
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1992 1,784 8,805 57 164,928 1,065,347 (239,507)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income 6,123
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends, preference - $5.50 per share (98)
Dividends, common - $.56 per share (47,003)
- ------------------------------------------------------------------------------------------------------------------------------------
Issuance of shares:
The Globe acquisition - 36,397,313 Class
A shares 1,940 432,624 440,337
Retirement units, etc. - 10,877 Class A
shares from treasury 123 339
Employee stock purchase plan - 819,166
Class A shares (2,612) 20,329
Stock options - 185,611 Class A shares 23 4,695 (934)
Stock conversions - 180 shares -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Purchase of company stock:
10,260,900 Class A shares (255,222)
- ------------------------------------------------------------------------------------------------------------------------------------
Foreign currency translation (1,411)
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1993 1,784 10,768 57 599,758 1,022,958 (34,658)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income 213,349
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends, preference - $5.50 per share (97)
Dividends, common - $.56 per share (58,190)
- ------------------------------------------------------------------------------------------------------------------------------------
Issuance of shares:
Retirement units, etc. - 10,889 Class A
shares from treasury (128) 271
Employee stock purchase plan - 1,191,323
Class A shares 2 (7,237) 29,119
Stock options - 223,700 Class A shares 35 6,928 (3,385)
Stock conversions - 1,503 shares -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Purchase of company stock:
10,043,900 Class A shares (236,245)
307 5 1/2 percent preference shares (31) 10
Proceeds from the sale of put options 1,189
Equity put option obligations (2,660)
- ------------------------------------------------------------------------------------------------------------------------------------
Foreign currency translation 1,695
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1994 $1,753 $10,805 $57 $597,860 $1,179,715 $(244,898)
- ------------------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements.
F-14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the
accounts of The New York Times Company and all subsidiaries (the "Company")
after elimination of intercompany items.
INVENTORIES. Inventories are stated at the lower of cost or current market
value. Inventory cost generally is based on the last-in, first-out ("LIFO")
method for newsprint and magazine paper and the first-in, first-out ("FIFO")
method for other inventories.
INVESTMENTS. Investments in which the Company has at least a 20 percent but
not more than 50 percent interest are accounted for under the equity method.
PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment is stated at cost,
and depreciation is computed by the straight-line method over estimated service
lives. The Company capitalizes interest costs as part of the cost of
constructing major facilities and equipment.
INTANGIBLE ASSETS ACQUIRED. Costs in excess of net assets acquired consist of
excess costs of businesses acquired over values assigned to their net tangible
assets and other intangible assets. The Company evaluates periodically whether
there has been a permanent impairment in any of its intangible assets, inclusive
of goodwill. The major factors which are considered in such valuation include
the cash flow and operating profit from the operations of the acquired business,
and any contemplated long-term strategies which might affect the viability of
such business. The excess costs which arose from acquisitions after October 31,
1970 are being amortized by the straight-line method principally over 40 years.
The remaining portion of such excess, which arose from acquisitions before
November 1, 1970 (approximately $13,000,000), is not being amortized since in
the opinion of management there has been no diminution in value. Other
intangible assets acquired consist principally of advertiser and subscriber
relationships which are being amortized over the remaining lives, ranging from
5 to 40 years. The general policy of 5 to 40 years relates to all intangible
assets with the life of 5 years used for various software licenses and lives
of 40 years used for mastheads on various acquired properties.
SUBSCRIPTION REVENUES AND COSTS. Proceeds from subscriptions and related costs,
principally agency commissions, are deferred at the time of sale and are
included in the Consolidated Statements of Operations on a pro rata basis over
the terms of the subscriptions.
FOREIGN CURRENCY TRANSLATION. The assets and liabilities of foreign companies
are translated at the year-end exchange rates. Results of operations are
translated at the average rates of exchange in effect during the year. The
resultant translation adjustment is included as a component of stockholders'
equity.
EARNINGS PER SHARE. Earnings per share is computed after preference dividends
and is based on the weighted average number of shares of Class A and Class B
Common Stock outstanding during each year. The effect of shares issuable under
the Company's Incentive Plans (see Note 11), including stock options, is not
material and therefore excluded from the computation.
CASH AND SHORT-TERM INVESTMENTS. For purposes of the Consolidated Statements of
Cash Flows, the Company considers all highly liquid debt instruments purchased
with maturities of three months or less to be cash equivalents. The Company has
overdraft positions at certain banks caused by outstanding checks. These
overdrafts have been reclassified to accounts payable.
DERIVATIVES. The Company has interest rate swap agreements with major financial
institutions that are used to manage exposure to fluctuations in interest rates.
The Company is exposed to credit losses in the event of nonperformance by the
counterparties to its interest rate swap agreements. The credit standings of
counterparties are monitored and the Company does not anticipate nonperformance.
- --------------------------------------------------------------------------------
2. ACQUISITIONS/DIVESTITURES
In December 1994, the Company divested its minority interest in Gaspesia Pulp &
Paper Company Ltd. ("Gaspesia"), a Canadian newsprint mill. The Company's 49
percent interest was transferred to Abitibi-Price, Inc., the majority owner. In
connection with the transfer, a pre-tax charge of approximately $3,100,000 ($.02
per share) was recorded. In 1993, the Company wrote down its investment in
Gaspesia by $47,000,000 ($.56 per share) to reflect its net realizable value.
In July and August 1994, the Company completed the sales of its Women's
Magazines Division and U.K. golf publications respectively. These transactions
resulted in a pre-tax gain of approximately $204,000,000 ($1.01 per share). In
connection with the sale of the Women's Magazines Division, the Company entered
into a four-year non-compete agreement, for which it received
$40,000,000. This amount is being recognized as operating income, on a
straight-line basis, over a four-year period commencing with the closing of the
sale on July 26, 1994.
On October 1, 1993, pursuant to an Agreement and Plan of Merger dated June
11, 1993, as amended as of August 12, 1993 (the "Agreement"), a wholly-owned
subsidiary of the Company was merged with Affiliated Publications, Inc., the
parent company of The Boston Globe ("The Globe"), which became a wholly-owned
subsidiary of the Company.
The transaction was accounted for as a purchase and, accordingly, The Globe's
operations have been included in the Company's consolidated financial statements
beginning October 1, 1993, the date the transaction closed. The acquisition had
a net cost of approximately $1,028,000,000. Under the Merger
F-15
Agreement the Company exchanged cash of approximately $160,000,000 for 15
percent of The Globe's common stock with the remainder of the consideration paid
by the exchange of approximately 36,400,000 shares of the Company's Class A
Common Stock valued at $24.03 per share. The purchase resulted in increases in
costs in excess of net assets acquired of approximately $850,000,000 (which is
being amortized by the straight-line method over 40 years); other intangible
assets acquired of $161,000,000 (which consist principally of advertiser and
subscriber relationships which are being amortized by the straight-line method
over an average period of 33 years); and property, plant and equipment of
$246,000,000. Net liabilities assumed as a result of the transaction totaled
approximately $229,000,000.
Pro forma operating results for the year ended December 31, 1993, had the
transaction occurred at the beginning of that period are as follows: revenues of
$2,335,985,000; net income of $1,178,000; and net income per share of $.01.
Pro forma operating results for the year ended December 31, 1994, had the
magazines sales occurred as of January 1, 1993 are as follows: revenues of
$2,231,942,000; net income of $115,518,000; and net income per share of $1.11.
Pro forma operating results for the year ended December 31, 1993, had the
magazine sales and The Globe transaction occurred at the beginning of that
period are as follows: revenues of $2,097,828,000; net income of $14,009,000;
and net income per share of $.13.
The above pro forma results are not necessarily indicative of the combined
results that would have occurred had the sales and the merger taken place as of
the beginning of the periods provided, nor necessarily indicative of results
that may be achieved in the future. The gain on the sales is not included in the
above pro forma operating results.
In February 1994, the sale of BPI Communications, L.P.("BPI"), a partnership
in which the Company acquired a one-third interest through the 1993 acquisition
of The Globe was completed. The Company received approximately $55,000,000 in
1994 from the sale. For financial reporting purposes, no gain or loss was
recognized on the sale. The investment in BPI of $55,000,000 was included in
other current assets on the accompanying Consolidated Balance Sheets at December
31, 1993.
On December 31, 1993, the Company sold two weekly newspapers and recognized a
pre-tax gain of $2,600,000, or $.02 per share, on the transaction.
In September 1992, the Company closed The Gwinnett (Ga.) Daily News and sold
the residual assets. The closing, related sale and its 1992 operations resulted
in a pre-tax loss of approximately $53,768,000 ($37,113,000 after taxes or
$.47 per share). The newspaper had not earned a profit since its acquisition in
1987, but its annual operating losses were not material.
In June 1992, the Company acquired two wholesale newspaper distribution
businesses that distribute The New York Times and other newspapers and
periodicals in New York City and central and northern New Jersey. The
acquisition was accounted for as a purchase; accordingly, the operating results
have been included in the consolidated financial statements from the date of the
acquisition. The cost of the acquisition was approximately $34,500,000, of which
$23,091,000 was paid in cash with the remainder representing net liabilities
assumed. The purchase resulted in an increase in intangible assets acquired of
$34,462,000.
In connection with the divestiture of a newsprint mill in 1991, the Company
made a loan commitment of up to $26,500,000 (C$30,000,000) to the new owners of
the mill. At December 31, 1994, the commitment was fully funded. Interest on the
outstanding balance is payable quarterly at annual rates ranging from 4 to 10
percent. Commencing in December 1997, the borrowings outstanding at December
1996 are payable annually over a five-year period in 20 percent increments. The
Company expects the obligation to be satisfied as stipulated in the loan
commitment.
- --------------------------------------------------------------------------------
3. VOLUNTARY STAFF REDUCTIONS
AND UNION NEGOTIATIONS
The Company has completed its negotiations of long-term labor agreements with
all of its unions at The New York Times ("The Times") and they extend to the
year 2000. These agreements encompass wages, payments to the unions' benefits
and pension funds, job security and financial incentives. The agreements apply
to all of The Times's current and new production and distribution facilities.
In connection with these agreements, the Company recorded pre-tax charges in
1993 totaling $35,400,000, or $.23 per share, for severance and related costs
resulting from anticipated white-collar staff reductions (approximately
$30,000,000) and voluntary early retirements from the composing room
(approximately $5,400,000) at The Times.
The Company recorded two pre-tax charges ($28,000,000, or $.20 per share, in
1992 and $30,000,000, or $.22 per share, in 1989) for voluntary production union
staff reductions at The Times related to the opening of Edison (see Note 8), the
further automation of newspaper production in the composing room and the
announced closing of Carlstadt.
In 1991 the Company recorded a $20,000,000 before-tax charge ($.15 per share)
for severance and related costs resulting from a voluntary termination benefits
program for approximately 160 employees at The Times, most of whom were members
of The Newspaper Guild of New York.
At December 31, 1994 and 1993, approximately $23,700,000 and $40,000,000,
respectively, are included in accrued expenses in the accompanying Consolidated
Balance Sheets, which represents the unpaid balance of the pre-tax charges. The
Company has committed the remaining funds. The remaining cash flows associated
with the these charges are expected to occur over the next two years due to the
timing of certain union pension and welfare fund contributions.
F - 16
- --------------------------------------------------------------------------------
4. INVESTMENT IN FOREST PRODUCTS GROUP
The Company has equity interests in a Canadian newsprint company, Donohue
Malbaie, Inc. ("Malbaie"), and in a partnership operating a supercalendered
paper mill in Maine, Madison Paper Industries ("Madison"). The equity interest
in Malbaie represents a 49 percent ownership interest.
The Company and Myllykoski Oy, a Finnish paper manufacturing company, are
partners through subsidiary companies in Madison. The partners' interests in the
net assets of Madison at any time will depend on their capital accounts, as
defined, at such time. Through an 80 percent-owned subsidiary, the Company's
share of Madison's profits and losses is 40 percent.
In December 1994, the Company divested its minority interest in Gaspesia,
which was written down to its net realizable value in 1993 (see Note 2).
Loans and contributions to Madison by the 80 percent-owned subsidiary of the
Company totaled $1,523,000, $1,279,000 and $1,337,000, respectively, in 1994,
1993 and 1992.
At December 31, 1993, the Company recorded a distribution receivable from
Malbaie of $8,224,000, which is included in other current assets on the
Company's Consolidated Balance Sheets at such date. The Company received payment
of the receivable in 1994. No other distributions were received from Malbaie in
1994, 1993 or 1992. The Company's share of undistributed earnings of Malbaie
aggregated approximately $4,882,000 and $3,975,000 at December 31, 1994 and
1993, respectively.
No loans or contributions were made to Malbaie in 1994, 1993 or 1992.
Condensed combined balance sheets of the Forest Products Group, which exclude
Gaspesia at December 31, 1994, are as follows:
- --------------------------------------------------------------------------------
Condensed Combined Balance Sheets
of Forest Products Group
- --------------------------------------------------------------------------------
Dollars in thousands
- --------------------------------------------------------------------------------
December 31 1994 1993
- --------------------------------------------------------------------------------
Current assets $66,280 $87,984
Less current liabilities 33,027 75,073
- --------------------------------------------------------------------------------
Working capital 33,253 12,911
Fixed assets, net 236,961 345,413
Long-term debt (62,355) (71,528)
Deferred income taxes (103,756) (102,752)
- --------------------------------------------------------------------------------
Net assets $104,103 $184,044
- --------------------------------------------------------------------------------
At December 31, 1994 long-term debt of the Forest Products Group (exclusive
of $11,300,000 due within one year) matures as follows: 1996, $47,347,000; 1997,
$500,000; and 1998, $14,408,000; and 1999, $100,000. The maturities of a
substantial portion of the debt may be accelerated if cash flow, as defined,
exceed certain levels. None of the Forest Products Group's debt is guaranteed
by the Company.
Condensed combined statements of operations of the Forest Products Group,
which exclude the operations of Gaspesia subsequent to the write-down at
December 31, 1993, are as follows:
- --------------------------------------------------------------------------------
Condensed Combined Statements of Operations
of Forest Products Group
- --------------------------------------------------------------------------------
Dollars in thousands
- --------------------------------------------------------------------------------
Year Ended December 31 1994 1993 1992
- --------------------------------------------------------------------------------
Net sales and other
income $189,805 $254,324 $266,451
Costs and expenses 180,860 269,845 297,117
- --------------------------------------------------------------------------------
Income (Loss) before
taxes 8,945 (15,521) (30,666)
Income tax expense
(benefit) 1,136 (2,700) (11,680)
- --------------------------------------------------------------------------------
Net income (loss) $7,809 $(12,821) $(18,986)
- --------------------------------------------------------------------------------
The condensed combined financial information of the Forest Products Group
excludes the income tax effects related to Madison. Such tax effects (see Note
6) have been included in the Company's consolidated financial statements.
Adjustments from translating certain balance sheet accounts, principally of
the Canadian newsprint companies, for each of the three years in the period
ended December 31, 1994, are set forth in the Consolidated Statements of
Stockholders' Equity.
The accumulated translation adjustment (included in earnings reinvested in
the business) decreased stockholders' equity by $933,000 and $2,628,000 at
December 31, 1994 and 1993, respectively. Upon the disposition in 1994,
stockholders' equity was increased by $3,000,000, net of tax, to reflect the
accumulated translation adjustment related to Gaspesia.
During 1994, 1993 and 1992, the Company's Newspaper Group purchased newsprint
and supercalendered paper from the Forest Products Group (including Gaspesia
through the disposal date) at competitive prices. Such purchases aggregated
approximately $107,000,000, $102,000,000, and $112,000,000, respectively.
F - 17
- --------------------------------------------------------------------------------
5. INVENTORIES
Inventories as shown in the accompanying Consolidated Balance Sheets are
composed of the following:
- -------------------------------------------------------------
Dollars in thousands
- -------------------------------------------------------------
December 31 1994 1993
- -------------------------------------------------------------
Newsprint and magazine paper $24,783 $38,691
Work-in-process, etc 5,762 8,580
- -------------------------------------------------------------
Total $30,545 $47,271
- -------------------------------------------------------------
Utilization of the LIFO method reduced inventories as calculated on the FIFO
method by approximately $2,694,000 and $2,263,000 at December 31, 1994 and 1993,
respectively.
- --------------------------------------------------------------------------------
6. INCOME TAXES
Income tax expense for each of the years presented is determined in
accordance with Statement of Financial Accounting Standard No. 109-Accounting
for Income Taxes ("SFAS 109"). The Company adopted SFAS 109 in 1992 and
reflected a credit of $13,414,000 as of January 1, 1992, representing the
cumulative effect of this accounting change on net income.
SFAS 109 requires recognition of deferred tax liabilities and assets for the
estimated future tax consequences attributable to temporary differences. Such
temporary differences exist when the tax basis differs from the financial
reporting amount of assets or liabilities. All tax liabilities and tax assets
are measured using current tax law and applicable rates. A valuation allowance
is recorded to reduce deferred tax assets to amounts which, in management's
judgment, are most likely to be realized.
Income tax expense as shown in the Consolidated Statements of Operations is
composed of the following:
- ------------------------------------------------------------
Dollars in thousands 1994 1993 1992
- ------------------------------------------------------------
Current tax expense
Federal $159,779 60,178 $8,970
State, local, foreign 49,651 17,612 1,413
- ------------------------------------------------------------
209,430 77,790 10,383
- ------------------------------------------------------------
Deferred tax expense
Federal (20,955) (26,982) (1,157)
State, local, foreign (13,088) (8,919) 1,302
- ------------------------------------------------------------
(34,043) (35,901) 145
- ------------------------------------------------------------
Income tax expense from
continuing operations 175,387 41,889 10,528
Less income tax expense
(benefit) related to
equity in operations 1,519 (1,342) (551)
- ------------------------------------------------------------
Income tax expense $173,868 $43,231 $11,079
- ------------------------------------------------------------
Tax expense in 1994 was reduced by approximately $10,000,000 and $3,000,000,
respectively, relating to a decrease in valuation allowance and recognition of
federal capital loss tax benefits. The decrease in valuation allowance is
associated with federal capital loss tax benefits. An increase in valuation
allowance associated with state and local capital loss carryforward tax benefits
added approximately $1,058,000 to 1994 tax expense.
Tax expense in 1993 was reduced by approximately $7,000,000 and $2,485,000,
respectively, relating to a decrease in valuation allowance and recognition of
federal tax benefits of capital loss carryforwards. Of the decrease in valuation
allowance, $4,390,000 was associated with federal tax benefits of capital loss
carryforwards; with the remainder attributable to state and local tax benefits
of net operating loss carryforwards. Adjustment of the Company's deferred tax
balances for the one percent rate increase provided in the Tax Reform Act of
1993 added $4,359,000 to deferred tax expense, inclusive of $600,000 of
expense reported in equity in operations of the Forest Products Group.
In connection with the Gwinnett transaction in 1992 (see Note 2), the Company
had a net tax benefit of $16,655,000 on a pre-tax loss of $53,768,000. The
difference of $1,626,000 between the tax benefit and such benefit calculated at
the federal statutory rate is mainly attributable to an unrecognized capital
loss (which increased tax expense by $3,405,000), net of the impact of
previously amortized intangibles (which decreased tax expense by $1,779,000).
In accordance with the provisions of SFAS 109, approximately $1,600,000 of
additional reduction in valuation allowance, which was established against
acquired deferred tax assets, was recorded as a reduction of goodwill in 1993.
No such amounts affected 1994 or 1992 tax expense.
Income tax benefits credited directly to stockholders' equity totaled
$2,434,000, $3,595,000 and $3,735,000 during 1994, 1993 and 1992, respectively.
Foreign taxes included in income tax expense in 1994 of $4,979,000 were
principally attributable to the disposition of the Company's U.K. golf
publications. Foreign taxes included in income tax expense in 1993 and 1992 were
not significant.
Equity in operations of the Forest Products Group (see Note 4) includes the
income tax effects of the Company's interest in Madison and its equity in the
operations of the Canadian newsprint companies. Of such amounts, tax benefits of
$117,000 in 1994, $585,000 in 1993 and $1,219,000 in 1992 are applicable to the
Canadian newsprint companies. Deferred taxes attributable to the Company's
interest in Madison were a benefit of $(39,000) in 1994, and expense of
$1,562,000 and $265,000, respectively, for 1993 and 1992. These deferred taxes
relate principally to differences between financial reporting and tax
depreciation. The Company's consolidated federal income tax returns include the
income tax effects of its interest in Madison.
F - 18
The reasons for the variance between the effective tax rate on income before
income taxes and equity in operations of the Forest Products Group and the
federal statutory rate (exclusive of the net gain on dispositions in 1994 and
loss on dispositions in 1992) are as follows:
- --------------------------------------------------------------------------------
Year Ended December 31 1994 1993 1992
- --------------------------------------------------------------------------------
% of % of % of
Dollars in thousands Amount Pretax Amount Pretax Amount Pretax
- --------------------------------------------------------------------------------
Tax at federal statutory
rate $64,078 35.0% $35,422 35.0% $21,180 34.0%
Increase (decrease)
resulting from State and
local taxes - net 5,177 2.8 6,883 6.8 2,294 3.7
Capital loss tax benefits (10,000) (5.4) (6,875) (6.8) -- --
Amortization of intangible
assets acquired 11,139 6.1 5,602 5.5 4,033 6.5
Change in enacted tax rate -- -- 3,759 3.7 -- --
Other - net 5,920 3.2 (1,560) (1.5) 227 0.3
- --------------------------------------------------------------------------------
Subtotal 76,314 41.7% 43,231 42.7% 27,734 44.5%
- --------------------------------------------------------------------------------
Dispositions 97,554 -- (16,655)
- --------------------------------------------------------------------------------
Income tax expense $173,868 $43,231 $11,079
- --------------------------------------------------------------------------------
Federal income taxes currently refundable totaled $28,109,000 and $2,992,000 at
December 31, 1994 and 1993, respectively, and are included in other current
assets on the Consolidated Balance Sheets. The components of the net deferred
tax liabilities recognized on the respective Consolidated Balance Sheets are
as follows:
- --------------------------------------------------------
Dollars in thousands
December 31 1994 1993
- --------------------------------------------------------
Deferred Tax Assets
Intangible assets acquired $10,425 $23,568
Accrued state and local taxes 14,996 19,890
Postretirement and
postemployment benefits 81,707 78,655
Other accrued employee
benefits and compensation 89,569 110,218
Allowance for doubtful
accounts 26,305 23,557
Tax loss carryforwards 20,260 23,595
Unearned Income 21,848 --
Other 4,578 22,860
- --------------------------------------------------------
Total deferred tax assets 269,688 302,343
Valuation allowance (19,774) (27,773)
- --------------------------------------------------------
Net deferred tax assets $249,914 $274,570
- --------------------------------------------------------
- --------------------------------------------------------
Dollars in thousands
December 31 1994 1993
- --------------------------------------------------------
Deferred Tax Liabilities
Property, plant and
equipment $121,617 $131,189
Tax certificate 125,664 137,343
Nontaxable acquisition 125,782 145,298
Deferred subscription
expenses 8,627 21,743
Safe harbor tax lease 19,717 20,376
Unremitted earnings 833 --
Investment in Forest
Products Group 13,324 --
Other 2,641 18,446
- -------------------------------------------------------
Total deferred tax liabilities 418,205 474,395
- --------------------------------------------------------
Net deferred tax assets (249,914) (274,570)
- --------------------------------------------------------
Net deferred tax liability 168,291 199,825
- --------------------------------------------------------
Less amounts included in:
Other current assets (9,296) (4,812)
Accrued expenses 999 7,762
- --------------------------------------------------------
Deferred income taxes $176,588 $196,875
- --------------------------------------------------------
At December 31, 1994, there were no federal net operating loss carryforwards.
Benefits from state and local loss carryforwards are attributable mainly to tax
operating losses. Such loss carryforwards expire in accordance with provisions
of applicable tax laws and have remaining lives ranging from 1 to 15 years. At
December 31, 1994, the tax benefits relating to these carryforwards expire as
follows: 1996, $4,015,000; 1997, $2,678,000; 1998, $3,018,000; 1999 through
2003, $10,442,000; and 2004 through 2008, $107,000.
In connection with the sale in 1989 of its cable television system, the
Federal Communications Commission granted the Company a tax certificate. This
certificate enabled the Company to defer income taxes on the gain on the
transaction and pay such taxes over a number of years. Under the provisions of
the Internal Revenue Code, this is accomplished through a reduction in the tax
bases of various assets. As a result, $10,508,000, $10,820,000 and $10,388,000
of income taxes that were so deferred became currently payable in 1994, 1993
and 1992, respectively. Additional income taxes that were deferred will become
currently payable over the remaining lives of those assets with reduced tax
bases.
Federal income tax returns for all years through 1989 have been examined by
the Internal Revenue Service, for which tentative agreements have been reached.
Examinations of the tax returns for the years 1990 through 1993 have not
commenced. Management is of the opinion that any assessments resulting from
these examinations will not have a material effect on the consolidated financial
statements.
F - 19
- --------------------------------------------------------------------------------
7. DEBT
In February 1995, the Company filed a shelf registration statement with the
Securities Exchange Commission that permits the issuance of up to $400,000,000
in unsecured senior debt securities. The unsecured senior debt securities
available under the shelf registration allow for the Company's classification of
certain current obligations as long-term debt.
Long-term debt consisted of the following:
- --------------------------------------------------------------------------------
Dollars in thousands
- --------------------------------------------------------------------------------
December 31 1994 1993
- --------------------------------------------------------------------------------
Notes due 1998-2000 (a) $200,000 $200,000
Notes due 1995 net of
unamortized discount:
1994, $511; 1993, $2,444 (b) 161,789 159,856
Notes due 1995 including
unamortized premium:
1994, $1,336; 1993, $3,725 (c) 51,336 53,725
Commercial Paper (d) 60,405 --
- --------------------------------------------------------------------------------
Total 473,530 413,581
Less current portion -- --
- --------------------------------------------------------------------------------
Total long-term portion $473,530 $413,581
- --------------------------------------------------------------------------------
(a) In October 1993, the Company issued senior notes totaling $200,000,000 to
an insurance company with interest payable semi-annually. Five-year notes
totaling $100,000,000 were issued at a rate of 5.50 percent, and the remaining
$100,000,000 were issued as six and one-half year notes at a rate of 5.77
percent.
(b) In connection with the 1985 acquisition of certain newspapers, the
Company issued 10-year notes with an aggregate stated value of $162,300,000
which have been discounted at an interest rate of 11.85 percent for financial
reporting purposes. Interest on certain of the notes is payable semi-annually.
The original difference of $12,600,000 between the stated value of the notes and
the amount that results from discounting the notes at 11.85 percent is being
amortized as interest expense over the term of the notes. The December 31, 1994
amount is included in long-term debt since the Company has the intent and the
ability, supported by the new shelf registration, to refinance these obligations
for at least one year.
(c) In connection with the 1993 acquisition of The Globe (see Note 2), the
Company assumed $50,000,000 of 9.34 percent fixed-rate notes maturing July 1995
which have been valued for financial reporting purposes using a discount rate of
4.25 percent. Interest on the notes is payable semi-annually. The excess of the
fair value of the notes at the acquisition date over the stated value of such
notes was $4,303,000, which is being amortized as a reduction of interest
expense over the remaining term of the notes. The December 31, 1994 amount is
included in long-term debt since the Company has the intent and the ability,
supported by the new shelf registration, to refinance these obligations for at
least one year.
The Company has an interest rate swap agreement (the "Agreement") with a
major financial institution to manage interest costs. The Agreement matures in
1995 and effectively converts the 9.34 percent interest rate to a variable rate
which is semi-annually indexed to the six-month London interbank ("LIBOR") rate.
Based on quoted market prices, the Agreement was valued at $1,800,000 as of the
acquisition date and is being amortized as interest expense over its term. As
of December 31, 1994, the carrying value of the Agreement was $600,000. The
difference of the carrying value and the estimated fair value at December 31,
1994 was not significant. During 1994, the Company's effective interest rate
on these unsecured notes was 7.70 percent.
(d) In December 1994, the Company established a $200,000,000 commercial paper
program. Borrowings are in the form of unsecured notes sold at a discount with
maturities ranging up to 270 days. The $60,700,000 in aggregate face value of
such notes outstanding at December 31, 1994 were issued at a weighted average
interest rate of 6.06 percent. The outstanding commercial paper was supported by
the Company's revolving credit and term loan agreements. Commercial paper is
classified as long-term debt as the Company intends to refinance these
obligations for at least one year either through continued short-term borrowings
or the issuance of long-term debt supported by the new shelf registration.
Based on borrowing rates currently available for debt with similar terms and
average maturities, the fair value of long-term debt, excluding the current
portion, was $455,100,000 and $432,725,000 at December 31, 1994 and 1993,
respectively.
- --------------------------------------------------------------------------------
In October 1994, the Company entered into an $93,300,000 revolving credit and
term loan agreement with a group of banks, which replaced the previous
$80,000,000 revolving credit and term loan agreement which would have terminated
in May 1995. The new agreement, as amended, terminates in October 1998. At such
time, then outstanding borrowings would be payable semi-annually in equal
installments over one year. At the Company's discretion, this facility may be
converted into term loans at any time. The agreement provides for an annual
commitment fee of 0.11 percent on the unused commitment.
The Company also has a $46,700,000 revolving credit agreement with the same
group of banks, which replaces a previous $40,000,000 revolving credit agreement
that terminated in October 1994. This agreement expires in October 1995. The
agreement provides for an annual commitment fee of 0.08 percent on the unused
commitment. A previous $50,000,000 revolving credit agreement was terminated in
October 1994 and the underlying bank was included in the two new aforementioned
revolving credit agreements.
The agreements permit borrowings which bear interest, at the Company's
option, (i) for domestic borrowings: based on the certificates of deposit rate,
the Federal Funds rate, a prime rate or a quoted rate; or (ii) for Eurodollar
borrowings: based on the LIBOR rate. Borrowings under these agreements may be
prepaid without penalty.
In October 1992, the Company entered into a $20,000,000 revolving credit
and term loan agreement with a bank and its affiliate, which replaced a previous
$30,000,000 revolving credit agreement with the same bank. The new agreement, as
amended, terminates in May 1996. At such time, then outstanding
F - 20
borrowings would be payable semi-annually aggregating 5 percent, 20 percent, 45
percent and 30 percent annually from 1996 to 1999. At the Company's discretion,
this facility may be converted into term loans at any time. The Company also has
entered into a $10,000,000 revolving credit agreement with the same bank and its
affiliate that expires May 1995, at which time, any outstanding borrowings would
be payable. Both agreements provide for an annual commitment fee of 1/8th of 1
percent on the unused commitment.
The agreements permit borrowings which bear interest, at the Company's
option, (i) for domestic borrowings: based on the certificates of deposit rate,
a prime rate or a quoted rate; or (ii) for Eurodollar borrowings: based on the
LIBOR rate. Borrowings under these agreements may be prepaid without penalty.
No borrowings under any of the above agreements were outstanding during 1994.
Certain of the agreements also include provisions which require, among other
matters, specified levels of stockholders' equity. At December 31, 1994,
approximately $795,000,000 of stockholders' equity was unrestricted.
In December 1994, the Company entered into a forward interest rate swap to
hedge against possible interest rate increases during the period prior to the
planned issuance of long-term debt. Gains or losses on these hedging
transactions are deferred and amortized as adjustments of interest expense
commencing on the date of issuance of debt. At December 31, 1994, the swaps
entered into by the Company hedged approximately $20,000,000 of anticipated
borrowings during the first quarter of 1995. At December 31, 1994, the carrying
amount of such swaps approximated the fair value. Accordingly, no deferred gains
or losses were recorded on the accompanying balance sheet. Subsequent to
year-end, the Company entered into forward interest rate swaps which hedged an
additional $130.0 million of anticipated first-quarter borrowings. In total,
these swaps fix the 10-year treasury rate used to determine the Company's
interest rate at 7.8 percent on $150.0 million of anticipated borrowings.
Short-term debt is comprised of current maturities of long-term debt and
capital lease obligations. Outstanding notes payable at December 31, 1993
consist of $62,340,000 of short-term bank borrowings at an average interest rate
of 3.71 percent. There were no outstanding notes payable at December 31, 1994.
Interest expense, net of interest income, as shown in the accompanying
Consolidated Statements of Operations consisted of the following:
- --------------------------------------------------------------------------------
Dollars in thousands
- --------------------------------------------------------------------------------
Year Ended December 31 1994 1993 1992
- --------------------------------------------------------------------------------
Interest expense $34,880 $29,549 $30,075
Interest income (6,718) (4,174) (3,960)
- --------------------------------------------------------------------------------
Net $28,162 $25,375 $26,115
- --------------------------------------------------------------------------------
In connection with various construction projects, interest of approximately
$4,943,000, $1,351,000 and $705,000 was capitalized as property, plant and
equipment for 1994, 1993 and 1992, respectively.
- --------------------------------------------------------------------------------
8. CAPITAL INVESTMENT PROJECTS
In December 1993, the Company and the City of New York executed a lease
agreement and related agreements, under which the Company is leasing 31acres of
City-owned land in College Point, Queens, New York, on which The Times is
building a state-of-the-art production and distribution facility. Conditions
stipulated under the lease were met in June 1994 and, accordingly, a capital
lease of $5,000,000 was recorded at such time. The lease will continue for 25
years after the start of construction with an option to ultimately purchase the
property. Under the terms of the agreement, The Times would receive various tax
and energy cost reductions.
In July 1994, the Company's Board of Directors approved the construction of
the new facility which will allow for later news deadlines and provide color and
inserting capability for the daily newspaper. The cost of the new facility,
excluding capitalized interest currently projected to be $45,000,000, is
estimated to be $315,000,000.
Construction of the facility began in August 1994 with completion
anticipated in the second half of 1997. While the new facility will replace
The Times's Manhattan production and distribution facility, business and news
operations will remain at the Manhattan building. No write-down is anticipated
as a result of the discontinuance of production at the Manhattan facility.
The Company's Edison facility commenced production in late 1992. Depreciation
of the equipment began during the fourth quarter of 1992 and was phased in as
each element was placed in service. Full operation of the facility began in the
first quarter of 1993. Depreciation of the building and equipment totaled
$33,000,000 in 1993 and increased to $35,000,000 in 1994 when the facility was
operational for a full year.
In 1993, the Company announced that The Times closed its printing plant in
Carlstadt, New Jersey, and transferred production and distribution to the Edison
facility. The Company completed removal of equipment from the facility in
September 1994 and has commenced marketing of the Carlstadt facility for lease.
The carrying value of the facility, which reflects management's estimate of its
net realizable value (approximately $16,400,000), has been included in
miscellaneous assets at December 31, 1994.
F - 21
- --------------------------------------------------------------------------------
9. PENSION PLANS
The Company sponsors several pension plans and makes contributions to several
others in connection with collective bargaining agreements, including a joint
Company-union plan and a number of joint industry-union plans. These plans cover
substantially all employees.
The Company-sponsored pension plans provide participating employees with
retirement benefits in accordance with benefit provision formulas which are
based on years of service and final average or career pay and, where applicable,
employee contributions. Funding is based on an evaluation and review of the
assets, liabilities and requirements of each plan. Retirement benefits are also
provided under supplemental unfunded pension plans.
Net periodic pension cost was $32,730,000 in 1994, $16,461,000 in 1993,
and $15,082,000 in 1992. The components
of net periodic pension cost are:
- --------------------------------------------------------------------------------
Dollars in thousands
- --------------------------------------------------------------------------------
Year Ended December 31 1994 1993 1992
- --------------------------------------------------------------------------------
Service cost $19,194 $14,075 $11,879
Interest cost 38,933 26,675 24,167
Actual loss (return) on plan assets 2,942 (38,907) (25,365)
Curtailment loss (gain)
(See Note 2) 1,887 -- (885)
Net amortization and
deferral (30,226) 14,618 5,286
- --------------------------------------------------------------------------------
Net periodic pension cost $32,730 $16,461 $15,082
- --------------------------------------------------------------------------------
Due to the sale of the Women's Magazines Division, the Company recognized a
curtailment loss in 1994. Accordingly, net periodic pension cost relating to
certain plans was remeasured at July 1994, using an increased discount rate of
8.0 percent.
Assumptions used in the actuarial computations were:
- --------------------------------------------------------------------------------
Year Ended December 31 1994 1993 1992
- --------------------------------------------------------------------------------
Discount rate 8.25% 7.00% 8.00%
Rate of increase in
compensation levels 5.50% 5.50% 5.50%
Expected long-term rate of
return on assets 8.75% 8.75% 8.75%
- --------------------------------------------------------------------------------
In connection with collective bargaining agreements, the Company contributes to
several other pension plans including a joint Company-union plan and a number of
joint industry-union plans. Contributions are determined as a function of hours
worked or period earnings. Pension cost for these plans was $19,535,000 in 1994,
$17,970,000 in 1993, and $15,700,000 in 1992.
The funded status of the Company's plans which were valued at September 30, 1994
and 1993 is as follows:
- --------------------------------------------------------------------------------
Plans Whose Plans Whose
Assets Exceed Accumulated
December 31, 1994 Accumulated Benefits
Dollars in thousands Benefits Exceed Assets
- --------------------------------------------------------------------------------
Actuarial present value of benefit obligation:
Vested benefit obligation $187,656 $207,104
- --------------------------------------------------------------------------------
Accumulated benefit obligation $193,129 $212,519
- --------------------------------------------------------------------------------
Projected benefit obligation $238,574 $263,044
Plan assets at fair value 231,236 144,200
- --------------------------------------------------------------------------------
Projected benefit obligation
in excess of plan assets 7,338 118,844
Unrecognized net (losses) gains (12,337) 11,269
Unrecognized prior service cost 6,567 (10,814)
Unrecognized transition obligation (2,038) (1,517)
Fourth-quarter contribution, net (2,483) (7,891)
- --------------------------------------------------------------------------------
Recorded pension (asset) liability $(2,953) $109,891
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Plans Whose Plans Whose
Assets Exceed Accumulated
December 31, 1993 Accumulated Benefits
Dollars in thousands Benefits Exceed Assets
- ------------------------------------------------------------------------------
Actuarial present value of benefit obligation:
Vested benefit obligation $187,972 $219,554
- ------------------------------------------------------------------------------
Accumulated benefit obligation $193,951 $227,102
- ------------------------------------------------------------------------------
Projected benefit obligation $251,679 $282,179
Plan assets at fair value 234,366 142,015
- ------------------------------------------------------------------------------
Projected benefit obligation
in excess of plan assets 17,313 140,164
Unrecognized net (losses) (24,972) (20,043)
Unrecognized prior service cost 7,746 (9,633)
Unrecognized transition obligation (2,690) (2,724)
Fourth-quarter contribution, net (2,675) (3,220)
Adjustment required to
recognize additional minimum liability 10,087
- --------------------------------------------------------------------------------
Recorded pension (asset) liability $(5,278) $114,631
- --------------------------------------------------------------------------------
Plan assets, which were valued as of September 30, 1994 and 1993, consist of
money market investments, investments in marketable fixed income and equity
securities, an investment in a diversified real estate equity fund and
investments in group annuity insurance contracts.
The additional minimum liability relating to the unfunded status of these
plans is included in other liabilities on the Consolidated Balance Sheets as of
December 31, 1993 and miscellaneous assets includes a related intangible asset
of an equal amount. No such liability was required as of December 31, 1994.
F - 22
- --------------------------------------------------------------------------------
10. POSTRETIREMENT BENEFITS OTHER THAN
PENSIONS AND POSTEMPLOYMENT BENEFITS
The Company provides health and life insurance benefits to retired employees
(and their eligible dependents) who are not covered by any collective bargaining
agreements if the employee meets specified age and service requirements.
The Company adopted the provisions of SFAS No. 106 - Employers' Accounting
for Postretirement Benefits Other Than Pensions ("SFAS 106"), changing to the
accrual method of accounting for these benefits effective January 1, 1992. Prior
to 1992, postretirement benefit expenses were recognized on a pay-as-you-go
basis and were not material.
As permitted by SFAS 106, the Company elected to recognize in 1992 the
accumulated postretirement benefit obligation related to prior service costs.
The Company recorded this obligation of $64,856,000 ($37,411,000 after taxes or
$.48 per share) as the cumulative effect of an accounting change at January 1,
1992.
Net periodic postretirement cost was $12,419,000 and $10,809,000 in 1994 and
1993, respectively. The components of this cost are as follows:
- --------------------------------------------------------------------------------
Dollars in thousands 1994 1993
- --------------------------------------------------------------------------------
Service cost for benefits
earned during the period $4,629 $3,955
Interest cost on accumulated
postretirement benefit obligation 9,376 6,854
Net amortization and deferral (102) -
Curtailment gain (See Note 2) (1,484) -
- --------------------------------------------------------------------------------
Net periodic postretirement
benefit cost $12,419 $10,809
- --------------------------------------------------------------------------------
The Company's policy is to fund the above-mentioned payments as claims and
premiums are paid.
The following table sets forth the amounts included in Accrued Expenses and
Other Liabilities on the Consolidated Balance Sheets at December 31, 1994 and
1993, based on valuation dates of September 30 in each year.
- --------------------------------------------------------------------------------
Dollars in thousands
- --------------------------------------------------------------------------------
December 31 1994 1993
- --------------------------------------------------------------------------------
Accumulated postretirement benefit
obligation
Retirees $49,595 $53,677
Fully eligible active plan participants 26,894 28,450
Other active plan participants 45,017 51,522
- --------------------------------------------------------------------------------
Total 121,506 133,649
Unrecognized net gains 26,287 4,535
Fourth-quarter benefit
payments (1,035) (821)
- --------------------------------------------------------------------------------
Total accrued postretirement
benefit liability 146,758 137,363
Current portion included in
accrued expenses 4,400 4,040
- --------------------------------------------------------------------------------
Long-term accrued postretirement
benefit liability $142,358 $133,323
- --------------------------------------------------------------------------------
Subsequent to the measurement date, a plan amendment was adopted to reduce
benefits for participants retiring after January 1, 1995. The effect on the
accumulated postretirement benefit obligation is a reduction of $16,736,000.
This amount will be amortized over a period of approximately nine years.
For 1994, the accumulated postretirement benefit obligation was determined
using a discount rate of 8.25 percent, an estimated increase in compensation
levels of 5.5 percent and a health care cost trend rate of between 12.0 percent
and 10.0 percent in the first year grading down to 5.0 percent in the year 2008.
Increasing the assumed health care cost trend rates by one percentage point
in each year and holding all other assumptions constant would increase the
accumulated postretirement benefit obligation as of December 31, 1994 by
$16,833,000 and increase the net periodic postretirement benefit cost for 1994
by $2,297,000.
For 1993, the accumulated postretirement benefit obligation was determined
using a discount rate of 7.0 percent, an estimated increase in compensation
levels of 5.5 percent and a health care cost trend rate of between 13.0 percent
and 11.0 percent in the first year, grading down to 5.0 percent in the year
2008.
In connection with collective bargaining agreements, the Company contributes
to several welfare plans including a joint Company-union plan and a number of
joint industry-union plans. Contributions are determined as a function of hours
worked or period earnings. Portions of these contributions, which cannot be
disaggregated, related to postretirement benefits for plan participants. Total
contributions to these welfare funds were approximately $25,460,000 and
$18,000,000 in 1994 and 1993, respectively.
The Company also adopted SFAS No. 112 - Employers' Accounting for
Postemployment Benefits ("SFAS 112") as of the beginning of 1992. SFAS 112
requires that certain benefits provided to former or inactive employees, after
employment but before retirement, such as workers' compensation, disability
benefits and health care continuation coverage be accrued if attributable to
employees' service already rendered. The cumulative effect on net income of this
change in accounting method resulted in a one-time charge of $16,365,000
($9,440,000 after taxes or $.12 per share) and has been reflected as of January
1, 1992.
F - 23
- --------------------------------------------------------------------------------
11. EXECUTIVE AND NON-EMPLOYEE DIRECTORS'
INCENTIVE PLAN
Under the Company's 1991 Executive Stock Incentive Plan and 1991 Executive Cash
Bonus Plan (together the "1991 Executive Plans"), the Board of Directors may
authorize incentive compensation awards and grant stock options to key employees
of the Company. Awards may be granted in cash, restricted and unrestricted
shares of the Company's Class A Common Stock, Retirement Units or such other
forms as the Board of Directors deems appropriate. Under the 1991 Executive
Plans, stock options of up to 10,000,000 shares of Class A Common Stock may be
granted and stock awards of up to 1,000,000 shares of Class A Common Stock may
be made. In adopting the 1991 Executive Plans, shares previously available for
issuance of retirement units and stock options under prior plans are no longer
available for future awards.
Retirement Units are payable in Class A Common Stock over a period of 10
years following retirement.
Stock options currently outstanding were granted under the Company's 1984
Stock Option Plan and the 1991 Executive Plans. The Plans provide for granting
of both incentive and non-qualified stock options principally at an option
price per share of 100 percent of the fair market value of the Class A Common
Stock on the date of grant. These options have terms of five or ten years, and
become exercisable in annual periods ranging from one year to four years from
the date of grant. Payment upon exercise of an option may be made in cash,
with previously-acquired shares, with shares (valued at fair market value)
which would be otherwise issued on the exercise of the option or any combination
thereof.
Under the Company's Non-Employee Directors' Stock Option Plan (the
"Directors' Plan"), non-qualified options with ten-year terms are granted
annually to each non-employee director of the Company. Each annual grant allows
the director to purchase from the Company up to 1,000 shares of Class A Common
Stock at the fair market value of such shares at the date of grant. Options for
an aggregate of 250,000 shares of Class A Common Stock may be granted under the
Directors' Plan.
Outstanding stock options granted to key employees of The Globe to purchase
its Series A and/or Series B Common Stock prior to the merger have been
converted to stock options to purchase the Company's Class A Common Stock. The
former Globe stock options were converted at a ratio of 0.6 shares of Class A
Common for each share of Globe stock as determined by the merger agreement.
All of these stock options became exercisable as of the acquisition date.
Changes in stock options for each of the three years in the period ended
December 31, 1994 were as follows:
- ------------------------------------------------------------------------
Dollars in thousands Option Price
except per share data Shares Per Share ($) Total
- ------------------------------------------------------------------------
Options oustanding
January 1, 1992 4,335,508 5.76 to 38.87 $98,099
Granted 1,103,410 25.93 to 28.88 28,473
Exercised (466,320) 5.76 to 26.75 (7,900)
Terminations (91,982) 20.56 to 36.43 (2,737)
- ------------------------------------------------------------------------
Options outstanding
December 31, 1992 4,880,616 13.96 to 38.87 115,935
Granted 1,909,080 26.50 to 30.68 50,641
Globe stock option
conversion 958,654 6.89 to 22.50 14,381
Exercised (346,334) 6.89 to 26.75 (6,333)
Terminations (41,175) 20.00 to 36.43 (1,116)
- ------------------------------------------------------------------------
Options outstanding
December 31, 1993 7,360,841 6.89 to 38.87 173,508
Granted 2,426,376 22.56 to 26.18 54,807
Exercised (378,392) 6.89 to 26.75 (6,634)
Terminations (127,037) 11.45 to 36.43 (3,174)
- ------------------------------------------------------------------------
Options outstanding
outstanding
December 31, 1994 9,281,788 6.89 to 38.87 $218,507
- ------------------------------------------------------------------------
Options which became
exercisable during
1992 728,859 20.00 to 20.81 $14,588
1993 1,803,174 6.89 to 28.88 35,098
1994 761,221 20.00 to 30.68 19,021
- ------------------------------------------------------------------------
Options exercisable
at December 31,
1992 3,237,964 13.96 to 38.87 $76,678
1993 4,673,663 6.89 to 38.87 104,789
1994 4,953,313 6.89 to 38.87 114,260
- ------------------------------------------------------------------------
F - 24
- --------------------------------------------------------------------------------
12. CAPITAL STOCK
The 5 1/2 percent cumulative prior preference stock, which is redeemable at the
option of the Company on 30-day's notice at par plus accrued dividends, is
entitled to an annual dividend of $5.50 payable quarterly.
The serial preferred stock is subordinate to the 5 1/2 percent cumulative
prior preference stock. The Board of Directors is authorized to set the
distinguishing characteristics of each series prior to issuance, including the
granting of limited or full voting rights; however, the consideration received
must be at least $100 per share. No shares of serial preferred stock have been
issued.
The Class A and Class B Common Stock are entitled to equal participation in
the event of liquidation and in dividend declarations. The Class B Common Stock
is convertible at the holders' option on a share-for-share basis into Class A
shares. As provided for in the Certificate of Incorporation, the Class A Common
Stock has limited voting rights, including the right to elect 30 percent of the
Board of Directors, and the Class A and Class B Common Stock have the right to
vote together on reservations of Company stock for stock options, on the
ratification of the selection of independent certified public accountants and,
in certain circumstances, on acquisitions of the stock or assets of other
companies. Otherwise, except as provided by the laws of the State of New York,
all voting power is vested solely and exclusively in the holders of the Class B
Common Stock.
At the April 1994 annual meeting of the Company's Class A and B Common
Stockholders, an amendment to the Employee Stock Purchase Plan was approved to
reserve an additional 6,000,000 shares of Class A Common Stock for sale under
the Plan.
At a special meeting of shareholders in September 1993, an amendment of the
Company's Restated Certificate of Incorporation was approved to increase the
total number of authorized shares of Class A Common Stock to 200,000,000 shares,
thereby increasing the Company's overall total number of authorized shares of
capital stock of The New York Times Company to 200,910,000 shares.
Under a stock repurchase program which commenced in June 1993 and expired at
the close of The Globe transaction on October 1, 1993, the Company repurchased
approximately 10,231,000 shares of its Class A Common Stock at an average price
of $24.87 per share.
The Company expended all of the $150,000,000 authorized under its previous
stock repurchase program announced in October 1993. In October 1994, the Company
announced authorized expenditures of up to $100,000,000 for repurchases of its
Class A Common Stock. Under the new program, purchases may be made from time to
time either in the open market or through private transactions. The number of
shares that may be purchased in market transactions may be limited as a result
of The Globe transaction. Purchases may be suspended from time to time or
discontinued. Under the two programs, the Company has repurchased approximately
10,074,000 shares of its Class A Common Stock at an average effective price of
$23.42 per share. Had the stock repurchases, under both programs, occurred as
of January 1, 1994, earnings per share for the year 1994 would have been $2.12.
In January 1995, the Company repurchased approximately 397,000 shares of its
Class A Common Stock at an average effective price of $22.32 per share under the
$100.0 million authorization. The Company has expended substantially all of this
authorization. In February 1995, the Company's Board of Directors authorized
additional expenditures of up to $50.0 million for repurchases of its Class A
Common Stock.
In addition to the Company's stock repurchase program, in 1994 the Company
sold equity put options in a series of private placements that entitle the
holder, upon exercise, to sell shares of Class A Common Stock to the Company at
a specified price. In 1994, put options for 1,210,000 shares were issued for
$1,189,000 in premiums which have been accounted for as additional capital. As
of December 31, 1994, put options of $2,660,000 included in other liabilities
for 120,000 shares remain outstanding at strike prices ranging from $21.88 to
$22.50 per share with exercise dates in March 1995. Premiums received on these
options reduced the average price of repurchased shares to $23.42 per share from
$23.53 per share.
Under the 1995 Offering of the Employee Stock Purchase Plan, eligible
employees may purchase Class A Common Stock through payroll deductions during
1995 at the lower of $19.23 per share (85 percent of the average market price on
November 1, 1994) or 85 percent of the average market price on December 28,
1995. Shares of Class A Common Stock reserved for issuance at December 31, 1994
and 1993 were as follows:
- --------------------------------------------------------------------------------
December 31 1994 1993
- --------------------------------------------------------------------------------
Retirement Units
Outstanding 221,021 216,806
Stock Awards
Available 973,844 993,359
Stock Options
Outstanding 9,281,788 7,360,841
Available 3,646,047 5,988,480
Employee Stock
Purchase Plan
Available 5,802,596 993,919
Voluntary Conversion of
Class B Common Stock
Available 570,121 571,624
- --------------------------------------------------------------------------------
Total 20,495,417 16,125,029
- --------------------------------------------------------------------------------
F - 25
- --------------------------------------------------------------------------------
13. LEASE COMMITMENTS
OPERATING LEASES:
Such lease commitments are primarily for office space and equipment. Certain
office space leases provide for adjustments relating to changes in real estate
taxes and other operating expenses.
Rental expense amounted to $26,559,000 in 1994, $24,744,000 in 1993 and
$23,689,000 in 1992. The approximate minimum rental commitments under
noncancelable leases (exclusive of minimum sublease rentals of $878,000) at
December 31, 1994 were as follows: 1995, $15,711,000; 1996, $13,252,000; 1997,
$10,758,000; 1998, $9,066,000; 1999, $7,995,000 and $28,275,000 thereafter.
CAPITAL LEASES:
In 1993, the Company and The City of New York executed a long-term lease
agreement and related agreements, under which the Company is leasing City-owned
land to build a state-of-the-art printing and distribution facility for The
Times. Conditions stipulated under the lease were met in 1994 and, accordingly,
a capital lease of $5,000,000 was recorded at such time (see Note 8).
The Company also has a long-term lease for a building and site in Edison, New
Jersey. The lease provides the Company with certain early cancellation rights,
as well as renewal and purchase options. For financial reporting purposes, the
lease has been classified as a capital lease; accordingly, an asset of
approximately $57,000,000 (included in buildings, building equipment and
improvements at December 31, 1994 and 1993) has been recorded.
The following is a schedule of future minimum lease payments under all
capitalized leases together with the present value of the net minimum lease
payments as of December 31, 1994:
- --------------------------------------------------------------------------------
Dollars in thousands
- --------------------------------------------------------------------------------
Year Ended December 31 Amount
- --------------------------------------------------------------------------------
1995 $7,089
1996 6,838
1997 6,734
1998 7,018
1999 6,971
Later years 64,110
- --------------------------------------------------------------------------------
Total minimum lease payments 98,760
Less: amount representing interest 46,413
- --------------------------------------------------------------------------------
Present value of net minimum
lease payments including current
maturities of $2,681 $52,347
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
14. ACCOUNTING CHANGES
During 1992, the Company adopted three noncash accounting changes mandated by
the Financial Accounting Standards Board: SFAS No. 106-Employers' Accounting for
Postretirement Benefits Other Than Pensions (see Note 10), SFAS 109-Accounting
for Income Taxes (see Note 6) and SFAS 112-Employers' Accounting for
Postemployment Benefits (see Note 10).
The cumulative effect of adopting these accounting changes is as follows:
- --------------------------------------------------------------------------------
After-tax effects Earnings
(Dollars in thousands) per share
- --------------------------------------------------------------------------------
Postretirement Benefits $(37,411) $(.48)
Income Taxes 13,414 17
Postemployment Benefits (9,440) (.12)
-------- ------
Net charge $(33,437) $(.43)
========= ======
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
15. SEGMENTS
The Company's segment and related information is included on pages 2 and 3 of
this Appendix. The information for the years 1994, 1993 and 1992 appearing
therein is presented on a basis consistent with, and is an integral part of,
the consolidated financial statements. Revenues from individual customers,
revenues between business segments and revenues, operating profit and
identifiable assets of foreign operations are not significant.
- --------------------------------------------------------------------------------
16. CONTINGENT LIABILITIES
There are various legal actions that have arisen in the ordinary course of
business and are now pending against the Company. Such actions are usually for
amounts greatly in excess of the payments, if any, that may be required to be
made. It is the opinion of management after reviewing such actions with legal
counsel to the Company that the ultimate liability which might result from
such actions would not have a material adverse effect on the consolidated
financial statements.
- --------------------------------------------------------------------------------
17. RECLASSIFICATIONS
For comparability, certain 1992 and 1993 amounts have been reclassified to
conform with the 1994 presentation.
F - 26
INDEPENDENT AUDITORS' REPORT
BOARD OF DIRECTORS
AND STOCKHOLDERS OF
THE NEW YORK TIMES COMPANY:
We have audited the accompanying consolidated balance sheets of The New York
Times Company as of December 31, 1994 and 1993, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 1994. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of The New York Times Company as of
December 31, 1994 and 1993, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1994 in
conformity with generally accepted accounting principles.
As discussed in notes 6, 10 and 14, the Company changed its methods of
accounting for income taxes, postretirement benefits other than pensions and
postemployment benefits effective January 1, 1992 to conform with Statements of
Financial Accounting Standards 109, 106 and 112.
Deloitte & Touche LLP
New York, New York
February 9, 1995
MANAGEMENT'S RESPONSIBILITIES REPORT
The Company's consolidated financial statements were prepared by management who
is responsible for their integrity and objectivity. The consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles and, as such, include amounts based on management's best estimates
and judgments.
Management is further responsible for maintaining a system of internal
accounting control, designed to provide reasonable assurance that the Company's
assets are adequately safeguarded and that the accounting records reflect
transactions executed in accordance with management's authorization. The system
of internal control is continually reviewed for its effectiveness and is
augmented by written policies and procedures, the careful selection and training
of qualified personnel and a program of internal audit.
The consolidated financial statements were audited by Deloitte & Touche LLP,
independent auditors. Their audit was conducted in accordance with generally
accepted auditing standards and their report is shown on this page.
The Audit Committee of the Board of Directors, which is composed solely of
independent directors, meets regularly with the independent auditors, internal
auditors and management to discuss specific accounting, financial reporting and
internal control matters. Both the independent auditors and the internal
auditors have full and free access to the Audit Committee. Each year the Audit
Committee selects, subject to ratification by stockholders, the firm which is to
perform audit and other related work for the Company.
- --------------------------------------------------------------------------------
MARKET INFORMATION
- --------------------------------------------------------------------------------
The Class A Common Stock is listed on the American Stock Exchange. The Class B
convertible Common Stock and the 5 1/2 percent cumulative prior preference stock
are unlisted and are not actively traded. Dividends on the preference stock were
paid at the quarterly rate of $1.375 per share during each of the two years.
The approximate number of security holders of record as of January 31, 1995
was as follows: Class A Common Stock: 17,678; Class B Common Stock: 44; 5 1/2
percent cumulative prior preference stock: 66.
The market price range of Class A Common Stock in 1994 and 1993 is as follows:
- --------------------------------------------------------------------------------
Quarter Ended 1994 1993
- --------------------------------------------------------------------------------
High Low High Low
March 31 $ 29.50 $ 25.75 $ 31.25 $ 26.37
June 30 27.62 23.00 31.25 23.00
September 30 25.00 21.62 26.12 22.62
December 31 24.62 21.25 28.75 22.37
Year 29.50 21.25 31.25 22.37
- --------------------------------------------------------------------------------
F - 27
QUARTERLY INFORMATION
(Unaudited)
- --------------------------------------------------------------------------------
Dollars and shares in
millions First Quarter Second Quarter Third Quarter
except per share data 1994 1993 1994 1993 1994
- --------------------------------------------------------------------------------
Revenues $589.5 $454.5 $635.5 $483.6 $527.2
- --------------------------------------------------------------------------------
Costs and Expenses
Production costs:
Raw materials 78.4 63.7 80.4 67.5 66.0
Wages and benefits 132.1 101.2 133.7 100.1 129.8
Other 112.9 94.5 117.6 98.6 96.2
- --------------------------------------------------------------------------------
Total 323.4 259.4 331.7 266.2 292.0
Selling, general and
administrative
expenses 223.0 164.0 230.4 168.4 201.9
- --------------------------------------------------------------------------------
Total 546.4 423.4 562.1 434.6 493.9
- --------------------------------------------------------------------------------
Operating profit 43.1 31.1 73.4 49.0 33.3
Interest expense, net 8.7 5.2 8.0 5.2 6.2
Net gain (loss) on
dispositions - - - - 204.0
Income taxes 16.7 12.9 31.4 20.9 112.0
- --------------------------------------------------------------------------------
Income (Loss) before
equity in operations of
forest products group 17.7 13.0 34.0 22.9 119.1
Equity in operations of
forest products group - (2.1) 0.3 (0.5) 1.5
- --------------------------------------------------------------------------------
Net income (loss) $17.7 $10.9 $34.3 $22.4 $120.6
- --------------------------------------------------------------------------------
Average number of common
shares outstanding 106.9 79.9 106.3 79.7 104.3
Per share of common
stock
Net income (loss) $.17 $.14 $.32 $.28 $1.16
Dividends .14 .14 .14 .14 .14
- --------------------------------------------------------------------------------
QUARTERLY INFORMATION
(Unaudited)
- --------------------------------------------------------------------------------
Dollars and shares in
millions Third Quarter Fourth Quarter Year
except per share data 1993 1994 1993 1994 1993
- --------------------------------------------------------------------------------
Revenues $ $445.6 $605.4 $636.0 $2,357.6 $2,019.7
- --------------------------------------------------------------------------------
Costs and Expenses
Production costs:
Raw materials 64.2 79.6 85.1 304.4 280.5
Wages and benefits 99.8 134.1 136.4 529.7 437.5
Other 102.9 102.0 122.6 428.7 418.6
- --------------------------------------------------------------------------------
Total 266.9 315.7 344.1 1,262.8 1,136.6
Selling, general and
administrative
expenses 166.5 228.3 257.6 883.6 756.5
- --------------------------------------------------------------------------------
Total 433.4 544.0 601.7 2,146.4 1,893.1
- --------------------------------------------------------------------------------
Operating profit 12.2 61.4 34.3 211.2 126.6
Interest expense, net 6.6 5.3 8.4 28.2 25.4
Net gain (loss) on
dispositions - (3.1) - 200.9 -
Income taxes 6.5 13.8 2.9 173.9 43.2
- --------------------------------------------------------------------------------
Income (Loss) before
equity in operations of
forest products group (0.9) 39.2 23.0 210.0 58.0
Equity in operations of
forest products group (2.1) 1.5 (47.2) 3.3 (51.9)
- --------------------------------------------------------------------------------
Net income (loss) $(3.0) $40.7 $(24.2) $213.3 $6.1
- --------------------------------------------------------------------------------
Average number of common
shares outstanding 72.4 98.8 106.0 104.1 84.5
Per share of common
stock
Net income (loss) $(.04) $.41 $(.23) $2.05 $.07
Dividends .14 .14 .14 .56 .56
- --------------------------------------------------------------------------------
The 1994 and 1993 quarters do not equal the respective year-end amounts for
earnings per share due to the weighted average number of shares outstanding used
in the computations for the respective periods. Per share amounts for the
respective quarters and years have been computed using the average number of
common shares outstanding as presented in the table above.
Annual and quarterly per share amounts are affected by the timing of share
issuances and repurchases. During the second half of 1993, 10.3 million shares
of Class A Common Stock were repurchased for approximately $255.2 million. On
October 1, 1993, 36.4 million shares were issued in connection with the
acquisition of The Globe. During 1994, approximately $235.2 million was expended
to repurchase 10.0 million shares.
The Company's largest source of revenues is advertising, which influences the
pattern of the Company's quarterly consolidated revenues and is seasonal in
nature. Traditionally, second-quarter and fourth-quarter advertising volume is
higher than that in the first quarter. Advertising volume tends to be lower in
the third quarter primarily because of the summer slow-down in many areas of
economic activity. Quarterly trends are also affected by the overall economy and
economic conditions that may exist in specific markets served by each of the
Company's business segments.
Third-quarter 1994 includes a $204.0 million pre-tax gain ($.99 per share)
from the sales of the Women's Magazines Division and U.K. golf publications.
Fourth-quarter 1994 includes a $3.1 million loss ($.02 per share) on the
disposition of Gaspesia.
First-quarter 1993 was negatively affected by $3.7 million pre-tax ($.02 per
share) rate adjustments due to a severe snowstorm.
Third-quarter 1993 includes $4.4 million ($.05 per share) of additional
income tax expense due to the enactment of the Tax Act.
Fourth-quarter 1993 includes a $2.6 million pre-tax gain ($.02 per share) on
the sale of assets.
Fourth-quarter 1993 includes $35.4 million of pre-tax charges ($.19 per
share) for severance and related costs for staff reductions at The Times.
Fourth-quarter 1993 includes an after-tax noncash charge to equity in
operations of $47.0 million ($.44 per share) to write down its investment in
Gaspesia to its net realizable value.
F - 28
TEN-YEAR SUPPLEMENTAL
FINANCIAL DATA
- --------------------------------------------------------------------------------
Dollars and shares in
millions Year Ended December 31
except per share data 1994 1993 1992 1991 1990
- --------------------------------------------------------------------------------
Revenues and Income
Revenues $2,358 $2,020 $1,774 $1,703 $1,777
- --------------------------------------------------------------------------------
Operating Profit 211 127 88 94 130
- --------------------------------------------------------------------------------
Income (Loss) from
continuing operations
before equity in
forest products group 210 58 (2) 41 61
Equity in operations of
forest products group 3 (52) (9) 6 4
- --------------------------------------------------------------------------------
Income (Loss) from
continuing operations 213 6 (11) 47 65
Discontinued operations - - - - -
Net cumulative effect of
accounting changes - - (34) - -
- --------------------------------------------------------------------------------
Net income (loss) 213 6 (45) 47 65
- --------------------------------------------------------------------------------
Balance Sheet
Total assets 3,138 3,215 1,995 2,128 2,150
Long-term debt
and capital lease
obligations 523 460 207 213 319
Common stockholders'
equity 1,544 1,599 1,000 1,073 1,056
- --------------------------------------------------------------------------------
Per share of Common Stock
Continuing operations 2.05 .07 (.14) .61 .85
Discontinued operations - - - - -
Net cumulative effect of
accounting changes - - (.43) - -
Net income (loss) 2.05 .07 (.57) .61 .85
Dividends .56 .56 .56 .56 .54
Common stockholders'
equity (end of year) 15.71 14.96 12.54 13.70 13.68
- --------------------------------------------------------------------------------
Shares Outstanding
(end of year)
Class A and Class B
Common 98.2 106.9 79.7 78.4 77.2
- --------------------------------------------------------------------------------
Market Price
(end of year) 22.12 26.25 26.37 23.62 20.62
- --------------------------------------------------------------------------------
TEN-YEAR SUPPLEMENTAL
FINANCIAL DATA
- -------------------------------------------------------------------------
Dollars and shares in Year Ended December 31
millions
except per share data 1989 1988 1987 1986 1985
- -------------------------------------------------------------------------
Revenues and Income
Revenues $1,769 $1,700 $1,642 $1,524 $1,358
- -------------------------------------------------------------------------
Operating Profit 169 251 284 266 210
- -------------------------------------------------------------------------
Income (Loss) from
continuing operations
before equity in
forest products group 84 132 138 110 93
Equity in operations of
forest products group (16) 29 18 20 21
- -------------------------------------------------------------------------
Income (Loss) from
continuing operations 68 161 156 130 114
Discontinued operations 199 7 4 2 2
Net cumulative effect of
accounting changes - - - - -
- -------------------------------------------------------------------------
Net income (loss) 267 168 160 132 116
- -------------------------------------------------------------------------
Balance Sheet
Total assets 2,188 1,915 1,712 1,405 1,296
Long-term debt
and capital lease
obligations 337 378 391 217 274
Common stockholders'
equity 1,064 873 823 705 586
- -------------------------------------------------------------------------
Per share of Common Stock
Continuing operations .87 2.00 1.91 1.60 1.43
Discontinued operations 2.52 .08 .05 .03 .02
Net cumulative effect of
accounting changes - - - - -
Net income (loss) 3.39 2.08 1.96 1.63 1.45
Dividends .50 .46 .40 .33 .29
Common stockholders'
equity (end of year) 13.63 11.02 10.04 8.59 7.24
- -------------------------------------------------------------------------
Shares Outstanding
(end of year)
Class A and Class B
Common 78.1 79.2 82.0 82.0 80.9
- -------------------------------------------------------------------------
Market Price
(end of year) 26.37 26.87 31.00 35.50 24.50
- -------------------------------------------------------------------------
1994 - Results include a net pre-tax gain of $200.9 million ($.99 per share) on
the sale of the Women's Magazines Division and U.K. golf publications and the
disposition of Gaspesia.
1993 - Results included pre-tax $3.7 million ($.02 per
share) rate adjustments due to a severe snowstorm.
Results included $4.4 million ($.05 per share) of additional tax expense for
remeasurement of deferred tax balances due to the enactment of the Tax Act.
Results included $1.2 million ($.02 per share) of additional tax expense due
to the Tax Act which increased the federal corporate income tax rate.
Results included a $2.6 million pre-tax gain ($.02 per share) on the sale of
assets.
Results included $35.4 million of pre-tax charges ($.23 per share) for
staff reductions at The Times.
Results included an after-tax noncash charge of $47.0 million ($.56 per
share) against equity in operations to write down the Company's investment in
Gaspesia to its net realizable value.
1992 - Results included a $53.8 million pre-tax loss ($.47 per share) on the
closing of The Gwinnett (Ga.) Daily News.
Results included a $3.1 million pre-tax gain ($.02 per share) from the sales
of assets.
Results included a $28.0 million pre-tax charge ($.20 per share) for
voluntary union staff reductions at The Times.
Results included $21.4 million pre-tax ($.15 per share) for labor disruptions
and training and start-up costs at Edison.
1991 - Results included a $20.0 million pre-tax charge ($.15 per share) for
voluntary union staff reductions at The Times.
Results included the reversal of a provision for income taxes of $10.0
million ($.13 per share) for a favorable tax settlement.
1989 - Results included an after-tax gain of $193.3 million ($2.46 per
share) from the sale of the Company's cable television operations. The gain
and results of operations through the 1989 sale date are included as
discontinued operations.
Results included a $30.0 million pre-tax charge ($.22 per share) for
voluntary union staff reductions at The Times.
Results included an after-tax charge of $27.2 million ($.35 per share) for a
valuation reserve against the Company's investment in the Forest Products Group.
1986 - Results included an interest charge of $8.5 million ($.05 per share)
which relates to a court decision arising from the Company's 1981 acquisition of
two cable television systems.
1985 - Results included a $2.8 million gain ($.03 per share) from the sale
of property. The Company acquired five newspapers and two television stations
for $389.6 million.
F - 29
[Map of North Carolina/South Carolina/Georgia region showing Spartanburg]
[Map of Spartanburg area showing Herald-Journal Production Facility]
From Greenville
Take I-85 North to the Bryant Road exit (exit 76). Turn right on Bryant Road,
then left at Herald-Journal Park. The production facility is the first building
on the left.
From Charlotte
Take I-85 South to the Bryant Road exit (exit 76). Turn left on Bryant Road,
then left at Herald-Journal Park. The production facility is the first building
on the left.
From Asheville
Take I-26 East to Highway 176 (exit 15). Turn right and follow Highway 176 to
I-85. Take I-85 North to the Bryant Road exit (exit 76). Turn right on Bryant
Road, then left at Herald-Journal Park. The production facility is the first
building on the left.
From Columbia
Take I-26 West to I-85. Take I-85 North to the Bryant Road exit (exit 76). Turn
right on Bryant Road, then left at Herald-Journal Park. The production facility
is the first building on the left.
[FRONT]
THE NEW YORK TIMES COMPANY
CLASS A
[LOGO] PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING ON APRIL 18, 1995
The undersigned hereby constitutes and appoints Arthur Ochs Sulzberger, Laura J.
Corwin and Solomon B. Watson IV, and each of them, as proxies with full power of
substitution in each, to represent the undersigned at the Annual Meeting of
Stockholders of THE NEW YORK TIMES COMPANY to be held at 9:00 A.M., local time,
at the Spartanburg Herald-Journal, 200 Herald-Journal Blvd., Spartanburg, South
Carolina 29303, on Tuesday, April 18, 1995, or at any adjournments thereof, and
to vote on all matters coming before said meeting including the proposals
indicated on the reverse side hereof.
Change of Address
Election of Class A Directors. Nominees: --------------------
Louis V. Gerstner, Jr., A. Leon Higginbotham, Jr., --------------------
Robert A. Lawrence, Charles H. Price II, --------------------
Donald M. Stewart --------------------
(If you have written in the
above space, please mark the
corresponding box on the
reverse side of this card)
You are encouraged to specify your choices by marking the appropriate boxes--SEE
REVERSE SIDE--but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations. Your shares cannot be voted
unless you sign and return this card.
SEE REVERSE
SIDE
[REVERSE]
X Please mark your
votes as in this
example.
0473
This proxy when properly executed will be voted in the manner directed herein.
If no direction is given, this proxy will be voted FOR the election of Class A
directors and FOR proposals 2 and 3.
The Board of Directors recommends a vote FOR proposals 1, 2 and 3.
FOR WITHHELD
1. Election of Class
A Directors
(see reverse)
For, except vote withheld from the
following nominee(s)
- -----------------------------------
FOR AGAINST ABSTAIN
2. Approval of Amended 1991 Executive
Cash Bonus and 1991 Executive Stock
Incentive Plans
3. Ratification of selection of Deloitte & Touche LLP
as auditors
This proxy is solicited on behalf of the Board of Directors
for the Annual Meeting on April 18, 1995.
Your signature on the proxy is your acknowledgment of receipt
of the Notice of Meeting and Proxy Statement, both dated
March 13, 1994.
The signer hereby revokes all proxies heretofore given by the
signer to vote at said meeting or at any adjournments thereof.
Change of
address on
Reverse Side
SIGNATURE(S) DATE
------------------------ -------------------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If signing as a corporation, please give full
corporate name by authorized officer.
[FRONT]
[LOGO] THE NEW YORK TIMES COMPANY
CLASS B
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING ON APRIL 18, 1995
The undersigned hereby constitutes and appoints Arthur Ochs Sulzberger, Laura J.
Corwin and Solomon B. Watson IV, and each of them, as proxies with full power of
substitution in each, to represent the undersigned at the Annual Meeting of
Stockholders of THE NEW YORK TIMES COMPANY to be held at 9:00 A.M., local time,
at the Spartanburg Herald-Journal, 200 Herald-Journal Blvd., Spartanburg, South
Carolina 29303, on Tuesday, April 18, 1995, or at any adjournments thereof, and
to vote on all matters coming before said meeting including the proposals
indicated on the reverse side hereof.
Change of Address
Election of Class B Directors. Nominees:
John F. Akers, Richard L. Gelb, Marian S. ------------------------
Heiskell, Ruth S. Holmberg, George B. Munroe, ------------------------
George L. Shinn, Arthur Ochs Sulzberger, Judith ------------------------
P. Sulzberger, William O. Taylor, Cyrus R. ------------------------
Vance
(If you have written in the
above space, please mark the
corresponding box on the
reverse side of this card)
You are encouraged to specify your choices by marking the appropriate boxes--SEE
REVERSE SIDE--but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations. Your shares cannot be voted
unless you sign and return this card.
SEE REVERSE
SIDE
[REVERSE]
X Please mark your
votes as in this
example.
2553
This proxy when properly executed will be voted in the manner directed herein.
If no direction is given, this proxy will be voted FOR the election of Class B
directors and FOR proposals 2 and 3.
The Board of Directors recommends a vote FOR proposals 1, 2 and 3.
FOR WITHHELD
1. Election of Class
B Directors
(see reverse)
For, except vote withheld from the
following nominee(s)
- -----------------------------------
FOR AGAINST ABSTAIN
2. Approval of Amended 1991 Executive
Cash Bonus and 1991 Executive Stock
Incentive Plans
3. Ratification of selection of Deloitte & Touche LLP
as auditors
This proxy is solicited on behalf of the Board of Directors
for the Annual Meeting on April 18, 1995.
Your signature on the proxy is your acknowledgment of receipt
of the Notice of Meeting and Proxy Statement, both dated
March 13, 1994.
The signer hereby revokes all proxies heretofore given by the
signer to vote at said meeting or at any adjournments thereof.
Change of
address on
Reverse Side
SIGNATURE(S) DATE
------------------------ -------------------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If signing as a corporation, please give full
corporate name by authorized officer.
[FRONT]
SECRETARY'S OFFICE
NO POSTAGE
NECESSARY
IF MAILED
IN THE
UNITED STATES
BUSINESS REPLY MAIL
FIRST CLASS MAIL PERMIT NO 289 NEW YORK NY
POSTAGE WILL BE PAID BY ADDRESSEE
THE NEW YORK TIMES COMPANY
229 WEST 43D STREET
NEW YORK NY 10109 - 0225
[REVERSE]
Please return this card only if you plan to attend.
The New York Times Company
Annual Meeting of Stockholders
9:00 A.M., Tuesday, April 18, 1995
Spartanburg Herald-Journal
200 Herald-Journal Boulevard
Spartanburg, South Carolina 29303
[LOGO]
I plan to attend the Meeting.*
Please type or print clearly.
- --------------------------------
Name of Stockholder
- --------------------------------
Street Address
- --------------------------------
City State Zip
*To facilitate counting, please forward your proxy to the Transfer Agent even if
you are planning to attend. You can always revoke it at the meeting if you wish.
[LOGO]
THE NEW YORK TIMES COMPANY
229 West 43 Street
New York, N.Y. 10036
March 13, 1995
TO: The Schedule 3 Stockholders Under the Stockholders
Agreement, dated as of June 11, 1993, by and between
The New York Times Company and the other parties
signatory thereto
c/o Boston Safe Deposit & Trust Co.
One Boston Place
Boston, MA
Attention: Richard W. Towle
Ladies and Gentlemen:
I am writing to you pursuant to the Stockholders Agreement,
dated as of June 11, 1993 by and between The New York Times Company ("Parent")
and the other parties signatory thereto (the "Stockholders Agreement"). All
terms used herein are used as defined in the Stockholders Agreement.
This letter is a reminder to you that, as contemplated by
Section 3.6(a)(i) of the Stockholders Agreement, each of you has agreed to vote
all shares of Parent Voting Securities Beneficially Owned by you as recommended
by the Board of Directors of Parent on all matters submitted to a vote of
Parent's stockholders. This agreement is applicable to the matters set forth in
the Proxy Statement, dated March 13, 1995, for stockholder approval at Parent's
1994 Annual Meeting of Stockholders to be held on Tuesday, April 18, 1995. If
you have not yet received this Proxy Statement in the mail, it should arrive
soon.
Sincerely,
Laura J. Corwin
/tc
cc: W. Lincoln Boyden
Rhonda L. Brauer
Solomon B. Watson IV