UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 24, 2017~~June 28, 2020

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission file number 1-5837

THE NEW YORK TIMES COMPANY

(Exact name of registrant as specified in its charter)



~~NEW YORK~~New York		13-1102020
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

620 ~~EIGHTH AVENUE, NEW YORK, NEW YORK~~Eighth Avenue, New York, New York10018

(Address and zip code of principal executive offices)

~~10018~~

~~(Zip Code)~~

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

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



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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx No o

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filerx	☒	Accelerated filero	☐	Non-accelerated filero	☐
Smaller reporting companyo	☐	Emerging growth companyo	☐

IfIf an emerging growth company, indicate by the check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. o☐

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

Number of shares of each class of the registrant’s common stock outstanding as of ~~October 27, 2017~~July 31, 2020 (exclusive of treasury shares):



Class A Common Stock	~~161,394,059~~165,953,189	shares
Class B Common Stock	~~808,763~~801,884	shares

THE NEW YORK TIMES COMPANY

INDEX


	ITEM NO.
PART I		Financial Information	1		Financial Information	1
Item	1	Financial Statements	1	1	Financial Statements	1
					Condensed Consolidated Balance Sheets as of June 28, 2020 (unaudited) and December 29, 2019	1
		Condensed Consolidated Balance Sheets as September 24, 2017 (unaudited) and December 25, 2016	1		Condensed Consolidated Statements of Operations (unaudited) for the quarters and six months ended June 28, 2020 and June 30, 2019	3
		Condensed Consolidated Statements of Operations (unaudited) for the quarters and nine months ended September 24, 2017 and September 25, 2016	3		Condensed Consolidated Statements of Comprehensive Income (unaudited) for the quarters and six months ended June 28, 2020 and June 30, 2019	4
		Condensed Consolidated Statements of Comprehensive Income (unaudited) for the quarters and nine months ended September 24, 2017 and September 25, 2016	5		Condensed Consolidated Statements of Changes In Stockholders’ Equity (unaudited) for the quarters and six months ended June 28, 2020 and June 30, 2019	5
		Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 24, 2017 and September 25, 2016	6		Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 28, 2020 and June 30, 2019	7
		Notes to the Condensed Consolidated Financial Statements	7		Notes to the Condensed Consolidated Financial Statements	8
Item	2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20	2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item	3	Quantitative and Qualitative Disclosures about Market Risk	30	3	Quantitative and Qualitative Disclosures about Market Risk	36
Item	4	Controls and Procedures	31	4	Controls and Procedures	37

PART II		Other Information	32		Other Information	38
Item	1	Legal Proceedings	32	1	Legal Proceedings	38
Item	1A	Risk Factors	32	1A	Risk Factors	38
Item	2	Unregistered Sales of Equity Securities and Use of Proceeds	32	2	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item	6	Exhibits	33	6	Exhibits	40

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)


	September 24, 2017		December 25, 2016		June 28, 2020		December 29, 2019
	(Unaudited)				(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	244,667	$	100,692	$	249,312	$	230,431
Short-term marketable securities	336,442		449,535		240,400		201,785
Accounts receivable (net of allowances of $13,838 in 2017 and $16,815 in 2016)	142,323		197,355
Accounts receivable (net of allowances of $13,646 in 2020 and $14,358 in 2019)					122,092		213,402
Prepaid expenses	17,869		15,948		28,382		29,089
Other current assets	26,462		32,648		42,331		42,124
Total current assets	767,763		796,178		682,517		716,831
Other assets
Long-term marketable securities	241,782		187,299		266,946		251,696
Investments in joint ventures	20,472		15,614
Property, plant and equipment (less accumulated depreciation and amortization of $945,416 in 2017 and $903,736 in 2016)	618,835		596,743
Property, plant and equipment (less accumulated depreciation and amortization of $978,828 in 2020 and $950,881 in 2019)					611,998		627,121
Goodwill	143,171		134,517		144,767		138,674
Deferred income taxes	290,473		301,342		111,355		115,229
Miscellaneous assets	156,462		153,702		240,774		239,587
Total assets	$	2,238,958	$	2,185,395	$	2,058,357	$	2,089,138

See Notes to Condensed Consolidated Financial Statements.

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS-(Continued)

(In thousands, except share and per share data)


	September 24, 2017			December 25, 2016			June 28, 2020			December 29, 2019
	(Unaudited)						(Unaudited)
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	116,724		$	104,463		$	70,692		$	116,571
Accrued payroll and other related liabilities	90,651			96,463			66,004			108,865
Unexpired subscriptions	76,886			66,686
Unexpired subscriptions revenue							99,674			88,419
Accrued expenses and other	134,411			131,125			134,742			123,840
Total current liabilities	418,672			398,737			371,112			437,695
Other liabilities
Long-term debt and capital lease obligations	249,375			246,978
Pension benefits obligation	518,395			558,790			294,470			313,655
Postretirement benefits obligation	55,107			57,999			35,935			37,688
Other	78,735			78,647			125,809			126,237
Total other liabilities	901,612			942,414			456,214			477,580
Stockholders’ equity
Common stock of $.10 par value:
Class A – authorized: 300,000,000 shares; issued: 2017 – 170,220,136; 2016 – 169,206,879 (including treasury shares: 2017 – 8,870,801; 2016 – 8,870,801)	17,022			16,921
Class B – convertible – authorized and issued shares: 2017 – 810,933; 2016 – 816,632 (including treasury shares: 2017 – none; 2016 – none)	81			82
Class A – authorized: 300,000,000 shares; issued: 2020 – 174,820,777; 2019 – 174,242,668 (including treasury shares: 2020 – 8,870,801; 2019 – 8,870,801)							17,482			17,424
Class B – convertible – authorized and issued shares: 2020 – 803,404; 2019 – 803,404							80			80
Additional paid-in capital	159,830			149,928			205,618			208,028
Retained earnings	1,373,478			1,331,911			1,659,158			1,612,658
Common stock held in treasury, at cost	(171,211		)	(171,211		)	(171,211		)	(171,211		)
Accumulated other comprehensive loss, net of income taxes:
Foreign currency translation adjustments	5,571			(1,822		)	3,706			3,438
Funded status of benefit plans	(465,440		)	(477,994		)	(489,748		)	(498,986		)
Net unrealized loss on available-for-sale securities	(653		)	—
Net unrealized gain on available-for-sale securities							4,086			572
Total accumulated other comprehensive loss, net of income taxes	(460,522		)	(479,816		)	(481,956		)	(494,976		)
Total New York Times Company stockholders’ equity	918,678			847,815			1,229,171			1,172,003
Noncontrolling interest	(4		)	(3,571		)	1,860			1,860
Total stockholders’ equity	918,674			844,244			1,231,031			1,173,863
Total liabilities and stockholders’ equity	$	2,238,958		$	2,185,395		$	2,058,357		$	2,089,138

See Notes to Condensed Consolidated Financial Statements.

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

For the Quarters Ended For the Nine Months Ended
September 24, 2017

September 25, 2016
September 24, 2017
September 25, 2016
(13 weeks) (39 weeks)
Revenues
Subscription $ 246,638
$ 217,099
$ 739,050
$ 654,573
Advertising 113,633
124,898
375,895
395,733
Other 25,364
21,550
76,568
65,386
Total revenues 385,635
363,547
1,191,513
1,115,692
Operating costs
Production costs:
Wages and benefits 89,866
91,041
269,209
274,142
Raw materials 15,718
18,228
48,461
53,115
Other 44,336
47,347
134,771
139,938
Total production costs 149,920
156,616
452,441
467,195
Selling, general and administrative costs 184,483
184,596
595,491
534,911
Depreciation and amortization 15,677
15,384
46,961
46,003
Total operating costs 350,080
356,596
1,094,893
1,048,109
Headquarters redesign and consolidation 2,542
—
6,929
—
Restructuring charge —
2,949
—
14,804
Multiemployer pension plan withdrawal expense —
(4,971 ) —
6,730
Operating profit 33,013
8,973
89,691
46,049
Gain/(loss) from joint ventures 31,557
463
31,464
(41,845 )
Interest expense, net 4,660
9,032
15,118
26,955
Income/(loss) from continuing operations before income taxes 59,910
404
106,037
(22,751 )
Income tax expense/(benefit) 23,420
121
40,873
(8,956 )
Income/(loss) from continuing operations 36,490
283
65,164
(13,795 )
Loss from discontinued operations, net of income taxes 488
—
488
—
Net income/(loss) 36,002
283
64,676
(13,795 )
Net (income)/loss attributable to the noncontrolling interest (3,673 ) 123
(3,567 ) 5,719
Net income/(loss) attributable to The New York Times Company common stockholders $ 32,329
$ 406
$ 61,109
$ (8,076 )
Average number of common shares outstanding:
Basic 162,173
161,185
161,798
161,092
Diluted 164,405
162,945
164,005
161,092
Basic earnings/(loss) per share attributable to The New York Times Company common stockholders:
Income/(loss) from continuing operations $ 0.20
$ —
$ 0.38
$ (0.05 )
Loss from discontinued operations, net of income taxes —
—
—
—
Net income/(loss) $ 0.20
$ —
$ 0.38
$ (0.05 )



	For the Quarters Ended					For the Six Months Ended
	June 28, 2020		June 30, 2019			June 28, 2020		June 30, 2019
	(13 weeks)					(26 weeks)
Revenues
Subscription	$	293,189	$	270,456		$	578,623	$	541,266
Advertising	67,760		120,761			173,897		245,849
Other	42,801		45,041			94,866		88,205
Total revenues	403,750		436,258			847,386		875,320
Operating costs
Cost of revenue (excluding depreciation and amortization)	230,147		245,195			473,819		484,554
Sales and marketing	39,617		62,289			113,413		137,109
Product development	30,737		25,261			61,539		48,989
General and administrative	58,812		50,400			111,673		102,039
Depreciation and amortization	15,631		15,180			30,816		30,098
Total operating costs	374,944		398,325			791,260		802,789
Operating profit	28,806		37,933			56,126		72,531
Other components of net periodic benefit costs	2,149		1,833			4,463		3,668
Interest income/(expense) and other, net	2,786		(1,514		)	16,640		(2,817		)
Income from continuing operations before income taxes	29,443		34,586			68,303		66,046
Income tax expense	5,781		9,415			11,787		10,719
Net income	23,662		25,171			56,516		55,327
Net income attributable to The New York Times Company common stockholders	$	23,662	$	25,171		$	56,516	$	55,327
Average number of common shares outstanding:
Basic	166,869		166,152			166,725		165,915
Diluted	168,083		167,549			167,968		167,322
Basic earnings per share attributable to The New York Times Company common stockholders	$	0.14	$	0.15		$	0.34	$	0.33
Diluted earnings per share attributable to The New York Times Company common stockholders	$	0.14	$	0.15		$	0.34	$	0.33
Dividends declared per share	$	—	$	0.05		$	0.06	$	0.10

See Notes to Condensed Consolidated Financial Statements.

~~THE NEW YORK TIMES COMPANY~~

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS~~

~~(Unaudited)~~

~~(In thousands, except per share data)~~

For the Quarters Ended For the Nine Months Ended
September 24, 2017
September 25, 2016
September 24, 2017
September 25, 2016
(13 weeks) (39 weeks)
Diluted earnings/(loss) per share attributable to The New York Times Company common stockholders:
Income/(loss) from continuing operations $ 0.20
$ —
$ 0.37
$ (0.05 )
Loss from discontinued operations, net of income taxes —
—
—
—
Net income/(loss) $ 0.20
$ —
$ 0.37
$ (0.05 )
Dividends declared per share $ 0.08
$ 0.08
$ 0.12
$ 0.12

~~See Notes to Condensed Consolidated Financial Statements.~~

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)


	For the Quarters Ended					For the Nine Months Ended						For the Quarters Ended				For the Six Months Ended
	September 24, 2017			September 25, 2016		September 24, 2017			September 25, 2016			June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019
	(13 weeks)					(39 weeks)						(13 weeks)				(26 weeks)
Net income/(loss)	$	36,002		$	283	$	64,676		$	(13,795	)
Net income												$	23,662	$	25,171	$	56,516	$	55,327
Other comprehensive income, before tax:
Income on foreign currency translation adjustments	6,099			604		11,170			2,110
Income/(loss) on foreign currency translation adjustments												619		1,522		365		(127		)
Pension and postretirement benefits obligation	6,921			6,552		20,762			19,655			6,231		4,896		12,628		9,792
Net unrealized loss on available-for-sale securities	(1,081		)	—		(1,081		)	—
Net unrealized gain on available-for-sale securities												4,075		1,415		4,790		3,489
Other comprehensive income, before tax	11,939			7,156		30,851			21,765			10,925		7,833		17,783		13,154
Income tax expense	4,200			2,912		11,557			8,492			2,848		2,015		4,763		3,414
Other comprehensive income, net of tax	7,739			4,244		19,294			13,273			8,077		5,818		13,020		9,740
Comprehensive income/(loss)	43,741			4,527		83,970			(522		)
Comprehensive (income)/loss attributable to the noncontrolling interest	(3,673		)	123		(3,567		)	5,719
Comprehensive income attributable to The New York Times Company common stockholders	$	40,068		$	4,650	$	80,403		$	5,197		$	31,739	$	30,989	$	69,536	$	65,067

See Notes to Condensed Consolidated Financial Statements.

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Quarters Ended June 28, 2020 and June 30, 2019

(Unaudited)

(In thousands, except share data)



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

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

Balance, March 29, 2020	$	17,552	$	199,933		$	1,635,473		$	(171,211	)	$	(490,033	)	$	1,191,714		$	1,860	$	1,193,574
Net income	—		—			23,662			—			—			23,662			—		23,662
Dividends	—		—			23			—			—			23			—		23
Other comprehensive income	—		—			—			—			8,077			8,077			—		8,077
Issuance of shares:
Stock options – 90,735 Class A shares	9		933			—			—			—			942			—		942
Restricted stock units vested – 6,516 Class A shares	1		(275		)	—			—			—			(274		)	—		(274		)
Stock-based compensation	—		5,027			—			—			—			5,027			—		5,027
Balance, June 28, 2020	$	17,562	$	205,618		$	1,659,158		$	(171,211	)	$	(481,956	)	$	1,229,171		$	1,860	$	1,231,031

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Six Months Ended June 28, 2020 and June 30, 2019

(Unaudited)

(In thousands, except share data)



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

Balance, December 30, 2018	$	17,396	$	206,316		$	1,506,004		$	(171,211	)	$	(517,724	)	$	1,040,781		$	1,860	$	1,042,641
Net income	—		—			55,327			—			—			55,327			—		55,327
Dividends	—		—			(16,637		)	—			—			(16,637		)	—		(16,637		)
Other comprehensive income	—		—			—			—			9,740			9,740			—		9,740
Issuance of shares:
Stock options – 279,510 Class A shares	28		2,937			—			—			—			2,965			—		2,965
Restricted stock units vested – 221,087 Class A shares	22		(3,747		)	—			—			—			(3,725		)	—		(3,725		)
Performance-based awards – 418,491 Class A shares	42		(11,966		)	—			—			—			(11,924		)	—		(11,924		)
Stock-based compensation	—		6,816			—			—			—			6,816			—		6,816
Balance, June 30, 2019	$	17,488	$	200,356		$	1,544,694		$	(171,211	)	$	(507,984	)	$	1,083,343		$	1,860	$	1,085,203

Balance, December 29, 2019	$	17,504	$	208,028		$	1,612,658		$	(171,211	)	$	(494,976	)	$	1,172,003		$	1,860	$	1,173,863
Net income	—		—			56,516			—			—			56,516			—		56,516
Dividends	—		—			(10,016		)	—			—			(10,016		)	—		(10,016		)
Other comprehensive income	—		—			—			—			13,020			13,020			—		13,020
Issuance of shares:
Stock options – 179,510 Class A shares	18		1,855			—			—			—			1,873			—		1,873
Restricted stock units vested – 141,501 Class A shares	14		(3,897		)	—			—			—			(3,883		)	—		(3,883		)
Performance-based awards – 257,098 Class A shares	26		(7,850		)	—			—			—			(7,824		)	—		(7,824		)
Stock-based compensation	—		7,482			—			—			—			7,482			—		7,482
Balance, June 28, 2020	$	17,562	$	205,618		$	1,659,158		$	(171,211	)	$	(481,956	)	$	1,229,171		$	1,860	$	1,231,031

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	For the Nine Months Ended						For the Six Months Ended
	September 24, 2017			September 25, 2016			June 28, 2020			June 30, 2019
	(39 weeks)						(26 weeks)
Cash flows from operating activities
Net income/(loss)	$	64,676		$	(13,795	)
Net income							$	56,516		$	55,327
Adjustments to reconcile net income to net cash provided by operating activities:
Restructuring charge	—			14,804
Multiemployer pension plan charges	—			11,701
Depreciation and amortization	46,961			46,003			30,816			30,098
Amortization of right of use asset							4,645			3,520
Stock-based compensation expense	10,927			8,561			7,482			6,826
Undistributed (gain)/loss of joint ventures	(31,464		)	41,845
Deferred income taxes							(1,209		)	—
Gain on non-marketable equity investment							(10,074		)	(1,886		)
Long-term retirement benefit obligations	(21,897		)	(22,366		)	(8,524		)	(11,574		)
Uncertain tax positions	139			53
Fair market value adjustment on life insurance products							170			(2,048		)
Other-net	2,609			8,257			1,514			(7,801		)
Changes in operating assets and liabilities:
Accounts receivable-net	55,032			54,591			91,310			59,673
Other assets	(1,761		)	(21,926		)	(1,292		)	(14,555		)
Accounts payable, accrued payroll and other liabilities	12,473			(45,546		)	(64,019		)	(57,217		)
Unexpired subscriptions	10,200			3,461			11,255			3,637
Net cash provided by operating activities	147,895			85,643			118,590			64,000
Cash flows from investing activities
Purchases of marketable securities	(398,246		)	(514,809		)	(278,773		)	(225,765		)
Maturities of marketable securities	454,022			522,655			228,938			223,327
Cash distribution from corporate-owned life insurance	—			38,000
Business acquisitions	—			(15,410		)	(8,055		)	—
Purchase of investments – net of proceeds	(422		)	(1,840		)
Change in restricted cash	7,014			3,816
Proceeds from sale of investments – net							4,074			110
Capital expenditures	(47,831		)	(21,820		)	(21,510		)	(23,065		)
Other-net	1,070			(380		)	2,388			1,872
Net cash provided by investing activities	15,607			10,212
Net cash used in investing activities							(72,938		)	(23,521		)
Cash flows from financing activities
Long-term obligations:
Repayment of debt and capital lease obligations	(414		)	(460		)
Repayment of debt and finance lease obligations							—			(230		)
Dividends paid	(19,483		)	(19,416		)	(18,359		)	(14,936		)
Capital shares:
Stock issuances	4,142			273
Repurchases	—			(15,684		)
Proceeds from stock option exercises							1,873			2,965
Share-based compensation tax withholding	(3,984		)	(9,572		)	(11,706		)	(15,649		)
Net cash used in financing activities	(19,739		)	(44,859		)	(28,192		)	(27,850		)
Net increase in cash and cash equivalents	143,763			50,996
Net increase in cash, cash equivalents and restricted cash							17,460			12,629
Effect of exchange rate changes on cash	212			166			162			305
Cash and cash equivalents at the beginning of the period	100,692			105,776
Cash and cash equivalents at the end of the period	$	244,667		$	156,938
Cash, cash equivalents and restricted cash at the beginning of the period							247,518			259,799
Cash, cash equivalents and restricted cash at the end of the period							$	265,140		$	272,733

See Notes to Condensed Consolidated Financial Statements.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. BASIS OF PRESENTATION

In the opinion of management of The New York Times Company (the “Company”), the Condensed Consolidated Financial Statements present fairly the financial position of the Company as of ~~September 24, 2017~~June 28, 2020 and December ~~25, 2016,~~29, 2019, and the results of operations, changes in stockholders’ equity and cash flows of the Company for the periods ended ~~September 24, 2017~~June 28, 2020, and ~~September 25, 2016.~~June 30, 2019. The Company and its consolidated subsidiaries are referred to collectively as “we,” “us” or “our.” All adjustments necessary for a fair presentation have been included and are of a normal and recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation. The financial statements were prepared in accordance with the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain notes or other financial information that are normally required by accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted from these interim financial statements. These financial statements, therefore, should be read in conjunction with the Consolidated Financial Statements and related Notes included in our Annual Report on Form 10-K for the year ended December ~~25, 2016.~~29, 2019. Due to the seasonal nature of our business, operating results for the interim periods are not necessarily indicative of a full year’s operations. The fiscal periods included herein comprise 13 weeks and 26 weeks for the ~~third quarter.~~second quarter and six months, respectively.

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

Reclassification

The Company has changed the expense captions on its Condensed Consolidated Statement of Operations effective for the quarter ended March 29, 2020. These changes were made in order to reflect how the Company manages its business and to communicate where the Company is investing resources and how this aligns with the Company’s strategy. The Company has reclassified expenses for the prior period in order to present comparable financial results. There is no change to consolidated operating income, operating expense, net income or cash flows as a result of this change in classification. See Note 15 for more detail.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Except as described herein, as of ~~September 24, 2017,~~June 28, 2020, our significant accounting policies, which are detailed in our Annual Report on Form 10-K for the year ended December ~~25, 2016,~~29, 2019, have not ~~changed:~~changed materially.

~~Marketable Securities~~

We have investments in marketable debt securities. We determine the appropriate classification of our investments at the date of purchase and reevaluate the classifications at the balance sheet date. Marketable debt securities with maturities of 12 months or less are classified as short-term. Marketable debt securities with maturities greater than 12 months are classified as long-term. Historically, we have accounted for all marketable securities as held-to-maturity (“HTM”) and stated at amortized cost as we had the intent and ability to hold our marketable debt securities until maturity. However, on June 29, 2017, our Board of Directors approved a change to the Company’s cash reserve investment policy to allow the Company to sell marketable securities prior to maturity. Beginning in the third quarter of 2017, the Company reclassified all marketable securities from HTM to available-for-sale (“AFS”).

Securities that we might not hold until maturity are classified as AFS securities and reported at fair value. Unrealized gains and losses, after applicable income taxes, are reported in accumulated other comprehensive income/(loss).

We conduct an other-than-temporary impairment (“OTTI”) analysis on a quarterly basis or more often if a potential loss-triggering event occurs. We consider factors such as the duration, severity and the reason for the decline in value, the potential recovery period and whether we intend to sell. For AFS securities, we also consider whether (i) it is more likely than not that we will be required to sell the debt securities before recovery of their amortized cost basis and (ii) the amortized cost basis cannot be recovered as a result of credit losses.

~~Other~~

As of the second quarter of 2017, the Company has renamed “circulation revenues” as “subscription revenues.” Subscription revenues consist of revenues from subscriptions to our print and digital products (including our news product, as well as Crossword and Cooking products), as well as single-copy sales of our print products (which comprise approximately 10% of these revenues). These revenues are based on both the number of copies of the printed newspaper sold and digital-only subscriptions, and the rates charged to the respective customers.

~~Recently Adopted Accounting Pronouncements~~

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, “Compensation-Stock Compensation,” which provides guidance on accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This guidance became effective for the Company for fiscal years beginning after December 25, 2016.

~~As a result of the adoption of ASU 2016-09 in the first quarter of 2017, we recognized excess tax windfalls in income tax expense rather than additional paid-in capital of~~ ~~$0.1 million~~ ~~and $0.2 million for the quarter and nine months ended~~

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

September 24, 2017, respectively. Excess tax shortfalls and/or windfalls for share-based payments are now included in net cash from operating activities rather than net cash from financing activities. The changes have been applied prospectively in accordance with the ASU and prior periods have not been adjusted. Additionally, the presentation of employee taxes paid to taxing authorities for share-based transactions are now included in net cash from financing activities rather than net cash from operating activities. This change was applied retrospectively and as a result, we reclassified $9.6 million for the nine months ended September 25, 2016 in our Condensed Statement of Cash Flows from operating activities to financing activities. No other material changes resulted from the adoption of this standard.Recently Adopted Accounting Pronouncements



Accounting Standard Update(s)	Topic	Effective Period	Summary
2018-15	Intangibles—Goodwill and Other—Internal-Use Software	Fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted.	Clarifies the accounting for implementation costs in cloud computing arrangements. The standard provides that implementation costs be evaluated for capitalization using the same criteria as that used for internal-use software development costs, with amortization expense being recorded in the same income statement expense line as the hosted service costs and over the expected term of the hosting arrangement. The Company adopted this ASU prospectively on December 30, 2019 and will include capitalized implementation costs in Miscellaneous assets in the Company’s Condensed Consolidated Balance Sheet and within Total operating costs in the Condensed Consolidated Statement of Operations. The adoption did not have a material impact on the Company’s consolidated financial statements.
2018-13	Fair Value Measurement (Topic 820) Disclosure Framework	Fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted.	Modifies the disclosure requirements on fair value measurements. The amendments of disclosures related to changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company adopted this ASU on December 30, 2019. The adoption did not have a material impact on the Company’s disclosures.
2016-13 2018-19 2019-04	Financial Instruments—Credit Losses	Fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.	Amends guidance on reporting credit losses for assets, including trade receivables, available-for-sale marketable securities and any other financial assets not excluded from the scope that have the contractual right to receive cash. For trade receivables, ASU 2016-13 eliminates the probable initial recognition threshold in current generally accepted accounting standards, and, instead, requires an entity to reflect its current estimate of all expected credit losses. For available-for-sale marketable securities, credit losses should be measured in a manner similar to current generally accepted accounting standards; however, ASU 2016-13 will require that credit losses be presented as an allowance rather than as a write-down. The Company adopted this ASU on December 30, 2019 using a modified retrospective approach. The adoption did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

~~In March 2017, the FASB~~The Financial Accounting Standards Board (the “FASB”) issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” The new guidance requires the service cost component to be presented separately from the other components of net benefit costs. Service cost will be presented with other employee compensation cost within operations. The other components of net benefit cost, such as interest cost, amortization of prior service cost and gains or losses are required to be presented outside of operations. The new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The guidance should be applied retrospectively for the presentation of the service cost component in the income statement and allows a practical expedient for the estimation basis for applying the retrospective presentation requirements.

Since the changes required in ASU 2017-07 only change the Condensed Consolidated Statements of Operations classification of the components of net periodic benefit cost, no changes are expected to net income. Upon adoption of the ASU during the first quarter of 2018, the Company will separately present the components of net periodic benefit cost or income, excluding the service cost component, in non-operating expenses on a retrospective basis. The historical components of net periodic benefit cost are disclosed in the Company’s previously filed Quarterly Reports on Form 10-Q and its 2016 Annual Report on Form 10-K.

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

In February 2016, the FASB issued ASU 2016-02, “Leases,” which provides guidance on accounting for leases and disclosure of key information about leasing arrangements. The guidance requires lessees to recognize the following for all operating and finance leases at the commencement date: (1) a lease liability, which is the obligation to make lease payments arising from a lease, measured on a discounted basis and (2) a right-of-use asset representing the lessee’s right to use, or control the use of, the underlying asset for the lease term. A lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities for short-term leases with a term of 12 months or less. The guidance does not fundamentally change lessor accounting; however, some changes have been made to align that guidance with the lessee guidance and other areas within GAAP. This guidance becomes effective for the Company for fiscal years beginning after December 30, 2018. Early application is permitted. This guidance will be applied on a modified retrospective basis for leases existing at, or entered into after, the earliest period presented in the financial statements. We are currently in the process of evaluating the impact of the new leasing guidance and expect that most of our operating lease commitments will be subject to the new standard. The adoption of the standard will require us to add right-of-use assets and lease liabilities onto our balance sheet. Based upon our initial evaluation, we do not expect the adoption of the standard to have a material effect on our results of operations and liquidity.

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities” which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments including requirements to measure most equity investments at fair value with changes in fair value recognized in net income, to perform a qualitative assessment of equity investments without readily determinable fair values, and to separately present financial assets and liabilities by measurement category and by type of financial asset on the balance sheet or the accompanying notes to the financial statements. The new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. We are currently in the process of evaluating the impact of this guidance on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which prescribes a single comprehensive model for entities to use in the accounting for revenue arising from contracts with customers. The new guidance

topics:



Accounting Standard Update(s)	Topic	Effective Period	Summary
2019-12	Simplifying the Accounting for Income Taxes (Topic 740)	Fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. Early adoption is permitted.	Simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in Accounting Standards Codification (“ASC”) 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. We do not expect this guidance to have a material impact on our consolidated financial statements.
2018-14	Compensation—Retirement Benefits—Defined Benefit Plans—General	Fiscal years ending after December 15, 2020. Early adoption is permitted.	Modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement benefit plans. The guidance removes disclosures, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant. We are currently in the process of evaluating the impact on our consolidated financial statements.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

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

Based upon our initial evaluation, we do not expect the adoption of ASU 2014-09 to have a material effect on our financial condition or results of operations. While we continue to evaluate the impact of the new revenue guidance, we currently believe that the most significant changes will be primarily related to how we account for certain licensing arrangements in the other revenue category.

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

NOTE 3. REVENUE

We generate revenues principally from subscriptions and advertising. Subscription revenues consist of revenues from subscriptions to our print and digital products (which include our news product, as well as our Crossword, Cooking and audio products) and single-copy and bulk sales of our print products. Subscription revenues are based on both the number of copies of the printed newspaper sold and digital-only subscriptions, and the rates charged to the respective customers.

Advertising revenues are primarily derived from offerings sold directly to marketers by our advertising sales team. A significantly smaller and diminishing proportion of our total advertising revenues is generated through programmatic auctions run by third-party ad exchanges. Advertising revenues are primarily determined by the volume, rate and mix of advertisements. Display advertising revenue is principally from advertisers promoting products, services or brands. Display advertising also includes advertisements that direct viewers to branded content on our platforms. Other print advertising revenue primarily includes classified advertising revenue. Other digital advertising revenue primarily includes creative services fees, including those associated with our branded content studio; advertising revenue from our podcasts; and advertising revenue generated by Wirecutter, our product review and recommendation website.

Other revenues primarily consist of revenues from licensing, affiliate referrals from Wirecutter, the leasing of floors in the New York headquarters building located at 620 Eighth Avenue, New York, New York (the “Company Headquarters”), commercial printing, television and film, retail commerce and NYT Live (our live events business).

Subscription, advertising and other revenues were as follows:



	For the Quarters Ended								For the Six Months Ended
(In thousands)	June 28, 2020		As % of total		June 30, 2019		As % of total		June 28, 2020		As % of total		June 30, 2019		As % of total
Subscription	$	293,189	72.6	%	$	270,456	62.0	%	$	578,623	68.3	%	$	541,266	61.8	%
Advertising	67,760		16.8	%	120,761		27.7	%	173,897		20.5	%	245,849		28.1	%
Other ⁽¹⁾	42,801		10.6	%	45,041		10.3	%	94,866		11.2	%	88,205		10.1	%
Total	$	403,750	100.0	%	$	436,258	100.0	%	$	847,386	100.0	%	$	875,320	100.0	%

⁽¹⁾ Other revenue includes building rental revenue, which is not under the scope of Revenue from Contracts with Customers (Topic 606). Building rental revenue was approximately $7 million for the second quarters of 2020 and 2019, respectively, and approximately $15 million for the first six months of 2020 and 2019, respectively.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table summarizes print and digital subscription revenues, which are components of subscription revenues above, for the second quarters and first six months ended June 28, 2020, and June 30, 2019:



	For the Quarters Ended				For the Six Months Ended
(In thousands)	June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019
Print subscription revenues:
Domestic home delivery subscription revenues⁽¹⁾	$	132,971	$	133,038	$	266,708	$	268,241
Single copy, NYT International and other subscription revenues⁽²⁾	14,234		24,783		35,921		50,531
Subtotal print subscription revenues	147,205		157,821		302,629		318,772
Digital-only subscription revenues:
News product subscription revenues⁽³⁾	132,922		104,430		251,880		206,776
Other product subscription revenues⁽⁴⁾	13,062		8,205		24,114		15,718
Subtotal digital-only subscriptions	145,984		112,635		275,994		222,494
Total subscription revenues	$	293,189	$	270,456	$	578,623	$	541,266
⁽¹⁾ Includes free access to some or all of the Company’s digital products.
⁽²⁾ NYT International is the international edition of our print newspaper.
⁽³⁾Includes revenues from subscriptions to the Company’s news product. News product subscription packages that include access to the Company’s Crossword and Cooking products are also included in this category.
⁽⁴⁾Includes revenues from standalone subscriptions to the Company’s Crossword, Cooking and audio products.

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



	For the Quarters Ended
	June 28, 2020						June 30, 2019
(In thousands)	Print		Digital		Total		Print		Digital		Total
Advertising revenues:
Display	$	21,460	$	30,466	$	51,926	$	55,859	$	42,833	$	98,692
Other	6,769		9,065		15,834		6,876		15,193		22,069
Total advertising	$	28,229	$	39,531	$	67,760	$	62,735	$	58,026	$	120,761



	For the Six Months Ended
	June 28, 2020						June 30, 2019
(In thousands)	Print		Digital		Total		Print		Digital		Total
Advertising revenues:
Display	$	69,619	$	70,360	$	139,979	$	118,201	$	84,945	$	203,146
Other	13,589		20,329		33,918		14,079		28,624		42,703
Total advertising	$	83,208	$	90,689	$	173,897	$	132,280	$	113,569	$	245,849

Performance Obligations

We have remaining performance obligations related to digital archive and other licensing and certain advertising contracts. As of June 28, 2020, the aggregate amount of transaction price allocated to the remaining performance obligations for contracts with a duration greater than one year was approximately $138 million. The Company will recognize this revenue as performance obligations are satisfied. We expect that approximately $26 million, $45 million and $67 million will be recognized in the remainder of 2020, 2021 and thereafter, respectively.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Contract Assets

As of June 28, 2020, and December 29, 2019, the Company had $2.6 million and $3.4 million, respectively, in contract assets recorded in the Condensed Consolidated Balance Sheets related to digital archiving licensing revenue. The contract asset is reclassified to Accounts receivable when the customer is invoiced based on the contractual billing schedule. The decrease in the contract assets balance of $0.8 million for the six months ended June 28, 2020, is due to consideration that was reclassified to Accounts receivable when invoiced based on the contractual billing schedules for the period ended June 28, 2020.

NOTE 3.4. MARKETABLE SECURITIES

~~As noted in Note 2, the~~The Company ~~reclassified all~~accounts for its marketable securities ~~from HTM to AFS in the third quarter~~as available for sale (“AFS”). The Company recorded $5.6 million and $0.8 million of 2017, following a change to the Company’s cash reserve investment policy that allows the Company to sell marketable securities prior to maturity. This change resulted in the recording of a $1.1 million net unrealized ~~loss~~gains inAccumulated other comprehensive ~~income. The reclassification~~income (“AOCI”) as of ~~the investment portfolio to AFS was made to provide increased flexibility in the use of our investments to support current operations.~~June 28, 2020, and December 29, 2019, respectively.

The following ~~table presents~~tables present the amortized cost, gross unrealized gains and losses, and fair market value of our AFS debt securities as of ~~September 24, 2017:~~June 28, 2020, and December 29, 2019:



	June 28, 2020
(In thousands)	Amortized Cost		Gross unrealized gains		Gross unrealized losses			Fair Value
Short-term AFS securities
Corporate debt securities	$	105,615	$	669	$	(13	)	$	106,271
U.S. Treasury securities	78,826		179		(1		)	79,004
U.S. governmental agency securities	35,965		180		(1		)	36,144
Commercial paper	15,981		—		—			15,981
Certificates of deposit	3,000		—		—			3,000
Total short-term AFS securities	$	239,387	$	1,028	$	(15	)	$	240,400
Long-term AFS securities
Corporate debt securities	$	114,618	$	1,751	$	(28	)	$	116,341
U.S. Treasury securities	92,680		2,714		—			95,394
U.S. governmental agency securities	55,089		125		(3		)	55,211
Total long-term AFS securities	$	262,387	$	4,590	$	(31	)	$	266,946

September 24, 2017
(In thousands) Amortized Cost Gross unrealized gains Gross unrealized losses Fair Value
Short-term AFS securities
U.S Treasury securities $ 73,220
$ —
$ (45 ) $ 73,175
Corporate debt securities 156,683
35
(79 ) 156,639
U.S. governmental agency securities 53,842
1
(89 ) 53,754
Certificates of deposit 20,403
—
—
20,403
Commercial paper 32,471
—
—
32,471
Total short-term AFS securities $ 336,619
$ 36
$ (213 ) $ 336,442
Long-term AFS securities
U.S. governmental agency securities $ 97,431
$ 2
$ (616 ) 96,817
Corporate debt securities 97,583
21
(259 ) 97,345
U.S Treasury securities 47,672
—
(52 ) 47,620
Total long-term AFS securities $ 242,686
$ 23
$ (927 ) $ 241,782



	December 29, 2019
(In thousands)	Amortized Cost		Gross unrealized gains		Gross unrealized losses			Fair Value
Short-term AFS securities
Corporate debt securities	$	98,864	$	271	$	(9	)	$	99,126
U.S. Treasury securities	43,098		8		(11		)	43,095
U.S. governmental agency securities	37,471		35		(4		)	37,502
Commercial paper	12,561		—		—			12,561
Certificates of deposit	9,501		—		—			9,501
Total short-term AFS securities	$	201,495	$	314	$	(24	)	$	201,785
Long-term AFS securities
Corporate debt securities	$	103,149	$	617	$	(29	)	$	103,737
U.S. Treasury securities	101,457		84		(103		)	101,438
U.S. governmental agency securities	46,600		5		(84		)	46,521
Total long-term AFS securities	$	251,206	$	706	$	(216	)	$	251,696

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following ~~table represents~~tables represent the AFS securities as of ~~September 24, 2017~~June 28, 2020, and December 29, 2019, that were in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position:


	September 24, 2017															June 28, 2020
	Less than 12 Months					12 Months or Greater					Total					Less than 12 Months					12 Months or Greater				Total
(In thousands)	Fair Value		Gross unrealized losses			Fair Value		Gross unrealized losses			Fair Value		Gross unrealized losses			Fair Value		Gross unrealized losses			Fair Value		Gross unrealized losses		Fair Value		Gross unrealized losses
Short-term AFS securities
U.S Treasury securities	$	73,175	$	(45	)	$	—	$	—		$	73,175	$	(45	)
Corporate debt securities	101,648		(77		)	2,500		(2		)	104,148		(79		)	$	22,721	$	(13	)	$	—	$	—	$	22,721	$	(13	)
U.S. Treasury securities																14,496		(1		)	—		—		14,496		(1		)
U.S. governmental agency securities	42,490		(53		)	8,964		(36		)	51,454		(89		)	9,999		(1		)	—		—		9,999		(1		)
Total short-term AFS securities	$	217,313	$	(175	)	$	11,464	$	(38	)	$	228,777	$	(213	)	$	47,216	$	(15	)	$	—	$	—	$	47,216	$	(15	)
Long-term AFS securities
Corporate debt securities																$	17,542	$	(28	)	$	—	$	—	$	17,542	$	(28	)
U.S. governmental agency securities	$	47,620	$	(312	)	$	—	(304		)	$	47,620	$	(616	)	8,747		(3		)	—		—		8,747		(3		)
Corporate debt securities	66,428		(196		)	8,918		(63		)	75,346		(259		)
U.S Treasury securities	53,142		(52		)	39,697		—			92,839		(52		)
Total long-term AFS securities	$	167,190	$	(560	)	$	48,615	$	(367	)	$	215,805	$	(927	)	$	26,289	$	(31	)	$	—	$	—	$	26,289	$	(31	)



	December 29, 2019
	Less than 12 Months					12 Months or Greater					Total
(In thousands)	Fair Value		Gross unrealized losses			Fair Value		Gross unrealized losses			Fair Value		Gross unrealized losses
Short-term AFS securities
Corporate debt securities	$	20,975	$	(6	)	$	8,251	$	(3	)	$	29,226	$	(9	)
U.S. Treasury securities	13,296		(3		)	11,147		(8		)	24,443		(11		)
U.S. governmental agency securities	—		—			15,000		(4		)	15,000		(4		)
Total short-term AFS securities	$	34,271	$	(9	)	$	34,398	$	(15	)	$	68,669	$	(24	)
Long-term AFS securities
Corporate debt securities	$	35,891	$	(25	)	$	4,502	$	(4	)	$	40,393	$	(29	)
U.S. Treasury securities	60,935		(103		)	—		—			60,935		(103		)
U.S. governmental agency securities	34,167		(84		)	—		—			34,167		(84		)
Total long-term AFS securities	$	130,993	$	(212	)	$	4,502	$	(4	)	$	135,495	$	(216	)

We ~~periodically review our~~assess AFS securities ~~for OTTI. See Note 2 for factors~~on a quarterly basis or more often if a potential loss-triggering event occurs. For AFS securities in an unrealized loss position, we first assess whether we intend to sell, or if it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For AFS securities that do not meet the aforementioned criteria, we evaluate whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, we consider ~~when assessing AFS securities~~the extent to which fair value is less than amortized cost, creditworthiness of the security, and adverse conditions specifically related to the security. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security is compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for ~~OTTI.~~ credit losses

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

is recorded, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.

As of ~~September 24, 2017,~~June 28, 2020, we did not intend to sell and it was not likely that we would be required to sell these investments before recovery of their amortized cost basis, which may be at maturity. ~~Unrealized~~As of June 28, 2020, we have recognized 0 losses or allowance for credit losses related to ~~these investments are primarily due to interest rate fluctuations as opposed to changes in credit quality. Therefore, as of September 24, 2017, we have recognized no OTTI loss.~~

~~The following table presents the amortized cost of our HTM securities as of December 25, 2016:~~

December 25, 2016
(In thousands)

Amortized Cost
Short-term HTM securities (1)

U.S Treasury securities $ 150,623
Corporate debt securities 150,599
U.S. governmental agency securities 64,135
Commercial paper 84,178
Total short-term HTM securities $ 449,535
Long-term HTM securities (1)

U.S. governmental agency securities $ 110,732
Corporate debt securities 61,775
U.S Treasury securities 14,792
Total long-term HTM securities $ 187,299

⁽¹⁾ All HTM securities were recorded at amortized cost and not adjusted to fair value in accordance with the HTM accounting treatment. As of December 25, 2016, the amortized cost approximated fair value because of the short-term maturity and highly liquid nature of these investments.AFS securities.

As of ~~September 24, 2017,~~June 28, 2020, our short-term and long-term marketable securities had remaining maturities of less than 1 month to 12 months and 13 months to 3436 months, respectively. See Note 8 for ~~additional~~more information regarding the fair value of our marketable securities.

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

NOTE 4.5. GOODWILL AND INTANGIBLES

~~In 2016,~~During the first quarter of 2020, the Company acquired ~~two digital marketing agencies, HelloSociety, LLC and Fake Love, LLC for an aggregate of $15.4 million~~Listen In Audio, Inc., a company that transforms journalism articles into audio that is made available in ~~separate all-cash transactions. Also in 2016, the Company acquired Submarine Leisure Club, Inc., which owned the~~a subscription-based product ~~review and recommendation websites The Wirecutter and The Sweethome,~~named “Audm,” in an all-cash transaction. We paid ~~$25.0~~$8.6 million ~~including a~~ (comprised of $8.0 million cash payment ~~made for a non-compete agreement,~~ and ~~also~~$0.6 million note receivable previously issued by the Company, which was canceled at the close of the transaction) and entered into ~~a consulting agreement and retention~~ agreements that will likely require retention payments over the three years following the acquisition.

The Company allocated the purchase ~~prices~~price for ~~these acquisitions~~this acquisition based on the final valuation of assets acquired and liabilities assumed, resulting in allocations primarily to goodwill and intangibles ~~property, plant and equipment and other miscellaneous assets.~~

as of June 28, 2020. The ~~aggregate~~ carrying amount of the intangible ~~assets~~asset of ~~$8.6~~$2.7 million related to ~~these acquisitions~~this acquisition has been included in ~~“Miscellaneous Assets”~~Miscellaneous Assets in our Condensed Consolidated Balance Sheets. The estimated useful ~~lives~~life for ~~these assets range from 3 to 7~~this asset is 8 years and ~~are~~it is amortized on a straight-line basis.

The changes in the carrying amount of goodwill as of ~~September 24, 2017,~~June 28, 2020, and since December ~~25, 2016,~~29, 2019, were as follows:



(In thousands)	Total Company
Balance as of December 29, 2019	$	138,674
Business acquisition	5,818
Foreign currency translation	275
Balance as of June 28, 2020	$	144,767

(In thousands) Total Company
Balance as of December 25, 2016 $ 134,517
Measurement period adjustment ⁽¹⁾
(198 )
Foreign currency translation 8,852
Balance as of September 24, 2017 $ 143,171

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

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

~~NOTE 5. INVESTMENTS~~

~~Equity Method Investments~~

~~As of September 24, 2017, our investments in joint ventures totaled $20.5 million and we had equity ownership interests in the following entities:~~



~~Company~~	~~Approximate %~~ ~~Ownership~~
~~Donohue Malbaie Inc.~~	49	%
~~Madison Paper Industries~~	40	%

We have investments in Donohue Malbaie Inc. (“Malbaie”), a Canadian newsprint company, and Madison Paper Industries (“Madison”), a partnership that previously operated a supercalendered paper mill in Maine. In the third quarter of 2017, we sold our 30% ownership in Women in the World Media, LLC, a live event conference business, for a nominal amount.

The Company and UPM-Kymmene Corporation (“UPM”), a Finnish paper manufacturing company, are partners through subsidiary companies in Madison. The Company’s 40% ownership of Madison is through an 80%-owned consolidated subsidiary which owns 50% of Madison. UPM owns 60% of Madison, including a 10% interest through a 20% noncontrolling interest in the consolidated subsidiary of the Company. The paper mill was closed in May 2016. During the first quarter of 2016, we recognized a $41.4 million loss from joint ventures related to the closure. The Company’s proportionate share of the loss was $20.1 million after tax and net of noncontrolling interest. As a result of the mill closure, we wrote our investment down to zero.

The Company’s joint venture in Madison is currently being liquidated. In the fourth quarter of 2016, Madison sold certain assets at the mill site and we recognized a gain of $3.9 million related to the sale. In the third quarter of 2017, Madison sold the remaining assets at the mill site (which primarily consisted of hydro power assets), and the Company recognized a gain of $30.1 million related to this sale. The Company’s proportionate share of the gain was $16.1 million after tax and net of noncontrolling interest.

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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

For the Quarters Ended For the Nine Months Ended
(In thousands) September 30, 2017
September 30, 2016
September 30, 2017
September 30, 2016
Revenues $ —
$ —
$ —
$ 40,523
Expenses:
Cost of sales (105 ) (1,450 ) (1,277 ) (68,039 )
General and administrative income/(expense) and other 60,216
(566 ) 59,662
(66,056 )
Total costs and expenses 60,111
(2,016 ) 58,385
(134,095 )
Operating income/(loss) 60,111
(2,016 ) 58,385
(93,572 )
Other (expense)/income (1 ) 2
(7 ) 4
Net income/(loss) $ 60,110
$ (2,014 ) $ 58,378
$ (93,568 )

~~We received no distributions from our equity method investments during the quarters and nine months ended September 24, 2017 and September 25, 2016.~~

We purchase newsprint from Malbaie, and previously purchased supercalendered paper from Madison, at competitive prices. These purchases totaled $2.3 million and $3.7 million for the third quarters ended September 24, 2017, and September 25, 2016, respectively, and $7.7 million and $10.3 million for the nine-month periods ended September 24, 2017, and September 25, 2016, respectively.

~~Cost Method Investments~~

The aggregate carrying ~~amounts~~amount of ~~cost method investments~~intangible assets of $4.5 million is included in ~~“Miscellaneous assets’’~~Miscellaneous assets in our Condensed Consolidated Balance Sheets ~~were $14.0 million and $13.6 million for September 24, 2017 and December 25, 2016, respectively.~~as of June 28, 2020.

NOTE 6. ~~DEBT OBLIGATIONS~~INVESTMENTS

Non-Marketable Equity Securities

Our ~~indebtedness consisted~~non-marketable equity securities are investments in privately held companies/funds without readily determinable market values. Gains and losses on non-marketable securities sold or impaired are recognized in Interest income/(expense) and other, net.

As of June 28, 2020, and December 29, 2019, non-marketable equity securities included in Miscellaneous assets in our Condensed Consolidated Balance Sheets had a carrying value of $19.3 million and $13.4 million, respectively. During the ~~repurchase option~~first six months of 2020, we recorded a $10.1 million gain related to a ~~sale-leaseback~~non-marketable equity investment transaction. The gain is comprised of ~~a portion of our New York headquarters. Our total debt and capital lease obligations consisted~~$2.5 million realized gain due to the partial sale of the ~~following:~~

(In thousands) September 24, 2017
December 25, 2016
Option to repurchase ownership interest in headquarters building in 2019:
Principal amount $ 250,000
$ 250,000
Less unamortized discount based on imputed interest rate of 13.0% 7,423
9,801
Total option to repurchase ownership interest in headquarters building in 2019 242,577
240,199
Capital lease obligations 6,798
6,779
Total long-term debt and capital lease obligations $ 249,375
$ 246,978

~~See Note 8 for additional information regarding~~investment and a $7.6 million unrealized gain due to the ~~fair value~~mark to market of ~~our long-term debt.~~

“the remaining investment, and is included in Interest ~~expense,~~income/(expense) and other, net~~” as shown~~ in ~~the accompanying~~our Condensed Consolidated Statements of ~~Operations was as follows:~~Operations.

For the Quarters Ended For the Nine Months Ended
(In thousands) September 24, 2017
September 25, 2016
September 24, 2017
September 25, 2016
Interest expense $ 6,956
$ 10,022
$ 20,775
$ 29,964
Amortization of debt costs and discount on debt 801
1,226
2,379
3,670
Capitalized interest (345 ) (131 ) (852 ) (412 )
Interest income (2,752 ) (2,085 ) (7,184 ) (6,267 )
Total interest expense, net $ 4,660
$ 9,032
$ 15,118
$ 26,955

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 7. OTHER

~~Advertising Expenses~~

Advertising expenses incurred to promote our brand, subscription products and marketing services were $26.6 million and $22.3 million in the third quarters of 2017 and 2016, respectively, and $86.0 million and $63.6 million in the first nine months of 2017 and 2016, respectively.

Capitalized Computer Software Costs

Amortization of capitalized computer software costs included in ~~“Depreciation~~Depreciation and ~~amortization”~~amortization in our Condensed Consolidated Statements of Operations were ~~$4.0~~$3.9 million and ~~$2.8~~$4.4 million in the ~~third~~second quarters of ~~2017~~2020 and ~~2016,~~2019, respectively, and ~~$9.7~~$7.7 million and ~~$8.5~~$8.7 million in the first ~~nine~~six months of ~~2017~~2020 and ~~2016, respectively.~~2019, respectively,

~~Headquarters Redesign~~Interest income/(expense) and ~~Consolidation~~other, net

Interest income/(expense) and other, net, as shown in the accompanying Condensed Consolidated Statements of Operations was as follows:



	For the Quarters Ended						For the Six Months Ended
(In thousands)	June 28, 2020			June 30, 2019			June 28, 2020			June 30, 2019
Interest expense	$	(189	)	$	(7,137	)	$	(381	)	$	(14,196	)
Amortization of debt costs and discount on debt	—			205			—			(688		)
Capitalized interest	10			8			17			52
Interest income and other expense, net ⁽¹⁾	2,965			5,410			17,004			12,015
Total interest income/(expense) and other, net	$	2,786		$	(1,514	)	$	16,640		$	(2,817	)

⁽¹⁾The six months ended June 28, 2020, include a $10.1 million gain related to a non-marketable equity investment transaction. The six months ended June 30, 2019, include a fair value adjustment of $1.9 million related to the sale of a non-marketable equity security.

Restricted Cash

A reconciliation of cash, cash equivalents and restricted cash as of June 28, 2020, and December 29, 2019, from the Condensed Consolidated Balance Sheets to the Condensed Consolidated Statements of Cash Flows is as follows:



(In thousands)	June 28, 2020		December 29, 2019
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	$	249,312	$	230,431
Restricted cash included within other current assets	531		528
Restricted cash included within miscellaneous assets	15,297		16,559
Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows	$	265,140	$	247,518

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

Revolving Credit Facility

In ~~December 2016, we announced plans~~September 2019, the Company entered into a $250.0 million five-year unsecured revolving credit facility (the “Credit Facility”). Certain of the Company’s domestic subsidiaries have guaranteed the Company’s obligations under the Credit Facility. Borrowings under the Credit Facility bear interest at specified rates based on our utilization and consolidated leverage ratio. The Credit Facility contains various customary affirmative and negative covenants. In addition, the Company is obligated to ~~redesign our headquarters building, consolidate our space within~~pay a ~~smaller number~~quarterly unused commitment fee of ~~floors~~0.20%.

As of June 28, 2020, there were 0 outstanding borrowings under the Credit Facility and ~~lease~~ the ~~additional floors to third parties. These changes are expected to generate additional rental income and result~~Company was in ~~a more collaborative workspace. We incurred $2.5 million and $6.9 million of total costs related to these measures~~compliance with the financial covenants contained in the ~~third quarter and first nine months of 2017, respectively. The capital expenditures related to these measures were approximately $26 million and $37 million in~~documents governing the ~~third quarter and the first nine months of 2017, respectively.~~Credit Facility.

Severance Costs

On May 31, 2017, we announced certain measures in our newsroom designed to streamline our editing process and allow us to make further investments in the newsroom. These measures resulted in a workforce reduction primarily affecting our newsroom. We recognized severance costs of $6.3 million and $0.7 million in the second quarters of 2020 and 2019, respectively, and $6.7 million and $2.1 million in the ~~third quarter of 2017 and $23.0 million in the~~ first ~~nine~~six months of ~~2017, substantially all of which~~2020 and 2019, respectively. Severance costs recognized in 2020 were largely related to ~~this~~ workforce ~~reduction. We recognized severance costs of $13.0 million in the third quarter of 2016 and $18.3 million in the first nine months of 2016.~~reductions primarily affecting our advertising department. These costs are recorded in ~~“Selling, general~~General and administrative ~~costs”~~costs in our Condensed Consolidated Statements of Operations.

Additionally, during the second quarter of 2016, we announced certain measures to streamline our international print operations and support future growth efforts. These measures included a redesign of our international print newspaper and the relocation of certain editing and production operations conducted in Paris to our locations in Hong Kong and New York. During the third and second quarters of 2016, we incurred $2.9 million and $11.9 million, respectively, of total costs related to the measures, primarily related to relocation and severance charges. These costs were recorded in “Restructuring charge” in our Condensed Consolidated Statements of Operations.

We had a severance liability of ~~$25.2~~$12.0 million and ~~$23.2~~$8.4 million included in ~~“Accrued~~Accrued expenses and ~~other”~~other in our Condensed Consolidated Balance Sheets as of ~~September 24, 2017,~~June 28, 2020, and December ~~25, 2016,~~29, 2019, respectively. We anticipate most of the ~~expenditures~~payments will be ~~recognized~~made within the next twelve months.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 8. FAIR VALUE MEASUREMENTS

Fair value is the price that would be received upon the sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. The transaction would be in the principal or most advantageous market for the asset or liability, based on assumptions that a market participant would use in pricing the asset or liability. The fair value hierarchy consists of three levels:

Level 1–quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date;

Level 2–inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

Level 3–unobservable inputs for the asset or liability.

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of ~~September 24, 2017,~~June 28, 2020, and December ~~25, 2016:~~29, 2019:



(In thousands)	June 28, 2020								December 29, 2019
(In thousands)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Short-term AFS securities ⁽¹⁾
Corporate debt securities	$	106,271	$	—	$	106,271	$	—	$	99,126	$	—	$	99,126	$	—
U.S. Treasury securities	79,004		—		79,004		—		43,095		—		43,095		—
U.S. governmental agency securities	36,144		—		36,144		—		37,502		—		37,502		—
Commercial paper	15,981		—		15,981		—		12,561		—		12,561		—
Certificates of deposit	3,000		—		3,000		—		9,501		—		9,501		—
Total short-term AFS securities	$	240,400	$	—	$	240,400	$	—	$	201,785	$	—	$	201,785	$	—
Long-term AFS securities ⁽¹⁾
Corporate debt securities	$	116,341	$	—	$	116,341	$	—	$	103,737	$	—	$	103,737	$	—
U.S. Treasury securities	95,394		—		95,394		—		101,438		—		101,438		—
U.S. governmental agency securities	55,211		—		55,211		—		46,521		—		46,521		—
Total long-term AFS securities	$	266,946	$	—	$	266,946	$	—	$	251,696	$	—	$	251,696	$	—
Liabilities:
Deferred compensation ⁽²⁾⁽³⁾	$	18,871	$	18,871	$	—	$	—	$	23,702	$	23,702	$	—	$	—

(In thousands) September 24, 2017
December 25, 2016 ⁽³⁾
Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3
Assets:
Short-term AFS securities ⁽¹⁾

U.S Treasury securities $ 73,175
$ —
$ 73,175
$ —
$ —
$ —
$ —
$ —
Corporate debt securities 156,639
—
156,639
—
—
—
—
—
U.S. governmental agency securities 53,754
—
53,754
—
—
—
—
—
Certificates of deposit 20,403
—
20,403
—
—
—
—
—
Commercial paper 32,471
—
32,471
—
—
—
—
—
Total short-term AFS securities $ 336,442
$ —
$ 336,442
$ —
$ —
$ —
$ —
$ —
Long-term AFS securities ⁽¹⁾

U.S. governmental agency securities $ 96,817
$ —
$ 96,817
$ —
$ —
$ —
$ —
$ —
Corporate debt securities 97,345
—
97,345
—
—
—
—
—
U.S Treasury securities 47,620
—
47,620
—
—
—
—
—
Total long-term AFS securities $ 241,782
$ —
$ 241,782
$ —
$ —
$ —
$ —
$ —
Liabilities:
Deferred compensation ⁽²⁾
$ 28,354
$ 28,354
$ —
$ —
$ 31,006
$ 31,006
$ —
$ —

⁽¹⁾Our marketable securities, which include U.S. Treasury securities, corporate debt securities, U.S. government agency securities, municipal securities, certificates of deposit and commercial paper, are recorded at fair value (see Note 3). We classified these investments as Level 2 since the fair value is based on market observable inputs for investments with similar terms and maturities.

⁽²⁾The deferred compensation liability, included in ~~“Other~~Other liabilities—~~Other”~~other in our Condensed Consolidated Balance Sheets, consists of deferrals under The New York Times Company Deferred Executive Compensation Plan (the “DEC”), which ~~enables~~previously enabled certain eligible executives to elect to defer a portion of their compensation on a pre-tax basis. The deferred amounts are invested at the executives’ option in various mutual funds. The fair value of deferred compensation is based on the mutual fund investments elected by the executives and on quoted prices in active markets for identical assets. Participation in the DEC was frozen effective December 31, 2015.

⁽³⁾~~As noted in Note 2, in~~The Company invests the third quarter of 2017, we reclassified our marketable securities from HTM to AFS. Prior to being classified as AFS, the securities were recorded at amortized cost and not adjusted to fair value in accordanceassets associated with the ~~HTM accounting treatment.~~

~~Financial Instruments Disclosed, But Not Reported, at Fair Value~~

~~The carrying value of~~deferred compensation liability in life insurance products. Our investments in life insurance products are included in Miscellaneous assets in our ~~long-term debt was approximately $243~~Condensed Consolidated Balance Sheets, and were $45.1 million as of ~~September 24, 2017~~June 28, 2020, and ~~approximately $240~~$46.0 million as of December ~~25, 2016.~~29, 2019. The fair value of ~~our long-term debt was approximately $281 million~~these assets is measured using the net asset value per share (or its equivalent) and ~~$298 million as of September 24, 2017 and December 25, 2016, respectively. We estimate~~has not been classified in the fair value of our debt utilizing market quotations for debt that have quoted prices in active markets. Since our debt does not trade on a daily basis in an active market, the fair value estimates are based on market observable inputs based on borrowing rates currently available for debt with similar terms and average maturities (Level 2).hierarchy.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 9. PENSION AND OTHER POSTRETIREMENT BENEFITS

Pension

Single-Employer Plans

We ~~sponsor several~~maintain The New York Times Companies Pension Plan (the “Pension Plan”), a frozen single-employer defined benefit pension ~~plans,~~plan. The Company also jointly sponsors a defined benefit plan with The NewsGuild of New York known as the ~~majority of which have been frozen.~~ Guild-Times Adjustable Pension Plan (the “APP”) that continues to accrue active benefits.

We also ~~participate~~have a foreign-based pension plan for certain employees (the “foreign plan”). The information for the foreign plan is combined with the information for U.S. non-qualified plans. The benefit obligation of the foreign plan is immaterial to our total benefit obligation.

The components of net periodic pension cost/(income) were as follows:



	For the Quarters Ended
	June 28, 2020								June 30, 2019
(In thousands)	Qualified Plans			Non- Qualified Plans		All Plans			Qualified Plans			Non- Qualified Plans		All Plans
Service cost	$	2,607		$	—	$	2,607		$	1,279		$	—	$	1,279
Interest cost	11,742			1,649		13,391			14,708			2,088		16,796
Expected return on plan assets	(17,745		)	—		(17,745		)	(20,259		)	—		(20,259		)
Amortization of actuarial loss	5,655			1,522		7,177			4,635			1,094		5,729
Amortization of prior service credit	(486		)	—		(486		)	(486		)	—		(486		)
Net periodic pension cost/(income) ⁽¹⁾	$	1,773		$	3,171	$	4,944		$	(123	)	$	3,182	$	3,059



	For the Six Months Ended
	June 28, 2020								June 30, 2019
(In thousands)	Qualified Plans			Non- Qualified Plans		All Plans			Qualified Plans			Non- Qualified Plans		All Plans
Service cost	$	5,214		$	—	$	5,214		$	2,557		$	—	$	2,557
Interest cost	23,484			3,297		26,781			29,417			4,176		33,593
Expected return on plan assets	(35,481		)	—		(35,481		)	(40,517		)	—		(40,517		)
Amortization of actuarial loss	11,310			3,043		14,353			9,270			2,188		11,458
Amortization of prior service credit	(972		)	—		(972		)	(972		)	—		(972		)
Net periodic pension cost/(income) ⁽¹⁾	$	3,555		$	6,340	$	9,895		$	(245	)	$	6,364	$	6,119

⁽¹⁾The service cost component of net periodic pension cost is recognized in ~~two joint Company~~Total operating costs, while the other components are included in Other components of net periodic benefit costs in our Condensed Consolidated Statements of Operations, below Operating profit.

During the first six months of 2020 and ~~Guild-sponsored defined benefit~~2019, we made pension ~~plans covering employees who are members~~contributions of $4.6 million and $4.3 million, respectively, to the APP. We expect contributions in 2020 to total approximately $9 million to satisfy funding requirements.

1417

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The NewsGuild of New York, including The Newspaper Guild of New York - The New York Times Pension Fund, which was frozen in 2012 and replaced by a successor plan, The Guild-Times Adjustable Pension Plan.

~~The components of net periodic pension cost were as follows:~~

For the Quarters Ended
September 24, 2017 September 25, 2016
(In thousands) Qualified
Plans Non-
Qualified
Plans All
Plans Qualified
Plans Non-
Qualified
Plans All
Plans
Service cost $ 2,423
$ —
$ 2,423
$ 2,248
$ —
$ 2,248
Interest cost 15,596
1,956
17,552
16,573
2,034
18,607
Expected return on plan assets (26,136 ) —
(26,136 ) (27,790 ) —
(27,790 )
Amortization of actuarial loss 7,351
1,088
8,439
7,069
1,054
8,123
Amortization of prior service credit (486 ) —
(486 ) (487 ) —
(487 )
Net periodic pension (income)/cost $ (1,252 ) $ 3,044
$ 1,792
$ (2,387 ) $ 3,088
$ 701

For the Nine Months Ended
September 24, 2017 September 25, 2016
(In thousands) Qualified
Plans Non-
Qualified
Plans All
Plans Qualified
Plans Non-
Qualified
Plans All
Plans
Service cost $ 7,269
$ —
$ 7,269
$ 6,743
$ —
$ 6,743
Interest cost 46,784
5,868
52,652
49,720
6,102
55,822
Expected return on plan assets (78,408 ) —
(78,408 ) (83,369 ) —
(83,369 )
Amortization of actuarial loss 22,057
3,264
25,321
21,206
3,160
24,366
Amortization of prior service credit (1,458 ) —
(1,458 ) (1,459 ) —
(1,459 )
Net periodic pension (income)/cost $ (3,756 ) $ 9,132
$ 5,376
$ (7,159 ) $ 9,262
$ 2,103

~~During the first nine months of 2017 and 2016, we made pension contributions of $5.9 million and $6.0 million, respectively, to certain qualified pension plans.~~

As part of our continued effort to reduce the size and volatility of our pension obligations, in October 2017, the Company entered into agreements with an insurance company to transfer future benefit obligations and annuity administration for certain retirees (or their beneficiaries) in two of the Company’s qualified pension plans. Additionally, as part of our management of the funded status of our qualified pension plans, in October 2017, the Company made a $100 million aggregate contribution to these pension plans, which was funded by cash on hand. See Note 15 for additional information.

~~Multiemployer Plans~~

During the third quarter of 2016, we received $5.0 million in connection with an arbitration matter related to a multiemployer pension plan. In the second quarter of 2016, we recorded a charge of $11.7 million related to partial withdrawal obligation under a multiemployer pension plan in connection with the same arbitration matter. See Note 14 for additional information with respect to the arbitration.

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Other Postretirement Benefits

The components of net periodic postretirement benefit ~~income~~(income)/cost were as follows:



	For the Quarters Ended						For the Six Months Ended
(In thousands)	June 28, 2020			June 30, 2019			June 28, 2020			June 30, 2019
Service cost	$	7		$	7		$	14		$	14
Interest cost	257			400			513			800
Amortization of actuarial loss	763			844			1,526			1,688
Amortization of prior service credit	(1,223		)	(1,191		)	(2,279		)	(2,382		)
Net periodic postretirement benefit (income)/cost ⁽¹⁾	$	(196	)	$	60		$	(226	)	$	120

For the Quarters Ended For the Nine Months Ended
(In thousands) September 24, 2017
September 25, 2016
September 24, 2017
September 25, 2016
Service cost $ 92
$ 104
$ 276
$ 313
Interest cost 470
495
1,410
1,485
Amortization of actuarial loss 905
1,026
2,715
3,078
Amortization of prior service credit (1,939 ) (2,110 ) (5,816 ) (6,330 )
Net periodic postretirement benefit income $ (472 ) $ (485 ) $ (1,415 ) $ (1,454 )
⁽¹⁾ The service cost component of net periodic postretirement benefit cost is recognized in Total operating costs, while the other components are included in Other components of net periodic benefit costs in our Condensed Consolidated Statements of Operations, below Operating profit.

NOTE 10. INCOME TAXES

The Company had income tax expense of ~~$23.4~~$5.8 million and ~~$40.9~~$11.8 million in the ~~third~~second quarter and first ~~nine~~six months of ~~2017,~~2020, respectively. The Company had income tax expense of ~~$0.1~~$9.4 million and $10.7 million in the third quarter of 2016 and an income tax benefit of $9.0 million in the first nine months of 2016. The increase in income tax expense was primarily due to higher income from continuing operations in the thirdsecond quarter and first ~~nine~~six months of ~~2017.~~

~~The Company’s effective tax rates from continuing operations were 39.1% and 38.5% for the third quarter and first nine months of 2017,~~2019, respectively. The Company’s effective tax rates from continuing operations were ~~30.0%~~19.6% and ~~39.4%~~17.3% for the ~~third~~second quarter and first ~~nine~~six months of ~~2016,~~2020, respectively. The ~~higher~~Company’s effective tax ~~rate in the third quarter of 2017 was primarily due to higher income~~rates from continuing operations ~~compared with~~were 27.2% and 16.2% for the ~~same period prior year.~~second quarter and first six months of 2019, respectively. The Company received a tax benefit in the second quarter of 2020 from a reduction in the Company’s reserve for uncertain tax positions, and in the first quarters of both 2020 and 2019 from stock price appreciation on stock-based awards that settled in the quarter, resulting in lower than statutory tax rates in the second quarter of 2020 and in the first six months of 2020 and 2019.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was signed into law. We do not expect the tax provisions in the CARES Act to have a material impact on the Company’s consolidated financial statements.

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

We compute ~~earnings/(loss)~~earnings per share using a two-class method, which is an earnings allocation method used when a company’s capital structure includes either two or more classes of common stock or common stock and participating securities. This method determines ~~earnings/(loss)~~earnings per share based on dividends declared on common stock and participating securities (i.e., distributed earnings), as well as participation rights of participating securities in any undistributed earnings.

~~Earnings/(loss)~~Earnings per share is computed using both basic shares and diluted shares. The difference between basic and diluted shares is that diluted shares include the dilutive effect of the assumed exercise of outstanding securities. Our stock options, stock-settled long-term performance awards and restricted stock units could have a significant impact on diluted shares. The difference between basic and diluted shares of approximately 1.2 million in the second quarter and first six months of 2020 and 1.4 million in the second quarter and first six months of 2019, resulted primarily from the dilutive effect of certain stock options, performance awards and restricted stock units.

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

The number of stock options excluded from the computation of diluted earnings per share because they were anti-dilutive was approximately 2 million in the third quarter and first nine months of 2017, respectively, and approximately 5 million and 6 million in the third quarter and first nine months of 2016, respectively.

There were no anti-dilutive stock-settled long-term performance awards and restricted stock units excluded from the computation of diluted earnings per share in the third quarter of 2017 or first nine months of 2017 and 2016. The number of stock-settled long-term performance awards andapproximately 0.2 million restricted stock units excluded from the computation of diluted earnings per share because they were anti-dilutive ~~was approximately 2 million~~ in the ~~third quarter~~first six months of ~~2016.~~2020, and no anti-dilutive stock options or stock-settled long-term performance awards excluded in the same period. There were no anti-dilutive stock options, stock-settled long-term performance awards or restricted stock units excluded from the computation of diluted earnings per share in the first six months of 2019 or in the second quarters of 2020 and 2019, respectively.

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

NOTE 12. SUPPLEMENTAL STOCKHOLDERS’ EQUITY INFORMATION

~~Stockholders’ equity is summarized as follows:~~

(In thousands) Total New York Times Company Stockholders’ Equity Noncontrolling Interest Total Stockholders’ Equity
Balance as of December 25, 2016 $ 847,815
$ (3,571 ) $ 844,244
Net income 61,109
3,567
64,676
Other comprehensive income, net of tax 19,294
—
19,294
Effect of issuance of shares 158
—
158
Dividends declared (19,543 ) —
(19,543 )
Stock-based compensation 9,845
—
9,845
Balance as of September 24, 2017 $ 918,678
$ (4 ) $ 918,674

(In thousands) Total New York Times Company Stockholders’ Equity Noncontrolling Interest Total Stockholders’ Equity
Balance as of December 27, 2015 $ 826,751
$ 1,704
$ 828,455
Net loss (8,076 ) (5,719 ) (13,795 )
Other comprehensive income, net of tax 13,273
—
13,273
Effect of issuance of shares (9,298 ) —
(9,298 )
Share repurchases (15,056 ) —
(15,056 )
Dividends declared (19,414 ) —
(19,414 )
Stock-based compensation 9,006
—
9,006
Balance as of September 25, 2016 $ 797,186
$ (4,015 ) $ 793,171

~~On January 14,~~In 2015, the Board of Directors ~~approved an authorization of~~authorized up to $101.1 million ~~to repurchase~~of repurchases of shares of the Company’s Class A Common Stock. As of June 28, 2020, repurchases under this authorization totaled $84.9 million (excluding commissions) and $16.2 million remained under this authorization. The Company did not repurchase any shares during the ~~third quarter~~first six months of ~~2017. As of September 24, 2017, the Company had repurchased 6,690,905 Class A shares under this authorization for a cost of $84.9 million (excluding commissions) and $16.2 million remained.~~2020. All purchases were made pursuant to our publicly announced share repurchase program. Our Board of Directors has

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

The following table summarizes the changes in ~~accumulated other comprehensive income (“AOCI”)~~AOCI by component as of ~~September 24, 2017:~~June 28, 2020:



(In thousands)	Foreign Currency Translation Adjustments		Funded Status of Benefit Plans			Net Unrealized Gain on Available-For-Sale Securities		Total Accumulated Other Comprehensive Loss
Balance as of December 29, 2019	$	3,438	$	(498,986	)	$	572	$	(494,976	)
Other comprehensive income before reclassifications, before tax	365		—			4,790		5,155
Amounts reclassified from accumulated other comprehensive loss, before tax	—		12,628			—		12,628
Income tax expense	97		3,390			1,276		4,763
Net current-period other comprehensive income, net of tax	268		9,238			3,514		13,020
Balance as of June 28, 2020	$	3,706	$	(489,748	)	$	4,086	$	(481,956	)

(In thousands) Foreign Currency Translation Adjustments Funded Status of Benefit Plans Net unrealized Loss on available-for-sale Securities Total Accumulated Other Comprehensive Loss
Balance as of December 25, 2016 $ (1,822 ) $ (477,994 ) —
$ (479,816 )
Other comprehensive income (loss) before reclassifications, before tax⁽¹⁾
11,170
—
(1,081 ) 10,089
Amounts reclassified from accumulated other comprehensive loss, before tax⁽¹⁾
—
20,762
—
20,762
Income tax expense (benefit) ⁽¹⁾
3,777
8,208
(428 ) 11,557
Net current-period other comprehensive income, net of tax 7,393
12,554
(653 ) 19,294
Balance as of September 24, 2017 $ 5,571
$ (465,440 ) (653 ) $ (460,522 )


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

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

The following table summarizes the reclassifications from AOCI for the ~~nine~~six months ended ~~September 24, 2017:~~

June 28, 2020:


(In thousands)
Detail about accumulated other comprehensive loss components	Amounts reclassified from accumulated other comprehensive loss			Affects line item in the statement where net income is presented
(In thousands) Detail about accumulated other comprehensive loss components					Amounts reclassified from accumulated other comprehensive loss			Affects line item in the statement where net income is presented
Funded status of benefit plans:
Amortization of prior service credit⁽¹⁾	$	(7,274	)	Selling, general & administrative costs	$	(3,251	)	Other components of net periodic benefit costs
Amortization of actuarial loss⁽¹⁾	28,036			Selling, general & administrative costs	15,879			Other components of net periodic benefit costs
Total reclassification, before tax⁽²⁾	20,762				12,628
Income tax expense	8,208			Income tax expense	3,390			Income tax expense
Total reclassification, net of tax	$	12,554			$	9,238


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


~~(2)~~	~~There were no reclassifications relating to noncontrolling interest for the nine months ended September 24, 2017.~~

⁽¹⁾ These AOCI components are included in the computation of net periodic benefit cost for pension and other postretirement benefits. See Note 9 for more information.

⁽²⁾ There were no reclassifications relating to noncontrolling interest for the six months ended June 28, 2020.

NOTE 13. SEGMENT INFORMATION

~~We have one~~The Company identifies a business as an operating segment if: (i) it engages in business activities from which it may earn revenues and incur expenses; (ii) its operating results are regularly reviewed by the Chief Operating Decision Maker (who is the Company’s President and Chief Executive Officer) to make decisions about resources to be allocated to the segment and assess its performance; and (iii) it has available discrete financial information. The Company has determined that it has 1 reportable ~~segment that includes The New York Times, NYTimes.com and related businesses.~~segment. Therefore, all required segment information can be found in the Condensed Consolidated Financial Statements.

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

NOTE 14. CONTINGENT LIABILITIES

~~Restricted Cash~~

We were required to maintain $17.9 million and $24.9 million of restricted cash as of September 24, 2017 and December 25, 2016, respectively, the majority of which is set aside to collateralize workers’ compensation obligations. The decrease reflects the settlement of certain litigation described below.

~~Newspaper and Mail Deliverers–Publishers’ Pension Fund~~

In September 2013, the Newspaper and Mail Deliverers-Publishers’ Pension Fund (the “NMDU Fund”) assessed a partial withdrawal liability against the Company in the amount of approximately $26 million for the plan years ending May 31, 2012 and 2013 (the “Initial Assessment”), an amount that was increased to approximately $34 million in December 2014, when the NMDU Fund issued a revised partial withdrawal liability assessment for the plan year ending May 31, 2013 (the “Revised Assessment”). The NMDU Fund claimed that when City & Suburban Delivery Systems, Inc., a retail and newsstand distribution subsidiary of the Company and the largest contributor to the NMDU Fund, ceased operations in 2009, it triggered a decline of more than 70% in contribution base units in each of these two plan years.

The Company disagreed with both the NMDU Fund’s determination that a partial withdrawal occurred and the methodology by which it calculated the withdrawal liability, and the parties engaged in arbitration proceedings to resolve the matter. In June 2016, the arbitrator issued an interim award and opinion that supported the NMDU Fund’s determination that a partial withdrawal had occurred, and concluded that the methodology used to calculate the Initial Assessment was correct. However, the arbitrator also concluded that the NMDU Fund’s calculation of the Revised Assessment was incorrect. In July 2017, the arbitrator issued a final award and opinion reflecting the same conclusions, which the Company has appealed.

Due to requirements of the Employee Retirement Income Security Act of 1974 that sponsors make payments demanded by plans during arbitration and any resultant appeals, the Company had been making payments to the NMDU fund since September 2013 relating to the Initial Assessment and February 2015 relating to the Revised Assessment based on the NMDU Fund’s demand. As a result, as of September 24, 2017, we have paid $14.4 million relating to the Initial Assessment since the receipt of the initial demand letter. We also paid $5.0 million related to the Revised Assessment, which was refunded in July 2016 based on the arbitrator’s ruling. The Company recognized $0.1 million and $0.3 million of expense for the third quarter and nine months ended September 24, 2017, respectively. The Company recognized $4.5 million income (inclusive of a special item of $5.0 million) and $10.6 million of expense (inclusive of a special item of $6.7 million) for the third quarter and nine months ended September 25, 2016, respectively.

~~THE NEW YORK TIMES COMPANY~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

The Company had a liability of $7.3 million as of September 24, 2017, related to this matter. Management believes it is reasonably possible that the total loss in this matter could exceed the liability established by a range of zero to approximately $10 million.

~~NEMG T&G, Inc.~~

The Company was involved in class action litigation brought on behalf of individuals who, from 2006 to 2011, delivered newspapers at NEMG T&G, Inc., a subsidiary of the Company (“T&G”). T&G was a part of the New England Media Group, which the Company sold in 2013. The plaintiffs asserted several claims against T&G, including a challenge to their classification as independent contractors, and sought unspecified damages. In December 2016, the Company reached a settlement with respect to the claims, which was approved by the court in May 2017. As a result of the settlement, the Company recorded charges of $3.7 million ($2.3 million after tax) in the fourth quarter of 2016 and $0.8 million ($0.5 million after tax) in the third quarter of 2017 within discontinued operations.

~~Other~~Legal Proceedings

We are involved in various legal actions incidental to our business that are now pending against us. These actions are generally for amounts greatly in excess of the payments, if any, that may be required to be made. Although the Company cannot predict the outcome of these matters, it is possible that an unfavorable outcome in one or more matters could be material to the Company’s consolidated results of operations or cash flows for an individual reporting period. However, based on currently available information, management does not believe that the ultimate resolution of these matters, individually or in the aggregate, is likely to have a material effect on the Company’s financial position.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 15. RECLASSIFICATION

“Production costs” has become “Cost of revenue”:

◦

Cost of revenue contains all costs related to content creation, subscriber and advertiser servicing, and print production and distribution costs as well as infrastructure costs related to delivering digital content, which include all cloud and cloud related costs as well as compensation for employees that enhance and maintain our platforms. This represents a change from previously disclosed production costs, which did not include distribution or subscriber servicing costs. In addition, certain product development costs previously included in production costs have been reclassified to product development.

“Selling, general and administrative” hasbeen split into three lines:


◦	Sales and marketing represents all costs related to the Company’s marketing efforts as well as advertising sales costs.


◦	Product development represents the Company’s investment into developing and enhancing new and existing product technology including engineering, product development, and data insights.


◦	General and administrative includes general management, corporate enterprise technology, building operations and unallocated overhead costs.

In addition, incentive compensation, which was previously wholly included in selling, general and administrative, was reclassified to align with the classification of the related wages across each of the expense captions.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A reconciliation of the expenses as previously disclosed to the recast presentation for the quarter and six months ended June 30, 2019, is as follows:



	As Reported for the Quarter Ended June 30, 2019		Reclassification				Recast for the Quarter Ended June 30, 2019
Operating costs
Production costs:
Wages and benefits	$	103,959	$	(103,959	)	⁽¹⁾⁽²⁾	$	—
Raw materials	19,158		(19,158		)	⁽¹⁾	—
Other production costs	49,897		(49,897		)	⁽¹⁾⁽²⁾	—
Total production costs	173,014		(173,014		)	⁽¹⁾⁽²⁾	—
Cost of revenue (excluding depreciation and amortization)	—		245,195			^(1)(3)(4)	245,195
Selling, general and administrative costs	210,131		(210,131		)	^(3)(4)(5)	—
Sales and marketing	—		62,289			⁽⁴⁾⁽⁵⁾	62,289
Product development	—		25,261			^(2)(4)(5)	25,261
General and administrative	—		50,400			⁽⁴⁾⁽⁵⁾	50,400
Depreciation and amortization	15,180		—				15,180
Total operating costs	$	398,325	$	—			$	398,325



	As Reported for the Six Months Ended June 30, 2019		Reclassification				Recast for the Six Months Ended June 30, 2019
Operating costs
Production costs:
Wages and benefits	$	206,867	$	(206,867	)	⁽¹⁾⁽²⁾	$	—
Raw materials	38,996		(38,996		)	⁽¹⁾	—
Other production costs	95,234		(95,234		)	⁽¹⁾⁽²⁾	—
Total production costs	341,097		(341,097		)	⁽¹⁾⁽²⁾	—
Cost of revenue (excluding depreciation and amortization)	—		484,554			^(1)(3)(4)	484,554
Selling, general and administrative costs	431,594		(431,594		)	^(3)(4)(5)	—
Sales and marketing	—		137,109			⁽⁴⁾⁽⁵⁾	137,109
Product development	—		48,989			^(2)(4)(5)	48,989
General and administrative	—		102,039			⁽⁴⁾⁽⁵⁾	102,039
Depreciation and amortization	30,098		—				30,098
Total operating costs	$	802,789	$	—			$	802,789

⁽¹⁾ In the first quarter of 2020, the Company discontinued the use of the production cost caption. These costs, with the exception of product engineering and product design costs, which were reclassified to product development, were reclassified to cost of revenue.

⁽²⁾Costs related to developing and enhancing new and existing product technology previously included in production costs were reclassified to product development.

⁽³⁾Distribution and fulfillment costs and subscriber and advertising servicing related costs previously included in selling, general and administrative were reclassified to cost of revenue.

⁽⁴⁾Incentive Compensation previously included in selling, general and administrative was reclassified to align with the related salaries in each caption.

⁽⁵⁾In the first quarter of 2020, the Company discontinued the use of the selling, general and administrative cost caption. These costs, with the exception of those related to distribution and fulfillment, subscriber and advertising servicing and incentive compensation related to cost of revenue, were reclassified to the new captions: sales and marketing, product development and general and administrative.

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE ~~15.~~16. SUBSEQUENT EVENTS

~~Transfer of Certain Pension Obligations~~

On ~~October 18, 2017,~~July 22, 2020, the Company entered into ~~agreements with Massachusetts Mutual Life Insurance Company (“MassMutual”) relating~~an agreement to The New York Times Companies Pension Plan and The Retirement Annuity Plan for Craft Employees of The New York Times Company (collectively, the “Pension Plans”). Under the agreements, the Company will purchase from MassMutual group annuity contracts with respect to the Pension Plans and transfer to MassMutual the future benefit obligations and annuity administration for approximately 3,800 retirees (or their beneficiaries). The pension benefit obligations and annuity administration for these transferred~~participants will be transferred to MassMutual and MassMutual will irrevocably guarantee the pension benefits for these participants.~~

~~This arrangement is part~~acquire substantially all of the ~~Company’s continued effort to reduce the overall size~~assets, and volatility of our pension plan obligations, as well as the premiums and other administrative costs related thereto. By transferring these obligations to MassMutual, the Company expects to reduce its qualified pension plan obligations by approximately $225 million. The purchasecertain of the ~~group annuity contracts is being funded through existing assets~~liabilities, of Serial Productions, LLC. The consideration includes approximately $25 million in cash that was paid at closing on July 29, 2020.

On June 30, 2020, our Board of Directors approved a quarterly dividend of $0.06 per share on our Class A and Class B common stock that was paid on July 23, 2020, to all stockholders of record as of the ~~Pension Plans’ respective trusts. As a result~~close of ~~this arrangement, the Company expects to recognize a pension settlement charge of approximately $95 millionbefore tax in the fourth quarter of 2017. This charge represents the acceleration of deferred charges currently accrued in AOCI.~~business on July 10, 2020.

~~Discretionary Pension Contribution~~

~~On October 20, 2017, the Company made a $100 million aggregate discretionary contribution to the Pension Plans as part of the Company’s management of the funded status of these plans.~~

1922

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

EXECUTIVE OVERVIEW

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

We generate revenues principally from subscriptions and advertising. Other revenues primarily consist of revenues from ~~news services/syndication, digital archives,~~licensing, affiliate referrals from Wirecutter, the leasing of floors in our New York headquarters building ~~rental income,~~located at 620 Eighth Avenue, New York, New York (the “Company Headquarters”), commercial printing, television and film, retail commerce and NYT Live (our live events business)~~, e-commerce and affiliate referrals.~~ .

Our main operating costs are employee-related costs.

In the accompanying analysis of financial information, we present certain information derived from consolidated financial information but not presented in our financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). ~~These~~We are presenting in this report supplemental non-GAAP financial performance measures that exclude depreciation, amortization, severance, non-operating retirement costs or multiemployer pension plan withdrawal costs, and certain identified special items, as applicable. These non-GAAP financial measures should not be considered in isolation from or as a substitute for the related GAAP measures, and should be read in conjunction with financial information presented on a GAAP basis. For further information and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures, see ~~“—Results of Operations—~~“Non-Operating Items—Non-GAAP Financial ~~Measures.~~Measurements.”

Financial Highlights

~~For the third quarter of 2017, diluted~~Diluted earnings per share from continuing operations were ~~$0.20, compared with $0.00~~$0.14 and $0.15 for the ~~third quarter~~second quarters of ~~2016.~~2020 and 2019, respectively. Diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and special items discussed below (or “adjusted diluted earnings per share,” a non-GAAP measure) were ~~$0.13~~$0.18 and ~~$0.06~~$0.17 for the ~~third~~second quarters of ~~2017~~2020 and ~~2016,~~2019, respectively.

The Company had an operating profit of ~~$33.0~~$28.8 million in the ~~third~~second quarter of ~~2017,~~2020, compared with ~~$9.0~~$37.9 million in the ~~third~~second quarter of ~~2016.~~2019. The ~~increase~~decrease was ~~largely due to~~principally driven by lower advertising revenues, partially offset by higher ~~digital~~digital-only subscription revenues and lower ~~severance costs, which more than offset lower print advertising revenues.~~costs. Operating profit before depreciation, amortization, severance, ~~non-operating retirement~~multiemployer pension plan withdrawal costs and special items discussed below (or “adjusted operating profit,” a non-GAAP measure) ~~was $56.5~~decreased to $52.1 million ~~and $39.2~~in the second quarter of 2020 from $55.6 million ~~for~~in the ~~third quarters~~second quarter of ~~2017 and 2016, respectively.~~2019, primarily as a result of the factors identified above.

Total revenues ~~increased 6.1%~~decreased 7.5% to ~~$385.6~~$403.8 million in the ~~third~~second quarter of ~~2017~~2020 from ~~$363.5~~$436.3 million in the ~~third~~second quarter of ~~2016,~~2019, primarily driven by ~~increases~~a decrease in ~~digital and print subscription~~advertising revenue, as well as ~~digital advertising~~a decrease in other revenue as a result of the conclusion of the first season of “The Weekly” television series, and lower revenues from live events and commercial printing. These declines were partially offset by ~~a decrease in print advertising revenue.~~

~~Subscription~~higher subscription revenues ~~increased 13.6% in the third quarter~~driven by year-over-year growth of ~~2017 compared with the third quarter of 2016, primarily due to significant growth in recent quarters~~50.0% in the number of subscriptions to the Company’s digital ~~subscription~~ products, as well as the 2017 increase in home-delivery prices for The New York Times newspaper, which more than offset a decline in print copies sold. Revenue from our digital-only subscription products (which include our news product, as well as our Crosswordhigher licensing revenue related to Facebook News and ~~Cooking products)~~ increased ~~46.3% in the third quarter of 2017 compared with the third quarter of 2016. Our Cooking product first launched as a paid digital product earlier in the third quarter of 2017.~~

Paid digital-only subscriptions totaled approximately 2,487,000 at the end of the third quarter of 2017, a 59.1% increase compared with the end of the third quarter of 2016. News product subscriptions totaled approximately 2,132,000 at the end of the third quarter of 2017, a 59.3% increase compared with the end of the third quarter of 2016. Other product subscriptions totaled approximately 355,000 at the end of the third quarter of 2017, a 57.8% increase compared with the end of the third quarter of 2016.

Total advertising revenues decreased 9.0% in the third quarter of 2017 compared with the third quarter of 2016, reflecting a 20.1% decrease in print advertising revenues, partially offset by an 11.0% increase in digital advertising revenues. The decrease in print advertising revenues resulted from a decline in display advertising, primarily in the luxury, travel, real estate, media, technology, and telecommunications categories. The increase in digital advertising revenues primarily reflected increases in revenue from our smartphone platform, programmatic channels and branded content, partially offset by a continued decrease in traditional website display advertising. We expect advertising revenues to remain under pressure in the fourth quarter of 2017, with digital advertising revenues expected to be flat or slightly lower compared with the same prior year period.

~~Other revenues increased 17.7% in the third quarter of 2017 compared with the third quarter of 2016, largely due to~~ affiliate referral revenue associated with the product review and recommendation websites, The Wirecutter and The Sweethome, which the Company acquired in October 2016. The two websites were subsequently combined and re-branded as “Wirecutter.”

from Wirecutter.

Operating costs decreased in the ~~third~~second quarter of ~~2017~~2020 to ~~$350.1~~$374.9 million from ~~$356.6~~$398.3 million in the ~~third~~second quarter of ~~2016,~~2019, largely due to lower ~~severance,~~media expenses and lower advertising sales costs, as well as lower print production and distribution ~~costs,~~ and ~~savings in international operations, which~~advertising servicing costs. These were partially offset by higher digital content delivery and journalism costs, ~~following~~including growth in the ~~acquisitions~~number of ~~Wirecutter~~newsroom and ~~digital marketing agency, Fake Love,~~technology employees, and higher ~~marketing~~severance costs. We recognized severance costs of $6.3 million in the second quarter of 2020, compared with $0.7 million in the second quarter of 2019. The severance costs recognized in 2020 were largely related to workforce reductions primarily affecting our advertising department. Operating costs before depreciation, amortization, severance and ~~non-operating retirement~~multiemployer pension plan withdrawal costs (or “adjusted operating costs,” a non-GAAP measure) ~~increased~~decreased in the ~~third~~second quarter of ~~2017~~2020 to ~~$329.2~~$351.6 million from ~~$324.4~~$380.7 million in the ~~third~~second quarter of ~~2016.~~2019, primarily as a result of the factors identified above other than severance.

~~Non-operating retirement costs decreased~~

Impact of COVID-19 Pandemic

The global coronavirus (COVID-19) pandemic, and attempts to ~~$3.1 million during~~contain it, have continued to result in significant economic disruption, market volatility and uncertainty. These conditions have affected our business and could continue to do so for the ~~third~~foreseeable future.

Unlike many media companies, which are primarily dependent on advertising, we derive substantial revenue from subscriptions (approximately 60% of total revenues in 2019 and 68% in the first half of 2020). We experienced significant growth in the number of subscriptions to our digital news and other products in the first and second quarters of 2020, which we attribute in part to an extraordinary increase in traffic given the current news environment. However, revenues from the single-copy and bulk sales of our print newspaper (which include our international edition and collectively represent less than 10% of our total subscription revenues) have been, and we expect will continue to be, adversely affected as a result of widespread business closures, increased remote working and reductions in travel.

The worldwide economic slowdown caused by the pandemic also led to a significant decline in our advertising revenues, beginning in the first quarter of ~~2017 from $3.8 million~~2020 and continuing in the ~~third~~second quarter of ~~2016 primarily due~~2020, and to ~~lower multiemployer pension plan withdrawal expense.~~the extent conditions persist, we expect that our advertising revenues will continue to be adversely affected.

However, our strong balance sheet has enabled us to continue to operate without the liquidity issues experienced by many other companies. As of June 28, 2020, we had cash, cash equivalents and short- and long-term marketable securities of $756.7 million, and we were debt-free. We believe our cash balance and cash provided by operations, in combination with other sources of cash, will be sufficient to meet our financing needs over the next twelve months, enabling us to continue hiring in our newsroom, and in product and technology, and continue investment in important growth areas.

We have incurred and expect to continue to incur some additional costs in response to the pandemic, including certain enhanced employee benefits. These costs have not been significant to date, but we may incur significant additional costs as we continue to implement operational changes in response to the pandemic.

At this time, the complete impact that the COVID-19 pandemic, and the associated economic downturn, will have on our business is uncertain. While we remain confident in our prospects over the longer term, the extent to which the pandemic impacts us will depend on numerous evolving factors and future developments, including the severity of the virus; the duration of the outbreak; the impact of the pandemic on economic activity and the companies with which we do business; governmental, business and other actions; travel restrictions; and social distancing measures, among many other factors. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state, local or foreign authorities, or that we determine are appropriate. Please see “Part II—Item 1A—Risk Factors” for more information.

2124

RESULTS OF OPERATIONS

The following table presents our consolidated financial results:

For the Quarters Ended For the Nine Months Ended
(In thousands) September 24, 2017
September 25, 2016
% Change
September 24, 2017
September 25, 2016
% Change
Revenues

Subscription $ 246,638
$ 217,099
13.6 % $ 739,050
$ 654,573
12.9 %
Advertising 113,633
124,898
(9.0 )% 375,895
395,733
(5.0 )%
Other 25,364
21,550
17.7 % 76,568
65,386
17.1 %
Total revenues 385,635
363,547
6.1 % 1,191,513
1,115,692
6.8 %
Operating costs
Production costs:

Wages and benefits 89,866
91,041
(1.3 )% 269,209
274,142
(1.8 )%
Raw materials 15,718
18,228
(13.8 )% 48,461
53,115
(8.8 )%
Other 44,336
47,347
(6.4 )% 134,771
139,938
(3.7 )%
Total production costs 149,920
156,616
(4.3 )% 452,441
467,195
(3.2 )%
Selling, general and administrative costs 184,483
184,596
(0.1 )% 595,491
534,911
11.3 %
Depreciation and amortization 15,677
15,384
1.9 % 46,961
46,003
2.1 %
Total operating costs 350,080
356,596
(1.8 )% 1,094,893
1,048,109
4.5 %
Headquarters redesign and consolidation 2,542
—
*
6,929
—
*
Restructuring charge —
2,949
*
—
14,804
*
Multiemployer pension plan withdrawal expense —
(4,971 ) *
—
6,730
*
Operating profit 33,013
8,973
*
89,691
46,049
94.8 %
Gain/(loss) from joint ventures 31,557
463
*
31,464
(41,845 ) *
Interest expense, net 4,660
9,032
(48.4 )% 15,118
26,955
(43.9 )%
Income/(loss) from continuing operations before income taxes 59,910
404
*
106,037
(22,751 ) *
Income tax expense/(benefit) 23,420
121
*
40,873
(8,956 ) *
Income/(loss) from continuing operations 36,490
283
*
65,164
(13,795 ) *
Loss from discontinued operations, net of income taxes 488
—
*
488
—
*
Net income/(loss) 36,002
283
*
64,676
(13,795 ) *
Net (income)/loss attributable to the noncontrolling interest (3,673 ) 123
*
(3,567 ) 5,719
*
Net income/(loss) attributable to The New York Times Company common stockholders $ 32,329
$ 406
*
$ 61,109
$ (8,076 ) *



	For the Quarters Ended							For the Six Months Ended
(In thousands)	June 28, 2020		June 30, 2019			% Change		June 28, 2020		June 30, 2019			% Change
Revenues
Subscription	$	293,189	$	270,456		8.4	%	$	578,623	$	541,266		6.9	%
Advertising	67,760		120,761			(43.9	)%	173,897		245,849			(29.3	)%
Other	42,801		45,041			(5.0	)%	94,866		88,205			7.6	%
Total revenues	403,750		436,258			(7.5	)%	847,386		875,320			(3.2	)%
Operating costs
Cost of revenue (excluding depreciation and amortization)	230,147		245,195			(6.1	)%	473,819		484,554			(2.2	)%
Sales and marketing	39,617		62,289			(36.4	)%	113,413		137,109			(17.3	)%
Product development	30,737		25,261			21.7	%	61,539		48,989			25.6	%
General and administrative	58,812		50,400			16.7	%	111,673		102,039			9.4	%
Depreciation and amortization	15,631		15,180			3.0	%	30,816		30,098			2.4	%
Total operating costs	374,944		398,325			(5.9	)%	791,260		802,789			(1.4	)%
Operating profit	28,806		37,933			(24.1	)%	56,126		72,531			(22.6	)%
Other components of net periodic benefit costs	2,149		1,833			17.2	%	4,463		3,668			21.7	%
Interest income/(expense) and other, net	2,786		(1,514		)	*		16,640		(2,817		)	*
Income from continuing operations before income taxes	29,443		34,586			(14.9	)%	68,303		66,046			3.4	%
Income tax expense	5,781		9,415			(38.6	)%	11,787		10,719			10.0	%
Net income	23,662		25,171			(6.0	)%	56,516		55,327			2.1	%
Net income attributable to The New York Times Company common stockholders	$	23,662	$	25,171		(6.0	)%	$	56,516	$	55,327		2.1	%


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

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

2225

Revenues

Subscription Revenues

~~As of the second quarter of 2017, the Company has renamed “circulation revenues” as “subscription revenues.”~~ Subscription revenues consist of revenues from subscriptions to our print and digital products (which include our news product, as well as our Crossword, Cooking and ~~Cooking~~audio products), ~~as well as~~and single-copy and bulk sales of our print products (which ~~comprise approximately~~represent less than 10% of these revenues). ~~Our Cooking product first launched as a paid digital product earlier in the third quarter of 2017. These~~Subscription revenues are based on both the number of copies of the printed newspaper sold and digital-only subscriptions, and the rates charged to the respective customers.

Subscription revenues increased ~~13.6%~~8.4% in the ~~third~~second quarter ~~and 12.9% in the first nine months~~ of ~~2017~~2020 compared with the same prior-year ~~periods,~~period, primarily due to ~~significant~~year-over-year growth ~~in recent quarters~~of 50.0% in the number of subscriptions to the Company’s digital products. This was partially offset by a decrease in print subscription ~~products,~~revenue attributable to lower single copy and bulk sales, as well as fewer subscriptions, partially offset by an increase in home delivery prices.

Print domestic home delivery subscriptions totaled approximately 840,000 at the end of the second quarter of 2020, flat compared with the end of the first quarter of 2020 and a net decrease of 38,000 compared with the end of the second quarter of 2019. The year-over-year decrease is a result of secular declines.

Paid digital-only subscriptions totaled approximately 5,670,000 at the end of the second quarter of 2020, a net increase of 669,000 subscriptions compared with the end of the first quarter of 2020 and a net increase of 1,890,000 compared with the end of the second quarter of 2019. This significant growth in the second quarter is attributed in part to an extraordinary increase in traffic given the current news environment, as well as the ~~2017 increase~~digital access model that we launched last year, which requires users to register and log in ~~home-delivery prices for The New York Times newspaper, which more than offset a decline in print copies sold. Revenues from~~to access most of our ~~digital-only~~content.

Digital-only news product subscriptions ~~(including e-readers and replica editions) were $82.1 million in~~totaled approximately 4,390,000 at the ~~third~~end of the second quarter of ~~2017 and $234.2 million in~~2020, a 493,000 net increase compared with the end of the first ~~nine months~~quarter of ~~2017, an~~2020 and a 1,402,000 increase compared with the end of ~~46.2%~~the second quarter of 2019. Other product subscriptions (which include our Crossword, Cooking and ~~44.3% from~~audio products) totaled approximately 1,280,000 at the ~~third~~end of the second quarter of 2020, a 176,000 increase compared with the end of the first quarter of 2020 and ~~first nine months~~a 488,000 increase compared with the end of ~~2016, respectively.~~the second quarter of 2019.

The following table summarizes ~~digital-only~~print and digital subscription revenues for the ~~third~~second quarters and first ~~nine~~six months of ~~2017~~2020 and ~~2016:~~2019:

For the Quarters Ended For the Nine Months Ended
(In thousands) September 24, 2017
September 25, 2016
% Change September 24, 2017
September 25, 2016
% Change
Digital-only subscription revenues:
News product subscription revenues⁽¹⁾
$ 82,073
$ 56,144
46.2 % $ 234,234
$ 162,344
44.3 %
Other product subscription revenues⁽²⁾
3,610
2,408
49.9 % 9,810
6,778
44.7 %
Total digital-only subscription revenues $ 85,683
$ 58,552
46.3 % $ 244,044
$ 169,122
44.3 %
⁽¹⁾Includes revenues from subscriptions to the Company’s news product. News product subscription packages that include access to the Company’s Crossword and Cooking products are also included in this category.
⁽²⁾Includes revenues from standalone subscriptions to the Company’s Crossword and Cooking products.



	For the Quarters Ended						For the Six Months Ended
(In thousands)	June 28, 2020		June 30, 2019		% Change		June 28, 2020		June 30, 2019		% Change
Print subscription revenues:
Domestic home delivery subscription revenues⁽¹⁾	$	132,971	$	133,038	(0.1	)%	$	266,708	$	268,241	(0.6	)%
Single copy, NYT International and other subscription revenues⁽²⁾	14,234		24,783		(42.6	)%	35,921		50,531		(28.9	)%
Subtotal print subscription revenues	147,205		157,821		(6.7	)%	302,629		318,772		(5.1	)%
Digital-only subscription revenues:
News product subscription revenues⁽³⁾	132,922		104,430		27.3	%	251,880		206,776		21.8	%
Other product subscription revenues⁽⁴⁾	13,062		8,205		59.2	%	24,114		15,718		53.4	%
Subtotal digital-only subscription revenues	145,984		112,635		29.6	%	275,994		222,494		24.0	%
Total subscription revenues	$	293,189	$	270,456	8.4	%	$	578,623	$	541,266	6.9	%
⁽¹⁾ Includes free access to some or all of the Company’s digital products.
⁽²⁾ NYT International is the international edition of our print newspaper.
⁽³⁾Includes revenues from subscriptions to the Company’s news product. News product subscription packages that include access to the Company’s Crossword and Cooking products are also included in this category.
⁽⁴⁾Includes revenues from standalone subscriptions to the Company’s Crossword, Cooking and audio products.

The following table summarizes ~~digital-only~~print and digital subscriptions as of the end of the ~~third~~second quarters of ~~2017~~2020 and ~~2016:~~ 2019:

For the Quarters Ended
(In thousands) September 24, 2017
September 25, 2016
% Change
Digital-only subscriptions⁽¹⁾:

News product subscriptions⁽²⁾
2,132
1,338
59.3 %
Other product subscriptions⁽³⁾
355
225
57.8 %
Total digital-only subscriptions 2,487
1,563
59.1 %
⁽¹⁾ Reflects certain immaterial prior-period corrections.

⁽²⁾Includes subscriptions to the Company’s news product. News product subscription packages that include access to the Company’s Crossword and Cooking products are also included in this category.
⁽³⁾Includes standalone subscriptions to the Company’s Crossword and Cooking products.



	For the Quarters Ended
(In thousands)	June 28, 2020	June 30, 2019	% Change
Print subscriptions	840	878	(4.3	)%
Digital-only subscriptions:
News product subscriptions⁽¹⁾	4,390	2,988	46.9	%
Other product subscriptions⁽²⁾	1,280	792	61.6	%
Subtotal digital-only subscriptions	5,670	3,780	50.0	%
Total subscriptions	6,510	4,658	39.8	%
⁽¹⁾Includes subscriptions to the Company’s news product. News product subscription packages that include access to the Company’s Crossword and Cooking products are also included in this category.
⁽²⁾Includes standalone subscriptions to the Company’s Crossword, Cooking and audio products. During the first quarter of 2020, the Company acquired a subscription-based audio product. Approximately 20,000 of the audio product’s subscriptions were included in the Company’s digital-only other product subscriptions at the time of acquisition.

2327

We believe that the significant growth over the last several years in subscriptions to our products demonstrates the success of our “subscription-first” strategy and the willingness of our readers to pay for high-quality journalism. The following charts illustrate the acceleration in net digital-only subscription additions and corresponding subscription revenues as well as the relative stability of our print domestic home delivery subscription products since the launch of the digital pay model in 2011.

⁽¹⁾Amounts may not add due to rounding.

⁽²⁾Print domestic home delivery subscriptions include free access to some or all of our digital products.

⁽³⁾Print Other includes single copy, NYT International and other subscription revenues.

Note: Revenues for 2012 and 2017 include the impact of an additional week.

Advertising Revenues

Advertising revenues are primarily derived from ~~the sale~~offerings sold directly to marketers by our advertising sales teams. A significantly smaller and diminishing proportion of our total advertising ~~products and services on our print, web and mobile platforms. These~~revenues is generated through programmatic auctions run by third-party ad exchanges. Advertising revenues are primarily determined by the volume, rate and mix of advertisements. Display advertising revenue is principally from advertisers promoting products, services or brands in print in the form of column-inch ads, and on our ~~web and mobile~~digital platforms in the form of banners and video ~~rich media~~in websites, mobile applications and ~~other interactive ads.~~emails. Display advertising ~~also~~ includes advertisements that direct viewers to branded content on ~~The Times’s~~our platforms. ~~Classified~~Other print advertising primarily represents classified advertising revenue, ~~includes~~including line-ads sold in the major categories of real estate, help wanted, automotive and ~~other. Other advertising revenue primarily includes creative services fees associated with, among~~ other ~~things, our branded content studio;~~as well as revenue from preprinted advertising, also known as free-standing ~~inserts;~~inserts. Other digital advertising revenue primarily includes creative services fees, including those associated with our branded content studio; advertising revenue from our podcasts; and advertising revenue generated ~~from branded bags in which~~by Wirecutter, our ~~newspapers are delivered.~~product review and recommendation website.

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


	For the Quarters Ended																			For the Quarters Ended
	September 24, 2017						September 25, 2016						% Change							June 28, 2020						June 30, 2019						% Change
(In thousands)	Print		Digital		Total		Print		Digital		Total		Print		Digital		Total			Print		Digital		Total		Print		Digital		Total		Print		Digital		Total
Advertising revenues:																			Advertising revenues:
Display	$	56,710	$	41,547	$	98,257	$	72,442	$	38,447	$	110,889	(21.7	)%	8.1	%	(11.4	)%		$	21,460	$	30,466	$	51,926	$	55,859	$	42,833	$	98,692	(61.6	)%	(28.9	)%	(47.4	)%
Classified and Other	7,679		7,697		15,376		8,102		5,907		14,009		(5.2	)%	30.3	%	9.8	%
Other																				6,769		9,065		15,834		6,876		15,193		22,069		(1.6	)%	(40.3	)%	(28.3	)%
Total advertising	$	64,389	$	49,244	$	113,633	$	80,544	$	44,354	$	124,898	(20.1	)%	11.0	%	(9.0	)%		$	28,229	$	39,531	$	67,760	$	62,735	$	58,026	$	120,761	(55.0	)%	(31.9	)%	(43.9	)%


	For the Nine Months Ended																			For the Six Months Ended
	September 24, 2017						September 25, 2016						% Change							June 28, 2020						June 30, 2019						% Change
(In thousands)	Print		Digital		Total		Print		Digital		Total		Print		Digital		Total			Print		Digital		Total		Print		Digital		Total		Print		Digital		Total
Advertising revenues:																			Advertising revenues:
Display	$	196,836	$	129,008	$	325,844	$	238,399	$	114,957	$	353,356	(17.4	)%	12.2	%	(7.8	)%		$	69,619	$	70,360	$	139,979	$	118,201	$	84,945	$	203,146	(41.1	)%	(17.2	)%	(31.1	)%
Classified and Other	24,966		25,085		50,051		26,156		16,221		42,377		(4.5	)%	54.6	%	18.1	%
Other																				13,589		20,329		33,918		14,079		28,624		42,703		(3.5	)%	(29.0	)%	(20.6	)%
Total advertising	$	221,802	$	154,093	$	375,895	$	264,555	$	131,178	$	395,733	(16.2	)%	17.5	%	(5.0	)%		$	83,208	$	90,689	$	173,897	$	132,280	$	113,569	$	245,849	(37.1	)%	(20.1	)%	(29.3	)%

Print advertising revenues, which represented ~~56.7%~~41.7% of total advertising revenues for the ~~third~~second quarter of ~~2017~~2020 and ~~59.0%~~47.8% of total advertising revenues for the first ~~nine~~six months of ~~2017,~~2020, declined ~~20.1%~~55.0% to ~~$64.4~~$28.2 million in the ~~third~~second quarter of ~~2017~~2020 and ~~16.2%~~37.1% to ~~$221.8~~$83.2 million in the first ~~nine~~six months of ~~2017,~~2020, compared with ~~$80.5~~$62.7 million and ~~$264.6~~$132.3 million, respectively, in the same prior-year periods. The decline in print advertising revenues in the second quarter of 2020 and for the six months of 2020 compared with the same prior-year periods was driven by lower demand as the COVID-19 pandemic further accelerated secular trends. The decline in print display advertising revenue in the second quarter of 2020 was primarily in the entertainment, luxury and technology categories. The decline in print display advertising revenue in the first six months of 2020 was primarily in the entertainment, luxury and media categories.

Digital advertising revenues, which represented 58.3% of total advertising revenues for the second quarter of 2020 and 52.2% of total advertising revenues for the first six months of 2020, declined 31.9% to $39.5 million in the second quarter of 2020 and 20.1% to $90.7 million in the first six months of 2020, compared with $58.0 million and $113.6 million, respectively, in the same prior-year periods. The decrease in ~~both periods was driven by a decline in display~~digital advertising ~~primarily in the luxury, travel, real estate, media, technology and telecommunications categories.~~

~~Digital advertising revenues, which represented 43.3% of total advertising revenues~~revenue for the ~~third~~second quarter of ~~2017~~2020 and ~~41.0% of total advertising revenues~~ for the first ~~nine~~six months of 2017, increased 11.0% to $49.2 million in the third quarter of 2017 and 17.5% to $154.1 million in the first nine months of 2017, respectively, compared with $44.4 million and $131.2 million, respectively, in the same prior-year periods. The increase in both periods primarily reflected increases in revenue from our smartphone platform, programmatic channels and branded content, partially offset by a continued decrease in traditional website display advertising.

~~Classified and Other advertising revenues increased 9.8% in the third quarter of 2017 and 18.1% in the first nine months of 2017,~~2020 compared with the same ~~prior-year~~ periods ~~due~~in the prior year primarily reflects lower demand for direct-sold advertising as advertisers respond to ~~an increase in digital creative services fees.~~weak and uneven economic conditions a result of the COVID-19 pandemic.

Other Revenues

Other revenues primarily consist of revenues from ~~news services/syndication, digital archives, building rental income,~~licensing, affiliate referrals from Wirecutter, the leasing of floors in our Company Headquarters, commercial printing, television and film, retail commerce and NYT Live ~~business, e-commerce~~(our live events business). Building rental revenue consists of revenue from the lease of floors in our Company Headquarters, which totaled $7.3 million and ~~affiliate referrals.~~$7.4 million in the second quarters of 2020 and 2019, respectively, and $15.2 million and $15.1 million in the first six months of 2020 and 2019, respectively.

Other revenues ~~increased 17.7%~~decreased 5.0% in the ~~third~~second quarter of ~~2017~~2020 and ~~17.1%~~increased 7.6% in the first ~~nine~~six months of ~~2017,~~2020, compared with the same prior-year ~~periods, largely due~~periods. The decrease in other revenues for the second quarter of 2020 compared with the

same period in the prior year is primarily a result of the conclusion of the first season of “The Weekly” television series, as well as lower revenues from live events and commercial printing. These declines were partially offset by higher licensing revenue related to Facebook News and affiliate referral revenue ~~associated~~related to Wirecutter. The increase in other revenues for the first six months of 2020 compared with the same period in the prior year primarily resulted from higher licensing revenue related to Facebook News and affiliate referral revenue related to Wirecutter, ~~which the Company acquired~~partially offset by a decline in ~~October 2016.~~

revenues from commercial printing and live events.

Operating Costs

As noted above, effective with the quarter ended March 29, 2020, the Company has changed the Operating costs captions on its Condensed Consolidated Statement of Operations. See Note 15 of the Notes to the Condensed Consolidated Financial Statements for more detail.

Operating costs were as follows:

For the Quarters Ended For the Nine Months Ended
(In thousands) September 24, 2017
September 25, 2016
% Change
September 24, 2017
September 25, 2016
% Change
Production costs:
Wages and benefits $ 89,866
$ 91,041
(1.3 )% $ 269,209
$ 274,142
(1.8 )%
Raw materials 15,718
18,228
(13.8 )% 48,461
53,115
(8.8 )%
Other 44,336
47,347
(6.4 )% 134,771
139,938
(3.7 )%
Total production costs 149,920
156,616
(4.3 )% 452,441
467,195
(3.2 )%
Selling, general and administrative costs 184,483
184,596
(0.1 )% 595,491
534,911
11.3 %
Depreciation and amortization 15,677
15,384
1.9 % 46,961
46,003
2.1 %
Total operating costs $ 350,080
$ 356,596
(1.8 )% $ 1,094,893
$ 1,048,109
4.5 %



	For the Quarters Ended						For the Six Months Ended
(In thousands)	June 28, 2020		June 30, 2019		% Change		June 28, 2020		June 30, 2019		% Change
Operating costs:
Cost of revenue (excluding depreciation and amortization)	$	230,147	$	245,195	(6.1	)%	$	473,819	$	484,554	(2.2	)%
Sales and marketing	39,617		62,289		(36.4	)%	113,413		137,109		(17.3	)%
Product development	30,737		25,261		21.7	%	61,539		48,989		25.6	%
General and administrative	58,812		50,400		16.7	%	111,673		102,039		9.4	%
Depreciation and amortization	15,631		15,180		3.0	%	30,816		30,098		2.4	%
Total operating costs	$	374,944	$	398,325	(5.9	)%	$	791,260	$	802,789	(1.4	)%

~~Production Costs~~Cost of Revenue (excluding depreciation and amortization)

~~Production~~Cost of revenue includes all costs ~~include items such as labor costs, raw materials, and machinery and equipment expenses~~ related to ~~news-gathering~~content creation, subscriber and advertiser servicing, and print production ~~activity,~~and distribution costs as well as infrastructure costs related to ~~producing branded content.~~delivering digital content, which include all cloud and cloud-related costs as well as compensation for employees that enhance and maintain our platforms.

~~Production~~Cost of revenue decreased in the second quarter of 2020 by $15.0 million compared with the second quarter of 2019, largely due to lower print production and distribution costs of $17.5 million and lower advertising servicing costs of $7.2 million, which were partially offset by higher digital content delivery costs of $5.0 million, higher subscriber servicing costs of $2.8 million and higher journalism costs of $1.9 million. The decrease in print production and distribution costs was largely due to lower newsprint consumption and pricing and lower distribution costs. The decrease in advertising servicing costs was due to lower volume of campaigns and workforce reductions affecting our advertising department. Higher digital content delivery costs were due to growth in the number of employees to support cloud related operations, content creation and delivery systems as well as higher cloud storage costs. The increase in subscriber servicing costs was primarily due to higher credit card processing fees due to increased subscriptions. The increase in journalism costs was largely driven by an increase in the number of newsroom employees, partially offset by lower costs related to our television series.

Cost of revenue decreased in the first six months of 2020 by $10.7 million compared with the first six months of 2019, largely due to lower print production and distribution costs of $28.4 million and lower advertising servicing costs of $9.6 million, which were partially offset by higher journalism costs of $15.7 million, higher digital content delivery costs of $7.3 million and higher subscriber servicing costs of $4.2 million. The decreases in print production and distribution costs and in advertising servicing costs were largely due to the factors identified above. The increase in journalism costs was largely driven by an increase in the number of newsroom employees. Higher digital content delivery and subscriber servicing costs were largely due to the factors identified above.

Sales and Marketing

Sales and marketing includes costs related to the Company’s marketing efforts as well as advertising sales costs.

Sales and marketing costs in the second quarter of 2020 decreased by $22.7 million compared with the second quarter of 2019, due primarily to lower media expenses, as well as lower advertising sales costs.

Sales and marketing costs decreased in the ~~third quarter~~first six months of ~~2017~~2020 by $23.7 million compared with the ~~third quarter~~first six months of ~~2016, driven by a decrease in other expenses ($3.0 million), raw materials ($2.5 million) and wage and benefits ($1.2 million). Other expenses decreased~~2019, primarily as a result of ~~lower outside printing~~the factors identified above.

Media expenses, a component of sales and marketing costs, ~~related~~which represents the cost to ~~coverage~~promote our subscription business, decreased to $16.5 million in the second quarter of the 2016 presidential election that did not recur in 2017. Raw materials expense decreased due to lower newsprint and magazine consumption. Wage and benefits expense decreased due to the streamlining of our international operations in 2016.

~~Production costs decreased~~2020 from $33.9 million in the first ~~nine~~quarter of 2019 and decreased to $61.9 million in the first six months of ~~2017~~2020 from $78.7 million in the first six months of 2019 as the Company reduced its marketing spend during the initial months of the COVID-19 pandemic.

Product Development

Product development includes costs associated with the Company’s investment into developing and enhancing new and existing product technology including engineering, product development, and data insights.

Product development costs in the second quarter of 2020 increased by $5.5 million compared with the second quarter of 2019, largely due to growth in the number of digital product development employees in connection with digital subscription strategic initiatives.

Product development costs in the first six months of 2020 increased by $12.6 million compared with the first ~~nine~~six months of ~~2016, driven by a decrease in other expenses ($5.2 million), wage and benefits ($4.9 million), and raw materials ($4.7 million). Other expenses decreased~~2019, primarily as a result of ~~lower outside printing expenses. Wage and benefits expense decreased primarily due to~~ the ~~streamlining of our international operations in 2016. Raw materials expense decreased due to lower newsprint and magazine paper consumption, partially offset by higher newsprint pricing.~~factors identified above.

~~Selling,~~ General and Administrative Costs

~~Selling, general~~General and administrative costs ~~include costs associated with the selling, marketing~~includes general management, corporate enterprise technology, building operations and ~~distribution of products as well as administrative expenses.~~unallocated overhead costs.

~~Selling, general~~General and administrative costs in the ~~third~~second quarter of ~~2017 were flat~~2020 increased by $8.4 million compared with the ~~third~~second quarter of ~~2016 as lower~~2019, primarily due to higher severance costs ~~($10.9 million) were~~largely related to workforce reductions primarily ~~offset by an increase in compensation costs ($4.8 million), promotion and marketing costs ($3.4 million) and other operating costs ($3.4 million).~~affecting our advertising department.

~~Selling, general~~General and administrative costs ~~increased~~ in the first ~~nine~~six months of ~~2017~~2020 increased by $9.6 million compared with the first ~~nine~~six months of ~~2016, primarily due to an increase in compensation costs ($25.6 million), promotion and marketing costs ($22.2 million) and severance costs ($4.7 million). Compensation costs increased~~2019, primarily as a result of an increase in variable compensation expenses and increased hiring to support digital growth initiatives. Promotion and marketing costs increased due to increased spending to promote our brand and subscription business. Severance costs increased due to a workforce reduction announced in the ~~second quarter of 2017 primarily affecting our newsroom.~~factors identified above.

Depreciation and Amortization

Depreciation and amortization costs ~~increased~~ in the ~~third~~second quarter and ~~the~~ first ~~nine~~six months of ~~2017~~2020 remained relatively flat compared with the same prior-year ~~period, primarily due to the Company’s acquisition of The Wirecutter.~~periods.

Other Items

See Note 7 of the Notes to the Condensed Consolidated Financial Statements for additional information regarding other ~~items, including costs related to the redesign of our headquarters building.~~items.

NON-OPERATING ITEMS

~~Joint Ventures~~Other Components of Net Periodic Benefit Costs

See Note 59 of the Notes to the Condensed Consolidated Financial Statements for information regarding ~~our joint venture investments.~~other components of net periodic benefit costs.

Interest ~~Expense, Net~~Income/(expense) and other, net

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

Income Taxes

See Note 10 of the Notes to the Condensed Consolidated Financial Statements for information regarding income taxes.

Non-GAAP Financial Measures

We have included in this report certain supplemental financial information derived from consolidated financial information but not presented in our financial statements prepared in accordance with GAAP. Specifically, we have referred to the following non-GAAP financial measures in this report:

diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and the impact of special items (or adjusted diluted earnings per share from continuing operations);

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

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

The special ~~items~~item in ~~2017~~2020 consisted of:

a ~~$30.1~~$10.1 million gain ($16.1 million after tax and net of noncontrolling interest or $.10 per share) from the sale of the remaining assets at a paper mill previously operated by Madison Paper Industries (“Madison”), in which the Company has an investment through a subsidiary, in the third quarter; and

expenses of $2.5 million ($1.5 million after tax or $.01 per share), $2.0 million ($1.2 million after tax or $.01 per share) and $2.4 million ($1.4 million after tax or $.01 per share) related to the ongoing redesign and consolidation of space in our headquarters building in the third, second and first quarters, respectively.

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

~~charges of $2.9 million ($1.8 million after tax or $.01 per share) and $11.9 million ($7.1~~7.4 million after tax or $.04 per share) ~~in connection with~~related to a non-marketable equity investment transaction. The gain is comprised of $2.5 million realized gain due to the ~~streamlining~~partial sale of the ~~Company’s international print operations (primarily consisting of severance costs) in the third~~investment and ~~second quarters, respectively;~~

an ~~$11.7~~$7.6 million charge ($7.0 million after tax or $.04 per share) for a partial withdrawal obligation under a multiemployer pension plan following an unfavorable arbitration decision in the second quarter, $5.0 million ($3.0 million after tax or $.02 per share) of which was reimbursedunrealized gain due to the ~~Company in the third quarter; and~~

~~a $41.4 million loss ($20.1 million after tax and net~~mark to market of the ~~noncontrolling interest or $0.13 per share) from joint ventures~~remaining investment, and is included in ~~the first quarter related to the announced closure~~Interest income/(expense) and other, net in our Condensed Consolidated Statements of ~~a paper mill operated by Madison.~~Operations.

There were no special items in 2019.

We have included these non-GAAP financial measures because management reviews them on a regular basis and uses them to evaluate and manage the performance of our operations. We believe that, for the reasons outlined below, these non-GAAP financial measures provide useful information to investors as a supplement to reported diluted earnings/(loss) per share from continuing operations, operating profit/(loss) and operating costs. However, these measures should be evaluated only in conjunction with the comparable GAAP financial measures and should not be viewed as alternative or superior measures of GAAP results.

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

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

~~Non-operating~~Included in our non-GAAP financial measures are non-operating retirement costs ~~include:~~

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

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

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

~~These non-operating retirement costs~~which are primarily tied to financial market performance and changes in market interest rates and investment performance. Non-operating retirement costs do not include service costs and amortization of prior service costs for pension and retiree medical benefits, which we believe reflect the ongoing operating costs of providing pension and retiree medical benefits to our employees. We considerManagement considers non-operating retirement costs to be outside the performance of ~~our ongoing core~~the business ~~operations~~ and ~~believe~~believes that presenting ~~operating results~~adjusted diluted earnings per share from continuing operations excluding non-operating retirement costs and presenting adjusted operating results excluding multiemployer pension plan withdrawal costs, in addition to ~~our~~the Company’s GAAP diluted earnings per share from continuing operations and GAAP operating results, ~~provides~~provide increased transparency and a better understanding of the underlying trends in ~~our~~the Company’s operating business performance.

Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are set out in the tables below.

Reconciliation of diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and special items (or adjusted diluted earnings per share from continuing operations)
For the Quarters Ended For the Nine Months Ended
September 24, 2017
September 25, 2016
% Change September 24, 2017
September 25, 2016
% Change
Diluted earnings/(loss) per share from continuing operations $ 0.20
$ —
*
$ 0.37
$ (0.05 ) *
Add:
Severance 0.01
0.08
(87.5 )% 0.14
0.11
27.3 %
Non-operating retirement costs 0.02
0.02
*
0.06
0.08
(25.0 )%
Special items:
Headquarters redesign and consolidation 0.02
—
*
0.04
—
*
Restructuring charge —
0.02
*
—
0.09
*
Multiemployer pension plan withdrawal (income)/expense —
(0.03 ) *
—
0.04
*
(Gain)/loss from joint ventures, net of noncontrolling interest (0.16 ) —
*
(0.16 ) 0.21
*
Income tax expense/(benefit) of adjustments 0.04
(0.04 ) *
(0.03 ) (0.21 ) (85.7 )%
Adjusted diluted earnings per share from continuing operations ⁽¹⁾
$ 0.13
$ 0.06
*
$ 0.42
$ 0.27
55.6 %



Reconciliation of diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and special items (or adjusted diluted earnings per share from continuing operations)
	For the Quarters Ended								For the Six Months Ended
	June 28, 2020			June 30, 2019			% Change		June 28, 2020			June 30, 2019			% Change
Diluted earnings per share from continuing operations	$	0.14		$	0.15		(6.7	)%	$	0.34		$	0.33		3.0	%
Add:
Severance	0.04			—			*		0.04			0.01			*
Non-operating retirement costs:
Multiemployer pension plan withdrawal costs	0.01			0.01			—		0.02			0.02			—
Other components of net periodic benefit costs	0.01			0.01			—		0.03			0.02			50.0	%
Special item:
Gain from non-marketable equity security	—			—			—		(0.06		)	—			*
Income tax expense of adjustments	(0.02		)	(0.01		)	*		(0.01		)	(0.01		)	—
Adjusted diluted earnings per share from continuing operations⁽¹⁾	$	0.18		$	0.17		5.9	%	$	0.35		$	0.37		(5.4	)%

⁽¹⁾Amounts may not add due to rounding.


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


Reconciliation of operating profit before depreciation & amortization, severance, non-operating retirement costs and special items (or adjusted operating profit)
Reconciliation of operating profit before depreciation & amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit)														Reconciliation of operating profit before depreciation & amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit)
	For the Quarters Ended							For the Nine Months Ended							For the Quarters Ended						For the Six Months Ended
(In thousands)	September 24, 2017		September 25, 2016			% Change		September 24, 2017		September 25, 2016		% Change			June 28, 2020		June 30, 2019		% Change		June 28, 2020		June 30, 2019		% Change
Operating profit	$	33,013	$	8,973		*		$	89,691	$	46,049	94.8	%		$	28,806	$	37,933	(24.1	)%	$	56,126	$	72,531	(22.6	)%
Add:
Depreciation & amortization	15,677		15,384			1.9	%	46,961		46,003		2.1	%		15,631		15,180		3.0	%	30,816		30,098		2.4	%
Severance	2,123		13,006			(83.7	)%	22,977		18,262		25.8	%		6,305		672		*		6,675		2,075		*
Non-operating retirement costs	3,100		3,845			(19.4	)%	9,642		13,349		(27.8	)%
Special items:
Headquarters redesign and consolidation	2,542		—			*		6,929		—		*
Restructuring charge	—		2,949			*		—		14,804		*
Multiemployer pension plan withdrawal (income)/expense	—		(4,971		)	*		—		6,730		*
Multiemployer pension plan withdrawal costs															1,400		1,801		(22.3	)%	2,823		3,250		(13.1	)%
Adjusted operating profit	$	56,455	$	39,186		44.1	%	$	176,200	$	145,197	21.4	%		$	52,142	$	55,586	(6.2	)%	$	96,440	$	107,954	(10.7	)%


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

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


Reconciliation of operating costs before depreciation & amortization, severance and non-operating retirement costs (or adjusted operating costs)
Reconciliation of operating costs before depreciation & amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs)													Reconciliation of operating costs before depreciation & amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs)
	For the Quarters Ended						For the Nine Months Ended							For the Quarters Ended						For the Six Months Ended
(In thousands)	September 24, 2017		September 25, 2016		% Change		September 24, 2017		September 25, 2016		% Change			June 28, 2020		June 30, 2019		% Change		June 28, 2020		June 30, 2019		% Change
Operating costs	$	350,080	$	356,596	(1.8	)%	$	1,094,893	$	1,048,109	4.5	%		$	374,944	$	398,325	(5.9	)%	$	791,260	$	802,789	(1.4	)%
Less:
Depreciation & amortization	15,677		15,384		1.9	%	46,961		46,003		2.1	%		15,631		15,180		3.0	%	30,816		30,098		2.4	%
Severance	2,123		13,006		(83.7	)%	22,977		18,262		25.8	%		6,305		672		*		6,675		2,075		*
Non-operating retirement costs	3,100		3,845		(19.4	)%	9,642		13,349		(27.8	)%
Multiemployer pension plan withdrawal costs														1,400		1,801		(22.3	)%	2,823		3,250		(13.1	)%
Adjusted operating costs	$	329,180	$	324,361	1.5	%	$	1,015,313	$	970,495	4.6	%		$	351,608	$	380,672	(7.6	)%	$	750,946	$	767,366	(2.1	)%


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

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

2834

LIQUIDITY AND CAPITAL RESOURCES

We believe our cash balance and cash provided by operations, in combination with other sources of cash, will be sufficient to meet our financing needs over the next twelve months. Although there is uncertainty related to the anticipated continued effect of the COVID-19 pandemic on our business (see “—Executive Overview— Impact of COVID-19 Pandemic” and “Part II—Item 1A—Risk Factors”), given the strength of our balance sheet, we do not expect the pandemic to materially impact our liquidity position. As of ~~September 24, 2017,~~June 28, 2020, we had cash, cash equivalents and short- and long-term marketable securities of $822.9 million and total debt and capital lease obligations of $249.4 million. Accordingly, our cash, cash equivalents and marketable securities exceeded total debt and capital lease obligations by $573.5$756.7 million. Our cash and ~~investment~~marketable securities balances ~~have increased since~~between the end of ~~2016,~~2019 and June 28, 2020, increased, primarily due to ~~higher~~ cash proceeds from operating activities and proceeds from sale of investments, partially offset by ~~cash~~ capital expenditures, dividend payments, share-based compensation tax withholding, and costs associated with the acquisition of ~~$47.8 million.~~a business.

We have paid quarterly dividends on the Class A and Class B Common Stock each quarter since late 2013. In February 2020, the Board of ~~$.04~~Directors approved an increase in the quarterly dividend to $0.06 per share, which was paid in April 2020. On June 30, 2020, the Board of Directors declared a quarterly dividend of $0.06 per share on the Class A and Class B Common Stock, ~~since late 2013.~~which was paid in July 2020. We currently expect to continue to pay comparable cash dividends in the future, although changes in our ~~dividend program~~dividends will be considered by our Board of Directors in light of our earnings, capital requirements, financial condition and other factors considered relevant.

The Company and UPM-Kymmene Corporation (“UPM”), a Finnish paper manufacturing company, are partners through subsidiary companies in Madison, which previously operated a supercalendered paper mill in Maine. The Company’s 40% ownership of Madison is through an 80%-owned consolidated subsidiary that owns 50% of Madison. UPM owns 60% of Madison, including a 10% interest through a 20% noncontrolling interest in the consolidated subsidiary of the Company. The paper mill was closed in May 2016. The Company’s joint venture in Madison is currently being liquidated. In the fourth quarter of 2016, Madison sold certain assets at the mill site and we recognized a gain of $3.9 million related to the sale. During the third quarter of 2017, the Company recognized a $30.1 million gain related to the sale of the remaining assets (which primarily consisted of hydro power assets). The Company’s proportionate share of the gain was $16.1 million after tax and net of noncontrolling interest. See Note 5 of the Notes to the Condensed Consolidated Financial Statements for more information on the Company’s investment in Madison.

As part of our continued effort to reduce the size and volatility of our pension obligations, in October 2017, the Company entered into agreements with an insurance company to transfer future benefit obligations and annuity administration of certain retirees in two of the Company’s qualified pension plans. Additionally, as part of our management of the funded status of our qualified pension plans, in October 2017, the Company made a $100 million aggregate contribution to these pension plans, which was funded by cash on hand. See Note 15 of the Notes to the Condensed Consolidated Financial Statements for additional information.

Capital Resources

Sources and Uses of Cash

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


	For the Nine Months Ended								For the Six Months Ended
(In thousands)	September 24, 2017			September 25, 2016			% Change		June 28, 2020			June 30, 2019			% Change
Operating activities	$	147,895		$	85,643		72.7	%	$	118,590		$	64,000		85.3	%
Investing activities	$	15,607		$	10,212		52.8	%	$	(72,938	)	$	(23,521	)	*
Financing activities	$	(19,739	)	$	(44,859	)	(56.0	)%	$	(28,192	)	$	(27,850	)	1.2	%

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

Operating Activities

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

Net cash provided by operating activities increased in the first ~~nine~~six months of ~~2017~~2020 compared with the same prior-year period due to higher ~~subscription revenue, lower income tax~~cash collections from accounts receivable and higher cash payments received from prepaid subscriptions, partially offset by higher cash payments made to settle accounts payable, accrued payroll and ~~a higher balance of unexpired subscriptions (or subscription revenue that has not yet been recognized).~~other liabilities.

Investing Activities

Cash from investing activities generally includes proceeds from marketable securities that have matured and the sale of assets, investments or a business. Cash used in investing activities generally includes purchases of marketable securities, payments for capital projects ~~restricted cash,~~and acquisitions of new businesses and investments.

Net cash ~~provided by~~used in investing activities in the first ~~nine~~six months of ~~2017~~2020 was primarily related to ~~maturities of marketable securities, partially offset by~~$49.8 million in net purchases of marketable securities, $21.5 million in capital expenditures payments, and ~~capital expenditures.~~$8.1 million cash outflow for the acquisition of a business.

Financing Activities

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

Net cash used in financing activities in the first ~~nine~~six months of ~~2017~~2020 was primarily related to dividend payments of ~~$19.5~~$18.4 million and share-based compensation tax withholding payments of $11.7 million.

Restricted Cash

We were required to maintain ~~$17.9~~$15.8 million of restricted cash as of ~~September 24, 2017~~June 28, 2020, and ~~$24.9~~$17.1 million as of December ~~25, 2016, the majority~~29, 2019, substantially all of which is set aside to collateralize workers’ compensation obligations.

Capital Expenditures

Capital expenditures totaled approximately ~~$67~~$17 million and ~~$17~~$24 million in the first ~~nine~~six months of ~~2017~~2020 and ~~2016,~~2019, respectively. The decrease in capital expenditures was primarily driven by lower investments in technology and lower expenditures related to improvements at our College Point, N.Y. printing and distribution facility. The cash payments related to ~~the~~ capital expenditures totaled approximately ~~$48~~$22 million and ~~$22~~$23 million in the first ~~nine~~six months of ~~2017~~2020 and ~~2016,~~2019, respectively. The increase in both periods was primarily driven by the ongoing redesign and consolidation of space in our headquarters building and certain improvements at our printing and distribution facility in College Point, New York.

Third-Party Financing

In September 2019, we entered into a $250 million five-year unsecured credit facility (the “Credit Facility”). Certain of our domestic subsidiaries have guaranteed our obligations under the Credit Facility. As of ~~September 24, 2017, our current indebtedness consisted of~~June 28, 2020, there were no outstanding borrowings under the ~~repurchase option related to a sale-leaseback of a portion of our New York headquarters. See Note 6 of~~Credit Facility and the ~~Notes to~~Company was in compliance with the ~~Condensed Consolidated Financial Statements for information regarding our total debt and capital lease obligations. See Note 8 of~~financial covenants contained in the ~~Notes to the Condensed Consolidated Financial Statements for information regarding the fair value of our long-term debt.~~Credit Facility.

CRITICAL ACCOUNTING POLICIES

Our critical accounting policies are detailed in our Annual Report on Form 10-K for the year ended December ~~25, 2016.~~29, 2019. Other than as described in Note 2 of the Notes to the Condensed Consolidated Financial Statements, as of ~~September 24, 2017,~~June 28, 2020, our critical accounting policies have not changed from December ~~25, 2016.~~29, 2019.

CONTRACTUAL OBLIGATIONS & OFF-BALANCE SHEET ARRANGEMENTS

Our contractual obligations and off-balance sheet arrangements are detailed in our Annual Report on Form 10-K for the year ended December ~~25, 2016.~~29, 2019. As of ~~September 24, 2017,~~June 28, 2020, our contractual obligations and off-balance sheet arrangements have not changed materially from December ~~25, 2016.~~29, 2019.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements that relate to future events or our future financial performance. We may also make written and oral forward-looking statements in our Securities and Exchange Commission (“SEC”) filings and otherwise. We have tried, where possible, to identify such statements by using words such as “believe,” “expect,” “intend,” “estimate,” “anticipate,” “will,” “could,” “project,” “plan” and similar expressions in connection with any discussion of future operating or financial performance. Any forward-looking statements are and will be based upon our then-current expectations, estimates and assumptions regarding future events and are applicable only as of the dates of such statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

By their nature, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in any such statements. You should bear this in mind as you consider forward-looking statements. Factors that we think could, individually or in the aggregate, cause our actual results to differ materially from expected and historical results include those described under the heading “Part II-Item 1A-Risk Factors” in this report, in our Annual Report on Form 10-K for the year ended December ~~25, 2016,~~29, 2019, as well as other risks and factors identified from time to time in our SEC filings.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our Annual Report on Form 10-K for the year ended December ~~25, 2016,~~29, 2019, details our disclosures about market risk. As of ~~September 24, 2017,~~June 28, 2020, there were no material changes in our market risks from December ~~25, 2016.~~29, 2019.

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Item 4. Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our management, with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of ~~September 24, 2017.~~June 28, 2020. Based upon such evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in our internal control over financial reporting during the quarter ended ~~September 24, 2017,~~June 28, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We have not experienced a material impact to our internal control over financial reporting despite the fact that most of our employees are working remotely due to the COVID-19 pandemic. We are continuing to monitor and evaluate the situation to minimize any impact of the pandemic on the design and operating effectiveness of our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are involved in various legal actions incidental to our business that are now pending against us. These actions are generally for amounts greatly in excess of the payments, if any, that may be required to be made. ~~See Note 14 of the Notes to the Consolidated Financial Statements for a description of certain matters, which is incorporated herein by reference.~~ Although the Company cannot predict the outcome of these matters, it is possible that an unfavorable outcome in one or more matters could be material to the Company’s consolidated results of operations or cash flows for an individual reporting period. However, based on currently available information, management does not believe that the ultimate resolution of these matters, individually or in the aggregate, is likely to have a material effect on the Company’s financial position.

Item 1A. Risk Factors

~~There have been no material changes to our~~The following risk factor supplements the risk factors as set forth in “Item 1A—Risk Factors” in our Annual Report on Form 10-K for the year ended December ~~25, 2016.~~29, 2019.

The global coronavirus (COVID-19) pandemic will continue to affect our industry, business and results of operations.

The global coronavirus (COVID-19) pandemic and attempts to contain it have continued to result in significant economic disruption, market volatility and uncertainty. As with many companies, the pandemic has disrupted our business and could continue to do so for the foreseeable future.

We derive substantial revenues from the sale of advertising (approximately 29% of our total revenues in 2019). Advertising spending is sensitive to overall economic conditions, and our advertising revenues are adversely affected if advertisers respond to weak and uneven economic conditions by reducing their budgets or shifting spending patterns or priorities, or if they are forced to consolidate or cease operations. The worldwide economic slowdown caused by the outbreak and spread of COVID-19 has materially adversely affected our advertising revenues, and if these conditions were to persist for an extended period of time, our advertising revenues would continue to be adversely affected. Likewise, the pandemic and attempts to contain it have resulted in the postponement and cancellation of live events, which has adversely affected our revenues from live events and related services, and will continue to adversely affect these revenues to the extent these conditions persist. It is possible that these revenues will not return to pre-pandemic levels once economic conditions improve.

We derive the majority of our revenues from the sale of subscriptions (approximately 60% of our total revenues in 2019). Although we have experienced significant growth in the number of subscriptions to our digital news and other products in the first and second quarters of 2020, this growth rate has been driven in part by an extraordinary increase in traffic given the current news environment, and may not be sustainable or indicative of results for future periods. In addition, the recent growth may reflect in part the shifting forward of growth that we would have otherwise seen in subsequent periods. Accordingly, growth in our subscriptions may slow due to slower acquisition and/or higher cancellations as the pandemic subsides and government and other restrictions are relaxed. Furthermore, to the extent that a prolonged weakening of global economic conditions leads consumers to reduce spending on discretionary activities, subscribers may increasingly shift to lower-priced subscription options or may forgo subscriptions altogether. In light of these factors, our ability to obtain new subscribers or to retain subscribers at their current or higher pricing levels could be hindered, reducing our subscription revenue. In addition, revenues from the single-copy and bulk sales of our print newspaper (which include our international edition and collectively represent less than 10% of our total subscription revenues) have been, and we expect will continue to be, adversely affected as a result of widespread business closures, increased remote working and reductions in travel.

In response to public health recommendations, government mandates and other concerns, we have altered certain aspects of our operations, including having the vast majority of our workforce work remotely since March 2020, and these remote work arrangements are expected to continue at least through the remainder of the year. An extended period of remote work arrangements could introduce operational risk (including cybersecurity risk), result in a decline in productivity or otherwise negatively affect our ability to manage the business. In addition, if a significant portion of our workforce is unable to work, including because of illness, travel or government restrictions in connection with COVID-19 or shortages of necessary personal protective equipment, our operations may be negatively impacted. We will continue to actively monitor the issues raised by the COVID-19 pandemic and may take further actions that alter our business operations as may be required or that we determine are appropriate. We have incurred and expect to continue to incur some additional costs in response to the pandemic, including certain enhanced employee benefits. These costs have not been significant to date, but we may incur significant additional costs as we continue to implement operational changes in response to the pandemic. It is not clear what the potential effects any such alterations or modifications may have on our business, including the effects on our financial results.

The Times is printed at our production and distribution facility in College Point, N.Y., as well as under contract at remote print sites across the United States and throughout the world. If a significant percentage of our College Point employees were unable to work as a result of the pandemic, our ability to print and distribute the newspaper and other commercial print products in the New York area could be negatively affected. To the extent our newsprint suppliers or print and distribution partners are

affected by government “stay-at-home” mandates or recommendations, financial pressures, labor shortages or other circumstances relating to COVID-19 that lead to reduced operations or consolidations or closures of print sites and/or distribution routes, this could lead to an increase in costs to print and distribute our newspapers and/or a decrease in revenues if printing and distribution are disrupted. Some of our print and distribution partners have taken steps to reduce the frequency with which newspapers are printed and distributed, and additional partners may take similar steps. Significant disruptions to operations at our College Point production and distribution facility or at our newsprint suppliers or print and distribution partners could adversely affect our operating results.

It is also possible that the COVID-19 pandemic may accelerate or worsen the other risks discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K. The extent to which the COVID-19 pandemic impacts us will depend on numerous evolving factors and future developments that we are not able to predict, including the severity of the virus; the duration of the outbreak; the impact of the pandemic on economic activity and the companies with which we do business; governmental, business and other actions; travel restrictions and social distancing measures, among many other factors.

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

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

On July 28, 2017, we issued 24 shares of Class A Common Stock to holders of Class B Common Stock upon the conversion of such Class B shares into Class A shares. The conversion, which was in accordance with our Certificate of Incorporation, did not involve a public offering and was exempt from registration pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended.

~~On January 14,~~In 2015, the Board of Directors approved an authorization of $101.1 million to repurchase shares of the Company’s Class A Common Stock. As of June 28, 2020, repurchases under this authorization totaled $84.9 million (excluding commissions), and $16.2 million remained under this authorization. The Company did not repurchase any shares during the ~~third quarter~~first six months of 2017. As of September 24, 2017, the Company had repurchased 6,690,905 Class A shares under this authorization for a cost of $84.9 million (excluding commissions) and $16.2 million remained under this authorization.2020. All purchases were made pursuant to our publicly announced share repurchase program. Our Board of Directors has authorized us to purchase shares from time to time, subject to market conditions and other factors. There is no expiration date with respect to this authorization.

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Item 6. Exhibits



Exhibit No.

~~10.1~~		~~Amendment No. 4 to The New York Times Companies Supplemental Retirement and Investment Plan, amended August 11, 2017, and effective January 1, 2015.~~

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

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

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

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

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

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

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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SIGNATURES

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



		THE NEW YORK TIMES COMPANY
		(Registrant)

Date:	~~November 1, 2017~~August 6, 2020	/s/ ~~JAMES M. FOLLO~~Roland A. Caputo
		~~James M. Follo~~Roland A. Caputo Executive Vice President and Chief Financial Officer (Principal Financial Officer)

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(In thousands)	Total Company
Balance as of December 25, 2016	$	134,517
Measurement period adjustment ⁽¹⁾	(198		)
Foreign currency translation	8,852
Balance as of September 24, 2017	$	143,171



(In thousands)	September 24, 2017								December 25, 2016 ⁽³⁾
(In thousands)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Short-term AFS securities ⁽¹⁾
U.S Treasury securities	$	73,175	$	—	$	73,175	$	—	$	—	$	—	$	—	$	—
Corporate debt securities	156,639		—		156,639		—		—		—		—		—
U.S. governmental agency securities	53,754		—		53,754		—		—		—		—		—
Certificates of deposit	20,403		—		20,403		—		—		—		—		—
Commercial paper	32,471		—		32,471		—		—		—		—		—
Total short-term AFS securities	$	336,442	$	—	$	336,442	$	—	$	—	$	—	$	—	$	—
Long-term AFS securities ⁽¹⁾
U.S. governmental agency securities	$	96,817	$	—	$	96,817	$	—	$	—	$	—	$	—	$	—
Corporate debt securities	97,345		—		97,345		—		—		—		—		—
U.S Treasury securities	47,620		—		47,620		—		—		—		—		—
Total long-term AFS securities	$	241,782	$	—	$	241,782	$	—	$	—	$	—	$	—	$	—
Liabilities:
Deferred compensation ⁽²⁾	$	28,354	$	28,354	$	—	$	—	$	31,006	$	31,006	$	—	$	—