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 26, 202125, 2022
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission file number 1-5837
THE NEW YORK TIMES COMPANY
(Exact name of registrant as specified in its charter)
| | | | | | | | |
New York | | 13-1102020 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
620 Eighth Avenue, New York, New York 10018
(Address and zip code of principal executive offices)
Registrant’s telephone number, including area code 212-556-1234
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Class A Common Stock | | NYT | | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | | | | | | |
Large accelerated filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | | |
Smaller reporting company | ☐ | Emerging growth company | ☐ | | | | |
If an emerging growth company, indicate by the check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
Number of shares of each class of the registrant’s common stock outstanding as of October 29, 202128, 2022 (exclusive of treasury shares):
| | | | | | | | |
Class A Common Stock | 167,093,950164,637,412 | | shares |
Class B Common Stock | 781,724780,724 | | shares |
THE NEW YORK TIMES COMPANY
INDEX
| | | | | | | | | | | |
PART I | PART I | | | | Financial Information | | | PART I | | | | Financial Information | | |
Item | Item | 1 | | Financial Statements | | | Item | 1 | | Financial Statements | | |
| | | | Condensed Consolidated Balance Sheets as of September 26, 2021 (unaudited) and December 27, 2020 | | | | | | Condensed Consolidated Balance Sheets as of September 25, 2022 (unaudited) and December 26, 2021 | | |
| | | | Condensed Consolidated Statements of Operations (unaudited) for the quarters and nine months ended September 26, 2021 and September 27, 2020 | | | | | | Condensed Consolidated Statements of Operations (unaudited) for the quarters and nine months ended September 25, 2022 and September 26, 2021 | | |
| | | | Condensed Consolidated Statements of Comprehensive Income (unaudited) for the quarters and nine months ended September 26, 2021 and September 27, 2020 | | | | | | Condensed Consolidated Statements of Comprehensive Income (unaudited) for the quarters and nine months ended September 25, 2022 and September 26, 2021 | | |
| | | | Condensed Consolidated Statements of Changes In Stockholders’ Equity (unaudited) for the quarters and nine months ended September 26, 2021 and September 27, 2020 | | | | | | Condensed Consolidated Statements of Changes In Stockholders’ Equity (unaudited) for the quarters and nine months ended September 25, 2022 and September 26, 2021 | | |
| | | | Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 26, 2021 and September 27, 2020 | | | | | | Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 25, 2022 and September 26, 2021 | | |
| | | | Notes to the Condensed Consolidated Financial Statements | | | | | | Notes to the Condensed Consolidated Financial Statements | | |
Item | Item | 2 | | Management’s Discussion and Analysis of Financial Condition and Results of Operations | | | Item | 2 | | Management’s Discussion and Analysis of Financial Condition and Results of Operations | | |
Item | Item | 3 | | Quantitative and Qualitative Disclosures About Market Risk | | | Item | 3 | | Quantitative and Qualitative Disclosures About Market Risk | | |
Item | Item | 4 | | Controls and Procedures | | | Item | 4 | | Controls and Procedures | | |
| PART II | PART II | | | | Other Information | | | PART II | | | | Other Information | | |
Item | Item | 1 | | Legal Proceedings | | | Item | 1 | | Legal Proceedings | | |
Item | Item | 1A | | Risk Factors | | | Item | 1A | | Risk Factors | | |
Item | Item | 2 | | Unregistered Sales of Equity Securities and Use of Proceeds | | | Item | 2 | | Unregistered Sales of Equity Securities and Use of Proceeds | | |
Item | Item | 6 | | Exhibits | | | Item | 6 | | Exhibits | | |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
| | | September 26, 2021 | | December 27, 2020 | | September 25, 2022 | | December 26, 2021 |
| | (Unaudited) | | | | (Unaudited) | | |
Assets | Assets | | Assets | |
Current assets | Current assets | | Current assets | |
Cash and cash equivalents | Cash and cash equivalents | | $ | 323,990 | | | $ | 286,079 | | Cash and cash equivalents | | $ | 190,050 | | | $ | 319,973 | |
Short-term marketable securities | Short-term marketable securities | | 357,814 | | | 309,080 | | Short-term marketable securities | | 102,620 | | | 341,075 | |
Accounts receivable (net of allowances of $12,069 in 2021 and $13,797 in 2020) | | 164,620 | | | 183,692 | | |
Accounts receivable (net of allowances of $11,991 in 2022 and $12,374 in 2021) | | Accounts receivable (net of allowances of $11,991 in 2022 and $12,374 in 2021) | | 163,553 | | | 232,908 | |
Prepaid expenses | Prepaid expenses | | 38,839 | | | 29,487 | | Prepaid expenses | | 58,733 | | | 33,199 | |
Other current assets | Other current assets | | 40,391 | | | 27,497 | | Other current assets | | 28,252 | | | 25,553 | |
Total current assets | Total current assets | | 925,654 | | | 835,835 | | Total current assets | | 543,208 | | | 952,708 | |
Other assets | Other assets | | | | | Other assets | | | | |
Long-term marketable securities | Long-term marketable securities | | 360,721 | | | 286,831 | | Long-term marketable securities | | 175,945 | | | 413,380 | |
Property, plant and equipment (less accumulated depreciation and amortization of $903,699 in 2021 and $886,149 in 2020) | | 579,444 | | | 594,516 | | |
Property, plant and equipment (less accumulated depreciation and amortization of $813,330 in 2022 and $777,637 in 2021) | | Property, plant and equipment (less accumulated depreciation and amortization of $813,330 in 2022 and $777,637 in 2021) | | 561,068 | | | 574,952 | |
Goodwill | Goodwill | | 168,854 | | | 171,657 | | Goodwill | | 406,373 | | | 166,360 | |
Intangible assets, net | | Intangible assets, net | | 328,735 | | | 14,246 | |
Deferred income taxes | Deferred income taxes | | 95,824 | | | 99,518 | | Deferred income taxes | | 111,678 | | | 95,800 | |
Miscellaneous assets | Miscellaneous assets | | 338,915 | | | 319,332 | | Miscellaneous assets | | 388,385 | | | 346,662 | |
Total assets | Total assets | | $ | 2,469,412 | | | $ | 2,307,689 | | Total assets | | $ | 2,515,392 | | | $ | 2,564,108 | |
See Notes to Condensed Consolidated Financial Statements.
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS-(Continued)
(In thousands, except share and per share data)
| | | September 26, 2021 | | December 27, 2020 | | September 25, 2022 | | December 26, 2021 |
| | (Unaudited) | | | | (Unaudited) | | |
Liabilities and stockholders’ equity | Liabilities and stockholders’ equity | | Liabilities and stockholders’ equity | |
Current liabilities | Current liabilities | | Current liabilities | |
Accounts payable | Accounts payable | | $ | 118,871 | | | $ | 123,157 | | Accounts payable | | $ | 119,531 | | | $ | 127,073 | |
Accrued payroll and other related liabilities | Accrued payroll and other related liabilities | | 146,378 | | | 121,159 | | Accrued payroll and other related liabilities | | 145,197 | | | 166,464 | |
Unexpired subscriptions revenue | Unexpired subscriptions revenue | | 115,666 | | | 105,346 | | Unexpired subscriptions revenue | | 152,409 | | | 119,296 | |
| Accrued expenses and other | Accrued expenses and other | | 145,679 | | | 137,086 | | Accrued expenses and other | | 138,621 | | | 146,319 | |
Total current liabilities | Total current liabilities | | 526,594 | | | 486,748 | | Total current liabilities | | 555,758 | | | 559,152 | |
Other liabilities | Other liabilities | | | | | Other liabilities | | | | |
| Pension benefits obligation | Pension benefits obligation | | 312,881 | | | 326,555 | | Pension benefits obligation | | 270,307 | | | 295,104 | |
Postretirement benefits obligation | Postretirement benefits obligation | | 34,344 | | | 38,690 | | Postretirement benefits obligation | | 33,949 | | | 36,086 | |
Other | Other | | 126,061 | | | 127,585 | | Other | | 113,020 | | | 133,041 | |
Total other liabilities | Total other liabilities | | 473,286 | | | 492,830 | | Total other liabilities | | 417,276 | | | 464,231 | |
Stockholders’ equity | Stockholders’ equity | | | | | Stockholders’ equity | | | | |
Common stock of $.10 par value: | Common stock of $.10 par value: | | Common stock of $.10 par value: | |
Class A – authorized: 300,000,000 shares; issued: 2021 – 175,964,351; 2020 – 175,308,672 (including treasury shares: 2021 – 8,870,801; 2020 – 8,870,801) | | 17,597 | | | 17,531 | | |
Class B – convertible – authorized and issued shares: 2021 – 781,724; 2020 – 781,724 | | 78 | | | 78 | | |
Class A – authorized: 300,000,000 shares; issued: 2022 – 176,286,593; 2021 – 175,971,801 (including treasury shares: 2022 – 11,195,509; 2021 – 8,870,801) | | Class A – authorized: 300,000,000 shares; issued: 2022 – 176,286,593; 2021 – 175,971,801 (including treasury shares: 2022 – 11,195,509; 2021 – 8,870,801) | | 17,629 | | | 17,597 | |
Class B – convertible – authorized and issued shares: 2022 – 780,724; 2021 – 781,724 | | Class B – convertible – authorized and issued shares: 2022 – 780,724; 2021 – 781,724 | | 78 | | | 78 | |
Additional paid-in capital | Additional paid-in capital | | 222,570 | | | 216,714 | | Additional paid-in capital | | 245,549 | | | 230,115 | |
Retained earnings | Retained earnings | | 1,799,023 | | | 1,672,586 | | Retained earnings | | 1,918,152 | | | 1,845,343 | |
Common stock held in treasury, at cost | Common stock held in treasury, at cost | | (171,211) | | | (171,211) | | Common stock held in treasury, at cost | | (251,014) | | | (171,211) | |
Accumulated other comprehensive loss, net of income taxes: | Accumulated other comprehensive loss, net of income taxes: | | Accumulated other comprehensive loss, net of income taxes: | |
Foreign currency translation adjustments | Foreign currency translation adjustments | | 5,879 | | | 8,386 | | Foreign currency translation adjustments | | (5,947) | | | 3,754 | |
Funded status of benefit plans | Funded status of benefit plans | | (407,624) | | | (421,698) | | Funded status of benefit plans | | (374,434) | | | (385,680) | |
Net unrealized gain on available-for-sale securities | | 1,215 | | | 3,131 | | |
Net unrealized loss on available-for-sale securities | | Net unrealized loss on available-for-sale securities | | (9,660) | | | (1,276) | |
Total accumulated other comprehensive loss, net of income taxes | Total accumulated other comprehensive loss, net of income taxes | | (400,530) | | | (410,181) | | Total accumulated other comprehensive loss, net of income taxes | | (390,041) | | | (383,202) | |
Total New York Times Company stockholders’ equity | Total New York Times Company stockholders’ equity | | 1,467,527 | | | 1,325,517 | | Total New York Times Company stockholders’ equity | | 1,540,353 | | | 1,538,720 | |
Noncontrolling interest | Noncontrolling interest | | 2,005 | | | 2,594 | | Noncontrolling interest | | 2,005 | | | 2,005 | |
Total stockholders’ equity | Total stockholders’ equity | | 1,469,532 | | | 1,328,111 | | Total stockholders’ equity | | 1,542,358 | | | 1,540,725 | |
Total liabilities and stockholders’ equity | Total liabilities and stockholders’ equity | | $ | 2,469,412 | | | $ | 2,307,689 | | Total liabilities and stockholders’ equity | | $ | 2,515,392 | | | $ | 2,564,108 | |
See Notes to Condensed Consolidated Financial Statements.
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
| | | | For the Quarters Ended | | For the Nine Months Ended | | | For the Quarters Ended | | For the Nine Months Ended |
| | September 26, 2021 | | September 27, 2020 | | September 26, 2021 | | September 27, 2020 | | September 25, 2022 | | September 26, 2021 | | September 25, 2022 | | September 26, 2021 |
| | (13 weeks) | | (39 weeks) | | (13 weeks) | | (39 weeks) |
Revenues | Revenues | | Revenues | |
Subscription | Subscription | | $ | 342,609 | | | $ | 300,950 | | | $ | 1,010,910 | | | $ | 879,573 | | Subscription | | $ | 382,672 | | | $ | 342,609 | | | $ | 1,138,270 | | | $ | 1,010,910 | |
Advertising | Advertising | | 110,887 | | | 79,253 | | | 320,777 | | | 253,150 | | Advertising | | 110,467 | | | 110,887 | | | 344,116 | | | 320,777 | |
Other | Other | | 55,607 | | | 46,692 | | | 148,958 | | | 141,558 | | Other | | 54,541 | | | 55,607 | | | 158,399 | | | 148,958 | |
Total revenues | Total revenues | | 509,103 | | | 426,895 | | | 1,480,645 | | | 1,274,281 | | Total revenues | | 547,680 | | | 509,103 | | | 1,640,785 | | | 1,480,645 | |
Operating costs | Operating costs | | Operating costs | |
Cost of revenue (excluding depreciation and amortization) | Cost of revenue (excluding depreciation and amortization) | | 256,978 | | | 235,665 | | | 759,333 | | | 709,062 | | Cost of revenue (excluding depreciation and amortization) | | 294,856 | | | 256,978 | | | 876,804 | | | 759,333 | |
Sales and marketing | Sales and marketing | | 83,767 | | | 50,615 | | | 197,475 | | | 164,004 | | Sales and marketing | | 64,732 | | | 83,767 | | | 205,089 | | | 197,475 | |
Product development | Product development | | 40,638 | | | 34,349 | | | 119,280 | | | 96,334 | | Product development | | 50,474 | | | 40,638 | | | 148,729 | | | 119,280 | |
General and administrative | General and administrative | | 64,418 | | | 51,118 | | | 183,278 | | | 162,791 | | General and administrative | | 71,970 | | | 64,418 | | | 212,468 | | | 183,278 | |
Depreciation and amortization | Depreciation and amortization | | 14,326 | | | 15,552 | | | 43,529 | | | 46,368 | | Depreciation and amortization | | 21,760 | | | 14,326 | | | 61,150 | | | 43,529 | |
Total operating costs | Total operating costs | | 460,127 | | | 387,299 | | | 1,302,895 | | | 1,178,559 | | Total operating costs | | 503,792 | | | 460,127 | | | 1,504,240 | | | 1,302,895 | |
| Acquisition-related costs | | Acquisition-related costs | | — | | | — | | | 34,712 | | | — | |
Gain from pension liability adjustment | | Gain from pension liability adjustment | | (7,127) | | | — | | | (7,127) | | | — | |
Lease termination charge | Lease termination charge | | — | | | — | | | 3,831 | | | — | | Lease termination charge | | — | | | — | | | — | | | 3,831 | |
| Operating profit | Operating profit | | 48,976 | | | 39,596 | | | 173,919 | | | 95,722 | | Operating profit | | 51,015 | | | 48,976 | | | 108,960 | | | 173,919 | |
Other components of net periodic benefit costs | Other components of net periodic benefit costs | | 2,599 | | | 2,272 | | | 7,796 | | | 6,735 | | Other components of net periodic benefit costs | | 1,757 | | | 2,599 | | | 4,903 | | | 7,796 | |
| Interest income and other, net | Interest income and other, net | | 28,569 | | | 3,537 | | | 31,953 | | | 20,177 | | Interest income and other, net | | 1,579 | | | 28,569 | | | 38,258 | | | 31,953 | |
Income from continuing operations before income taxes | Income from continuing operations before income taxes | | 74,946 | | | 40,861 | | | 198,076 | | | 109,164 | | Income from continuing operations before income taxes | | 50,837 | | | 74,946 | | | 142,315 | | | 198,076 | |
Income tax expense | Income tax expense | | 20,290 | | | 7,283 | | | 47,994 | | | 19,070 | | Income tax expense | | 14,220 | | | 20,290 | | | 39,196 | | | 47,994 | |
| Net income | | Net income | | 36,617 | | | 54,656 | | | 103,119 | | | 150,082 | |
| Net income attributable to The New York Times Company common stockholders | Net income attributable to The New York Times Company common stockholders | | $ | 54,656 | | | $ | 33,578 | | | $ | 150,082 | | | $ | 90,094 | | Net income attributable to The New York Times Company common stockholders | | $ | 36,617 | | | $ | 54,656 | | | $ | 103,119 | | | $ | 150,082 | |
Average number of common shares outstanding: | Average number of common shares outstanding: | | | | | | | | | Average number of common shares outstanding: | | | | | | | | |
Basic | Basic | | 168,027 | | | 167,075 | | | 167,895 | | | 166,842 | | Basic | | 166,433 | | | 168,027 | | | 167,290 | | | 167,895 | |
Diluted | Diluted | | 168,546 | | | 168,059 | | | 168,492 | | | 167,943 | | Diluted | | 166,497 | | | 168,546 | | | 167,418 | | | 168,492 | |
Basic earnings per share attributable to The New York Times Company common stockholders | Basic earnings per share attributable to The New York Times Company common stockholders | | $ | 0.33 | | | $ | 0.20 | | | $ | 0.89 | | | $ | 0.54 | | Basic earnings per share attributable to The New York Times Company common stockholders | | $ | 0.22 | | | $ | 0.33 | | | $ | 0.62 | | | $ | 0.89 | |
Diluted earnings per share attributable to The New York Times Company common stockholders | Diluted earnings per share attributable to The New York Times Company common stockholders | | $ | 0.32 | | | $ | 0.20 | | | $ | 0.89 | | | $ | 0.54 | | Diluted earnings per share attributable to The New York Times Company common stockholders | | $ | 0.22 | | | $ | 0.32 | | | $ | 0.62 | | | $ | 0.89 | |
Dividends declared per share | Dividends declared per share | | $ | 0.07 | | | $ | 0.12 | | | $ | 0.14 | | | $ | 0.18 | | Dividends declared per share | | $ | 0.09 | | | $ | 0.07 | | | $ | 0.18 | | | $ | 0.14 | |
See Notes to Condensed Consolidated Financial Statements.
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEINCOME/(LOSS)
(Unaudited)
(In thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Nine Months Ended |
| | September 26, 2021 | | September 27, 2020 | | September 26, 2021 | | September 27, 2020 |
| | (13 weeks) | | (39 weeks) |
Net income | | $ | 54,656 | | | $ | 33,578 | | | $ | 150,082 | | | $ | 90,094 | |
Other comprehensive income, before tax: | | | | | | | | |
(Loss)/gain on foreign currency translation adjustments | | (1,654) | | | 2,730 | | | (3,421) | | | 3,095 | |
Pension and postretirement benefits obligation | | 6,405 | | | 6,354 | | | 19,220 | | | 18,982 | |
Net unrealized (loss)/gain on available-for-sale securities | | (770) | | | (854) | | | (2,616) | | | 3,936 | |
Other comprehensive income, before tax | | 3,981 | | | 8,230 | | | 13,183 | | | 26,013 | |
Income tax expense | | 1,067 | | | 2,192 | | | 3,532 | | | 6,955 | |
Other comprehensive income, net of tax | | 2,914 | | | 6,038 | | | 9,651 | | | 19,058 | |
| | | | | | | | |
| | | | | | | | |
Comprehensive income attributable to The New York Times Company common stockholders | | $ | 57,570 | | | $ | 39,616 | | | $ | 159,733 | | | $ | 109,152 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Nine Months Ended |
| | September 25, 2022 | | September 26, 2021 | | September 25, 2022 | | September 26, 2021 |
| | (13 weeks) | | (39 weeks) |
Net income | | $ | 36,617 | | | $ | 54,656 | | | $ | 103,119 | | | $ | 150,082 | |
Other comprehensive (loss)/income, before tax: | | | | | | | | |
Loss on foreign currency translation adjustments | | (7,603) | | | (1,654) | | | (13,219) | | | (3,421) | |
Pension and postretirement benefits obligation | | 5,247 | | | 6,405 | | | 15,371 | | | 19,220 | |
Net unrealized loss on available-for-sale securities | | (1,631) | | | (770) | | | (11,458) | | | (2,616) | |
Other comprehensive (loss)/income, before tax | | (3,987) | | | 3,981 | | | (9,306) | | | 13,183 | |
Income tax (benefit)/expense | | (983) | | | 1,067 | | | (2,467) | | | 3,532 | |
Other comprehensive (loss)/income, net of tax | | (3,004) | | | 2,914 | | | (6,839) | | | 9,651 | |
| | | | | | | | |
| | | | | | | | |
Comprehensive income attributable to The New York Times Company common stockholders | | $ | 33,613 | | | $ | 57,570 | | | $ | 96,280 | | | $ | 159,733 | |
See Notes to Condensed Consolidated Financial Statements.
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
For the Quarters Ended September 26, 202125, 2022 and September 27, 202026, 2021
(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, June 28, 2020 | $ | 17,562 | | $ | 205,618 | | $ | 1,659,158 | | $ | (171,211) | | $ | (481,956) | | $ | 1,229,171 | | $ | 1,860 | | $ | 1,231,031 | |
| | | | | | | | |
Net income | — | | — | | 33,578 | | — | | — | | 33,578 | | — | | 33,578 | |
Dividends | — | | — | | (20,103) | | — | | — | | (20,103) | | — | | (20,103) | |
Other comprehensive income | — | | — | | — | | — | | 6,038 | | 6,038 | | — | | 6,038 | |
Issuance of shares: | | | | | | | | |
Stock options – 372,508 Class A shares | 37 | | 3,397 | | — | | — | | — | | 3,434 | | — | | 3,434 | |
Restricted stock units vested – 635 Class A shares | — | | (16) | | — | | — | | — | | (16) | | — | | (16) | |
| | | | | | | | |
Stock-based compensation | — | | 3,292 | | — | | — | | — | | 3,292 | | — | | 3,292 | |
| | | | | | | | |
Balance, September 27, 2020 | $ | 17,599 | | $ | 212,291 | | $ | 1,672,633 | | $ | (171,211) | | $ | (475,918) | | $ | 1,255,394 | | $ | 1,860 | | $ | 1,257,254 | |
| | | | | | | | |
Balance, June 27, 2021 | $ | 17,674 | | $ | 217,565 | | $ | 1,756,198 | | $ | (171,211) | | $ | (403,444) | | $ | 1,416,782 | | $ | 2,005 | | $ | 1,418,787 | |
| | | | | | | | |
Net income | — | | — | | 54,656 | | — | | — | | 54,656 | | — | | 54,656 | |
Dividends | — | | — | | (11,831) | | — | | — | | (11,831) | | — | | (11,831) | |
Other comprehensive income | — | | — | | — | | — | | 2,914 | | 2,914 | | — | | 2,914 | |
Issuance of shares: | | | | | | | | |
Stock options – 700 Class A shares | — | | 4 | | — | | — | | — | | 4 | | — | | 4 | |
Restricted stock units vested – 1,379 Class A shares | 1 | | (48) | | — | | — | | — | | (47) | | — | | (47) | |
| | | | | | | | |
Stock-based compensation | — | | 5,049 | | — | | — | | — | | 5,049 | | — | | 5,049 | |
| | | | | | | | |
| | | | | | | | |
Balance, September 26, 2021 | $ | 17,675 | | $ | 222,570 | | $ | 1,799,023 | | $ | (171,211) | | $ | (400,530) | | $ | 1,467,527 | | $ | 2,005 | | $ | 1,469,532 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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, June 27, 2021 | $ | 17,674 | | $ | 217,565 | | $ | 1,756,198 | | $ | (171,211) | | $ | (403,444) | | $ | 1,416,782 | | $ | 2,005 | | $ | 1,418,787 | |
| | | | | | | | |
Net income | — | | — | | 54,656 | | — | | — | | 54,656 | | — | | 54,656 | |
Dividends | — | | — | | (11,831) | | — | | — | | (11,831) | | — | | (11,831) | |
Other comprehensive income | — | | — | | — | | — | | 2,914 | | 2,914 | | — | | 2,914 | |
Issuance of shares: | | | | | | | | |
Stock options – 700 Class A shares | — | | 4 | | — | | — | | — | | 4 | | — | | 4 | |
Restricted stock units vested – 1,379 Class A shares | 1 | | (48) | | — | | — | | — | | (47) | | — | | (47) | |
| | | | | | | | |
Stock-based compensation | — | | 5,049 | | — | | — | | — | | 5,049 | | — | | 5,049 | |
| | | | | | | | |
Balance, September 26, 2021 | $ | 17,675 | | $ | 222,570 | | $ | 1,799,023 | | $ | (171,211) | | $ | (400,530) | | $ | 1,467,527 | | $ | 2,005 | | $ | 1,469,532 | |
| | | | | | | | |
Balance, June 26, 2022 | $ | 17,705 | | $ | 236,495 | | $ | 1,896,646 | | $ | (225,680) | | $ | (387,037) | | $ | 1,538,129 | | $ | 2,005 | | $ | 1,540,134 | |
| | | | | | | | |
Net income | — | | — | | 36,617 | | — | | — | | 36,617 | | — | | 36,617 | |
Dividends | — | | — | | (15,111) | | — | | — | | (15,111) | | — | | (15,111) | |
Other comprehensive loss | — | | — | | — | | — | | (3,004) | | (3,004) | | — | | (3,004) | |
Issuance of shares: | | | | | | | | |
| | | | | | | | |
Restricted stock units vested – 11,655 Class A shares | 2 | | (209) | | — | | — | | — | | (207) | | — | | (207) | |
| | | | | | | | |
Share repurchases – 850,378 Class A shares | — | | — | | — | | (25,334) | | — | | (25,334) | | — | | (25,334) | |
Stock-based compensation | — | | 9,263 | | — | | — | | — | | 9,263 | | — | | 9,263 | |
| | | | | | | | |
| | | | | | | | |
Balance, September 25, 2022 | $ | 17,707 | | $ | 245,549 | | $ | 1,918,152 | | $ | (251,014) | | $ | (390,041) | | $ | 1,540,353 | | $ | 2,005 | | $ | 1,542,358 | |
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
For the Nine Months Ended September 25, 2022 and September 26, 2021 and September 27, 2020
(Unaudited)
(In thousands, except share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Capital Stock - Class A and Class B Common | Additional Paid-in Capital | Retained Earnings | Common Stock Held in Treasury, at Cost | Accumulated Other Comprehensive Loss, Net of Income Taxes | Total New York Times Company Stockholders’ Equity | Non- controlling Interest | Total Stock- holders’ Equity |
|
Balance, December 29, 2019 | $ | 17,504 | | $ | 208,028 | | $ | 1,612,658 | | $ | (171,211) | | $ | (494,976) | | $ | 1,172,003 | | $ | 1,860 | | $ | 1,173,863 | |
| | | | | | | | |
Net income | — | | — | | 90,094 | | — | | — | | 90,094 | | — | | 90,094 | |
Dividends | — | | — | | (30,119) | | — | | — | | (30,119) | | — | | (30,119) | |
Other comprehensive income | — | | — | | — | | — | | 19,058 | | 19,058 | | — | | 19,058 | |
Issuance of shares: | | | | | | — | | | — | |
Stock options – 552,018 Class A shares | 55 | | 5,252 | | — | | — | | — | | 5,307 | | — | | 5,307 | |
Restricted stock units vested – 142,136 Class A shares | 14 | | (3,913) | | — | | — | | — | | (3,899) | | — | | (3,899) | |
Performance-based awards – 257,098 Class A shares | 26 | | (7,850) | | — | | — | | — | | (7,824) | | — | | (7,824) | |
Stock-based compensation | — | | 10,774 | | — | | — | | — | | 10,774 | | — | | 10,774 | |
| | | | | | | | |
Balance, September 27, 2020 | $ | 17,599 | | $ | 212,291 | | $ | 1,672,633 | | $ | (171,211) | | $ | (475,918) | | $ | 1,255,394 | | $ | 1,860 | | $ | 1,257,254 | |
| | | | | | | | |
Balance, December 27, 2020 | $ | 17,609 | | $ | 216,714 | | $ | 1,672,586 | | $ | (171,211) | | $ | (410,181) | | $ | 1,325,517 | | $ | 2,594 | | $ | 1,328,111 | |
| | | | | | | | |
Net income | — | | — | | 150,082 | | — | | — | | 150,082 | | — | | 150,082 | |
Dividends | — | | — | | (23,645) | | — | | — | | (23,645) | | — | | (23,645) | |
Other comprehensive income | — | | — | | — | | — | | 9,651 | | 9,651 | | — | | 9,651 | |
Issuance of shares: | | | | | | | | |
Stock options – 324,060 Class A shares | 33 | | 2,418 | | — | | — | | — | | 2,451 | | — | | 2,451 | |
Restricted stock units vested – 189,366 Class A shares | 19 | | (5,002) | | — | | — | | — | | (4,983) | | — | | (4,983) | |
Performance-based awards – 142,253 Class A shares | 14 | | (5,947) | | — | | — | | — | | (5,933) | | — | | (5,933) | |
Stock-based compensation | — | | 14,387 | | — | | — | | — | | 14,387 | | — | | 14,387 | |
Distributions | — | | — | | — | | — | | — | | — | | (589) | | (589) | |
| | | | | | | | |
Balance, September 26, 2021 | $ | 17,675 | | $ | 222,570 | | $ | 1,799,023 | | $ | (171,211) | | $ | (400,530) | | $ | 1,467,527 | | $ | 2,005 | | $ | 1,469,532 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Capital Stock - Class A and Class B Common | Additional Paid-in Capital | Retained Earnings | Common Stock Held in Treasury, at Cost | Accumulated Other Comprehensive Loss, Net of Income Taxes | Total New York Times Company Stockholders’ Equity | Non- controlling Interest | Total Stock- holders’ Equity |
|
Balance, December 27, 2020 | $ | 17,609 | | $ | 216,714 | | $ | 1,672,586 | | $ | (171,211) | | $ | (410,181) | | $ | 1,325,517 | | $ | 2,594 | | $ | 1,328,111 | |
Net income | — | | — | | 150,082 | | — | | — | | 150,082 | | — | | 150,082 | |
Dividends | — | | — | | (23,645) | | — | | — | | (23,645) | | — | | (23,645) | |
Other comprehensive income | — | | — | | — | | — | | 9,651 | | 9,651 | | — | | 9,651 | |
Issuance of shares: | | | | | | | | |
Stock options – 324,060 Class A shares | 33 | | 2,418 | | — | | — | | — | | 2,451 | | — | | 2,451 | |
Restricted stock units vested – 189,366 Class A shares | 19 | | (5,002) | | — | | — | | — | | (4,983) | | — | | (4,983) | |
Performance-based awards - 142,253 Class A shares | 14 | | (5,947) | | — | | — | | — | | (5,933) | | — | | (5,933) | |
Stock-based compensation | — | | 14,387 | | — | | — | | — | | 14,387 | | | 14,387 | |
Distributions | — | | — | | — | | — | | — | | — | | (589) | | (589) | |
Balance, September 26, 2021 | $ | 17,675 | | $ | 222,570 | | $ | 1,799,023 | | $ | (171,211) | | $ | (400,530) | | $ | 1,467,527 | | $ | 2,005 | | $ | 1,469,532 | |
| | | | | | | | |
Balance, December 26, 2021 | $ | 17,675 | | $ | 230,115 | | $ | 1,845,343 | | $ | (171,211) | | $ | (383,202) | | $ | 1,538,720 | | $ | 2,005 | | $ | 1,540,725 | |
Net income | — | | — | | 103,119 | | — | | — | | 103,119 | | — | | 103,119 | |
Dividends | — | | — | | (30,310) | | — | | — | | (30,310) | | — | | (30,310) | |
Other comprehensive loss | — | | — | | — | | — | | (6,839) | | (6,839) | | — | | (6,839) | |
Issuance of shares: | | | | | | | | |
Stock options – 400 Class A shares | — | | 3 | | — | | — | | — | | 3 | | — | | 3 | |
| | | | | | | | |
Restricted stock units vested –149,874 Class A shares | 16 | | (4,295) | | — | | — | | — | | (4,279) | | — | | (4,279) | |
Performance-based awards –163,518 Class A shares | 16 | | (5,573) | | — | | — | | — | | (5,557) | | — | | (5,557) | |
Share repurchases – 2,324,708 Class A shares | | | | (79,803) | | | (79,803) | | — | | (79,803) | |
Stock-based compensation | — | | 25,299 | | — | | — | | — | | 25,299 | | — | | 25,299 | |
Balance, September 25, 2022 | $ | 17,707 | | $ | 245,549 | | $ | 1,918,152 | | $ | (251,014) | | $ | (390,041) | | $ | 1,540,353 | | $ | 2,005 | | $ | 1,542,358 | |
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| | | For the Nine Months Ended | | For the Nine Months Ended |
| | September 26, 2021 | | September 27, 2020 | | September 25, 2022 | | September 26, 2021 |
| | (39 weeks) | | (39 weeks) |
Cash flows from operating activities | Cash flows from operating activities | | Cash flows from operating activities | |
Net income | Net income | | $ | 150,082 | | | $ | 90,094 | | Net income | | $ | 103,119 | | | $ | 150,082 | |
Adjustments to reconcile net income to net cash provided by operating activities: | Adjustments to reconcile net income to net cash provided by operating activities: | | Adjustments to reconcile net income to net cash provided by operating activities: | |
| Depreciation and amortization | Depreciation and amortization | | 43,529 | | | 46,368 | | Depreciation and amortization | | 61,150 | | | 43,529 | |
Lease termination charge | Lease termination charge | | 3,831 | | | — | | Lease termination charge | | — | | | 3,831 | |
Amortization of right of use asset | Amortization of right of use asset | | 7,069 | | | 6,446 | | Amortization of right of use asset | | 7,465 | | | 7,069 | |
Stock-based compensation expense | Stock-based compensation expense | | 14,387 | | | 10,744 | | Stock-based compensation expense | | 25,299 | | | 14,387 | |
| Gain on pension liability adjustment | | Gain on pension liability adjustment | | (7,127) | | | — | |
Gain on the sale of land | | Gain on the sale of land | | (34,227) | | | — | |
Gain on non-marketable equity investment | Gain on non-marketable equity investment | | (27,156) | | | (10,074) | | Gain on non-marketable equity investment | | — | | | (27,156) | |
| Change in long-term retirement benefit obligations | Change in long-term retirement benefit obligations | | (13,440) | | | (11,635) | | Change in long-term retirement benefit obligations | | (19,100) | | | (13,440) | |
| Fair market value adjustment on life insurance products | | Fair market value adjustment on life insurance products | | 1,494 | | | 312 | |
Other – net | Other – net | | (256) | | | (5,505) | | Other – net | | (1,221) | | | (568) | |
Changes in operating assets and liabilities: | | |
Changes in operating assets and liabilities, net of business acquisitions: | | Changes in operating assets and liabilities, net of business acquisitions: | |
Accounts receivable – net | Accounts receivable – net | | 19,072 | | | 88,065 | | Accounts receivable – net | | 74,869 | | | 19,072 | |
Other assets | Other assets | | (13,192) | | | 3,816 | | Other assets | | (25,575) | | | (13,192) | |
Accounts payable, accrued payroll and other liabilities | Accounts payable, accrued payroll and other liabilities | | 15,311 | | | (23,366) | | Accounts payable, accrued payroll and other liabilities | | (106,174) | | | 15,311 | |
Unexpired subscriptions | Unexpired subscriptions | | 10,320 | | | 11,730 | | Unexpired subscriptions | | 5,052 | | | 10,320 | |
Net cash provided by operating activities | Net cash provided by operating activities | | 209,557 | | | 206,683 | | Net cash provided by operating activities | | 85,024 | | | 209,557 | |
Cash flows from investing activities | Cash flows from investing activities | | | | | Cash flows from investing activities | | | | |
Purchases of marketable securities | Purchases of marketable securities | | (550,649) | | | (460,117) | | Purchases of marketable securities | | (6,650) | | | (550,649) | |
Maturities of marketable securities | Maturities of marketable securities | | 421,679 | | | 331,786 | | Maturities of marketable securities | | 469,863 | | | 421,679 | |
| Business acquisitions | | — | | | (33,085) | | |
Business acquisitions, net of cash acquired | | Business acquisitions, net of cash acquired | | (515,299) | | | — | |
Sales of investments – net | Sales of investments – net | | 20,569 | | | 1,000 | | Sales of investments – net | | (1,886) | | | 20,569 | |
Capital expenditures | Capital expenditures | | (23,750) | | | (29,236) | | Capital expenditures | | (27,809) | | | (23,750) | |
Other-net | | 2,466 | | | 2,388 | | |
Other – net | | Other – net | | 2,482 | | | 2,466 | |
Net cash used in investing activities | Net cash used in investing activities | | (129,685) | | | (187,264) | | Net cash used in investing activities | | (79,299) | | | (129,685) | |
Cash flows from financing activities | Cash flows from financing activities | | | | | Cash flows from financing activities | | | | |
Long-term obligations: | Long-term obligations: | | Long-term obligations: | |
| Dividends paid | Dividends paid | | (33,627) | | | (28,393) | | Dividends paid | | (41,878) | | | (33,627) | |
Payment of contingent consideration | Payment of contingent consideration | | (862) | | | (862) | | Payment of contingent consideration | | (1,724) | | | (862) | |
Capital shares: | Capital shares: | | Capital shares: | |
Proceeds from stock option exercises | Proceeds from stock option exercises | | 2,451 | | | 5,307 | | Proceeds from stock option exercises | | 3 | | | 2,451 | |
| Repurchases | | Repurchases | | (79,803) | | | — | |
Share-based compensation tax withholding | Share-based compensation tax withholding | | (10,916) | | | (11,723) | | Share-based compensation tax withholding | | (9,837) | | | (10,916) | |
Net cash used in financing activities | Net cash used in financing activities | | (42,954) | | | (35,671) | | Net cash used in financing activities | | (133,239) | | | (42,954) | |
Net increase (decrease) in cash, cash equivalents and restricted cash | | 36,918 | | | (16,252) | | |
Net (decrease)/increase in cash, cash equivalents and restricted cash | | Net (decrease)/increase in cash, cash equivalents and restricted cash | | (127,514) | | | 36,918 | |
Effect of exchange rate changes on cash | Effect of exchange rate changes on cash | | (560) | | | 349 | | Effect of exchange rate changes on cash | | (3,074) | | | (560) | |
Cash, cash equivalents and restricted cash at the beginning of the period | Cash, cash equivalents and restricted cash at the beginning of the period | | 301,964 | | | 247,518 | | Cash, cash equivalents and restricted cash at the beginning of the period | | 334,306 | | | 301,964 | |
Cash, cash equivalents and restricted cash at the end of the period | Cash, cash equivalents and restricted cash at the end of the period | | $ | 338,322 | | | $ | 231,615 | | Cash, cash equivalents and restricted cash at the end of the period | | $ | 203,718 | | | $ | 338,322 | |
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 26, 2021,25, 2022, and December 27, 2020,26, 2021, and the results of operations, changes in stockholders’ equity and cash flows of the Company for the periods ended September 26, 2021,25, 2022, and September 27, 2020.26, 2021. The Company and its consolidated subsidiaries are referred to collectively as “we,” “us” or “our.” All adjustments necessary for a fair presentation have been included and are of a normal and recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation. The financial statements were prepared in accordance with the requirements of the United States Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain notes or other financial information that are normally required by accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted from these interim financial statements. These financial statements, therefore, should be read in conjunction with the Consolidated Financial Statements and related Notes included in our Annual Report on Form 10-K for the year ended December 27, 2020.26, 2021. Due to the seasonal nature of our business, operating results for the interim periods are not necessarily indicative of a full year’s operations. The fiscal periods included herein comprise 13 and 39 weeks for the third quarter and first nine months, respectively.
In December 2021, the Board of Directors approved a resolution to change the Company’s fiscal year from a 52/53 week fiscal year ending the last Sunday of December to a calendar year. Accordingly, the Company’s 2022 fiscal year, which commenced December 27, 2021, will be extended from December 25, 2022, to December 31, 2022, and subsequent fiscal years will begin on January 1 and end on December 31 of each year.
On February 1, 2022, we acquired The Athletic Media Company (“The Athletic”), a global digital subscription-based sports media business. The results of The Athletic have been included in our Condensed Consolidated Financial Statements beginning February 1, 2022. The Athletic is a separate reportable segment of the Company. As a result, beginning in the first quarter of 2022, the Company has two reportable segments: The New York Times Group and The Athletic. Management, including the Company’s President and Chief Executive Officer (who is the Company’s Chief Operating Decision Maker), uses adjusted operating profit (loss) by segment (as defined below) in assessing performance and allocating resources. The Company includes in its presentation revenues and adjusted operating costs (as defined below) to arrive at adjusted operating profit (loss) by segment.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our Condensed Consolidated Financial Statements. Actual results could differ from these estimates.
Certain prior period amounts have been reclassified to conform with the current period presentation.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Except as described herein, as of September 26, 2021,25, 2022, our significant accounting policies, which are detailed in our Annual Report on Form 10-K for the year ended December 27, 2020,26, 2021, have not changed materially.
Recently Adopted Accounting Pronouncements
| | | | | | | | | | | |
Accounting Standard Update(s) | Topic | Effective Period | Summary |
2019-122021-08 | Simplifying theBusiness Combinations (Topic 805): Accounting for Income Taxes (Topic 740)Contract Assets and Contract Liabilities from Contracts with Customers | Fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.2022. Early adoption is permitted. | Simplifies the accounting for income taxes by eliminating certain exceptionsRequires entities to the guidancerecognize and measure contract assets and contract liabilities acquired in Accounting Standards Codification 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxesa business combination in accordance with ASC 2014-09, Revenue from Contracts with Customers (Topic 606). The update will generally result in an interim periodentity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the recognition of deferred tax liabilities for outside basis differences. The standard also simplifies aspects ofacquiree immediately before the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.acquisition date rather than at fair value. The Company adopted this guidance on December 28, 2020.27, 2021. As a result of The adoption did not have a material impact onAthletic acquisition, the Company’s consolidated financial statements.Company assumed unexpired subscriptions revenue of $28.1 million. |
Recently Issued Accounting Pronouncements
The Company considers the applicability and impact of all recently issued accounting pronouncements. Recent accounting pronouncements not specifically identified in our disclosures are either not applicable to the Company or are not expected to have a material effect on our financial condition or results of operations.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3. REVENUE
We generate revenues principally from subscriptions and advertising. Subscription revenues consist of revenues from subscriptions to our digital and print products (which include our news product, as well as The Athletic and our Games, Cooking, Audm and Wirecutter (to which a subscription option was launched during the third quarter of 2021) products (“other digital-only products”))products), and single-copy and bulk sales of our print products. Subscription revenues are based on both the number of copies of the printed newspaper sold and digital-only subscriptions, and the rates charged to the respective customers.
Advertising revenue is generated principally from advertisers (such as technology, financial and luxury goods companies) promoting products, services or brands on digital platforms in the form of display ads, audio and video, and in print in the form of column-inch ads. Advertising revenue is generated primarily derived from offerings sold directly to marketers by our advertising sales teams. A smaller proportion of our total advertising revenues is generated through programmatic auctions run by third-party ad exchanges. Advertising revenue is primarily determined by the volume (e.g., impressions), rate and mix of advertisements. Digital advertising includes our core digital advertising business and other digital advertising. Our core digital advertising
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
business includes direct-sold website, mobile application, podcast, email and video advertisements. Advertising revenue from The Athletic is primarily podcast revenue and therefore is reflected in this category. Direct-sold display advertising, a component of core digital advertising, includes offerings on websites and mobile applications sold directly to marketers by our advertising sales teams. Other digital advertising includes open-market programmatic advertising and creative services fees. Print advertising includes revenue from column-inch ads and classified advertising as well as preprinted advertising, also known as freestanding inserts.
Other revenues primarily consist of revenues from licensing, Wirecutter affiliate referrals, commercial printing, the leasing of floors in the New York headquarters building located at 620 Eighth Avenue, New York, New York (the “Company Headquarters”), retail commerce, television and film, our live events business and our student subscription sponsorship program and our live events business.program.
Subscription, advertising and other revenues were as follows:follows for the third quarters and first nine months ended September 25, 2022, and September 26, 2021: | | | For the Quarters Ended | | For the Nine Months Ended | | For the Quarters Ended | | For the Nine Months Ended |
(In thousands) | (In thousands) | | September 26, 2021 | | As % of total | | September 27, 2020 | | As % of total | | September 26, 2021 | | As % of total | | September 27, 2020 | | As % of total | (In thousands) | | September 25, 2022 | | As % of total | | September 26, 2021 | | As % of total | | September 25, 2022 | | As % of total | | September 26, 2021 | | As % of total |
Subscription | Subscription | | $ | 342,609 | | | 67.4 | % | | $ | 300,950 | | | 70.5 | % | | $ | 1,010,910 | | | 68.3 | % | | $ | 879,573 | | | 69.0 | % | Subscription | | $ | 382,672 | | | 69.9 | % | | $ | 342,609 | | | 67.4 | % | | $ | 1,138,270 | | | 69.3 | % | | $ | 1,010,910 | | | 68.3 | % |
Advertising | Advertising | | 110,887 | | | 21.7 | % | | 79,253 | | | 18.6 | % | | 320,777 | | | 21.6 | % | | 253,150 | | | 19.9 | % | Advertising | | 110,467 | | | 20.1 | % | | 110,887 | | | 21.7 | % | | 344,116 | | | 21.0 | % | | 320,777 | | | 21.6 | % |
Other (1) | Other (1) | | 55,607 | | | 10.9 | % | | 46,692 | | | 10.9 | % | | 148,958 | | | 10.1 | % | | 141,558 | | | 11.1 | % | Other (1) | | 54,541 | | | 10.0 | % | | 55,607 | | | 10.9 | % | | 158,399 | | | 9.7 | % | | 148,958 | | | 10.1 | % |
Total | Total | | $ | 509,103 | | | 100.0 | % | | $ | 426,895 | | | 100.0 | % | | $ | 1,480,645 | | | 100.0 | % | | $ | 1,274,281 | | | 100.0 | % | Total | | $ | 547,680 | | | 100.0 | % | | $ | 509,103 | | | 100.0 | % | | $ | 1,640,785 | | | 100.0 | % | | $ | 1,480,645 | | | 100.0 | % |
(1) Other revenues include building rental revenue, which is not under the scope of Revenue from Contracts with Customers (Topic 606). Building rental revenue was approximately $7 million for the third quarters of each of2022 and 2021, and 2020,respectively, and approximately $20$22 million and $22$20 million for the first nine months of 2022 and 2021, and 2020, respectively.
The following table summarizes digital and print subscription revenues, which are components of subscription revenues above, for the third quarters and first nine months ended September 26, 2021, and September 27, 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | | | For the Nine Months Ended | | |
(In thousands) | | September 26, 2021 | | As % of total | | September 27, 2020 | | As % of total | | September 26, 2021 | | As % of total | | September 27, 2020 | | As % of total |
Digital-only subscription revenues: | | | | | | | | | | | | | | | | |
News product subscription revenues(1) | | $ | 178,382 | | | 52.1 | % | | $ | 140,740 | | | 46.8 | % | | $ | 510,563 | | | 50.5 | % | | $ | 392,620 | | | 44.6 | % |
Other digital-only product subscription revenues(2) | | 20,251 | | | 5.9 | % | | 14,546 | | | 4.8 | % | | 57,815 | | | 5.7 | % | | 38,660 | | | 4.4 | % |
Subtotal digital-only subscriptions | | 198,633 | | | 58.0 | % | | 155,286 | | | 51.6 | % | | 568,378 | | | 56.2 | % | | 431,280 | | | 49.0 | % |
Print subscription revenues: | | | | | | | | | | | | | | | | |
Domestic home delivery subscription revenues(3) | | 128,895 | | | 37.6 | % | | 129,912 | | | 43.2 | % | | 398,045 | | | 39.4 | % | | 396,620 | | | 45.1 | % |
Single-copy, NYT International and other subscription revenues(4) | | 15,081 | | | 4.4 | % | | 15,752 | | | 5.2 | % | | 44,487 | | | 4.4 | % | | 51,673 | | | 5.9 | % |
Subtotal print subscription revenues | | 143,976 | | | 42.0 | % | | 145,664 | | | 48.4 | % | | 442,532 | | | 43.8 | % | | 448,293 | | | 51.0 | % |
Total subscription revenues | | $ | 342,609 | | | 100.0 | % | | $ | 300,950 | | | 100.0 | % | | $ | 1,010,910 | | | 100.0 | % | | $ | 879,573 | | | 100.0 | % |
(1) Includes revenues from subscriptions to the Company’s news product. News product subscription packages that include access to the Company’s Games, Cooking and Wirecutter products are also included in this category. | | |
(2) Includes revenues from standalone subscriptions to the Company’s other digital-only products. | | |
(3) Includes free access to some of the Company’s digital products. | | |
(4) NYT International is the international edition of our print newspaper. | | |
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table summarizes digital and print subscription revenues, which are components of subscription revenues above, for the third quarters and first nine months ended September 25, 2022, and September 26, 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Nine Months Ended |
(In thousands) | | September 25, 2022 | | As % of total | | September 26, 2021 | | As % of total | | September 25, 2022 | | As % of total | | September 26, 2021 | | As % of total |
Digital-only subscription revenues (1) | | $ | 243,889 | | | 63.7 | % | | $ | 198,633 | | | 58.0 | % | | $ | 709,378 | | | 62.3 | % | | $ | 568,378 | | | 56.2 | % |
Print subscription revenues: | | | | | | | | | | | | | | | | |
Domestic home delivery subscription revenues (2) | | 124,653 | | | 32.6 | % | | 128,895 | | | 37.6 | % | | 387,125 | | | 34.0 | % | | 398,045 | | | 39.4 | % |
Single-copy, NYT International and Other subscription revenues (3) | | 14,130 | | | 3.7 | % | | 15,081 | | | 4.4 | % | | 41,767 | | | 3.7 | % | | 44,487 | | | 4.4 | % |
Subtotal print subscription revenues | | 138,783 | | | 36.3 | % | | 143,976 | | | 42.0 | % | | 428,892 | | | 37.7 | % | | 442,532 | | | 43.8 | % |
Total subscription revenues | | $ | 382,672 | | | 100.0 | % | | $ | 342,609 | | | 100.0 | % | | $ | 1,138,270 | | | 100.0 | % | | $ | 1,010,910 | | | 100.0 | % |
(1) Includes revenue from digital-only bundled and standalone subscriptions to our news product, as well as The Athletic and our Games, Cooking, Audm and Wirecutter products. |
(2) Domestic home delivery subscriptions include access to our digital news product, as well as The Athletic and our Games, Cooking and Wirecutter products. |
(3) NYT International is the international edition of our print newspaper. |
The following table summarizes digital and print advertising revenues, which are components of advertising revenues above, for the third quarters and first nine months ended September 26, 2021,25, 2022, and September 27, 2020:26, 2021:
| | | For the Quarters Ended | | For the Nine Months Ended | | | For the Quarters Ended | | For the Nine Months Ended |
(In thousands) | (In thousands) | | September 26, 2021 | | As % of total | | September 27, 2020 | | As % of total | | September 26, 2021 | | As % of total | | September 27, 2020 | | As % of total | (In thousands) | | September 25, 2022 | | As % of total | | September 26, 2021 | | As % of total | | September 25, 2022 | | As % of total | | September 26, 2021 | | As % of total |
Advertising revenues: | Advertising revenues: | | | | | | | | | | | | | | | | | Advertising revenues: | | | | | | | | | | | | | | | | |
Digital | Digital | | $ | 66,981 | | | 60.4 | % | | $ | 47,763 | | | 60.3 | % | | $ | 197,472 | | | 61.6 | % | | $ | 138,452 | | | 54.7 | % | Digital | | $ | 70,282 | | | 63.6 | % | | $ | 66,981 | | | 60.4 | % | | $ | 206,588 | | | 60.0 | % | | $ | 197,472 | | | 61.6 | % |
Print | Print | | 43,906 | | | 39.6 | % | | 31,490 | | | 39.7 | % | | 123,305 | | | 38.4 | % | | 114,698 | | | 45.3 | % | Print | | 40,185 | | | 36.4 | % | | 43,906 | | | 39.6 | % | | 137,528 | | | 40.0 | % | | 123,305 | | | 38.4 | % |
Total advertising | Total advertising | | $ | 110,887 | | | 100.0 | % | | $ | 79,253 | | | 100.0 | % | | $ | 320,777 | | | 100.0 | % | | $ | 253,150 | | | 100.0 | % | Total advertising | | $ | 110,467 | | | 100.0 | % | | $ | 110,887 | | | 100.0 | % | | $ | 344,116 | | | 100.0 | % | | $ | 320,777 | | | 100.0 | % |
Performance Obligations
We have remaining performance obligations related to digital archive and other licensing and certain advertising contracts. As of September 26, 2021,25, 2022, the aggregate amount of the transaction price allocated to the remaining performance obligations for contracts with a duration greater than one year was approximately $128$99 million. The Company will recognize this revenue as performance obligations are satisfied. We expect that approximately $13$8 million, $40$25 million and $75$66 million will be recognized in the remainder of 2021, 2022, 2023 and thereafter through 2028, respectively.
Contract Assets
As of September 26, 2021,25, 2022, and December 27, 2020,26, 2021, the Company had $3.1$3.8 million and $1.8$3.4 million, respectively, in contract assets recorded in the Condensed Consolidated Balance Sheets related to digital archiving licensing revenue. The contract asset is reclassified to Accounts receivable when the customer is invoiced based on the contractual billing schedule.
NOTE 4. MARKETABLE SECURITIES
The Company accounts for its marketable securities as available for sale (“AFS”). The Company recorded $1.7$13.2 million and $4.3$1.7 million of net unrealized gainslosses in Accumulated other comprehensive income (“AOCI”) as of September 26, 2021,25, 2022, and December 27, 2020,26, 2021, respectively.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following tables present the amortized cost, gross unrealized gains and losses, and fair market value of our AFS securities as of September 26, 2021,25, 2022, and December 27, 2020:26, 2021:
| | | September 26, 2021 | | September 25, 2022 |
(In thousands) | (In thousands) | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value | (In thousands) | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value |
| Short-term AFS securities | Short-term AFS securities | | | | | | | | | Short-term AFS securities | | | | | | | | |
U.S. Treasury securities | U.S. Treasury securities | | $ | 108,696 | | | $ | 898 | | | $ | (2) | | | $ | 109,592 | | U.S. Treasury securities | | $ | 41,116 | | | $ | 1 | | | $ | (693) | | | $ | 40,424 | |
Certificates of deposit | | 109,253 | | | — | | | — | | | 109,253 | | |
| Corporate debt securities | Corporate debt securities | | 100,627 | | | 361 | | | (14) | | | 100,974 | | Corporate debt securities | | 38,269 | | | — | | | (980) | | | 37,289 | |
U.S. governmental agency securities | U.S. governmental agency securities | | 19,964 | | | 10 | | | — | | | 19,974 | | U.S. governmental agency securities | | 16,805 | | | — | | | (575) | | | 16,230 | |
Commercial paper | | 18,021 | | | — | | | — | | | 18,021 | | |
| Municipal securities | | Municipal securities | | 8,913 | | | — | | | (236) | | | 8,677 | |
Total short-term AFS securities | Total short-term AFS securities | | $ | 356,561 | | | $ | 1,269 | | | $ | (16) | | | $ | 357,814 | | Total short-term AFS securities | | $ | 105,103 | | | $ | 1 | | | $ | (2,484) | | | $ | 102,620 | |
Long-term AFS securities | Long-term AFS securities | | | | | | | | | Long-term AFS securities | | | | | | | | |
Corporate debt securities | Corporate debt securities | | $ | 233,971 | | | $ | 594 | | | $ | (274) | | | $ | 234,291 | | Corporate debt securities | | $ | 133,812 | | | $ | — | | | $ | (7,819) | | | $ | 125,993 | |
U.S. Treasury securities | U.S. Treasury securities | | 71,722 | | | 200 | | | (61) | | | 71,861 | | U.S. Treasury securities | | 40,858 | | | — | | | (2,315) | | | 38,543 | |
U.S. governmental agency securities | U.S. governmental agency securities | | 42,497 | | | — | | | (43) | | | 42,454 | | U.S. governmental agency securities | | 11,999 | | | — | | | (590) | | | 11,409 | |
Municipal securities | | 12,123 | | | 5 | | | (13) | | | 12,115 | | |
| Total long-term AFS securities | Total long-term AFS securities | | $ | 360,313 | | | $ | 799 | | | $ | (391) | | | $ | 360,721 | | Total long-term AFS securities | | $ | 186,669 | | | $ | — | | | $ | (10,724) | | | $ | 175,945 | |
| | | December 27, 2020 | | December 26, 2021 |
(In thousands) | (In thousands) | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value | (In thousands) | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value |
| Short-term AFS securities | Short-term AFS securities | | | | | | | | | Short-term AFS securities | | | | | | | | |
U.S. Treasury securities | U.S. Treasury securities | | $ | 79,467 | | | $ | 39 | | | $ | (3) | | | $ | 79,503 | | U.S. Treasury securities | | $ | 148,899 | | | $ | 692 | | | $ | (43) | | | $ | 149,548 | |
Corporate debt securities | | Corporate debt securities | | 107,158 | | | 245 | | | (69) | | | 107,334 | |
Certificates of deposit | Certificates of deposit | | 36,525 | | | — | | | — | | | 36,525 | | Certificates of deposit | | 55,551 | | | — | | | — | | | 55,551 | |
Corporate debt securities | | 129,805 | | | 504 | | | (8) | | | 130,301 | | |
Commercial paper | | Commercial paper | | 21,145 | | | — | | | — | | | 21,145 | |
U.S. governmental agency securities | U.S. governmental agency securities | | 25,113 | | | 61 | | | (3) | | | 25,171 | | U.S. governmental agency securities | | 3,500 | | | — | | | — | | | 3,500 | |
Commercial paper | | 37,580 | | | — | | | — | | | 37,580 | | |
| Municipal securities | | Municipal securities | | 3,999 | | | — | | | (2) | | | 3,997 | |
Total short-term AFS securities | Total short-term AFS securities | | $ | 308,490 | | | $ | 604 | | | $ | (14) | | | $ | 309,080 | | Total short-term AFS securities | | $ | 340,252 | | | $ | 937 | | | $ | (114) | | | $ | 341,075 | |
Long-term AFS securities | Long-term AFS securities | | | | | | | | | Long-term AFS securities | | | | | | | | |
Corporate debt securities | Corporate debt securities | | $ | 134,296 | | | $ | 1,643 | | | $ | (5) | | | $ | 135,934 | | Corporate debt securities | | $ | 242,764 | | | $ | 149 | | | $ | (1,858) | | | $ | 241,055 | |
U.S. Treasury securities | U.S. Treasury securities | | 95,511 | | | 2,054 | | | — | | | 97,565 | | U.S. Treasury securities | | 119,695 | | | — | | | (549) | | | 119,146 | |
U.S. governmental agency securities | U.S. governmental agency securities | | 48,342 | | | 19 | | | (13) | | | 48,348 | | U.S. governmental agency securities | | 39,498 | | | — | | | (252) | | | 39,246 | |
Municipal securities | Municipal securities | | 4,994 | | | — | | | (10) | | | 4,984 | | Municipal securities | | 13,994 | | | — | | | (61) | | | 13,933 | |
Total long-term AFS securities | Total long-term AFS securities | | $ | 283,143 | | | $ | 3,716 | | | $ | (28) | | | $ | 286,831 | | Total long-term AFS securities | | $ | 415,951 | | | $ | 149 | | | $ | (2,720) | | | $ | 413,380 | |
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following tables represent the AFS securities as of September 26, 2021,25, 2022, and December 27, 2020,26, 2021, that were in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position:
| | | September 26, 2021 | | September 25, 2022 |
| | Less than 12 Months | | 12 Months or Greater | | Total | | Less than 12 Months | | 12 Months or Greater | | Total |
(In thousands) | (In thousands) | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | (In thousands) | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses |
| Short-term AFS securities | Short-term AFS securities | | | | | | | | | | | | | Short-term AFS securities | | | | | | | | | | | | |
Corporate debt securities | | Corporate debt securities | | $ | 30,120 | | | $ | (736) | | | $ | 7,169 | | | $ | (244) | | | $ | 37,289 | | | $ | (980) | |
U.S. Treasury securities | U.S. Treasury securities | | $ | 32,611 | | | $ | (2) | | | $ | — | | | $ | — | | | $ | 32,611 | | | $ | (2) | | U.S. Treasury securities | | 23,655 | | | (439) | | | 12,241 | | | (254) | | | 35,896 | | | (693) | |
Corporate debt securities | | 28,090 | | | (14) | | | — | | | — | | | 28,090 | | | (14) | | |
| U.S. governmental agency securities | | U.S. governmental agency securities | | 4,833 | | | (167) | | | 11,397 | | | (408) | | | 16,230 | | | (575) | |
Municipal securities | | Municipal securities | | 6,215 | | | (175) | | | 2,463 | | | (61) | | | 8,678 | | | (236) | |
Total short-term AFS securities | Total short-term AFS securities | | $ | 60,701 | | | $ | (16) | | | $ | — | | | $ | — | | | $ | 60,701 | | | $ | (16) | | Total short-term AFS securities | | $ | 64,823 | | | $ | (1,517) | | | $ | 33,270 | | | $ | (967) | | | $ | 98,093 | | | $ | (2,484) | |
Long-term AFS securities | Long-term AFS securities | | | | | | | | | | | | | Long-term AFS securities | | | | | | | | | | | | |
Corporate debt securities | Corporate debt securities | | $ | 128,315 | | | $ | (274) | | | $ | — | | | $ | — | | | $ | 128,315 | | | $ | (274) | | Corporate debt securities | | $ | 72,968 | | | $ | (4,459) | | | $ | 53,025 | | | $ | (3,360) | | | $ | 125,993 | | | $ | (7,819) | |
U.S. Treasury securities | U.S. Treasury securities | | 54,539 | | | (61) | | | — | | | — | | | 54,539 | | | (61) | | U.S. Treasury securities | | 22,181 | | | (1,328) | | | 16,362 | | | (987) | | | 38,543 | | | (2,315) | |
U.S. governmental agency securities | U.S. governmental agency securities | | 42,454 | | | (43) | | | — | | | — | | | 42,454 | | | (43) | | U.S. governmental agency securities | | 930 | | | (69) | | | 10,479 | | | (521) | | | 11,409 | | | (590) | |
Municipal securities | | 5,114 | | | (13) | | | — | | | — | | | 5,114 | | | (13) | | |
| Total long-term AFS securities | Total long-term AFS securities | | $ | 230,422 | | | $ | (391) | | | $ | — | | | $ | — | | | $ | 230,422 | | | $ | (391) | | Total long-term AFS securities | | $ | 96,079 | | | $ | (5,856) | | | $ | 79,866 | | | $ | (4,868) | | | $ | 175,945 | | | $ | (10,724) | |
| | | December 27, 2020 | | December 26, 2021 |
| | Less than 12 Months | | 12 Months or Greater | | Total | | Less than 12 Months | | 12 Months or Greater | | Total |
(In thousands) | (In thousands) | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | (In thousands) | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses |
| Short-term AFS securities | Short-term AFS securities | | | | | | | | | | | | | Short-term AFS securities | | | | | | | | | | | | |
Corporate debt securities | | Corporate debt securities | | $ | 53,148 | | | $ | (69) | | | $ | — | | | $ | — | | | $ | 53,148 | | | $ | (69) | |
U.S. Treasury securities | U.S. Treasury securities | | $ | 20,133 | | | $ | (3) | | | $ | — | | | $ | — | | | $ | 20,133 | | | $ | (3) | | U.S. Treasury securities | | 61,018 | | | (43) | | | — | | | — | | | 61,018 | | | (43) | |
Corporate debt securities | | 33,735 | | | (8) | | | — | | | — | | | 33,735 | | | (8) | | |
U.S. governmental agency securities | | 4,999 | | | (2) | | | 8,749 | | | (1) | | | 13,748 | | | (3) | | |
Municipal securities | | Municipal securities | | 1,998 | | | (2) | | | — | | | — | | | 1,998 | | | (2) | |
| | Total short-term AFS securities | Total short-term AFS securities | | $ | 58,867 | | | $ | (13) | | | $ | 8,749 | | | $ | (1) | | | $ | 67,616 | | | $ | (14) | | Total short-term AFS securities | | $ | 116,164 | | | $ | (114) | | | $ | — | | | $ | — | | | $ | 116,164 | | | $ | (114) | |
Long-term AFS securities | Long-term AFS securities | | | | | | | | | | | | | Long-term AFS securities | | | | | | | | | | | | |
Corporate debt securities | Corporate debt securities | | $ | 6,717 | | | $ | (5) | | | $ | — | | | $ | — | | | $ | 6,717 | | | $ | (5) | | Corporate debt securities | | $ | 224,022 | | | $ | (1,858) | | | $ | — | | | $ | — | | | $ | 224,022 | | | $ | (1,858) | |
| U.S. Treasury securities | | U.S. Treasury securities | | 119,146 | | | (549) | | | — | | | — | | | 119,146 | | | (549) | |
U.S. governmental agency securities | U.S. governmental agency securities | | 26,236 | | | (13) | | | — | | | — | | | 26,236 | | | (13) | | U.S. governmental agency securities | | 39,246 | | | (252) | | | — | | | — | | | 39,246 | | | (252) | |
Municipal securities | Municipal securities | | 4,984 | | | (10) | | | — | | | — | | | 4,984 | | | (10) | | Municipal securities | | 13,933 | | | (61) | | | — | | | — | | | 13,933 | | | (61) | |
Total long-term AFS securities | Total long-term AFS securities | | $ | 37,937 | | | $ | (28) | | | $ | — | | | $ | — | | | $ | 37,937 | | | $ | (28) | | Total long-term AFS securities | | $ | 396,347 | | | $ | (2,720) | | | $ | — | | | $ | — | | | $ | 396,347 | | | $ | (2,720) | |
We assess AFS securities on a quarterly basis or more often if a potential loss-triggering event occurs.
As of September 26, 202125, 2022, and December 27, 2020,26, 2021, we did not intend to sell and it was not likely that we would be required to sell these investments before recovery of their amortized cost basis, which may be at maturity. Unrealized losses related to these investments are primarily due to interest rate fluctuations as opposed to changes in credit quality. Therefore, as of September 26, 202125, 2022, and December 27, 2020,26, 2021, we have recognized no losses or allowance for credit losses related to AFS securities.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
As of September 26, 2021, and December 27, 2020,25, 2022, our short-term and long-term marketable securities had remaining maturities of less than one month to 12 months and 13 months to 3630 months, respectively. See Note 8 for more information regarding the fair value of our marketable securities.
NOTE 5. GOODWILL AND INTANGIBLESBUSINESS COMBINATION
The Athletic Acquisition
The Company accounts for business combinations using the acquisition method of accounting. The purchase price is allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. The excess of the purchase price over the estimated fair value of the net assets acquired is recorded as goodwill. The results of businesses acquired in a business combination are included in the Company’s consolidated financial statements from the date of acquisition.
On February 1, 2022, the Company acquired The Athletic in an all-cash transaction. The consideration paid of approximately $550 million was funded from cash on hand and included $523.5 million which we determined to be the purchase price for assets acquired and liabilities assumed, and $26.7 million paid in connection with the acceleration of The Athletic stock options. The stock options acceleration is included in Acquisition-related costs in our Condensed Consolidated Statements of Operations for the nine months ended September 25, 2022.
The purchase price allocation has been prepared on a preliminary basis. As additional information becomes available, the Company may revise the allocation to certain assets and liabilities, including tax estimates. The Company will finalize the acquisition accounting within the required measurement period of one year.
The following table summarizes the preliminary allocation of the purchase price (at fair value) to the assets acquired and liabilities assumed of The Athletic as of February 1, 2022 (the date of acquisition):
| | | | | | | | | | | | | | |
(In thousands) | | Preliminary Purchase Price Allocation | | Estimated Useful Life (in years) |
Total current assets | | $ | 18,495 | | | |
Property, plant and equipment | | 281 | | | 3- 5 |
Right of use asset (1) | | 2,612 | | | |
Trademark (2) | | 160,000 | | | 20 |
Existing subscriber base (2) | | 135,000 | | | 12 |
Developed technology (2) | | 35,000 | | | 5 |
Content archive (2) | | 2,000 | | | 2 |
Goodwill | | 249,792 | | | Indefinite |
Total current liabilities (3) | | (41,107) | | | |
Other liabilities — Other | | (3,491) | | | |
Deferred tax liability, net (4) | | (35,116) | | | |
| | | | |
Total purchase price | | $ | 523,466 | | | |
(1) Included in Miscellaneous assets in our Condensed Consolidated Balance Sheets.
(2) Included in Intangible assets, net in our Condensed Consolidated Balance Sheets.
(3) Includes Unexpired subscriptions revenue of $28.1 million.
(4) Included in Deferred income taxes in our Condensed Consolidated Balance Sheets.
Goodwill is primarily attributable to future subscribers expected to be acquired both organically and through synergies from adding The Athletic to the Company’s products as well as the acquired assembled workforce. Goodwill is not expected to be deductible for tax purposes. The fair value of trademarks is estimated using a relief from royalty valuation method, the fair
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
value of subscriber relationships is estimated using a multi-period excess earnings valuation method, and the fair value of developed technology and content archive is estimated using a replacement cost method.
The following unaudited pro forma summary presents consolidated information of the Company, including The Athletic, as if the business combination had occurred on December 28, 2020, the first day of fiscal nine months ended September 26, 2021, which is the earliest period presented herein:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Nine Months Ended |
(In thousands) | | September 25, 2022 | | September 26, 2021 | | September 25, 2022 | | September 26, 2021 |
Revenue | | $ | 547,068 | | | $ | 526,581 | | | $ | 1,647,320 | | | $ | 1,528,513 | |
Net income | | 37,793 | | | 40,800 | | | 127,615 | | | 71,855 | |
The pro forma adjustments include (1) transaction costs and other one-time non-recurring costs that reduced expenses by $47.8 million for the nine months ended September 25, 2022 and increased expenses by $47.8 million for the nine months ended September 26, 2021, (2) recognition of additional amortization related to the intangible assets acquired, (3) alignment of accounting policies, and (4) recognition of the estimated income tax impact of the pro forma adjustments. The pro forma summary does not reflect cost savings or operating synergies expected to result from the acquisition. These pro forma results are illustrative only and not indicative of the actual results of operations that would have been achieved nor are they indicative of future results of operations.
Goodwill and Intangibles
The changes in the carrying amount of goodwill as of September 26, 2021,25, 2022, and since December 27, 2020,26, 2021, were as follows:
| | | | | | | | |
(In thousands) | | Total Company |
Balance as of December 27, 2020 | | $ | 171,657 | |
Foreign currency translation | | (2,803) | |
Balance as of September 26, 2021 | | $ | 168,854 | |
| | | | | | | | | | | | | | | | | | | | |
(In thousands) | | The New York Times Group | | The Athletic | | Total |
Balance as of December 27, 2020 | | $ | 171,657 | | | $ | — | | | $ | 171,657 | |
Foreign currency translation | | (5,297) | | | — | | | (5,297) | |
Balance as of December 26, 2021 | | 166,360 | | | — | | | 166,360 | |
Foreign currency translation | | (9,779) | | | — | | | (9,779) | |
Acquisition of The Athletic | | — | | | 249,792 | | | 249,792 | |
Balance as of September 25, 2022 | | $ | 156,581 | | | $ | 249,792 | | | $ | 406,373 | |
The foreign currency translation line item reflects changes in goodwill resulting from fluctuating exchange rates related to the consolidation of certain international subsidiaries.
As of September 25, 2022, the gross book value and accumulated amortization of acquired intangible assets from the acquisition of The Athletic were as follows: | | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Gross book value | | Accumulated amortization | | Net book value |
Trademark | | $ | 160,000 | | | $ | (5,333) | | | $ | 154,667 | |
Existing subscriber base | | 135,000 | | | (7,500) | | | 127,500 | |
Developed technology | | 35,000 | | | (4,667) | | | 30,333 | |
Content archive | | 2,000 | | | (667) | | | 1,333 | |
Total | | $ | 332,000 | | | $ | (18,167) | | | $ | 313,833 | |
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Amortization expense for intangible assets from the acquisition of The Athletic included in Depreciation and amortization in our Condensed Consolidated Statements of Operations for the third quarter and first nine months of 2022 was $6.8 million and $18.2 million, respectively. The estimated aggregate amortization expense for the remainder of 2022 and each of the following fiscal years ending December 31 is presented below:
| | | | | | | | |
(In thousands) | | |
Remainder of 2022 | | $ | 6,813 | |
2023 | | 27,250 | |
2024 | | 26,333 | |
2025 | | 26,250 | |
2026 | | 26,250 | |
Thereafter | | 200,937 | |
Total amortization expense | | $ | 313,833 | |
The aggregate carrying amount of intangible assets of $14.6$328.7 million, which includes an indefinite-lived intangible of $9.0 million, is included in MiscellaneousIntangible assets, net in our Condensed Consolidated Balance SheetsSheet as of September 26, 2021.25, 2022.
NOTE 6. INVESTMENTS
Non-Marketable Equity Securities
Our non-marketable equity securities are investments in privately held companies/funds without readily determinable market values. Gains and losses on non-marketable securities revalued, sold or impaired are recognized in Interest income and other, net in our Condensed Consolidated Statements of Operations.
As of September 26, 2021,25, 2022, and December 27, 2020,26, 2021, non-marketable equity securities included in Miscellaneous assets in our Condensed Consolidated Balance Sheets had a carrying value of $27.4$29.8 million and $20.9$27.9 million, respectively. The carrying value includes $15.3 million of unrealized gains as of September 26, 2021. During the third quarter of 2021, we recorded a $27.2 million gain related to a non-marketable equity investment transaction. The gain consists of a $15.2 million realized gain due to the partial sale of the investment and a $11.9 million unrealized gain due to the mark to market of the remaining investment. During the first nine months of 2020, we recorded a $10.1 million gain related to a non-marketable equity investment transaction. The gain consists of a $2.5 million realized gain due to the partial sale of the investment and a $7.6 million unrealized gain due to the mark to market of the remaining investment.
NOTE 7. OTHER
Capitalized Computer Software Costs
Amortization of capitalized computer software costs included in Depreciation and amortization in our Condensed Consolidated Statements of Operations was $2.0 million and $2.1 million and $3.9 million infor the third quarters of 2022 and 2021, respectively, and 2020, respectively,$5.9 million and $7.1 million and $11.6 million infor the first nine months of 20212022 and 2020,2021, respectively.
Interest income and other, net
Interest income and other, net, as shown in the accompanying Condensed Consolidated Statements of Operations, was as follows:
| | | For the Quarters Ended | | For the Nine Months Ended | | For the Quarters Ended | | For the Nine Months Ended |
(In thousands) | (In thousands) | | September 26, 2021 | | September 27, 2020 | | September 26, 2021 | | September 27, 2020 | (In thousands) | | September 25, 2022 | | September 26, 2021 | | September 25, 2022 | | September 26, 2021 |
Interest income and other expense, net | Interest income and other expense, net | | $ | 1,598 | | | $ | 3,720 | | | $ | 5,342 | | | $ | 10,650 | | Interest income and other expense, net | | $ | 1,817 | | | $ | 1,598 | | | $ | 4,574 | | | $ | 5,342 | |
Gain on non-marketable equity investment (1) | | 27,156 | | | — | | | 27,156 | | | 10,074 | | |
Gain on the sale of land (1) | | Gain on the sale of land (1) | | — | | | — | | | 34,227 | | | — | |
Gain on non-marketable equity investment (2) | | Gain on non-marketable equity investment (2) | | — | | | 27,156 | | | — | | | 27,156 | |
Interest expense | Interest expense | | (185) | | | (183) | | | (545) | | | (547) | | Interest expense | | (238) | | | (185) | | | (543) | | | (545) | |
| Total interest income and other, net | Total interest income and other, net | | $ | 28,569 | | | $ | 3,537 | | | $ | 31,953 | | | $ | 20,177 | | Total interest income and other, net | | $ | 1,579 | | | $ | 28,569 | | | $ | 38,258 | | | $ | 31,953 | |
(1) On December 9, 2020, we entered into an agreement to lease and subsequently sell approximately four acres of land at our printing and distribution facility in College Point, N.Y., subject to certain conditions. The lease commenced on April 11, 2022. At the time of the lease expiration in February 2025, we will sell the parcel to the lessee for approximately $36 million. The transaction is accounted for as a sales-type lease and as a result, we recognized a gain of approximately $34 million (net of commissions) at the time of lease commencement.
(2) Represents gains related to a non-marketable equity investment transaction.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Restricted Cash
A reconciliation of cash, cash equivalents and restricted cash as of September 26, 2021,25, 2022, and December 27, 2020,26, 2021, from the Condensed Consolidated Balance Sheets to the Condensed Consolidated Statements of Cash Flows is as follows:
| (In thousands) | (In thousands) | | September 26, 2021 | | December 27, 2020 | (In thousands) | | September 25, 2022 | | December 26, 2021 |
Reconciliation of cash, cash equivalents and restricted cash | Reconciliation of cash, cash equivalents and restricted cash | | | | | Reconciliation of cash, cash equivalents and restricted cash | | | | |
Cash and cash equivalents | Cash and cash equivalents | | $ | 323,990 | | | $ | 286,079 | | Cash and cash equivalents | | $ | 190,050 | | | $ | 319,973 | |
Restricted cash included within other current assets | | — | | | 686 | | |
| Restricted cash included within miscellaneous assets | Restricted cash included within miscellaneous assets | | 14,332 | | | 15,199 | | Restricted cash included within miscellaneous assets | | 13,668 | | | 14,333 | |
Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows | Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows | | $ | 338,322 | | | $ | 301,964 | | Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows | | $ | 203,718 | | | $ | 334,306 | |
Substantially all of the amount included in restricted cash is set aside to collateralize workers’ compensation obligations.
Revolving Credit Facility
In September 2019, the Company entered into a $250.0 million five-year unsecured revolving credit facility (the “2019 Credit Facility”). On July 27, 2022, the Company entered into an amendment and restatement of the 2019 Credit Facility that, among other changes, increased the committed amount to $350.0 million and extended the maturity date to July 27, 2027 (as amended and restated, the “Credit Facility”). Certain of the Company’s domestic subsidiaries have guaranteed the Company’s obligations under the Credit Facility. Borrowings under the Credit Facility bear interest at specified rates based on our utilization and consolidated leverage ratio. The Credit Facility contains various customary affirmative and negative covenants. In addition, the Company is obligated to pay a quarterly unused commitment fee at an annual rate of 0.20%.
As of September 26, 2021,25, 2022, there were nowas approximately $0.6 million in outstanding borrowings underletters of credit and the Credit Facility andremaining committed amount remains available. As of September 25, 2022, the Company was in compliance with the financial covenants contained in the documents governing the Credit Facility.
Severance Costs
We recognized $0.5$2.0 million in severance costs in the third quarter of 20212022 and no$4.7 million in severance costs in the first nine months of 2022. We recognized $0.5 million severance costs in the third quarter of 2020,2021 and $0.9 million and $6.7 millionin severance costs in the first nine months of 2021 and 2020, respectively.2021. These costs are recorded in General and administrative costs in our Condensed Consolidated Statements of Operations.
We had a severance liability of $2.6$5.2 million and $5.0$2.1 million included in Accrued expenses and other in our Condensed Consolidated Balance Sheets as of September 25, 2022, and December 26, 2021, and December 27, 2020, respectively.
Acquisition-Related Costs
The Company incurred $34.7 million of acquisition-related costs for the nine months ended September 25, 2022. Acquisition-related costs primarily include expenses paid in connection with the acceleration of The Athletic stock options, and legal, accounting, financial advisory and integration planning expenses.
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 26, 2021,25, 2022, and December 27, 2020:26, 2021:
| (In thousands) | (In thousands) | | September 26, 2021 | | December 27, 2020 | (In thousands) | | September 25, 2022 | | December 26, 2021 |
| Total | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 |
Assets: | Assets: | | | | | | | | | | | | | | | | | Assets: | | | | | | | | | | | | | | | | |
Short-term AFS securities (1) | Short-term AFS securities (1) | | Short-term AFS securities (1) | |
U.S. Treasury securities | U.S. Treasury securities | | $ | 109,592 | | | $ | — | | | $ | 109,592 | | | $ | — | | | $ | 79,503 | | | $ | — | | | $ | 79,503 | | | $ | — | | U.S. Treasury securities | | $ | 40,424 | | | $ | — | | | $ | 40,424 | | | $ | — | | | $ | 149,548 | | | $ | — | | | $ | 149,548 | | | $ | — | |
Corporate debt securities | | Corporate debt securities | | 37,289 | | | — | | | 37,289 | | | — | | | 107,334 | | | — | | | 107,334 | | | — | |
Certificates of deposit | Certificates of deposit | | 109,253 | | | — | | | 109,253 | | | — | | | 36,525 | | | — | | | 36,525 | | | — | | Certificates of deposit | | — | | | — | | | — | | | — | | | 55,551 | | | — | | | 55,551 | | | — | |
Corporate debt securities | | 100,974 | | | — | | | 100,974 | | | — | | | 130,301 | | | — | | | 130,301 | | | — | | |
U.S. governmental agency securities | U.S. governmental agency securities | | 19,974 | | | — | | | 19,974 | | | — | | | 25,171 | | | — | | | 25,171 | | | — | | U.S. governmental agency securities | | 16,230 | | | — | | | 16,230 | | | — | | | 3,500 | | | — | | | 3,500 | | | — | |
Municipal securities | | Municipal securities | | 8,677 | | | — | | | 8,677 | | | — | | | 3,997 | | | — | | | 3,997 | | | — | |
Commercial paper | Commercial paper | | 18,021 | | | — | | | 18,021 | | | — | | | 37,580 | | | — | | | 37,580 | | | — | | Commercial paper | | — | | | — | | | — | | | — | | | 21,145 | | | — | | | 21,145 | | | — | |
Total short-term AFS securities | Total short-term AFS securities | | $ | 357,814 | | | $ | — | | | $ | 357,814 | | | $ | — | | | $ | 309,080 | | | $ | — | | | $ | 309,080 | | | $ | — | | Total short-term AFS securities | | $ | 102,620 | | | $ | — | | | $ | 102,620 | | | $ | — | | | $ | 341,075 | | | $ | — | | | $ | 341,075 | | | $ | — | |
Long-term AFS securities (1) | Long-term AFS securities (1) | | | | | | | | | | | | | | | | | Long-term AFS securities (1) | | | | | | | | | | | | | | | | |
Corporate debt securities | Corporate debt securities | | $ | 234,291 | | | $ | — | | | $ | 234,291 | | | $ | — | | | $ | 135,934 | | | $ | — | | | $ | 135,934 | | | $ | — | | Corporate debt securities | | $ | 125,993 | | | $ | — | | | $ | 125,993 | | | $ | — | | | $ | 241,055 | | | $ | — | | | $ | 241,055 | | | $ | — | |
U.S. Treasury securities | U.S. Treasury securities | | 71,861 | | | — | | | 71,861 | | | — | | | 97,565 | | | — | | | 97,565 | | | — | | U.S. Treasury securities | | 38,543 | | | — | | | 38,543 | | | — | | | 119,146 | | | — | | | 119,146 | | | — | |
U.S. governmental agency securities | U.S. governmental agency securities | | 42,454 | | | — | | | 42,454 | | | — | | | 48,348 | | | — | | | 48,348 | | | — | | U.S. governmental agency securities | | 11,409 | | | — | | | 11,409 | | | — | | | 39,246 | | | — | | | 39,246 | | | — | |
Municipal securities | Municipal securities | | 12,115 | | | — | | | 12,115 | | | — | | | 4,984 | | | — | | | 4,984 | | | — | | Municipal securities | | — | | | — | | | — | | | — | | | 13,933 | | | — | | | 13,933 | | | — | |
Total long-term AFS securities | Total long-term AFS securities | | $ | 360,721 | | | $ | — | | | $ | 360,721 | | | $ | — | | | $ | 286,831 | | | $ | — | | | $ | 286,831 | | | $ | — | | Total long-term AFS securities | | $ | 175,945 | | | $ | — | | | $ | 175,945 | | | $ | — | | | $ | 413,380 | | | $ | — | | | $ | 413,380 | | | $ | — | |
Liabilities: | Liabilities: | | | | | | | | | | | | | | | | | Liabilities: | | | | | | | | | | | | | | | | |
Deferred compensation (2)(3) | Deferred compensation (2)(3) | | $ | 19,998 | | | $ | 19,998 | | | $ | — | | | $ | — | | | $ | 22,245 | | | $ | 22,245 | | | $ | — | | | $ | — | | Deferred compensation (2)(3) | | $ | 13,609 | | | $ | 13,609 | | | $ | — | | | $ | — | | | $ | 21,101 | | | $ | 21,101 | | | $ | — | | | $ | — | |
Contingent consideration | Contingent consideration | | $ | 7,450 | | | $ | — | | | $ | — | | | $ | 7,450 | | | $ | 8,431 | | | $ | — | | | $ | — | | | $ | 8,431 | | Contingent consideration | | $ | 5,858 | | | $ | — | | | $ | — | | | $ | 5,858 | | | $ | 7,450 | | | $ | — | | | $ | — | | | $ | 7,450 | |
(1) We classified these investments as Level 2 since the fair value is based on market observable inputs for investments with similar terms and maturities.
(2) The deferred compensation liability, included in Other liabilities—other in our Condensed Consolidated Balance Sheets, consists of deferrals under The New York Times Company Deferred Executive Compensation Plan (the “DEC”), which previously enabled certain eligible executives to elect to defer a portion of their compensation on a pre-tax basis. The deferred amounts are invested at the executives’ option in various mutual funds. The fair value of deferred compensation is based on the mutual fund investments elected by the executives and on quoted prices in active markets for identical assets. Participation in the DEC was frozen effective December 31, 2015.
(3) The Company invests the assets associated with the deferred compensation liability in life insurance products. Our investments in life insurance products are included in Miscellaneous assets in our Condensed Consolidated Balance Sheets, and were $51.2$47.0 million as of September 26, 2021,25, 2022, and $49.2$52.5 million as of December 27, 2020.26, 2021. The fair value of these assets is measured using the net asset value per share (or its equivalent) and has not been classified in the fair value hierarchy.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Level 3 Liabilities
The contingent consideration liability is related to the 2020 acquisition of substantially all the assets and certain liabilities of Serial Productions, LLC (the “Serial acquisition”) and represents contingent payments based on the achievement of certain operational targets, as defined in the acquisition agreement, over the five years following the acquisition. The Company estimated the fair value using a probability-weighted discounted cash flow model. The estimate of the fair value of contingent consideration requires subjective assumptions to be made regarding probabilities assigned to operational targets and the discount rate. As the fair value is based on significant unobservable inputs, this is a Level 3 liability.
The following table presents changes in the contingent consideration balances for the quarterquarters and nine months ended September 25, 2022, and September 26, 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Quarter ended | | Nine months ended |
(In thousands) | | September 26, 2021 | | September 27, 2020 | | September 26, 2021 | | September 27, 2020 |
Balance at the beginning of the period | | $ | 7,450 | | | $ | 9,293 | | | $ | 8,431 | | | $ | 9,293 | |
| | | | | | | | |
Payments | | — | | | (862) | | | (862) | | | (862) | |
Fair value adjustments (1) | | — | | | — | | | (119) | | | — | |
Contingent consideration at the end of the period | | $ | 7,450 | | | $ | 8,431 | | | $ | 7,450 | | | $ | 8,431 | |
(1) Fair value adjustments are included in General and administrative expenses in our Condensed Consolidated Statements of Operations. | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Quarters Ended | | Nine Months Ended |
(In thousands) | | September 25, 2022 | | September 26, 2021 | | September 25, 2022 | | September 26, 2021 |
Balance at the beginning of the period | | $ | 5,858 | | | $ | 7,450 | | | $ | 7,450 | | | $ | 8,431 | |
| | | | | | | | |
Payments | | — | | | — | | | (1,724) | | | (862) | |
Fair value adjustments (1) | | — | | | — | | | 132 | | | (119) | |
Contingent consideration at the end of the period | | $ | 5,858 | | | $ | 7,450 | | | $ | 5,858 | | | $ | 7,450 | |
(1) Fair value adjustments are included in General and administrative costs in our Condensed Consolidated Statements of Operations. |
The remaining contingent consideration balances as of September 25, 2022, and December 26, 2021, and December 27, 2020, of $7.5$5.9 million and $8.4$7.5 million, respectively, are included in Accrued expenses and other, for the current portion of the liability, and Other non-current liabilities, for the long-term portion of the liability, in our Condensed Consolidated Balance Sheets.
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 maintain The New York Times Companies Pension Plan, a frozen single-employer defined benefit pension plan. The Company also jointly sponsors a defined benefit plan with The NewsGuild of New York known as the Guild-Times Adjustable Pension Plan (the “APP”) that continues to accrue active benefits.
We also have a foreign-based pension plan for certain employees (the “foreign plan”). The information for the foreign plan is combined with the information for U.S. non-qualified plans. The benefit obligation of the foreign plan is immaterial to our total benefit obligation.
The components of net periodic pension cost were as follows:
| | | For the Quarters Ended | | For the Quarters Ended |
| | | September 26, 2021 | | September 27, 2020 | | | September 25, 2022 | | September 26, 2021 |
(In thousands) | (In thousands) | | Qualified Plans | | Non- Qualified Plans | | All Plans | | Qualified Plans | | Non- Qualified Plans | | All Plans | (In thousands) | | Qualified Plans | | Non- Qualified Plans | | All Plans | | Qualified Plans | | Non- Qualified Plans | | All Plans |
Service cost | Service cost | | $ | 2,276 | | | $ | — | | | $ | 2,276 | | | $ | 2,608 | | | $ | — | | | $ | 2,608 | | Service cost | | $ | 2,882 | | | $ | — | | | $ | 2,882 | | | $ | 2,276 | | | $ | — | | | $ | 2,276 | |
Interest cost | Interest cost | | 7,630 | | | 1,087 | | | 8,717 | | | 11,742 | | | 1,648 | | | 13,390 | | Interest cost | | 8,837 | | | 1,284 | | | 10,121 | | | 7,630 | | | 1,087 | | | 8,717 | |
Expected return on plan assets | Expected return on plan assets | | (12,678) | | | — | | | (12,678) | | | (17,741) | | | — | | | (17,741) | | Expected return on plan assets | | (13,807) | | | — | | | (13,807) | | | (12,678) | | | — | | | (12,678) | |
Amortization of actuarial loss | Amortization of actuarial loss | | 5,056 | | | 1,821 | | | 6,877 | | | 5,655 | | | 1,521 | | | 7,176 | | Amortization of actuarial loss | | 3,266 | | | 1,643 | | | 4,909 | | | 5,056 | | | 1,821 | | | 6,877 | |
Amortization of prior service credit | Amortization of prior service credit | | (486) | | | — | | | (486) | | | (486) | | | — | | | (486) | | Amortization of prior service credit | | (486) | | | — | | | (486) | | | (486) | | | — | | | (486) | |
| Net periodic pension cost (1) | Net periodic pension cost (1) | | $ | 1,798 | | | $ | 2,908 | | | $ | 4,706 | | | $ | 1,778 | | | $ | 3,169 | | | $ | 4,947 | | Net periodic pension cost (1) | | $ | 692 | | | $ | 2,927 | | | $ | 3,619 | | | $ | 1,798 | | | $ | 2,908 | | | $ | 4,706 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended |
| | September 25, 2022 | | September 26, 2021 |
(In thousands) | | Qualified Plans | | Non- Qualified Plans | | All Plans | | Qualified Plans | | Non- Qualified Plans | | All Plans |
Service cost | | $ | 8,645 | | | $ | — | | | $ | 8,645 | | | $ | 6,828 | | | $ | — | | | $ | 6,828 | |
Interest cost | | 26,512 | | | 3,853 | | | 30,365 | | | 22,888 | | | 3,263 | | | 26,151 | |
Expected return on plan assets | | (41,422) | | | — | | | (41,422) | | | (38,033) | | | — | | | (38,033) | |
Amortization of actuarial loss | | 9,799 | | | 4,929 | | | 14,728 | | | 15,169 | | | 5,463 | | | 20,632 | |
Amortization of prior service credit | | (1,459) | | | — | | | (1,459) | | | (1,458) | | | — | | | (1,458) | |
| | | | | | | | | | | | |
Net periodic pension cost | | $ | 2,075 | | | $ | 8,782 | | | $ | 10,857 | | | $ | 5,394 | | | $ | 8,726 | | | $ | 14,120 | |
During the first nine months of 2022 and 2021, we made pension contributions of $7.5 million and $6.5 million, respectively, to the APP. We expect to make contractual contributions in 2022 of approximately $10 million, which more than satisfy minimum funding requirements.
Multiemployer Plans
During the third quarter of 2022 we recorded a gain of $7.1 million from a multiemployer pension liability adjustment, which is included in Gain from pension liability adjustment in our Condensed Consolidated Statements of Operations.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended |
| | September 26, 2021 | | September 27, 2020 |
(In thousands) | | Qualified Plans | | Non- Qualified Plans | | All Plans | | Qualified Plans | | Non- Qualified Plans | | All Plans |
Service cost | | $ | 6,828 | | | $ | — | | | $ | 6,828 | | | $ | 7,822 | | | $ | — | | | $ | 7,822 | |
Interest cost | | 22,888 | | | 3,263 | | | 26,151 | | | 35,226 | | | 4,945 | | | 40,171 | |
Expected return on plan assets | | (38,033) | | | — | | | (38,033) | | | (53,222) | | | — | | | (53,222) | |
Amortization of actuarial loss | | 15,169 | | | 5,463 | | | 20,632 | | | 16,966 | | | 4,564 | | | 21,530 | |
Amortization of prior service credit | | (1,458) | | | — | | | (1,458) | | | (1,459) | | | — | | | (1,459) | |
| | | | | | | | | | | | |
Net periodic pension cost (1) | | $ | 5,394 | | | $ | 8,726 | | | $ | 14,120 | | | $ | 5,333 | | | $ | 9,509 | | | $ | 14,842 | |
(1) The service cost component of net periodic pension cost is recognized in Total operating costs, while the other components are included in Other components of net periodic benefit costs in our Condensed Consolidated Statements of Operations, below Operating profit.
During the first nine months of 2021 and 2020, we made pension contributions of $6.5 million and $6.9 million, respectively, to the APP. We expect to make contractual contributions in 2021 of approximately $9 million, which more than satisfy minimum funding requirements.
Other Postretirement Benefits
The components of net periodic postretirement benefit cost/(income)cost were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Nine Months Ended |
(In thousands) | | September 26, 2021 | | September 27, 2020 | | September 26, 2021 | | September 27, 2020 |
Service cost | | $ | 14 | | | $ | 7 | | | $ | 40 | | | $ | 21 | |
Interest cost | | 141 | | | 257 | | | 423 | | | 770 | |
Amortization of actuarial loss | | 851 | | | 763 | | | 2,555 | | | 2,289 | |
Amortization of prior service credit | | (837) | | | (1,099) | | | (2,509) | | | (3,378) | |
Net periodic postretirement benefit cost/(income) (1) | | $ | 169 | | | $ | (72) | | | $ | 509 | | | $ | (298) | |
(1) The service cost component of net periodic postretirement benefit cost/(income) is recognized in Total operating costs, while the other components are included in Other components of net periodic benefit costs in our Condensed Consolidated Statements of Operations, below Operating profit. | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Nine Months Ended |
(In thousands) | | September 25, 2022 | | September 26, 2021 | | September 25, 2022 | | September 26, 2021 |
Service cost | | $ | 11 | | | $ | 14 | | | $ | 34 | | | $ | 40 | |
Interest cost | | 183 | | | 141 | | | 548 | | | 423 | |
Amortization of actuarial loss | | 823 | | | 851 | | | 2,470 | | | 2,555 | |
Amortization of prior service credit | | — | | | (837) | | | (368) | | | (2,509) | |
Net periodic postretirement benefit cost | | $ | 1,017 | | | $ | 169 | | | $ | 2,684 | | | $ | 509 | |
NOTE 10. INCOME TAXES
The Company had income tax expense of $14.2 million and $39.2 million in the third quarter and first nine months of 2022, respectively. The Company had income tax expense of $20.3 million and $48.0 million in the third quarter and first nine months of 2021, respectively. The Company had incomeCompany’s effective tax expense of $7.3 millionrates from continuing operations were 28.0% and $19.1 million in27.5% for the third quarter and first nine months of 2020,2022, respectively. The Company’s effective tax rates from continuing operations were 27.1% and 24.2% for the third quarter and first nine months of 2021, respectively. The Company’s effective tax rates from continuing operations were 17.8% and 17.5% for the third quarter and first nine months of 2020, respectively. The increasedecrease in income tax expense in the third quarter and first nine months of 2021 is2022 was primarily due to higherlower income from continuing operations in those periods.the third quarter of 2022. The Company receiveddecrease in income tax expense in the first nine months of 2022 was primarily due to lower income from continuing operations in the first nine months of 2022. The increase in the effective tax rate in the first nine months of 2022 was primarily due to a taxlower benefit in the first quarternine months of 2021 and in the first and third quarters of 20202022 from stock price appreciation on stock-based awards that settled in the quarter, whichrespective nine-month periods.
Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminates the option to deduct research and development expenditures immediately in the caseyear incurred and instead requires taxpayers to capitalize and amortize such expenditures over five years. Although it is possible that Congress may defer, modify, or repeal this provision, potentially with retroactive effect, we have no assurance that Congress will take any action with respect to this provision. If the 2022 effective date remains in place, our initial assessment is that our cash from operations will be negatively impacted by approximately $50 million in 2022 and our net deferred tax assets will increase by a similar amount. The actual impact on fiscal 2022 cash from operations will depend on the amount of 2020, resulted in lower-than-statutory tax rates inresearch and development costs we incur, on whether Congress modifies or repeals this provision, and on whether new guidance and interpretive rules are issued by the third quarter and first nine monthsU.S. Treasury, among other factors.
On August 16, 2022, the President signed the Inflation Reduction Act of 2020.2022 (the “IRA”) into law. We do not expect the tax-related provisions of the IRA to have a material impact on our consolidated financial statements.
NOTE 11. EARNINGS PER SHARE
We compute earnings per share based upon the lower of the two-class method or the treasury stock method. The two-class method is an earnings allocation method used when a company’s capital structure includes either two or more classes of common stock or common stock and participating securities. This method determines earnings per share based on dividends declared on common stock and participating securities (i.e., distributed earnings), as well as participation rights of participating securities in any undistributed earnings.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 was de minimis in the third quarter and first nine months of 2022, respectively, and resulted primarily from the dilutive effect of certain restricted stock units. The difference between basic and diluted shares was approximately 0.5 million and 0.6 million in the third quarter and first nine months of 2021, respectively, and 1.0 million and 1.1 million in the third quarter and first nine months of 2020, respectively,respectively. In 2021, dilution resulted primarily from the dilutive effect of certain stock options, performance awards, and restricted stock units.units and stock options.
Securities that could potentially be dilutive are excluded from the computation of diluted earnings per share when a loss from continuing operations exists or when the exercise price exceeds the market value of our Class A Common Stock because their inclusion would result in an anti-dilutive effect on per share amounts.
There were approximately 1.6 million and 1.1 million restricted stock units excluded from the computation of diluted earnings per share in the third quarter and first nine months of 2022, respectively, because they were anti-dilutive. There were no anti-dilutive restricted stock units excluded from the computation of diluted earnings per share in the third quarter and first
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
nine months of 2021. There were no anti-dilutive stock options or stock-settled long-term performance awards or restricted stock units excluded from the computation of diluted earnings per share in the third quarters and first nine months of 20212022 and 2020, respectively.2021.
NOTE 12. SUPPLEMENTAL STOCKHOLDERS’ EQUITY INFORMATION
In 2015,February 2022, the Board of Directors authorized up to $101.1approved a $150 million of repurchases of shares of the Company’s Class A Common Stock. As of September 26, 2021, repurchases under thisStock repurchase program. The authorization totaled $84.9 million (excluding commissions) and $16.2 million remained. Our Board of Directors has authorized us to purchaseprovides that Class A shares may be purchased from time to time subject toas market conditions andwarrant, through open market purchases, privately negotiated transactions or other factors.means, including Rule 10b5-1 trading plans. There is no expiration date with respect to this authorization. There have been no purchases
As of September 25, 2022, repurchases under this authorization since 2016.totaled approximately $79.8 million (excluding commissions) and approximately $70.2 million remained.
The following table summarizes the changes in AOCI by component as of September 26, 2021:25, 2022:
| (In thousands) | (In thousands) | | Foreign Currency Translation Adjustments | | Funded Status of Benefit Plans | | Net Unrealized Gain on Available-For-Sale Securities | | Total Accumulated Other Comprehensive Loss | (In thousands) | | Foreign Currency Translation Adjustments | | Funded Status of Benefit Plans | | Net Unrealized Loss on Available-For-Sale Securities | | Total Accumulated Other Comprehensive Loss |
Balance as of December 27, 2020 | | $ | 8,386 | | | $ | (421,698) | | | $ | 3,131 | | | $ | (410,181) | | |
Other comprehensive income before reclassifications, before tax | | (3,421) | | | — | | | (2,616) | | | (6,037) | | |
Balance as of December 26, 2021 | | Balance as of December 26, 2021 | | $ | 3,754 | | | $ | (385,680) | | | $ | (1,276) | | | $ | (383,202) | |
Other comprehensive loss before reclassifications, before tax | | Other comprehensive loss before reclassifications, before tax | | (13,219) | | | — | | | (11,458) | | | (24,677) | |
Amounts reclassified from accumulated other comprehensive loss, before tax | Amounts reclassified from accumulated other comprehensive loss, before tax | | — | | | 19,220 | | | — | | | 19,220 | | Amounts reclassified from accumulated other comprehensive loss, before tax | | — | | | 15,371 | | | — | | | 15,371 | |
Income tax (benefit)/expense | Income tax (benefit)/expense | | (914) | | | 5,146 | | | (700) | | | 3,532 | | Income tax (benefit)/expense | | (3,518) | | | 4,125 | | | (3,074) | | | (2,467) | |
Net current-period other comprehensive (loss)/ income, net of tax | Net current-period other comprehensive (loss)/ income, net of tax | | (2,507) | | | 14,074 | | | (1,916) | | | 9,651 | | Net current-period other comprehensive (loss)/ income, net of tax | | (9,701) | | | 11,246 | | | (8,384) | | | (6,839) | |
| Balance as of September 26, 2021 | | $ | 5,879 | | | $ | (407,624) | | | $ | 1,215 | | | $ | (400,530) | | |
Balance as of September 25, 2022 | | Balance as of September 25, 2022 | | $ | (5,947) | | | $ | (374,434) | | | $ | (9,660) | | | $ | (390,041) | |
The following table summarizes the reclassifications from AOCI for the nine months ended September 26, 2021:25, 2022:
| | | | | | | | | | | | | | |
| | | | |
(In thousands)
Detail about accumulated other comprehensive loss components | | Amounts reclassified from accumulated other comprehensive loss | | Affects line item in the statement where net income is presented |
Funded status of benefit plans: | | | | |
Amortization of prior service credit(1) | | $ | (3,967)(1,827) | | | Other components of net periodic benefit costs |
Amortization of actuarial loss(1) | | 23,18717,198 | | | Other components of net periodic benefit costs |
| | | | |
Total reclassification, before tax(2) | | 19,22015,371 | | | |
Income tax expense | | 5,1464,125 | | | Income tax expense |
Total reclassification, net of tax | | $ | 14,07411,246 | | | |
(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 quarter ended September 25, 2022. |
Total stock-based compensation expense included in the computationCondensed Consolidated Statements of net periodic benefit cost for pension and other postretirement benefits. See Note 9 for more information.Operations is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Nine Months Ended |
(In thousands) | | September 25, 2022 | | September 26, 2021 | | September 25, 2022 | | September 26, 2021 |
Cost of revenue | | $ | 2,028 | | | $ | 1,325 | | | $ | 5,647 | | | $ | 3,746 | |
Sales and marketing | | 337 | | | 293 | | | 1,006 | | | 917 | |
Product development | | 2,986 | | | 852 | | | 7,586 | | | 2,528 | |
General and administrative | | 3,912 | | | 2,579 | | | 11,060 | | | 7,196 | |
Total stock-based compensation expense | | $ | 9,263 | | | $ | 5,049 | | | $ | 25,299 | | | $ | 14,387 | |
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(2) There were no reclassifications relating to noncontrolling interest for thenine monthsended September 26, 2021.
NOTE 13. SEGMENT INFORMATION
The Company identifies a business as an operating segment if: (i) it engages in business activities from which it may earn revenues and incur expenses; (ii) its operating results are regularly reviewed by the Chief Operating Decision Maker (who
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
is the Company’s President and Chief Executive Officer)Officer (who is the Company’s Chief Operating Decision Maker) to make decisions about resources to be allocated to the segment and assess its performance; and (iii) it has available discrete financial information.
On February 1, 2022, the Company acquired The Company has determined that it has 1 reportable segment. Therefore, all required segment information can be foundAthletic (see Note 5). Beginning with the first quarter of 2022, the results of The Athletic have been included in the Company's Condensed Consolidated Financial Statements.Statements beginning February 1, 2022. The Athletic is a separate reportable segment of the Company. As a result, beginning in the first quarter of 2022, the Company has two reportable segments: The New York Times Group and The Athletic. These segments are evaluated regularly by the Company’s Chief Operating Decision Maker in assessing performance and allocating resources. Management uses adjusted operating profit (loss) by segment in assessing performance and allocating resources. The Company includes in its presentation revenues and adjusted operating costs to arrive at adjusted operating profit (loss) by segment. Adjusted operating costs are defined as operating costs before depreciation and amortization, severance and multiemployer pension plan withdrawal costs. Adjusted operating profit is defined as operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items.
Subscription revenue from our digital subscription package (or “bundle”) is allocated to The New York Times Group and The Athletic. We allocate revenue first to our digital news product based on its list price and then the remaining bundle revenue is allocated to the other products in the bundle, including The Athletic, based on their relative list price. The direct variable expenses associated with the bundle, which include credit card fees, third party fees and sales taxes, are allocated to The New York Times Group and The Athletic based on a historical actual percentage of these costs to bundle revenue.
The following tables present segment information:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Nine Months Ended |
(In thousands) | | September 25, 2022 | | September 26, 2021 | | % Change | | September 25, 2022 | | September 26, 2021 | | % Change |
Revenues | | | | | | | | | | | | |
The New York Times Group | | $ | 523,570 | | | $ | 509,103 | | | 2.8 | % | | $ | 1,584,970 | | | $ | 1,480,645 | | | 7.0 | % |
The Athletic | | 24,110 | | | — | | | * | | 55,815 | | | — | | | * |
Total revenues | | $ | 547,680 | | | $ | 509,103 | | | 7.6 | % | | $ | 1,640,785 | | | $ | 1,480,645 | | | 10.8 | % |
Adjusted operating costs | | | | | | | | | | | | |
The New York Times Group | | $ | 445,020 | | | $ | 444,050 | | | 0.2 | % | | $ | 1,349,880 | | | $ | 1,254,582 | | | 7.6 | % |
The Athletic | | 33,683 | | | — | | | * | | 84,806 | | | — | | | * |
Total adjusted operating costs | | $ | 478,703 | | | $ | 444,050 | | | 7.8 | % | | $ | 1,434,686 | | | $ | 1,254,582 | | | 14.4 | % |
Adjusted operating profit | | | | | | | | | | | | |
The New York Times Group | | $ | 78,550 | | | $ | 65,053 | | | 20.7 | % | | $ | 235,090 | | | $ | 226,063 | | | 4.0 | % |
The Athletic | | (9,573) | | | — | | | * | | (28,991) | | | — | | | * |
Total adjusted operating profit | | $ | 68,977 | | | $ | 65,053 | | | 6.0 | % | | $ | 206,099 | | | $ | 226,063 | | | (8.8) | % |
Adjusted operating profit margin % - New York Times Group | | 15.0 | % | | 12.8 | % | | 220 bps | | 14.8 | % | | 15.3 | % | | (50) bps |
* Represents a change equal to or in excess of 100% or not meaningful. | | | | | | |
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues detail by segment | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Nine Months Ended |
(In thousands) | | September 25, 2022 | | September 26, 2021 | | % Change | | September 25, 2022 | | September 26, 2021 | | % Change |
The New York Times Group | | | | | | | | | | | | |
Subscription | | $ | 360,997 | | | $ | 342,609 | | | 5.4 | % | | $ | 1,089,218 | | | $ | 1,010,910 | | | 7.7 | % |
Advertising | | 108,134 | | | 110,887 | | | (2.5) | % | | 337,455 | | | 320,777 | | | 5.2 | % |
Other | | 54,439 | | | 55,607 | | | (2.1) | % | | 158,297 | | | 148,958 | | | 6.3 | % |
Total | | $ | 523,570 | | | $ | 509,103 | | | 2.8 | % | | $ | 1,584,970 | | | $ | 1,480,645 | | | 7.0 | % |
The Athletic | | | | | | | | | | | | |
Subscription | | $ | 21,675 | | | $ | — | | | * | | $ | 49,052 | | | $ | — | | | * |
Advertising | | 2,333 | | | — | | | * | | 6,661 | | | — | | | * |
Other | | 102 | | | — | | | * | | 102 | | | — | | | * |
Total | | $ | 24,110 | | | $ | — | | | * | | $ | 55,815 | | | $ | — | | | * |
The New York Times Company | | | | | | | | | | | | |
Subscription | | $ | 382,672 | | | $ | 342,609 | | | 11.7 | % | | $ | 1,138,270 | | | $ | 1,010,910 | | | 12.6 | % |
Advertising | | 110,467 | | | 110,887 | | | (0.4) | % | | 344,116 | | | 320,777 | | | 7.3 | % |
Other | | 54,541 | | | 55,607 | | | (1.9) | % | | 158,399 | | | 148,958 | | | 6.3 | % |
Total | | $ | 547,680 | | | $ | 509,103 | | | 7.6 | % | | $ | 1,640,785 | | | $ | 1,480,645 | | | 10.8 | % |
* Represents a change equal to or in excess of 100% or not meaningful. | | | | | | |
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted operating costs (operating costs before depreciation and amortization, severance and multiemployer pension plan withdrawal costs) detail by segment |
| | For the Quarters Ended | | For the Nine Months Ended |
(In thousands) | | September 25, 2022 | | September 26, 2021 | | % Change | | September 25, 2022 | | September 26, 2021 | | % Change |
The New York Times Group | | | | | | | | | | | | |
Cost of revenue (excluding depreciation and amortization) | | $ | 274,945 | | | $ | 256,978 | | | 7.0 | % | | $ | 824,405 | | | $ | 759,333 | | | 8.6 | % |
Sales and marketing | | 57,326 | | | 83,767 | | | (31.6) | % | | 189,970 | | | 197,475 | | | (3.8) | % |
Product development | | 46,273 | | | 40,638 | | | 13.9 | % | | 138,225 | | | 119,280 | | | 15.9 | % |
Adjusted general and administrative (1) | | 66,476 | | | 62,667 | | | 6.1 | % | | 197,280 | | | 178,494 | | | 10.5 | % |
Total | | $ | 445,020 | | | $ | 444,050 | | | 0.2 | % | | $ | 1,349,880 | | | $ | 1,254,582 | | | 7.6 | % |
The Athletic | | | | | | | | | | | | |
Cost of revenue (excluding depreciation and amortization) | | $ | 19,911 | | | $ | — | | | * | | $ | 52,399 | | | $ | — | | | * |
Sales and marketing | | 7,406 | | | — | | | * | | 15,119 | | | — | | | * |
Product development | | 4,201 | | | — | | | * | | 10,504 | | | — | | | * |
Adjusted general and administrative (2) | | 2,165 | | | — | | | * | | 6,784 | | | — | | | * |
Total | | $ | 33,683 | | | $ | — | | | * | | $ | 84,806 | | | $ | — | | | * |
The New York Times Company | | | | | | | | | | | | |
Cost of revenue (excluding depreciation and amortization) | | $ | 294,856 | | | $ | 256,978 | | | 14.7 | % | | $ | 876,804 | | | $ | 759,333 | | | 15.5 | % |
Sales and marketing | | 64,732 | | | 83,767 | | | (22.7) | % | | 205,089 | | | 197,475 | | | 3.9 | % |
Product development | | 50,474 | | | 40,638 | | | 24.2 | % | | 148,729 | | | 119,280 | | | 24.7 | % |
Adjusted general and administrative | | 68,641 | | | 62,667 | | | 9.5 | % | | 204,064 | | | 178,494 | | | 14.3 | % |
Total | | $ | 478,703 | | | $ | 444,050 | | | 7.8 | % | | $ | 1,434,686 | | | $ | 1,254,582 | | | 14.4 | % |
(1) Excludes severance of $2.0 million and $4.5 million for the quarter and nine months ended September 25, 2022, respectively, and multiemployer pension withdrawal costs of $1.3 million and $3.7 million for the quarter and nine months ended September 25, 2022, respectively. Excludes severance of $0.5 million and $0.9 million for the quarter and nine months ended September 26, 2021, respectively, and multiemployer pension withdrawal costs of $1.3 million and $3.9 million for the quarter and nine months ended September 26, 2021, respectively. |
(2) Excludes $0.2 million of severance for the nine months ended September 25, 2022. |
* Represents a change equal to or in excess of 100% or not meaningful. | | | | | | |
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of operating costs before depreciation and amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs) |
| | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Nine Months Ended | | | | |
(In thousands) | | September 25, 2022 | | September 26, 2021 | | % Change | | September 25, 2022 | | September 26, 2021 | | % Change | | | | |
Operating costs | | $ | 503,792 | | | $ | 460,127 | | | 9.5 | % | | $ | 1,504,240 | | | $ | 1,302,895 | | | 15.5 | % | | | | |
Less: | | | | | | | | | | | | | | | | |
Depreciation and amortization | | 21,760 | | | 14,326 | | | 51.9 | % | | 61,150 | | | 43,529 | | | 40.5 | % | | | | |
Severance | | 2,010 | | | 476 | | | * | | 4,670 | | | 882 | | | * | | | | |
Multiemployer pension plan withdrawal costs | | 1,319 | | | 1,275 | | | 3.5 | % | | 3,734 | | | 3,902 | | | (4.3) | % | | | | |
Adjusted operating costs | | $ | 478,703 | | | $ | 444,050 | | | 7.8 | % | | $ | 1,434,686 | | | $ | 1,254,582 | | | 14.4 | % | | | | |
* Represents a change equal to or in excess of 100% or not meaningful. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit) |
| | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Nine Months Ended | | | | |
(In thousands) | | September 25, 2022 | | September 26, 2021 | | % Change | | September 25, 2022 | | September 26, 2021 | | % Change | | | | |
Operating profit | | $ | 51,015 | | | $ | 48,976 | | | 4.2 | % | | $ | 108,960 | | | $ | 173,919 | | | (37.4) | % | | | | |
Add: | | | | | | | | | | | | | | | | |
Depreciation and amortization | | 21,760 | | | 14,326 | | | 51.9 | % | | 61,150 | | | 43,529 | | | 40.5 | % | | | | |
Severance | | 2,010 | | | 476 | | | * | | 4,670 | | | 882 | | | * | | | | |
Multiemployer pension plan withdrawal costs | | 1,319 | | | 1,275 | | | 3.5 | % | | 3,734 | | | 3,902 | | | (4.3) | % | | | | |
Special items: | | | | | | | | | | | | | | | | |
Acquisition-related costs | | — | | | — | | | — | | | 34,712 | | | — | | | * | | | | |
Lease termination charge | | — | | | — | | | * | | — | | | 3,831 | | | * | | | | |
Gain from pension liability adjustment | | (7,127) | | | — | | | * | | (7,127) | | | — | | | * | | | | |
Adjusted operating profit | | $ | 68,977 | | | $ | 65,053 | | | 6.0 | % | | $ | 206,099 | | | $ | 226,063 | | | (8.8) | % | | | | |
* Represents a change equal to or in excess of 100% or not meaningful. |
NOTE 14. CONTINGENT LIABILITIES
Legal Proceedings
We are involved in various legal actions incidental to our business that are now pending against us. These actions generally have damage claims that are greatly in excess of the payments, if any, that we would be required to pay if we lost or settled the cases. Although the Company cannot predict the outcome of these matters, it is possible that an unfavorable outcome in one or more matters could be material to the Company’s consolidated results of operations or cash flows for an individual reporting period. However, based on currently available information, management does not believe that the ultimate resolution of these matters, individually or in the aggregate, is likely to have a material effect on the Company’s financial position.
NOTE 15. SUBSEQUENT EVENTS
On September 30, 2021, our Board of Directors approved a quarterly dividend of $0.07 per share on our Class A and Class B common stock that was paid on October 22, 2021, to all stockholders of record as of the close of business on October 11, 2021.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
EXECUTIVE OVERVIEW
We are a global media organization that includes digital and print products and related businesses. WeOn February 1, 2022, we acquired The Athletic Media Company (“The Athletic”), a global digital subscription-based sports media business. The results of The Athletic have onebeen included in our Condensed Consolidated Financial Statements beginning February 1, 2022. The Athletic is a separate reportable segment with businesses that include our core news productof the Company. As a result, beginning in the first quarter of 2022, we have two reportable segments: The New York Times Group and other interest-specific products, and related content and services.The Athletic.
We generate revenues principally from subscriptions and advertising. In addition, we generate other revenues primarily consisting of revenues from licensing, Wirecutter affiliate referrals, commercial printing, the leasing of floors in our New York headquarters building located at 620 Eighth Avenue, New York, New York (the “Company Headquarters”), retail commerce, television and film, our live events business and our student subscription sponsorship program and our live events business.program.
Our main operating costs are employee-related costs.
In the accompanying analysis of financial information, we present certain information derived from consolidated financial information but not presented in our financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). We are presenting in this report supplemental non-GAAP financial performance measures that exclude depreciation, amortization, severance, non-operating retirement costs or multiemployer pension plan withdrawal costs, and certain identified special items, as applicable. These non-GAAP financial measures should not be considered in isolation from or as a substitute for the related GAAP measures, and should be read in conjunction with financial information presented on a GAAP basis. For further information and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures, see “Non-Operating Items—Non-GAAP“Non-GAAP Financial Measures.”
Beginning with the second quarter of 2022, the Company has updated its rounding methodology for subscriptions (including net subscriptions additions), subscribers (including net subscriber additions) and subscriber-related metrics (other than average revenue per subscriber (“ARPU”)) and will round to the nearest ten thousand instead of the nearest thousand as it had previously been presenting. The sum of individual metrics may not always equal total amounts indicated due to rounding.
Financial Highlights
•Diluted earnings per share from continuing operations were $0.32 and $0.20 forOperating profit increased 4.2% to $51.0 million in the third quartersquarter of 2021 and 2020, respectively. Diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and special items discussed below under “Non-Operating Items – Non-GAAP Financial Measures” (or “adjusted diluted earnings per share,” a non-GAAP measure) were $0.23 and $0.22 for the third quarters of 2021 and 2020, respectively.
•The Company had an operating profit of2022, compared with $49.0 million in the third quarter of 2021, compared with $39.6 million in the third quarter of 2020.2021. Operating profit before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items discussed below under “Non-Operating Items – Non-GAAP“Non-GAAP Financial Measures” (or “adjusted operating profit,” a non-GAAP measure) increased 6.0% to $69.0 million in the third quarter of 2022, compared with $65.1 million in the third quarter of 20212021. The increases were primarily attributable to higher digital-only subscription revenues, partially offset by operating losses at The Athletic, as well as higher operating costs at The New York Times Group. Operating profit margin decreased to 9.3% in the third quarter of 2022, compared with $56.59.6% in the third quarter of 2021. Adjusted operating profit margin (adjusted operating profit expressed as a percentage of revenues) decreased to 12.6% in the third quarter of 2022, compared with 12.8% in the third quarter of 2021.
•Total revenues increased 7.6% to $547.7 million in the third quarter of 2020.
•Total revenues increased 19.3% to2022 from $509.1 million in the third quarter of 2021 from $426.92021.
•Total subscription revenues increased 11.7% to $382.7 million in the third quarter of 2020.
•Subscription revenues increased 13.8%2022 from $342.6 million in the third quarter of 2021 compared with2021. Digital-only subscription revenues increased 22.8% to $243.9 million in the same prior-year period.third quarter of 2022 from $198.6 million in the third quarter of 2021. Paid digital-only subscriptionssubscribers totaled approximately 7,588,0008.59 million with approximately 10.02 million paid digital-only subscriptions at the end of the third quarter of 2021,2022, a net increase of 455,000180,000 digital-only subscribers and 210,000 digital-only subscriptions compared with the end of the second quarter of 20212022 and a net increase of 1,525,0001,010,000digital-only subscribers and 1,230,000 digital-only subscriptions compared with the end of the third quarter of 2020. Of the 455,000 total net additions, 320,000 came from the Company’s digital news product, while 135,000 came from the Company’s Cooking, Games, Audm and Wirecutter (to which a subscription option was launched during the third quarter of 2021) products (“other digital-only products”).2021.
•Total advertising revenues increased 39.9%decreased 0.4% to $110.5 million in the third quarter of 2022 from $110.9 million in the third quarter of 2021, compared with the same prior-year period, due to a decrease of 8.5% in print advertising revenues, partially offset by an increase of 40.2%4.9% in digital advertising revenues and an increase of 39.4% in print advertising revenues.
•Operating costs increased 18.8%9.5% to $503.8 million in the third quarter of 2022 from $460.1 million in the third quarter of 2021 from $387.3 million compared with the third quarter of 2020.2021. Operating costs before depreciation, amortization, severance and multiemployer pension plan withdrawal costs (or “adjusted operating costs,” a non-GAAP measure) increased 19.9% in the third quarter of 20217.8% to $444.1 million from $370.4$478.7 million in the third quarter of 2020.
Impact of Covid-19 Pandemic
Given the impact of the Covid-19 pandemic on our business in 2020, we believe that certain comparisons of our operating results in 2021 to 2019 provide useful context for our 2021 results. We have included supplemental tables comparing the operating results in 2021 to 2020 and to 2019 (see “Supplemental Financial Information”), as well as discussion comparing the third quarter and first nine months in 2021 to 2020 and 2019.
The Covid-19 pandemic has impacted our business in various ways, including impacts on both our operating revenues and operating expenses. During 2020, we experienced significant growth in the number of subscriptions to our digital news and
other products, which we believe was attributable in part to an increase in traffic given the news environment and as a result of the pandemic, and we do not expect the 2020 growth rate to be sustainable or indicative of results for future periods. Revenues2022 from the single-copy and bulk sales of our print newspaper (which include our international edition and collectively represent less than 5% of our total subscription revenues) were adversely affected as a result of widespread business closures, increased remote working and reductions in travel. The worldwide economic slowdown caused by the pandemic also led to a significant decline in our advertising revenues in 2020 as advertisers reduced their spending. More recently, we experienced increasing demand for advertising with the recovery of the broader market. Our live events business was and continues to be adversely affected by the impacts of the Covid-19 pandemic.
In 2020 we incurred less media expense as we decreased marketing spend due to a heightened news cycle, lower print production and distribution costs due to less demand for print copies of the newspaper, lower costs related to our advertising business as a result of lower variable expenses in connection with lower advertising revenues and lower travel and entertainment costs as a result of the Covid-19 pandemic. More recently we have begun increasing some of our spending in these areas, and as referenced below, media expenses to promote our subscription business$444.1 million in the third quarter of 20212021.
•Operating costs that we refer to as “technology costs,” consisting of product development costs as well as components of costs of revenues and general and administrative costs as described below, increased 20.1% to $92.1 million compared with $76.7 million in the third quarter of 2021.
•Diluted earnings per share from continuing operations were higher than$0.22 and $0.32 for the third quarters of both 20202022 and 2019. 2021, respectively. Diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and special items discussed below under “Non-GAAP Financial Measures” (or “adjusted diluted earnings per share,” a non-GAAP measure) were $0.21 and $0.23 for the third quarters of 2022 and 2021, respectively.
Current Economic Conditions, Continued Impact of Covid-19 Pandemic
We, also incurred some additional expenses in responseand the companies with which we do business, including our advertisers, are subject to the pandemic,risks and uncertainties caused by factors beyond our control, including certain enhanced employee benefits; however these expenses have not yet been significant. We have invested and expect to continue to invest inmacroeconomic factors such as inflation (which could materially impact employee-related costs, our Company Headquarters and other officesmain operating cost, as well as technological improvementsthe cost of raw materials for our print newspaper), a competitive labor market and evolving workforce expectations (including for unionized employees), supply chain disruptions, and global economic uncertainty and volatility, the war in Ukraine and the continued effects of the Covid-19 pandemic. Our employee-related costs have increased in recent years as we transitionhave invested in our business and competed for talent. Although we have not seen a significant impact from inflation to hybrid work with employees working both fromour financial results in the officefirst nine months of 2022, if inflation remains at current levels, or increases, for an extended period, our employee-related costs are likely to increase. If we are unable to successfully mitigate the impact of such increased costs, they could adversely affect our profits, margins and/or cash flows.
We actively monitor these conditions to remain flexible and remotely.
At this time,to optimize and evolve our business as appropriate; however, the full impact that the Covid-19 pandemicthey will have on our business, operations and financial results is uncertain. The extent to which the pandemic will continue to impact usuncertain and will depend on numerous evolving factors and future developments, including the scope and duration of the pandemic (including the extent of variants and resurgences); the effect of ongoing vaccination and mitigation efforts; the impact of the pandemic on economic conditions and the companies with which we do business; governmental, business and other actions; the status of travel restrictions; and changes in consumer behavior in responsedevelopments. The risks related to the pandemic, among many other factors. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state, local or foreign authorities, or that we determine are appropriate. Please seefurther described in the section titled “Item 1A — Risk Factors” in our Annual Report on Form 10-K for the year ended December 27,26, 2021.
As a result of the Covid-19 pandemic, the vast majority of our employees worked remotely from March 2020 to September 2022. During the third quarter of 2022, we transitioned to hybrid work with most of our employees expected to work both from the office and remotely. In preparation for more information.hybrid work, we invested in our Company Headquarters and other offices as well as in technological improvements.
RESULTS OF OPERATIONS
The following table presents our consolidated financial results:
| | | | For the Quarters Ended | | For the Nine Months Ended | | | | For the Quarters Ended | | For the Nine Months Ended | |
(In thousands) | (In thousands) | | September 26, 2021 | | September 27, 2020 | | % Change | | September 26, 2021 | | September 27, 2020 | | % Change | (In thousands) | | September 25, 2022 | | September 26, 2021 | | % Change | | September 25, 2022 | | September 26, 2021 | | % Change | |
Revenues | Revenues | | | | | | | | | | | | | Revenues | | | | | | | | | | | | | |
Subscription | Subscription | | $ | 342,609 | | | $ | 300,950 | | | 13.8 | % | | $ | 1,010,910 | | | $ | 879,573 | | | 14.9 | % | Subscription | | $ | 382,672 | | | $ | 342,609 | | | 11.7 | % | | $ | 1,138,270 | | | $ | 1,010,910 | | | 12.6 | % | |
Advertising | Advertising | | 110,887 | | | 79,253 | | | 39.9 | % | | 320,777 | | | 253,150 | | | 26.7 | % | Advertising | | 110,467 | | | 110,887 | | | (0.4) | % | | 344,116 | | | 320,777 | | | 7.3 | % | |
Other | Other | | 55,607 | | | 46,692 | | | 19.1 | % | | 148,958 | | | 141,558 | | | 5.2 | % | Other | | 54,541 | | | 55,607 | | | (1.9) | % | | 158,399 | | | 148,958 | | | 6.3 | % | |
Total revenues | Total revenues | | 509,103 | | | 426,895 | | | 19.3 | % | | 1,480,645 | | | 1,274,281 | | | 16.2 | % | Total revenues | | 547,680 | | | 509,103 | | | 7.6 | % | | 1,640,785 | | | 1,480,645 | | | 10.8 | % | |
Operating costs | Operating costs | | Operating costs | | |
Cost of revenue (excluding depreciation and amortization) | Cost of revenue (excluding depreciation and amortization) | | 256,978 | | | 235,665 | | | 9.0 | % | | 759,333 | | | 709,062 | | | 7.1 | % | Cost of revenue (excluding depreciation and amortization) | | 294,856 | | | 256,978 | | | 14.7 | % | | 876,804 | | | 759,333 | | | 15.5 | % | |
Sales and marketing | Sales and marketing | | 83,767 | | | 50,615 | | | 65.5 | % | | 197,475 | | | 164,004 | | | 20.4 | % | Sales and marketing | | 64,732 | | | 83,767 | | | (22.7) | % | | 205,089 | | | 197,475 | | | 3.9 | % | |
Product development | Product development | | 40,638 | | | 34,349 | | | 18.3 | % | | 119,280 | | | 96,334 | | | 23.8 | % | Product development | | 50,474 | | | 40,638 | | | 24.2 | % | | 148,729 | | | 119,280 | | | 24.7 | % | |
General and administrative | General and administrative | | 64,418 | | | 51,118 | | | 26.0 | % | | 183,278 | | | 162,791 | | | 12.6 | % | General and administrative | | 71,970 | | | 64,418 | | | 11.7 | % | | 212,468 | | | 183,278 | | | 15.9 | % | |
Depreciation and amortization | Depreciation and amortization | | 14,326 | | | 15,552 | | | (7.9) | % | | 43,529 | | | 46,368 | | | (6.1) | % | Depreciation and amortization | | 21,760 | | | 14,326 | | | 51.9 | % | | 61,150 | | | 43,529 | | | 40.5 | % | |
Total operating costs | Total operating costs | | 460,127 | | | 387,299 | | | 18.8 | % | | 1,302,895 | | | 1,178,559 | | | 10.5 | % | Total operating costs | | 503,792 | | | 460,127 | | | 9.5 | % | | 1,504,240 | | | 1,302,895 | | | 15.5 | % | |
Acquisition-related costs | | Acquisition-related costs | | — | | | — | | | — | | | 34,712 | | | — | | | * | |
| Gain from pension liability adjustment | | Gain from pension liability adjustment | | (7,127) | | | — | | | * | | (7,127) | | | — | | | * | |
| Lease termination charge | Lease termination charge | | — | | | — | | | — | | | 3,831 | | | — | | | * | Lease termination charge | | — | | | — | | | — | | | — | | | 3,831 | | | * | |
Operating profit | Operating profit | | 48,976 | | | 39,596 | | | 23.7 | % | | 173,919 | | | 95,722 | | | 81.7 | % | Operating profit | | 51,015 | | | 48,976 | | | 4.2 | % | | 108,960 | | | 173,919 | | | (37.4) | % | |
Other components of net periodic benefit costs | Other components of net periodic benefit costs | | 2,599 | | | 2,272 | | | 14.4 | % | | 7,796 | | | 6,735 | | | 15.8 | % | Other components of net periodic benefit costs | | 1,757 | | | 2,599 | | | (32.4) | % | | 4,903 | | | 7,796 | | | (37.1) | % | |
| Interest income and other, net | Interest income and other, net | | 28,569 | | | 3,537 | | | * | | 31,953 | | | 20,177 | | | 58.4 | % | Interest income and other, net | | 1,579 | | | 28,569 | | | (94.5) | % | | 38,258 | | | 31,953 | | | 19.7 | % | |
Income from continuing operations before income taxes | Income from continuing operations before income taxes | | 74,946 | | | 40,861 | | | 83.4 | % | | 198,076 | | | 109,164 | | | 81.4 | % | Income from continuing operations before income taxes | | 50,837 | | | 74,946 | | | (32.2) | % | | 142,315 | | | 198,076 | | | (28.2) | % | |
Income tax expense | Income tax expense | | 20,290 | | | 7,283 | | | * | | 47,994 | | | 19,070 | | | * | Income tax expense | | 14,220 | | | 20,290 | | | (29.9) | % | | 39,196 | | | 47,994 | | | (18.3) | % | |
| Net income | | Net income | | 36,617 | | | 54,656 | | | (33.0) | % | | 103,119 | | | 150,082 | | | (31.3) | % | |
| Net income attributable to The New York Times Company common stockholders | Net income attributable to The New York Times Company common stockholders | | $ | 54,656 | | | $ | 33,578 | | | 62.8 | % | | $ | 150,082 | | | $ | 90,094 | | | 66.6 | % | Net income attributable to The New York Times Company common stockholders | | $ | 36,617 | | | $ | 54,656 | | | (33.0) | % | | $ | 103,119 | | | $ | 150,082 | | | (31.3) | % | |
* Represents a change equal to or in excess of 100% or not meaningful.
SUPPLEMENTAL FINANCIAL INFORMATION
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended |
| | September 26, 2021 | | September 27, 2020 | | 2021 vs 2020 % Change | | September 29, 2019 | | 2021 vs 2019 % Change |
| | | | | | | | | | |
Revenues | | | | | | | | | | |
Digital | | $ | 198,633 | | | $ | 155,286 | | | 27.9 | % | | $ | 115,864 | | | 71.4 | % |
Print | | 143,976 | | | 145,664 | | | (1.2) | % | | 151,438 | | | (4.9) | % |
Subscription revenues | | 342,609 | | | 300,950 | | | 13.8 | % | | 267,302 | | | 28.2 | % |
Digital | | 66,981 | | | 47,763 | | | 40.2 | % | | 54,653 | | | 22.6 | % |
Print | | 43,906 | | | 31,490 | | | 39.4 | % | | 58,878 | | | (25.4) | % |
Advertising revenues | | 110,887 | | | 79,253 | | | 39.9 | % | | 113,531 | | | (2.3) | % |
Other revenues | | 55,607 | | | 46,692 | | | 19.1 | % | | 47,668 | | | 16.7 | % |
Total revenues | | 509,103 | | | 426,895 | | | 19.3 | % | | 428,501 | | | 18.8 | % |
Operating costs | | | | | | | | | | |
Cost of revenue (excluding depreciation and amortization) | | 256,978 | | | 235,665 | | | 9.0 | % | | 244,891 | | | 4.9 | % |
Sales and marketing | | 83,767 | | | 50,615 | | | 65.5 | % | | 64,209 | | | 30.5 | % |
Product development | | 40,638 | | | 34,349 | | | 18.3 | % | | 26,886 | | | 51.1 | % |
General and administrative | | 64,418 | | | 51,118 | | | 26.0 | % | | 50,015 | | | 28.8 | % |
Depreciation and amortization | | 14,326 | | | 15,552 | | | (7.9) | % | | 15,450 | | | (7.3) | % |
Total operating costs | | 460,127 | | | 387,299 | | | 18.8 | % | | 401,451 | | | 14.6 | % |
| | | | | | | | | | |
Restructuring charge | | — | | | — | | | — | | | 4,008 | | | * |
Gain from pension liability adjustment | | — | | | — | | | — | | | (2,045) | | | * |
Operating profit | | $ | 48,976 | | | $ | 39,596 | | | 23.7 | % | | $ | 25,087 | | | 95.2 | % |
| | | | | | | | | | |
* Represents a change equal to or in excess of 100% or not meaningful. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended |
| | September 26, 2021 | | September 27, 2020 | | 2021 vs 2020 % Change | | September 29, 2019 | | 2021 vs 2019 % Change |
Revenues | | | | | | | | | | |
Digital | | $ | 568,378 | | | $ | 431,280 | | | 31.8 | % | | $ | 338,358 | | | 68.0 | % |
Print | | 442,532 | | | 448,293 | | | (1.3) | % | | 470,210 | | | (5.9) | % |
Subscription revenues | | 1,010,910 | | | 879,573 | | | 14.9 | % | | 808,568 | | | 25.0 | % |
Digital | | 197,472 | | | 138,452 | | | 42.6 | % | | 168,222 | | | 17.4 | % |
Print | | 123,305 | | | 114,698 | | | 7.5 | % | | 191,158 | | | (35.5) | % |
Advertising revenues | | 320,777 | | | 253,150 | | | 26.7 | % | | 359,380 | | | (10.7) | % |
Other revenues | | 148,958 | | | 141,558 | | | 5.2 | % | | 135,873 | | | 9.6 | % |
Total revenues | | 1,480,645 | | | 1,274,281 | | | 16.2 | % | | 1,303,821 | | | 13.6 | % |
Operating costs | | | | | | | | | | |
Cost of revenue (excluding depreciation and amortization) | | 759,333 | | | 709,062 | | | 7.1 | % | | 729,016 | | | 4.2 | % |
Sales and marketing | | 197,475 | | | 164,004 | | | 20.4 | % | | 201,303 | | | (1.9) | % |
Product development | | 119,280 | | | 96,334 | | | 23.8 | % | | 76,320 | | | 56.3 | % |
General and administrative | | 183,278 | | | 162,791 | | | 12.6 | % | | 152,054 | | | 20.5 | % |
Depreciation and amortization | | 43,529 | | | 46,368 | | | (6.1) | % | | 45,548 | | | (4.4) | % |
Total operating costs | | 1,302,895 | | | 1,178,559 | | | 10.5 | % | | 1,204,241 | | | 8.2 | % |
Lease termination charge | | 3,831 | | | — | | | * | | — | | | * |
Restructuring charge | | — | | | — | | | — | | | 4,008 | | | * |
Gain from pension liability adjustment | | — | | | — | | | — | | | (2,045) | | | * |
Operating profit | | $ | 173,919 | | | $ | 95,722 | | | 81.7 | % | | $ | 97,617 | | | 78.2 | % |
| | | | | | | | | | |
* Represents a change equal to or in excess of 100% or not meaningful. |
Revenues
Subscription Revenues
Subscription revenues consist of revenues from subscriptions to our digital and print products (which include our news product, as well as The Athletic and our other digital-onlyGames, Cooking, Audm and Wirecutter products), and single-copy and bulk sales of our print products (which represent less than 5% of these revenues). Subscription revenues are based on both the number of copies of the printed newspaper sold and digital-only subscriptions, and the rates charged to the respective customers.
2021 Compared with 2020
Subscription revenues increased 13.8%11.7% in the third quarter and increased 14.9%12.6% in the first nine months of 20212022 compared with the same prior-year periods. The increase in the third quarter and first nine months wasperiods, primarily due to the large number of subscribers whose introductory promotional subscriptions have graduated to higher prices, growth in the number of subscriptionssubscribers to the Company’s digital-only products, as well as digital subscriptions graduating to higher pricesthe inclusion of subscription revenue from introductory promotional pricing.The Athletic. The increases in digital-onlydigital subscription revenue in both periods were partiallyslightly offset by a decrease in print subscription revenuerevenue. This decrease was primarily attributable to lower single-copy and bulk sales as a result of increased levels of remote working and reductionsdeclines in travel due to the Covid-19 pandemic as well as ongoing secular trends. Subscription revenues from domestic home delivery decreased 0.8% inrevenue of 3.3% and 2.7% for the third quarter and first nine months of 2021 compared with the same prior year period2022, respectively, due to a decrease in the number of print subscriptions driven by secular trends, partially offset by an increase in print subscription prices. RevenuesThere is no print subscription revenue generated from domestic home delivery in the first nine months compared with the same period in the prior year increased 0.4% as the increase in subscription prices offset the decrease in the number of subscriptions.The Athletic.
Paid digital-only subscriptions totaled approximately 7,588,000 at the end ofThe Company ended the third quarter of 2021,2022 with approximately 9.33 million paid subscribers with approximately 10.75 million paid subscriptions across its print and digital products. Of the 9.33 million subscribers, approximately 8.59 million were paid digital-only subscribers with approximately 10.02 million paid digital-only subscriptions.
There was a net increase of 455,000180,000 digital-only subscribers and 210,000 digital-only subscriptions compared with the end of the second quarter of 2022. Compared with the end of the third quarter of 2021, andthere was a net increase of 1,525,0001,010,000 digital-only subscribers and 1,230,000 digital-only subscriptions, which excludes approximately 1,029,000 subscribers and 1,161,000 subscriptions that were added as a result of the acquisition of The Athletic in the first quarter of 2022. The Company provided the ability to access The Athletic to additional digital bundle subscribers in the third quarter of 2022. Digital-only subscribers with The Athletic increased by 600,000, largely as a result of this action.
Print domestic home delivery subscribers totaled approximately 740,000 with 730,000 print subscriptions at the end of the third quarter of 2022, a net decrease of 20,000 subscribers and subscriptions, respectively, compared with the end of the second quarter of 2022 and a net decrease of 60,000 subscribers and subscriptions, respectively, compared with the end of the third quarter of 2020. The year-over-year growth in our digital subscriptions is attributable in part to initiatives we have undertaken to drive subscriptions, including adjustments to our access model.
Digital-only news product subscriptions totaled approximately 5,654,000 at the end of the third quarter of 2021, a 320,000 net increase compared with the end of the second quarter of 2021 and a 989,000 increase compared with the end of the third quarter of 2020. Other digital-only products subscriptions totaled approximately 1,934,000 at the end of the third quarter of 2021, an increase of 135,000 subscriptions compared with the end of the second quarter of 2021 and an increase of 536,000 subscriptions compared with the end of the third quarter of 2020.
Print domestic home delivery subscriptions totaled approximately 795,000 at the end of the third quarter of 2021, a net decrease of 8,000 compared with the end of the second quarter of 2021 and a net decrease of 36,000 compared with the end of the third quarter of 2020.
2021 Compared with 2019
Subscription revenues increased 28.2% in the third quarter and increased 25.0% in the first nine months of 2021 compared with the same periods in 2019. The increase in the third quarter and first nine months of 2021 was primarily due to growth in the number of subscriptions to the Company’s digital-only products. These increases were partially offset by a decrease in print subscription revenue from single-copy and bulk sales as a result of increased levels of remote working and reductions in travel due to the Covid-19 pandemic as well as secular trends. Single-copy and bulk sales decreased 34.1% and 37.3% in the third quarter and the first nine months, respectively.
The following table summarizes digital and print subscription revenues for the third quarters and first nine months of 20212022 and 2020:2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | | | For the Nine Months Ended | | |
(In thousands) | | September 26, 2021 | | September 27, 2020 | | % Change | | September 26, 2021 | | September 27, 2020 | | % Change |
Digital-only subscription revenues: | | | | | | | | | | | | |
News product subscription revenues(1) | | $ | 178,382 | | | $ | 140,740 | | | 26.7 | % | | $ | 510,563 | | | $ | 392,620 | | | 30.0 | % |
Other digital-only product subscription revenues(2) | | 20,251 | | | 14,546 | | | 39.2 | % | | 57,815 | | | 38,660 | | | 49.5 | % |
Subtotal digital-only subscription revenues | | 198,633 | | | 155,286 | | | 27.9 | % | | 568,378 | | | 431,280 | | | 31.8 | % |
Print subscription revenues: | | | | | | | | | | | | |
Domestic home delivery subscription revenues(3) | | 128,895 | | | 129,912 | | | (0.8) | % | | 398,045 | | | 396,620 | | | 0.4 | % |
Single-copy, NYT International and other subscription revenues(4) | | 15,081 | | | 15,752 | | | (4.3) | % | | 44,487 | | | 51,673 | | | (13.9) | % |
Subtotal print subscription revenues | | 143,976 | | | 145,664 | | | (1.2) | % | | 442,532 | | | 448,293 | | | (1.3) | % |
Total subscription revenues | | $ | 342,609 | | | $ | 300,950 | | | 13.8 | % | | $ | 1,010,910 | | | $ | 879,573 | | | 14.9 | % |
(1) Includes revenues from subscriptions to the Company’s news product. News product subscription packages that include access to the Company’s Games, Cooking and Wirecutter products are also included in this category. |
(2) Includes revenues from standalone subscriptions to the Company’s other digital-only products. |
(3) Includes free access to some of the Company’s digital products. |
(4) NYT International is the international edition of our print newspaper. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Nine Months Ended | | | | |
(In thousands) | | September 25, 2022 | | September 26, 2021 | | % Change | | September 25, 2022 | | September 26, 2021 | | % Change | | | | | | |
Digital-only subscription revenues (1) | | $ | 243,889 | | | $ | 198,633 | | | 22.8 | % | | $ | 709,378 | | | $ | 568,378 | | | 24.8 | % | | | | | | |
Print subscription revenues: | | | | | | | | | | | | | | | | | | |
Domestic home delivery subscription revenues (2) | | 124,653 | | | 128,895 | | | (3.3) | % | | 387,125 | | | 398,045 | | | (2.7) | % | | | | | | |
Single-copy, NYT International and Other subscription revenues (3) | | 14,130 | | | 15,081 | | | (6.3) | % | | 41,767 | | | 44,487 | | | (6.1) | % | | | | | | |
Subtotal print subscription revenues | | 138,783 | | | 143,976 | | | (3.6) | % | | 428,892 | | | 442,532 | | | (3.1) | % | | | | | | |
Total subscription revenues | | $ | 382,672 | | | $ | 342,609 | | | 11.7 | % | | $ | 1,138,270 | | | $ | 1,010,910 | | | 12.6 | % | | | | | | |
(1) Includes revenue from digital-only bundled and standalone subscriptions to the Company’s news product, as well as The Athletic and our Games, Cooking, Audm and Wirecutter products. |
(2) Domestic home delivery subscriptions include access to our digital news product, as well as The Athletic and our Games, Cooking and Wirecutter products. |
(3) NYT International is the international edition of our print newspaper. |
We offer a digital subscription package (or “bundle”) that includes access to our digital news product as well as The Athletic and our Games, Cooking and Wirecutter products. We also offer standalone digital subscriptions to our digital news product, as well as to The Athletic, and our Games, Cooking, Audm and Wirecutter products. The Company has set out below the number of digital-only, print and total subscribers to the Company’s products as well as certain additional metrics, including ARPU. A digital-only subscriber is defined as a subscriber who has subscribed (and provided a valid method of payment) for the right to access one or more of the Company’s digital products.
The following table summarizes digital and print subscribers as of the end of the five most recent fiscal quarters:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended |
| | September 25, 2022 | | June 26, 2022 | | March 27, 2022 | | December 26, 2021 | | September 26, 2021 |
Digital-only subscribers(1) | | 8,590 | | | 8,410 | | | 8,230 | | | 6,783 | | | 6,546 | |
Print subscribers(2) | | 740 | | | 760 | | | 780 | | | 795 | | | 806 | |
Total subscribers(3) | | 9,330 | | | 9,170 | | | 9,010 | | | 7,578 | | | 7,352 | |
(1) Subscribers with paid digital-only subscriptions to one or more of our news product, The Athletic, or our Games, Cooking and Wirecutter products. Subscribers with a paid domestic home-delivery print subscription to The New York Times are excluded. The number of digital-only subscribers includes group corporate and group education subscriptions (which collectively represented approximately 4% of paid digital-only subscriptions as of the third quarter of 2022). The number of group subscribers is derived using the value of the relevant contract and a discounted subscription rate. |
(2) Subscribers with a paid domestic home delivery or mail print subscription to The New York Times, which also includes access to our digital news product, as well as The Athletic and our Games, Cooking and Wirecutter products, or a paid print subscription to our Book Review or Large Type Weekly products. Book Review, Mail and Large Type Weekly subscribers are included in the count of subscribers but not subscriptions. |
(3) The sum of individual metrics may not always equal total amounts indicated due to rounding. |
The following table summarizes supplementary subscriber metrics as of the end of the five most recent fiscal quarters:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended |
(In thousands except for ARPU) | | September 25, 2022 | | June 26, 2022 | | March 27, 2022 | | December 26, 2021 | | September 26, 2021 |
Digital-only subscriber ARPU(1) | | $ | 8.87 | | | $ | 8.83 | | | $ | 9.13 | | | $ | 9.60 | | | $ | 9.64 | |
Digital-only bundle and multiproduct subscribers(2) | | 2,130 | | | 1,980 | | | 1,835 | | | 1,607 | | | 1,491 | |
Digital-only subscribers with News(3) | | 6,210 | | | 6,140 | | | 6,101 | | | 5,826 | | | 5,665 | |
Digital-only subscribers with The Athletic(4) | | 2,290 | | | 1,690 | | | 1,216 | | | — | | | — | |
(1) “Digital-only subscriber Average Revenue per User” or “Digital-only subscriber ARPU” is calculated by dividing the average monthly digital subscription revenue (calculated by dividing digital subscription revenue in the quarter by 3.25 to reflect a 28-day billing cycle) in the measurement period by the average number of digital subscribers during the period. |
(2) Subscribers with a digital bundle or paid digital-only subscriptions that include access to two or more of the Company’s products, including through separate standalone subscriptions. This metric was previously called “Total Multiproduct subscribers” and included subscribers with a print home-delivery subscription. The four quarters prior to the third quarter of 2022 have been recast to reflect this change. |
(3) Subscribers with a paid digital-only subscription that includes the ability to access the Company’s digital news product. |
(4) Subscribers with a paid digital-only subscription that includes the ability to access The Athletic. This metric was previously called “Subscribers with The Athletic”. |
The following table summarizes digital and print subscriptions as of the end of the third quarters of 2021 and 2020:five most recent fiscal quarters:
| | | | | | | | | | | | | | | | | | | | |
| | Quarters Ended | | |
(In thousands) | | September 26, 2021 | | September 27, 2020 | | % Change |
Digital-only subscriptions: | | | | | | |
News product subscriptions(1) | | 5,654 | | | 4,665 | | | 21.2 | % |
Other digital-only product subscriptions(2) | | 1,934 | | | 1,398 | | | 38.3 | % |
Subtotal digital-only subscriptions | | 7,588 | | | 6,063 | | | 25.2 | % |
Print subscriptions | | 795 | | | 831 | | | (4.3) | % |
Total subscriptions | | 8,383 | | | 6,894 | | | 21.6 | % |
(1) Includes subscriptions to the Company’s news product. News product subscription packages that include access to the Company’s Games, Cooking and Wirecutter products are also included in this category. |
(2) Includes standalone subscriptions to the Company’s other digital-only products. During the third quarter of 2021, the Company launched a Wirecutter subscription option. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended |
(In thousands) | | September 25, 2022 | | June 26, 2022 | | March 27, 2022 | | December 26, 2021 | | September 26, 2021 |
Digital-only subscriptions (1) | | 10,020 | | | 9,810 | | | 9,579 | | | 8,005 | | | 7,630 | |
Print subscriptions (2) | | 730 | | | 750 | | | 770 | | | 784 | | | 795 | |
Total subscriptions (3) | | 10,750 | | | 10,560 | | | 10,349 | | | 8,789 | | | 8,425 | |
(1) Paid digital-only subscriptions to our news product, as well as The Athletic and our Games, Cooking, Audm and Wirecutter products. Standalone subscriptions to these products are counted separately and bundle subscriptions are counted as one subscription. The number of paid digital-only subscriptions includes group corporate and group education subscriptions (which collectively represented approximately 4% of paid digital-only subscriptions as of the third quarter of 2022). The number of group subscriptions is derived using the value of the relevant contract and a discounted subscription rate. |
(2) Paid domestic home-delivery print subscriptions to The New York Times, which also include access to our digital news product, as well as The Athletic and our Games, Cooking and Wirecutter products. Excludes subscriptions to our Book Review or Large Type Weekly products and subscriptions to The New York Times that are delivered by mail. |
(3) The sum of individual metrics may not always equal total amounts indicated due to rounding. |
We believe that the significant growth over the last several years in subscriptionssubscribers to our products demonstrates the success of our “subscription-first” strategy and the willingness of our readers to pay for high-quality journalism. The Company is increasing its emphasis on subscriber growth rather than growth of total subscriptions. The following charts illustrate the growth in net digital-only subscriptionssubscribers and corresponding subscription revenues as well as the relative stability of our print domestic home delivery subscription products since the launch of the digital pay model in 2011.
products.
(1) Amounts may not add due to rounding.
(2)Print domestic home delivery subscriptions include free Includes access to some of our digital products.
(3)Includes Book Review, Mail and Large Type Weekly subscribers.
(4) Print Other includes single-copy, NYT International and other subscription revenues.
Note: Revenues for 2012 and 2017 include the impact of an additional week.
Advertising Revenues
Advertising revenue is principally from advertisers (such as technology, financial and luxury goods companies) promoting products, services or brands on digital platforms in the form of display ads, audio and video, and in print, in the form of column-inch ads. Advertising revenue is primarily derived from offerings sold directly to marketers by our advertising sales teams. A smaller proportion of our total advertising revenues is generated through programmatic auctions run by third-party ad exchanges. Advertising revenue is primarily determined by the volume (e.g., impressions or column inches), rate and mix of advertisements. Digital advertising includes our core digital advertising business and other digital advertising. Our core digital advertising business includes direct-sold website, mobile application, podcast, email and video advertisements. Advertising revenue from The Athletic is primarily podcast revenue and therefore is reflected in this category. Direct-sold display advertising, a component of core digital advertising, includes offerings on websites and mobile applications sold directly to marketers by our advertising sales teams. We launched direct-sold display advertising at The Athletic in the third quarter. Other digital advertising includes open-market programmatic advertising and creative services fees. Print advertising includes revenue from column-inch ads and classified advertising, as well as preprinted advertising, also known as freestanding inserts. There is no print advertising revenue generated from The Athletic.
The following table summarizes digital and print advertising revenues for the third quarters and first nine months of 20212022 and 2020:2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | | | For the Nine Months Ended | | |
(In thousands) | | September 26, 2021 | | September 27, 2020 | | % Change | | September 26, 2021 | | September 27, 2020 | | % Change |
Advertising revenues: | | | | | | | | | | |
Digital | | $ | 66,981 | | | $ | 47,763 | | | 40.2 | % | | $ | 197,472 | | | $ | 138,452 | | | 42.6 | % |
Print | | 43,906 | | | 31,490 | | | 39.4 | % | | 123,305 | | | 114,698 | | | 7.5 | % |
Total advertising | | $ | 110,887 | | | $ | 79,253 | | | 39.9 | % | | $ | 320,777 | | | $ | 253,150 | | | 26.7 | % |
2021 Compared with 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Nine Months Ended | | | | |
(In thousands) | | September 25, 2022 | | September 26, 2021 | | % Change | | September 25, 2022 | | September 26, 2021 | | % Change | | | | | | |
Advertising revenues: | | | | | | | | | | | | | | |
Digital | | $ | 70,282 | | | $ | 66,981 | | | 4.9 | % | | $ | 206,588 | | | $ | 197,472 | | | 4.6 | % | | | | | | |
Print | | 40,185 | | | 43,906 | | | (8.5) | % | | 137,528 | | | 123,305 | | | 11.5 | % | | | | | | |
Total advertising | | $ | 110,467 | | | $ | 110,887 | | | (0.4) | % | | $ | 344,116 | | | $ | 320,777 | | | 7.3 | % | | | | | | |
Digital advertising revenues, which represented 60.4%63.6% of total advertising revenues in the third quarter of 2021,2022, increased $19.2$3.3 million, or 40.2%4.9%, to $67.0$70.3 million compared with $47.8$67.0 million in the same prior-year period. The increase was primarily driven bya result of higher direct-sold advertising including traditional displayat The New York Times Group and podcasts, as well as the impactaddition of $2.3 million in advertising revenue from The Athletic, which more than offset lower revenue from fewer programmatic advertising impressions; in addition we believe the comparison to weak digitalmacroeconomic environment adversely impacted advertising revenues in the prior year period caused by reduced advertiser spending during the earlier stages of the Covid-19 pandemic.spend. Core digital advertising revenue increased $16.1$8.9 million, which includes $2.3 million from The Athletic, due to growth in direct-sold display advertising and podcast advertising revenues. Direct-sold display impressions increased 33%52%, while the average rate grew 24%decreased 20%. Other digital advertising revenue increased $3.1decreased $5.6 million, primarily due to a 44% increase in creative services fees, as well as a 7.1% increase34.1% decrease in open-market programmatic advertising revenue.revenue, as well as an 18.2% decrease in creative services fees. Programmatic impressions decreased by 39%27%, while the average rate increased 63%decreased 8%.
Digital advertising revenues, which represented 61.6%60.0% of total advertising revenues in the first nine months of 2021,2022, increased $59.0$9.1 million, or 42.6%4.6%, to $197.5$206.6 million compared with $138.5$197.5 million in the same prior-year period. The increase was primarily driven bya result of higher direct-sold advertising including traditional displayat The New York Times Group and podcasts, as well as the impactaddition of advertising revenue from The Athletic, which contributed $6.7 million which more than offset lower revenue from fewer programmatic advertising impressions; in addition we believe the comparison to weak digitalmacroeconomic environment adversely impacted advertising revenues in the prior year period caused by reduced advertiser spending during the earlier stages of the Covid-19 pandemic.spend. Core digital advertising revenue increased $53.1$22.2 million, which includes $6.7 million from The Athletic, due to growth in direct-sold display advertising revenue and podcast advertising revenues. Direct-sold display impressions increased 21%32%, while the average rate grew 29%decreased 11%. Other digital advertising revenue increased $5.9decreased $13.1 million, primarily due to a 36% increase26.3% decrease in creative services fees,open-market programmatic advertising revenue, as well as a 2.7% increase16.8% decrease in open-market programmatic advertising revenue.creative services fees. Programmatic impressions decreased by 39% offsetting32%, while the average rate increase of 63%increased 10%.
Print advertising revenues, which represented 39.6%36.4% of total advertising revenues in the third quarter of 2021, increased $12.42022, decreased $3.7 million, or 39.4%8.5%, to $43.9$40.2 million compared with $31.5$43.9 million in the same prior-year period. The increase in the third quarter of 2021decrease was primarily in the luxuryadvocacy and entertainment categories, largely due to the impact of the comparison to weak printmedia categories. Print advertising revenues in the third quarter of 2020 caused by reduced advertiser spending by businesses negativelyrevenue was impacted by secular trends and in addition we believe the earlier stages of the Covid-19 pandemic. The increase in the third quarter of 2021 was partially offset by secular trends. macroeconomic environment adversely impacted advertising spend.
Print advertising revenues, which represented 38.4%40.0% of total advertising revenues in the first nine months of 2021,2022, increased $8.6$14.2 million, or 7.5%11.5%, to $123.3$137.5 million compared with $114.7$123.3 million in the same prior-year period.The increase was primarily in the entertainment and luxury categories, which were more severely impacted by the Covid-19 pandemic in the first nine months of 2021 was primarily in the luxury and media categories and2021. The increase was partially offset by a decrease in the entertainment category and as a result of secular trends. We expect reduced advertising spending by businesses that continue to be negatively impacted by the Covid-19 pandemic, along with secular trends to continue toand in addition we believe the macroeconomic environment adversely affect our printimpacted advertising revenues. Some of our print advertising revenues may not return to pre-pandemic levels.spend.
2021 Compared with 2019
Digital advertising revenues for the third quarter of 2021 increased $12.3 million, or 22.6%, to $67.0 million compared with $54.7 million in the third quarter of 2019. The increase was primarily driven by higher direct-sold advertising, including traditional display and podcasts. Core digital advertising revenue increased $16.4 million due to growth in direct-sold display advertising revenues and podcast advertising revenues. Direct-sold display impressions increased 7%, while the average rate grew 43%. Other digital advertising revenue decreased $4.1 million, primarily due to the closure of our HelloSociety and Fake Love digital marketing agencies, partially offset by a 8.1% increase in open-market programmatic advertising revenue. Programmatic impressions decreased by 29%, while the average rate increased 50%.
Digital advertising revenues for the first nine months of 2021 increased $29.3 million, or 17.4%, to $197.5 million compared with $168.2 million in the first nine months of 2019. The increase was primarily driven by higher direct-sold advertising, including traditional display and podcasts. Core digital advertising revenue increased $43.0 million due to growth in direct-sold display advertising revenue and podcast advertising revenues. Direct-sold display impressions were flat, while the average rate grew 31%. Other digital advertising revenue decreased $13.7 million, primarily due to the closure of our HelloSociety and Fake Love digital marketing agencies, partially offset by a 7.5% increase in open-market programmatic advertising revenue. Programmatic impressions decreased by 12%, while the average rate increased 21%.
Print advertising revenues for the third quarter of 2021 declined $15.0 million, or 25.4%, to $43.9 million compared with $58.9 million in the same period of 2019. Print advertising revenues for the first nine months of 2021 declined $67.9 million, or 35.5%, to $123.3 million compared with $191.2 million in the same period of 2019. The declines in both periods reflected reduced spending on print advertising by businesses negatively impacted by the Covid-19 pandemic as well as continued secular trends.
Other Revenues
Other revenues primarily consist of revenues from licensing, Wirecutter affiliate referrals, commercial printing, the leasing of floors in the Company Headquarters, retail commerce, television and film, our live events business and our student subscription sponsorship program and our live events business.
2021 Compared with 2020program.
Other revenues increased 19.1%decreased 1.9% in the third quarter of 2021 and2022 compared with the same prior-year period, primarily as a result of lower licensing revenue, which was partially offset by higher Wirecutter affiliate referral revenues.
Other revenues increased 5.2%6.3% in the first nine months of 2021,2022 compared with the same prior-year periods. The increase in the third quarter of 2021 wasperiod, primarily as a result of higher licensing and commercial printing revenue. The increaserevenue as we began printing several News Corporation publications in the first nine months of 2021 was primarily a result ofmid-2021 and several other smaller publications in 2022 in our College Point, N.Y., printing and distribution facility, higher Wirecutter affiliate referral revenues mainly due to Wirecutter’s presence on our core news website (NYTimes.com) homepage resulting in increased views, and licensing revenues, partially offset by lower television series revenues.higher live events revenue due to more in-person events.
Building rental revenue from the leasing of floors in the Company Headquarters totaled $7.1$7.2 million and $7.0 million in the third quarters of 20212022 and 2020,2021, respectively, and $20.0$21.5 millionand $22.3$20.0 million in the first nine months of 2022 and 2021, and 2020, respectively.
2021 Compared with 2019
Other revenues increased 16.7% in the third quarter of 2021 and increased 9.6% in the first nine months, compared with the same periods in 2019. The increase in the third quarter of 2021 was primarily a result of higher Wirecutter affiliate referral revenues and licensing revenue related to Facebook News partially offset by lower television series and live events revenues. The increase in the first nine months of 2021 was primarily a result of higher Wirecutter affiliate referral revenues and licensing revenue primarily related to Facebook News, partially offset by lower revenues from television series, live events and commercial printing.
Operating Costs
Operating costs were as follows:
| | | For the Quarters Ended | | For the Nine Months Ended | | | For the Quarters Ended | | For the Nine Months Ended | |
(In thousands) | (In thousands) | | September 26, 2021 | | September 27, 2020 | | % Change | | September 26, 2021 | | September 27, 2020 | | % Change | (In thousands) | | September 25, 2022 | | September 26, 2021 | | % Change | | September 25, 2022 | | September 26, 2021 | | % Change | |
Operating costs: | Operating costs: | | | | | | | | | | | | | Operating costs: | | | | | | | | | | | | | |
Cost of revenue (excluding depreciation and amortization)(1) | Cost of revenue (excluding depreciation and amortization)(1) | | $ | 256,978 | | | $ | 235,665 | | | 9.0 | % | | $ | 759,333 | | | $ | 709,062 | | | 7.1 | % | Cost of revenue (excluding depreciation and amortization)(1) | | $ | 294,856 | | | $ | 256,978 | | | 14.7 | % | | $ | 876,804 | | | $ | 759,333 | | | 15.5 | % | |
Sales and marketing | Sales and marketing | | 83,767 | | | 50,615 | | | 65.5 | % | | 197,475 | | | 164,004 | | | 20.4 | % | Sales and marketing | | 64,732 | | | 83,767 | | | (22.7) | % | | 205,089 | | | 197,475 | | | 3.9 | % | |
Product development(1) | Product development(1) | | 40,638 | | | 34,349 | | | 18.3 | % | | 119,280 | | | 96,334 | | | 23.8 | % | Product development(1) | | 50,474 | | | 40,638 | | | 24.2 | % | | 148,729 | | | 119,280 | | | 24.7 | % | |
General and administrative(1) | General and administrative(1) | | 64,418 | | | 51,118 | | | 26.0 | % | | 183,278 | | | 162,791 | | | 12.6 | % | General and administrative(1) | | 71,970 | | | 64,418 | | | 11.7 | % | | 212,468 | | | 183,278 | | | 15.9 | % | |
Depreciation and amortization(2) | Depreciation and amortization(2) | | 14,326 | | | 15,552 | | | (7.9) | % | | 43,529 | | | 46,368 | | | (6.1) | % | Depreciation and amortization(2) | | 21,760 | | | 14,326 | | | 51.9 | % | | 61,150 | | | 43,529 | | | 40.5 | % | |
Total operating costs | Total operating costs | | $ | 460,127 | | | $ | 387,299 | | | 18.8 | % | | $ | 1,302,895 | | | $ | 1,178,559 | | | 10.5 | % | Total operating costs | | $ | 503,792 | | | $ | 460,127 | | | 9.5 | % | | $ | 1,504,240 | | | $ | 1,302,895 | | | 15.5 | % | |
(1)Technology costs, which include product development costs and certain components of cost of revenue and general and administrative costs as described below, increased 20.1% to $92.1 million compared with $76.7 million in the third quarter of 2021 and increased 22.0% to $272.4 million compared with $223.3 million in the first nine months of 2021. | | (1)Technology costs, which include product development costs and certain components of cost of revenue and general and administrative costs as described below, increased 20.1% to $92.1 million compared with $76.7 million in the third quarter of 2021 and increased 22.0% to $272.4 million compared with $223.3 million in the first nine months of 2021. | |
(2) Includes amortization of intangible assets related to our acquisitions of approximately $7 million and $19 million for the quarter and nine months ended September 25, 2022, respectively. | | (2) Includes amortization of intangible assets related to our acquisitions of approximately $7 million and $19 million for the quarter and nine months ended September 25, 2022, respectively. | |
Cost of Revenue (excluding depreciation and amortization)
Cost of revenue includes all costs related to content creation, subscriber and advertiser servicing, and print production and distribution as well as infrastructure costs related to delivering digital content, which include all cloud and cloud-related costs as well as compensation for employees that enhance and maintain that infrastructure.
2021 Compared with 2020
Cost of revenue increased in the third quarter of 20212022 by $21.3$37.9 million, or 9.0%14.7%, compared with the third quarter of 2020,2021. The increase is largely due to higher journalism costs of $15.1$24.6 million, higher subscriber servicing costs of $3.6$6.2 million, higher advertising servicingdigital content delivery costs of $1.4$3.7 million, and higher print production and distribution costs of $1.2$2.1 million and higher advertising servicing costs of $1.3 million. The increase in journalism costs was largely driven bydue to the inclusion of $16.8 million in journalism costs from The Athletic as well as growth in the number of employees who work in the newsroom and on our Games, Cooking and audio products, costs in connection with the production of audio content and a higher incentive compensation accrual.The New York Times Group newsroom. The increase in subscriber servicing costs was primarily due to the inclusion of $2.5 million of subscriber servicing costs from The Athletic and higher credit card processing fees and third-party commissions due to increased subscriptions. Advertising servicingThe increase in digital content delivery costs increasedwas primarily due to higher cloud-related costs, as a result of costs to producewell as higher creative services revenues.compensation and benefits. The increase in print production and distribution costs was largely due to an increase in compensation and benefits, newsprint pricing and higher utilitiesincreased commercial printing activity. Advertising servicing costs increased primarily due to an increase in live events. Technology costs in Cost of revenue, which include costs related to content delivery and maintenance costs partially offset by lower outside printing and distribution costs.subscriber technology, increased 18.1% to $25.4 million compared with $21.5 million in the third quarter of 2021.
Cost of revenue increased in the first nine months of 20212022 by $50.3$117.5 million, or 7.1%15.5%, compared with the first nine months of 2020,2021. The increase is largely due to higher journalism costs of $42.2$77.7 million, higher subscriber servicing costs of $11.3$19.1 million, higher print production and distribution costs of $10.5 million, higher digital content delivery costs of $4.1 $7.1
million and higher advertising servicing costs of $3.2 million. The increases were partially offset by lower print production and distribution costs of $10.5$3.1 million. The increase in journalism costs was largely driven by the inclusion of $45.9 million in journalism costs from The Athletic, as well as growth in the number of employees who work in theThe New York Times Group newsroom and on our Games, Cooking, Audm and audio products, a higher incentive compensation accrual and costs in connection with the production of audio content. This cost growth was partially offset by lower content creation costs as a result of fewer television episodes.Wirecutter products. The increase in subscriber servicing costs was primarily due to the inclusion of $5.7 million in subscriber servicing costs from The Athletic, as well as higher credit card processing fees and third-party commissions due to increased subscriptions. Digital content delivery costs increased due to a higher incentive compensation accrual and higher cloud storage costs. Advertising servicing costs increased as a result of costs to produce higher creative services revenues. The decreaseincrease in print production and distribution costs was largely due to lower outsidean increase in newsprint pricing and fuel costs and increased commercial printing and distribution costs, as well as lower newsprint consumption and pricing.
2021 Compared with 2019
Cost of revenue increasedactivity. The increase in the third quarter of 2021 by $12.1 million, or 4.9%, compared with the third quarter of 2019, largely due to higher journalism costs of $19.2 million, higher subscriber servicing costs of $6.7 million, and higher digital content delivery costs of $5.1 million. The increases were partially offset by lower print production and distribution costs of $12.4 million and lower advertising servicing costs of $6.5 million. The increase in journalism costs was largely driven by growth in the number of employees who work in the newsroom and on our Games, Cooking and audio products, and a higher incentive compensation accrual. The increase in subscriber servicing costs was primarily due to higher credit card processing feescloud-related costs, as well as higher compensation and third-party commissions due to increased subscriptions. Digital content deliverybenefits. Advertising servicing costs increased primarily due to higher cloud-related costs and an increase in the number of employees. The decreaselive events. Technology costs in print production and distribution costs was largely due to lower newsprint consumption and pricing, lower distribution costs, and lower outside printing costs. Advertising servicing costs decreased primarily as a result of the closure of our HelloSociety and Fake Love digital marketing agencies, as well as lower volume of creative services campaigns and live events.
Cost of revenue, which include costs related to content delivery and subscriber technology, increased 16.0%to $75.6 million compared with $64.9 million in the first nine months of 2021 by $30.3 million, or 4.2%, compared with the first nine months of 2019, largely due to higher journalism costs of $61.9 million, higher subscriber servicing costs of $18.5 million, and higher digital content delivery costs of $16.6 million. The increases were partially offset by lower print production and distribution costs of $52.4 million and lower advertising costs of $14.3 million. The increase in journalism costs was largely driven by growth in the number of employees who work in the newsroom and on our Games, Cooking and audio products, and a higher incentive compensation accrual. The increase in subscriber servicing costs was primarily due to higher credit card processing fees and third-party commissions due to increased subscriptions. Digital content delivery costs increased due to higher cloud storage costs and growth in the number of employees. The decrease in print production and distribution costs was largely due to lower newsprint consumption and pricing, as well as lower distribution costs and outside printing costs. Advertising servicing costs decreased primarily as a result of the closure of our HelloSociety and Fake Love digital marketing agencies as well as fewer live events.2021.
Sales and Marketing
Sales and marketing includes costs related to the Company’s marketing efforts as well as advertising sales costs. Media expenses is a component of salesSales and marketing costs that represents the cost to promote our subscription business.
2021 Compared with 2020
Sales and marketing costs in the third quarter of 2021 increased2022 decreased by $33.2$19.0 million, or 65.5%22.7%, compared with the third quarter of 2020,2021. The decrease is primarily due to higherlower media expenses.expenses at The New York Times Group, partially offset by $7.4 million in sales and marketing costs from The Athletic and growth in the number of sales and marketing employees.
Sales and marketing costs in the first nine months of 20212022 increased by $33.5$7.6 million, or 20.4%3.9%, compared with the first nine months of 2020. The increase2021, largely due to the inclusion of $15.1 million in sales and marketing costs resulting from higher media expenses wasThe Athletic, as well as growth in the number of sales and marketing employees, partially offset by lower advertising sales costs.media expenses at The New York Times Group.
Media expenses increased decreased44.7%to $30.6 million in the third quarter of 2022 from $55.3 million in the third quarter of 2021 from $27.32021. Media expenses decreased 10.3% to $107.9 million in the third quarterfirst nine months of 2020 and increased to2022 from $120.2 million in the first nine months of 2021 from $89.2 million in2021. In each case, the first nine months of 2020. The Company increased media expenses indecreases were the third quarter of 2021 as we were able to profitably scale media spend as a result of strong demand for news and success in converting readers to subscribers.lower brand marketing expenses at The Company had reduced its marketing expense in 2020 during the earlier stages of the Covid-19 pandemic.
2021 Compared with 2019
Sales and marketing costs in the third quarter of 2021 increased by $19.6 million, or 30.5%, compared with the third quarter of 2019, primarily due to higher media expenses.
Sales and marketing costs in the first nine months of 2021 decreased by $3.8 million, or 1.9%, compared with the first nine months of 2019. The decrease in sales and marketing costs is primarily a result of the closure of our HelloSociety and Fake Love digital marketing agencies,New York Times Group, partially offset by higher media expenses and the growth in the numberinclusion of marketing employees.
Media expenses increased to $55.3 million in the third quarter of 2021 from $35.9 million in the third quarter of 2019 and increased to $120.2 million in the first nine months of 2021 from $114.6 million in the first nine months of 2019. The Company increased media expenses in the third quarter of 2021 as we were able to profitably scale media spend as a result of strong demand for news and success in converting readers to subscribers.Athletic.
Product Development
Product development includes costs associated with the Company’s investment intoin developing and enhancing new and existing product technology, including engineering, product development and data insights.
2021 Compared with 2020 All product development costs are technology costs.
Product development costs in the third quarter of 20212022 increased by $6.3$9.8 million, or 18.3%24.2%, compared with the third quarter of 2020,2021. Product development costs in the first nine months of 2022 increased by $29.4 million, or 24.7%, compared with the first nine months of 2021. The increases in each period were largely due to growth in the number of digital product development employees in connection with digital subscription strategic initiatives, as well as a higher incentive compensation accrual.
Productthe inclusion of product development costs from The Athletic of $4.2 million in the third quarter of 2022 and $10.4 million in the first nine months of 2021 increased by $22.9 million, or 23.8%, compared with the first nine months of 2020, largely due to the factors identified above.2022.
2021 Compared with 2019
Product development costs in the third quarter of 2021 increased by $13.8 million, or 51.1%, compared with the third quarter of 2019, largely due to growth in the number of digital product development employees to support our digital subscription strategic initiatives as well as a higher incentive compensation accrual.
Product development costs in the first nine months of 2021 increased by $43.0 million, or 56.3%, compared with the first nine months of 2019, largely due to the factors identified above.
General and Administrative Costs
General and administrative costs include general management, corporate enterprise technology, building operations, unallocated overhead costs, severance and multiemployer pension plan withdrawal costs.
2021 Compared with 2020
General and administrative costs in the third quarter of 20212022 increased by $13.3$7.6 million, or 26.0%11.7%, compared with the third quarter of 2020,2021. The increase is primarily due to athe inclusion of $2.2 million in general and administrative costs from The Athletic, higher incentive compensation accrual,severance expense, growth in the number of employees, stock price appreciation on stock-based awards and higher consultingbuilding operations and maintenance costs. Technology costs in general and administrative, which include costs related to enterprise technology and information security, increased 11.4% to $16.2 million compared with $14.5 million in the third quarter of 2021.
General and administrative costs in the first nine months of 20212022 increased by $20.5$29.2 million, or 12.6%15.9%, compared with the first nine months of 2020, primarily due to a higher incentive compensation accrual, higher consulting costs and growth in the number of employees, partially offset by a severance charge in the second quarter of 2020, and lower building operations and maintenance costs in 2021.
2021 Compared with 2019
General and administrative costs in the third quarter of 2021 increased by $14.4 million, or 28.8%, compared with the third quarter of 2019, The increase is primarily due to growth in the number of employees, mainlythe inclusion of $6.9 million in thegeneral and administrative costs from The Athletic, higher building operations and maintenance costs, as well as higher severance expense. Technology costs in general and administrative, which include costs related to enterprise technology and human resources departments in support of employee growth in other areas, a higher incentive compensation accrual, stock price appreciation on stock-based awards and higher consulting costs.
General and administrative costsinformation security, increased 23.1% to $48.1 million compared with $39.1 million in the first nine months of 2021 increased by $31.2 million, or 20.5%, compared with the first nine months of 2019, largely due to the factors identified above.2021.
Depreciation and Amortization
2021 Compared with 2020
Depreciation and amortization costs in the third quarter and first nine months of 2021 decreased $1.22022 increased $7.4 million, or 7.9%51.9%, and $2.8$17.6 million, or 6.1%40.5%, respectively, compared with the same prior-year periods. The decrease in both periodsincrease is due to lower depreciationThe Athletic intangible assets amortization of software assets.
2021 Compared with 2019
Depreciationapproximately $6.8 million and amortization costs$18.2 million in the third quarter and first nine months of 2021 decreased $1.1 million, or 7.3%,2022, respectively, and $2.0 million, or 4.4%, respectively, compared with the same periods in 2019. The decrease in both periods is due tohigher equipment depreciation, partially offset by lower depreciation of software assets, partially offset by equipmentassets. See Notes 5 and building projects that were placed in service.
See Note 7 of the Notes to the Condensed Consolidated Financial Statements for additional information regarding the estimated aggregate amortization expense resulting from The Athletic acquisition and other items.items, respectively.
Segment Information
On February 1, 2022, we acquired The Athletic, and the results of The Athletic have been included in our Condensed Consolidated Financial Statements beginning February 1, 2022. Beginning in the first quarter of 2022, we have two reportable segments: The New York Times Group and The Athletic. Management, including our President and Chief Executive Officer (who is our Chief Operating Decision Maker), uses adjusted operating profit by segment (as defined below) in assessing performance and allocating resources. We include in our presentation revenues and adjusted operating costs (as defined below) to arrive at adjusted operating profit by segment. See “Non-GAAP Financial Measures” below for more information on adjusted operating costs and adjusted operating profit.
Subscription revenue from our digital subscription package (or “bundle”) is allocated to The New York Times Group and The Athletic. We allocate revenue first to our digital news product based on its list price and then the remaining bundle revenue is allocated to the other products in the bundle, including The Athletic, based on their relative list price. The direct variable expenses associated with the bundle, which include credit card fees, third party fees and sales taxes, are allocated to The New York Times Group and The Athletic based on a historical actual percentage of these costs to bundle revenue.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Nine Months Ended |
(In thousands) | | September 25, 2022 | | September 26, 2021 | | % Change | | September 25, 2022 | | September 26, 2021 | | % Change |
Revenues | | | | | | | | | | | | |
The New York Times Group | | $ | 523,570 | | | $ | 509,103 | | | 2.8 | % | | $ | 1,584,970 | | | $ | 1,480,645 | | | 7.0 | % |
The Athletic | | 24,110 | | | — | | | * | | 55,815 | | | — | | | * |
Total revenues | | $ | 547,680 | | | $ | 509,103 | | | 7.6 | % | | $ | 1,640,785 | | | $ | 1,480,645 | | | 10.8 | % |
Adjusted operating costs | | | | | | | | | | | | |
The New York Times Group | | $ | 445,020 | | | $ | 444,050 | | | 0.2 | % | | $ | 1,349,880 | | | $ | 1,254,582 | | | 7.6 | % |
The Athletic | | 33,683 | | | — | | | * | | 84,806 | | | — | | | * |
Total adjusted operating costs | | $ | 478,703 | | | $ | 444,050 | | | 7.8 | % | | $ | 1,434,686 | | | $ | 1,254,582 | | | 14.4 | % |
Adjusted operating profit | | | | | | | | | | | | |
The New York Times Group | | $ | 78,550 | | | $ | 65,053 | | | 20.7 | % | | $ | 235,090 | | | $ | 226,063 | | | 4.0 | % |
The Athletic | | (9,573) | | | — | | | * | | (28,991) | | | — | | | * |
Total adjusted operating profit | | $ | 68,977 | | | $ | 65,053 | | | 6.0 | % | | $ | 206,099 | | | $ | 226,063 | | | (8.8) | % |
Adjusted operating profit margin % - New York Times Group | | 15.0 | % | | 12.8 | % | | 220 bps | | 14.8 | % | | 15.3 | % | | (50) bps |
* Represents a change equal to or in excess of 100% or not meaningful. | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues detail by segment | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Nine Months Ended |
(In thousands) | | September 25, 2022 | | September 26, 2021 | | % Change | | September 25, 2022 | | September 26, 2021 | | % Change |
The New York Times Group | | | | | | | | | | | | |
Subscription | | $ | 360,997 | | | $ | 342,609 | | | 5.4 | % | | $ | 1,089,218 | | | $ | 1,010,910 | | | 7.7 | % |
Advertising | | 108,134 | | | 110,887 | | | (2.5) | % | | 337,455 | | | 320,777 | | | 5.2 | % |
Other | | 54,439 | | | 55,607 | | | (2.1) | % | | 158,297 | | | 148,958 | | | 6.3 | % |
Total | | $ | 523,570 | | | $ | 509,103 | | | 2.8 | % | | $ | 1,584,970 | | | $ | 1,480,645 | | | 7.0 | % |
The Athletic | | | | | | | | | | | | |
Subscription | | $ | 21,675 | | | $ | — | | | * | | $ | 49,052 | | | $ | — | | | * |
Advertising | | 2,333 | | | — | | | * | | 6,661 | | | — | | | * |
Other | | 102 | | | — | | | * | | 102 | | | — | | | * |
Total | | $ | 24,110 | | | $ | — | | | * | | $ | 55,815 | | | $ | — | | | * |
The New York Times Company | | | | | | | | | | | | |
Subscription | | $ | 382,672 | | | $ | 342,609 | | | 11.7 | % | | $ | 1,138,270 | | | $ | 1,010,910 | | | 12.6 | % |
Advertising | | 110,467 | | | 110,887 | | | (0.4) | % | | 344,116 | | | 320,777 | | | 7.3 | % |
Other | | 54,541 | | | 55,607 | | | (1.9) | % | | 158,399 | | | 148,958 | | | 6.3 | % |
Total | | $ | 547,680 | | | $ | 509,103 | | | 7.6 | % | | $ | 1,640,785 | | | $ | 1,480,645 | | | 10.8 | % |
* Represents a change equal to or in excess of 100% or not meaningful. | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted operating costs (operating costs before depreciation and amortization, severance and multiemployer pension plan withdrawal costs) details by segment |
| | For the Quarters Ended | | For the Nine Months Ended |
(In thousands) | | September 25, 2022 | | September 26, 2021 | | % Change | | September 25, 2022 | | September 26, 2021 | | % Change |
The New York Times Group | | | | | | | | | | | | |
Cost of revenue (excluding depreciation and amortization) | | $ | 274,945 | | | $ | 256,978 | | | 7.0 | % | | $ | 824,405 | | | $ | 759,333 | | | 8.6 | % |
Sales and marketing | | 57,326 | | | 83,767 | | | (31.6) | % | | 189,970 | | | 197,475 | | | (3.8) | % |
Product development | | 46,273 | | | 40,638 | | | 13.9 | % | | 138,225 | | | 119,280 | | | 15.9 | % |
Adjusted general and administrative (1) | | 66,476 | | | 62,667 | | | 6.1 | % | | 197,280 | | | 178,494 | | | 10.5 | % |
Total | | $ | 445,020 | | | $ | 444,050 | | | 0.2 | % | | $ | 1,349,880 | | | $ | 1,254,582 | | | 7.6 | % |
The Athletic | | | | | | | | | | | | |
Cost of revenue (excluding depreciation and amortization) | | $ | 19,911 | | | $ | — | | | * | | $ | 52,399 | | | $ | — | | | * |
Sales and marketing | | 7,406 | | | — | | | * | | 15,119 | | | — | | | * |
Product development | | 4,201 | | | — | | | * | | 10,504 | | | — | | | * |
Adjusted general and administrative (2) | | 2,165 | | | — | | | * | | 6,784 | | | — | | | * |
Total | | $ | 33,683 | | | $ | — | | | * | | $ | 84,806 | | | $ | — | | | * |
The New York Times Company | | | | | | | | | | | | |
Cost of revenue (excluding depreciation and amortization) | | $ | 294,856 | | | $ | 256,978 | | | 14.7 | % | | $ | 876,804 | | | $ | 759,333 | | | 15.5 | % |
Sales and marketing | | 64,732 | | | 83,767 | | | (22.7) | % | | 205,089 | | | 197,475 | | | 3.9 | % |
Product development | | 50,474 | | | 40,638 | | | 24.2 | % | | 148,729 | | | 119,280 | | | 24.7 | % |
Adjusted general and administrative (1) | | 68,641 | | | 62,667 | | | 9.5 | % | | 204,064 | | | 178,494 | | | 14.3 | % |
Total | | $ | 478,703 | | | $ | 444,050 | | | 7.8 | % | | $ | 1,434,686 | | | $ | 1,254,582 | | | 14.4 | % |
(1) Excludes severance of $2.0 million and $4.5 million for the quarter and nine months ended September 25, 2022, respectively, and multiemployer pension withdrawal costs of $1.3 million and $3.7 million for the quarter and nine months ended September 25, 2022, respectively. Excludes severance of $0.5 million and $0.9 million for the quarter and nine months ended September 26, 2021, respectively, and multiemployer pension withdrawal costs of $1.3 million and $3.9 million for the quarter and nine months ended September 26, 2021, respectively. |
(2) Excludes $0.2 million of severance for the nine months ended September 25, 2022. |
* Represents a change equal to or in excess of 100% or not meaningful. | | | | | | |
The New York Times Group
The New York Times Group revenues grew 2.8% in the third quarter of 2022 to $523.6 million from $509.1 million in the third quarter of 2021 and grew 7.0% in the first nine months of 2022 to $1.6 billion from $1.5 billion in the first nine months of 2021. Subscription revenues increased 5.4% to $361.0 million from $342.6 million in the third quarter of 2021 and increased 7.7% to $1.1 billion from $1.0 billion in the first nine months of 2021, primarily due to growth in subscription revenues from digital-only products. Advertising revenues decreased 2.5% to $108.1 million from $110.9 million in the third quarter of 2021 due to lower print advertising revenues. Advertising revenues increased 5.2% to $337.5 million from $320.8 million in the first nine months of 2021 primarily due to growth in print advertising.
The New York Times Group adjusted operating costs grew 0.2% in the third quarter of 2022 to $445.0 million from $444.1 million in the third quarter of 2021 and grew 7.6% in the first nine months of 2022 to $1.35 billion from $1.25 billion in the first nine months of 2021. The increase in costs in the third quarter and in the first nine months of 2022 was primarily related to growth in the number of employees, partially offset by lower media expenses.
The New York Times Group adjusted operating profit increased 20.7% in the third quarter of 2022 to $78.6 million from $65.1 million in the third quarter of 2021 and increased 4.0% in the first nine months of 2022 to $235.1 million from $226.1 million in the first nine months of 2021, as higher revenues more than offset higher costs.
The Athletic
The Athletic revenues in the third quarter and first nine months (from February 1, 2022) of 2022 totaled $24.1 million and $55.8 million, respectively, primarily from subscription revenues.
The Athletic adjusted operating costs totaled $33.7 million and $84.8 million for the third quarter and first nine months (from February 1, 2022) of 2022, respectively, largely from cost of revenue, which was primarily related to journalism costs.
The Athleticadjusted operating loss totaled $9.6 million and $29.0 million for the third quarter and first nine months (from February 1, 2022) of 2022, respectively.
NON-OPERATING ITEMS
Other Components of Net Periodic Benefit Costs
See Note 9 of the Notes to the Condensed Consolidated Financial Statements for information regarding other components of net periodic benefit costs.
Interest Income and other, net
See Note 7 of the Notes to the Condensed Consolidated Financial Statements for information regarding interest income and other, net.
Income Taxes
See Note 10 of the Notes to the Condensed Consolidated Financial Statements for information regarding income taxes.
Non-GAAP Financial MeasuresNON-GAAP FINANCIAL MEASURES
We have included in this report certain supplemental financial information derived from consolidated financial information but not presented in our financial statements prepared in accordance with GAAP. Specifically, we have referred to the following non-GAAP financial measures in this report:
•diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and the impact of special items (or adjusted diluted earnings per share from continuing operations);
•operating profit before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit);, and expressed as a percentage of revenues, adjusted operating profit margin; and
•operating costs before depreciation, amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs).
The special items in 2022 consisted of:
•a $7.1 million gain ($5.2 million or $0.03 per share after tax) in the third quarter related to a multiemployer pension liability adjustment;
•a $34.2 million gain ($24.9 million or $0.15 per share after tax) in the second quarter related to an agreement to lease and subsequently sell approximately four acres of land at our printing and distribution facility in College Point, N.Y. The gain is included in Interest income and other, net in our Condensed Consolidated Statements of Operations; and
•a $34.7 million pre-tax charge ($25.4 million or $0.15 per share after tax) in the first quarter related to the acquisition of The Athletic. Acquisition-related costs primarily include expenses paid in connection with the acceleration of The Athletic stock options, and legal, accounting, financial advisory and integration planning expenses.
The special items in 2021 consisted of:
•a $27.2 million gain ($19.8 million after tax or $0.12 per share)share after tax) in the third quarter related to a non-marketable equity investment transaction. The gain consists of a $15.2 million realized gain due to the partial sale of the investment and an $11.9 million unrealized gain due to the mark to market of the remaining investment, and is included in Interest income and other, net in our Condensed Consolidated Statements of Operations; and
•a $3.8 million charge ($2.8 million or $0.02 per share after tax) in the second quarter resulting from the termination of a tenant’s lease in theour Company Headquarters.
The special item in 2020 consisted of:
•a $10.1 million gain ($7.4 million after tax or $0.04 per share) in the first quarter related to a non-marketable equity investment transaction. The gain consists of a $2.5 million realized gain due to the partial sale of the investment and a $7.6 million unrealized gain due to the mark to market of the remaining investment, and is included in Interest income and other, net in our Condensed Consolidated Statements of Operations.
The special items in 2019 consisted of:
•a $4.0 million charge ($3.0 million after tax or $0.02 per share) in the third quarter related to restructuring charges, including impairment and severance charges related to the closure of our digital marketing agency, HelloSociety, LLC; and
•a $2.0 million gain ($1.5 million after tax or $0.01 per share) in the third quarter from a multiemployer pension plan liability adjustment.
We have included these non-GAAP financial measures because management reviews them on a regular basis and uses them to evaluate and manage the performance of our operations. We believe that, for the reasons outlined below, these non-GAAP financial measures provide useful information to investors as a supplement to reported diluted earnings/(loss) per share from continuing operations, operating profit/(loss) and operating costs. However, these measures should be evaluated only in
conjunction with the comparable GAAP financial measures and should not be viewed as alternative or superior measures of GAAP results.
Adjusted diluted earnings per share provides useful information in evaluating the Company’s period-to-period performance because it eliminates items that the Company does not consider to be indicative of earnings from ongoing operating activities. Adjusted operating profit isand adjusted operating profit margin are useful in evaluating the ongoing performance of the Company’s businesses as it excludesthey exclude the significant non-cash impact of depreciation and amortization as well as items not indicative of ongoing operating activities. Total operating costs include depreciation, amortization, severance and multiemployer pension plan withdrawal costs. Total operating costs, excluding these items, provideprovides investors with helpful supplemental information on the Company’s underlying operating costs that is used by management in its financial and operational decision-making.
Management considers special items, which may include impairment charges, pension settlement charges, acquisition-related costs and other items that arise from time to time, to be outside the ordinary course of our operations. Management believes that excluding these items provides a better understanding of the underlying trends in the Company’s operating performance and allows more
accurate comparisons of the Company’s operating results to historical performance. In addition, management excludes severance costs, which may fluctuate significantly from quarter to quarter, because it believes these costs do not necessarily reflect expected future operating costs and do not contribute to a meaningful comparison of the Company’s operating results to historical performance.
Included in our non-GAAP financial measures are non-operating retirement costs which are primarily tied to financial market performance and changes in market interest rates and investment performance. Management considers non-operating retirement costs to be outside the performance of the business and believes that presenting adjusted diluted earnings per share from continuing operations excluding non-operating retirement costs and presenting adjusted operating results excluding multiemployer pension plan withdrawal costs, in addition to the Company’s GAAP diluted earnings per share from continuing operations and GAAP operating results, provide increased transparency and a better understanding of the underlying trends in the Company’s operating business performance.
Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are set out in the tables below.
| Reconciliation of diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and special items (or adjusted diluted earnings per share from continuing operations) | Reconciliation of diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and special items (or adjusted diluted earnings per share from continuing operations) | Reconciliation of diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and special items (or adjusted diluted earnings per share from continuing operations) |
| | For the Quarters Ended | | For the Nine Months Ended | | | For the Quarters Ended | | For the Nine Months Ended | |
| | September 26, 2021 | | September 27, 2020 | | % Change | | September 26, 2021 | | September 27, 2020 | | % Change | | September 25, 2022 | | September 26, 2021 | | % Change | | September 25, 2022 | | September 26, 2021 | | % Change | |
Diluted earnings per share from continuing operations | Diluted earnings per share from continuing operations | | $ | 0.32 | | | $ | 0.20 | | | 60.0 | % | | $ | 0.89 | | | $ | 0.54 | | | 64.8 | % | Diluted earnings per share from continuing operations | | $ | 0.22 | | | $ | 0.32 | | | (31.3) | % | | $ | 0.62 | | | $ | 0.89 | | | (30.3) | % | |
Add: | Add: | | Add: | | |
Severance | Severance | | — | | | — | | | — | | | 0.01 | | | 0.04 | | | (75.0) | % | Severance | | 0.01 | | | — | | | * | | 0.03 | | | 0.01 | | | * | |
Non-operating retirement costs: | Non-operating retirement costs: | | Non-operating retirement costs: | | |
Multiemployer pension plan withdrawal costs | Multiemployer pension plan withdrawal costs | | 0.01 | | | 0.01 | | | — | | | 0.02 | | | 0.02 | | | — | | Multiemployer pension plan withdrawal costs | | 0.01 | | | 0.01 | | | — | | | 0.02 | | | 0.02 | | | — | | |
Other components of net periodic benefit costs | Other components of net periodic benefit costs | | 0.02 | | | 0.01 | | | * | | 0.05 | | | 0.04 | | | 25.0 | % | Other components of net periodic benefit costs | | 0.01 | | | 0.02 | | | (50.0) | % | | 0.03 | | | 0.05 | | | (40.0) | % | |
Special items: | Special items: | | Special items: | | |
Acquisition-related costs | | Acquisition-related costs | | — | | | — | | | — | | | 0.21 | | | — | | | * | |
Lease termination charge | | Lease termination charge | | — | | | — | | | — | | | — | | | 0.02 | | | * | |
| Gain from non-marketable equity security | | (0.16) | | | — | | | * | | (0.16) | | | (0.06) | | | * | |
Lease termination charge | | — | | | — | | | — | | | 0.02 | | | — | | | * | |
Gain from non-marketable equity investment | | Gain from non-marketable equity investment | | — | | | (0.16) | | | * | | — | | | (0.16) | | | * | |
Land sale | | Land sale | | — | | | — | | | — | | | (0.20) | | | — | | | * | |
Gain from pension liability adjustment | | Gain from pension liability adjustment | | (0.04) | | | — | | | * | | (0.04) | | | — | | | * | |
Income tax expense of adjustments | Income tax expense of adjustments | | 0.04 | | | (0.01) | | | * | | 0.02 | | | (0.01) | | | * | Income tax expense of adjustments | | — | | | 0.04 | | | * | | (0.01) | | | 0.02 | | | * | |
Adjusted diluted earnings per share from continuing operations(1) | Adjusted diluted earnings per share from continuing operations(1) | | $ | 0.23 | | | $ | 0.22 | | | 4.5 | % | | $ | 0.84 | | | $ | 0.57 | | | 47.4 | % | Adjusted diluted earnings per share from continuing operations(1) | | $ | 0.21 | | | $ | 0.23 | | | (8.7) | % | | $ | 0.65 | | | $ | 0.84 | | | (22.6) | % | |
(1)Amounts may not add due to rounding.
* Represents a change equal to or in excess of 100% or not meaningful.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit) | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Nine Months Ended | | | | | | | | | | | | | | |
| | September 25, 2022 | | September 26, 2021 | | % Change | | September 25, 2022 | | September 26, 2021 | | % Change | | | | | | | | | | | | | | |
Operating profit | | $ | 51,015 | | | $ | 48,976 | | 4.2 | % | | $ | 108,960 | | $ | 173,919 | | (37.4) | % | | | | | | | | | | | | | | |
Add: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization | | 21,760 | | | 14,326 | | 51.9 | % | | 61,150 | | 43,529 | | 40.5 | % | | | | | | | | | | | | | | |
Severance | | 2,010 | | | 476 | | * | | 4,670 | | 882 | | * | | | | | | | | | | | | | | |
Multiemployer pension plan withdrawal costs | | 1,319 | | | 1,275 | | 3.5 | % | | 3,734 | | 3,902 | | (4.3) | % | | | | | | | | | | | | | | |
Special items: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Acquisition-related costs | | — | | | — | | — | | | 34,712 | | — | | * | | | | | | | | | | | | | | |
Lease termination charge | | — | | | — | | * | | — | | 3,831 | | * | | | | | | | | | | | | | | |
Gain from pension liability adjustment | | (7,127) | | | — | | * | | (7,127) | | — | | * | | | | | | | | | | | | | | |
Adjusted operating profit | | $ | 68,977 | | | $ | 65,053 | | 6.0 | % | | $ | 206,099 | | $ | 226,063 | | (8.8) | % | | | | | | | | | | | | | | |
Divided by: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue | | 547,680 | | | 509,103 | | 7.6 | % | | 1,640,785 | | 1,480,645 | | 10.8 | % | | | | | | | | | | | | | | |
Operating profit margin | | 9.3 | % | | 9.6 | % | | (30) bps | | 6.6 | % | | 11.7 | % | | (510) bps | | | | | | | | | | | | | | |
Adjusted operating profit margin | | 12.6 | % | | 12.8 | % | | (20) bps | | 12.6 | % | | 15.3 | % | | (270) bps | | | | | | | | | | | | | | |
* Represents a change equal to or in excess of 100% or not meaningful. | | | | | | | | | | |
34
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of operating costs before depreciation and amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs) | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Nine Months Ended | | | | | | | | | | | | | | |
| | September 25, 2022 | | September 26, 2021 | | % Change | | September 25, 2022 | | September 26, 2021 | | % Change | | | | | | | | | | | | | | |
Operating costs | | $ | 503,792 | | | $ | 460,127 | | | 9.5 | % | | $ | 1,504,240 | | | $ | 1,302,895 | | | 15.5 | % | | | | | | | | | | | | | | |
Less: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization | | 21,760 | | | 14,326 | | | 51.9 | % | | 61,150 | | | 43,529 | | | 40.5 | % | | | | | | | | | | | | | | |
Severance | | 2,010 | | | 476 | | | * | | 4,670 | | | 882 | | | * | | | | | | | | | | | | | | |
Multiemployer pension plan withdrawal costs | | 1,319 | | | 1,275 | | | 3.5 | % | | 3,734 | | | 3,902 | | | (4.3) | % | | | | | | | | | | | | | | |
Adjusted operating costs | | $ | 478,703 | | | $ | 444,050 | | | 7.8 | % | | $ | 1,434,686 | | | $ | 1,254,582 | | | 14.4 | % | | | | | | | | | | | | | | |
* Represents a change equal to or in excess of 100% or not meaningful. | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit) |
| | | | | | | | | | |
| | For the Quarters Ended |
| | September 26, 2021 | | September 27, 2020 | | 2021 vs 2020 % Change | | September 29, 2019 | | 2021 vs 2019 % Change |
Operating profit | | $ | 48,976 | | | $ | 39,596 | | | 23.7 | % | | $ | 25,087 | | | 95.2 | % |
Add: | | | | | | | | | | |
Depreciation and amortization | | 14,326 | | | 15,552 | | | (7.9) | % | | 15,450 | | | (7.3) | % |
Severance | | 476 | | | — | | | * | | 367 | | | 29.7 | % |
Multiemployer pension plan withdrawal costs | | 1,275 | | | 1,376 | | | (7.3) | % | | 1,204 | | | 5.9 | % |
Special items: | | | | | | | | | | |
| | | | | | | | | | |
Restructuring charge | | — | | | — | | | — | | | 4,008 | | | * |
Gain from pension liability adjustment | | — | | | — | | | — | | | (2,045) | | | * |
Adjusted operating profit | | $ | 65,053 | | | $ | 56,524 | | | 15.1 | % | | $ | 44,071 | | | 47.6 | % |
| | | | | | | | | | |
* Represents a change equal to or in excess of 100% or not meaningful. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of operating costs before depreciation and amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs) |
| | | | | | | | | | |
| | For the Quarters Ended |
| | September 26, 2021 | | September 27, 2020 | | 2021 vs 2020 % Change | | September 29, 2019 | | 2021 vs 2019 % Change |
Operating costs | | $ | 460,127 | | | $ | 387,299 | | | 18.8 | % | | $ | 401,451 | | | 14.6 | % |
Less: | | | | | | | | | | |
Depreciation and amortization | | 14,326 | | | 15,552 | | | (7.9) | % | | 15,450 | | | (7.3) | % |
Severance | | 476 | | | — | | | * | | 367 | | | 29.7 | % |
Multiemployer pension plan withdrawal costs | | 1,275 | | | 1,376 | | | (7.3) | % | | 1,204 | | | 5.9 | % |
Adjusted operating costs | | $ | 444,050 | | | $ | 370,371 | | | 19.9 | % | | $ | 384,430 | | | 15.5 | % |
| | | | | | | | | | |
* Represents a change equal to or in excess of 100% or not meaningful. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit) |
| | | | | | | | | | |
| | For the Nine Months Ended |
| | September 26, 2021 | | September 27, 2020 | | 2021 vs 2020 % Change | | September 29, 2019 | | 2021 vs 2019 % Change |
Operating profit | | $ | 173,919 | | | $ | 95,722 | | | 81.7 | % | | $ | 97,617 | | | 78.2 | % |
Add: | | | | | | | | | | |
Depreciation and amortization | | 43,529 | | | 46,368 | | | (6.1) | % | | 45,548 | | | (4.4) | % |
Severance | | 882 | | | 6,675 | | | (86.8) | % | | 2,441 | | | (63.9) | % |
Multiemployer pension plan withdrawal costs | | 3,902 | | | 4,198 | | | (7.1) | % | | 4,454 | | | (12.4) | % |
Special items: | | | | | | | | | | |
Lease termination charge | | 3,831 | | | — | | | * | | — | | | * |
Restructuring charge | | — | | | — | | | — | | | 4,008 | | | * |
Gain from pension liability adjustment | | — | | | — | | | — | | | (2,045) | | | * |
Adjusted operating profit | | $ | 226,063 | | | $ | 152,963 | | | 47.8 | % | | $ | 152,023 | | | 48.7 | % |
| | | | | | | | | | |
* Represents a change equal to or in excess of 100% or not meaningful. |
Supplementary Information | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of operating costs before depreciation and amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs) |
| | | | | | | | | | |
| | For the Nine Months Ended |
| | September 26, 2021 | | September 27, 2020 | | 2021 vs 2020 % Change | | September 29, 2019 | | 2021 vs 2019 % Change |
Operating costs | | $ | 1,302,895 | | | $ | 1,178,559 | | | 10.5 | % | | $ | 1,204,241 | | | 8.2 | % |
Less: | | | | | | | | | | |
Depreciation and amortization | | 43,529 | | | 46,368 | | | (6.1) | % | | 45,548 | | | (4.4) | % |
Severance | | 882 | | | 6,675 | | | (86.8) | % | | 2,441 | | | (63.9) | % |
Multiemployer pension plan withdrawal costs | | 3,902 | | | 4,198 | | | (7.1) | % | | 4,454 | | | (12.4) | % |
Adjusted operating costs | | $ | 1,254,582 | | | $ | 1,121,318 | | | 11.9 | % | | $ | 1,151,798 | | | 8.9 | % |
| | | | | | | | | | |
* Represents a change equal to or in excess of 100% or not meaningful. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning with the second quarter of 2022, the Company has updated its rounding methodology for subscriptions (including net subscriptions additions), subscribers (including net subscriber additions) and subscriber-related metrics (other than ARPU) and will round to the nearest ten thousand instead of the nearest thousand as it had previously been presenting.
In addition, starting with the second quarter of 2022, the Company has made a change in its methodology for counting subscribers and subscriptions to The Athletic to exclude free trials (which are primarily long-dated (6-12 months) and given as part of its business development partnerships).
In addition, during the second quarter of 2022, the Company identified certain nonmaterial errors in previously released subscription, subscriber and subscriber-related metrics data for the periods presented below.
As a result, our computation of the number of The Athletic subscribers and subscriptions as of the acquisition date each decreased by 72,000, as reported in our second quarter results.
The below supplementary tables, which were included in our second quarter results, update certain historical disclosures for the first quarters of 2021 and 2022 and the fourth quarter of 2021 to reflect the changes in methodology and the error corrections described above. The adjustments had no impact on the Company’s consolidated balance sheets, consolidated statements of comprehensive income (loss) or the consolidated statements of cash flows for any of these periods. The impact of the items noted above on our historical disclosures is as follows: |
| | | | | | | | | | | | | | | | | | |
The following table summarizes the adjustments to digital subscribers as of the end of the first quarters of 2022 and 2021, and fourth quarter of 2021: |
| | | | | | | | | | | | | | | | | | |
| | First Quarter | | Fourth Quarter |
| | 2022 | | | | 2022 | | 2021 | | | | 2021 | | 2021 | | | | 2021 |
| | As Filed | | Adj | | Adjusted | | As Filed | | Adj | | Adjusted | | As Filed | | Adj | | Adjusted |
Digital-only subscribers(1) | | 8,328 | | | (98) | | | 8,230 | | | 6,101 | | | (18) | | | 6,083 | | | 6,840 | | | (57) | | | 6,783 | |
(1) Refer to the corresponding footnotes in the main section of the Results of Operations. |
| | | | | | | | | | | | | | | | | | | | |
The following table summarizes the adjustments to digital subscriptions as of the end of the first quarter of 2022: |
| | | | | | |
| | First Quarter 2022 |
| | As Filed | | Adj | | Adjusted |
Digital-only subscriptions(1) | | 9,620 | | | (41) | | | 9,579 | |
(1) Refer to the corresponding footnotes in the main section of the Results of Operations. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The following table summarizes the adjustments to supplementary subscriber metrics as of the end of the first quarters of 2022 and 2021, and fourth quarter of 2021: |
| | | | | | | | | | | | | | | | | | |
| | First Quarter | | Fourth Quarter |
| | 2022 | | | | 2022 | | 2021 | | | | 2021 | | 2021 | | | | 2021 |
| | As Filed | | Adj | | Adjusted | | As Filed | | Adj | | Adjusted | | As Filed | | Adj | | Adjusted |
Digital-only subscriber ARPU (1) | | $ | 9.04 | | | $ | 0.09 | | | $ | 9.13 | | | $ | 9.15 | | | $ | 0.03 | | | $ | 9.18 | | | $ | 9.55 | | | $ | 0.05 | | | $ | 9.60 | |
Total multiproduct subscribers (1)(2) | | 2,569 | | | (3) | | | 2,566 | | | 2,100 | | | 3 | | | 2,103 | | | 2,351 | | | — | | | 2,351 | |
Digital-only subscribers with News (1) | | 6,150 | | | (49) | | | 6,101 | | | 5,290 | | | (20) | | | 5,270 | | | 5,880 | | | (54) | | | 5,826 | |
Subscribers with The Athletic (1) | | 1,257 | | | (41) | | | 1,216 | | | — | | | — | | | — | | | — | | | — | | | — | |
(1) Refer to the corresponding footnotes in the main section of the Results of Operations. |
(2) Subscribers with paid subscriptions that include access to two or more of the Company’s products, including through separate standalone subscriptions; a digital bundle; or a print home-delivery subscription (which includes access to our digital news product, as well as The Athletic and our Games, Cooking and Wirecutter products). This metric is currently called “Digital-only bundle and multiproduct subscribers” and excludes subscribers with a print home-delivery subscription. |
LIQUIDITY AND CAPITAL RESOURCES
We believe our cash balance and cash provided by operations, in combination with other sources of cash, will be sufficient to meet our financing needs over the next twelve months. Although there is uncertainty related to the anticipated continued effect of the Covid-19 pandemic on our business (as referenced above and in “Item 1A — Risk Factors” in our Annual Report on Form 10-K for the year ended December 27, 2020), given the strength of our balance sheet and based on the information currently available to us, we do not expect the impact of the pandemic to have a material effect on our liquidity position. As of September 26, 2021,25, 2022, we had cash, cash equivalents and short- and long-term marketable securities of $1.04 billion.$468.6 million. Our cash and marketable securities balances between the end of 2020December 26, 2021, and September 26, 2021, increased25, 2022, decreased primarily due to cash proceeds from operating activitiesconsideration paid for the acquisition of The Athletic and proceeds fromannual incentive compensation payments made in the sale of investments, partially offset by dividend payments, capital expenditures and share-based compensation tax withholding.first quarter.
We have paid quarterly dividends on the Class A and Class B Common Stock each quarter since late 2013. In February 2021,2022, the Board of Directors approved an increase in the quarterly dividend to $0.07$0.09 per share, which was paid in April 2021. In2022. On June and September 2021,29, 2022, the Board of Directors declared a quarterly dividendsdividend of $0.07$0.09 per share on the Class A and Class B Common Stock, which werewas paid in July 2022. On September 30, 2022, the Board of Directors declared a quarterly dividend of $0.09 per share on the Class A and Class B Common Stock, which was paid in October 2021.2022. We currently expect to continue to pay comparable cash dividends in the future, although changes in our dividends will be considered by our Board of Directors in light of our earnings, capital requirements, financial condition and other factors considered relevant.
In February 2022, the Board of Directors approved a $150.0 million Class A Common Stock repurchase program. The authorization provides that Class A shares may be purchased from time to time as market conditions warrant, through open market purchases, privately negotiated transactions or other means, including Rule 10b5-1 trading plans. We expect to repurchase shares primarily to offset the impact of dilution from our equity compensation program, but subject to market conditions and other factors, we may also make opportunistic repurchases to reduce share count. There is no expiration date with respect to this authorization. As of September 25, 2022, we had repurchased 2,324,708 shares for approximately $79.8 million (excluding commissions) under this authorization. As of October 28, 2022, we had repurchased 2,778,380 shares for approximately $93.1 million (excluding commissions) and approximately $56.9 million remained under this authorization.
Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminates the option to deduct research and development expenditures immediately in the year incurred and instead requires taxpayers to capitalize and amortize such expenditures over five years. Although it is possible that Congress may defer, modify, or repeal this provision, potentially with retroactive effect, we have no assurance that Congress will take any action with respect to this provision. If the 2022 effective date remains in place, our initial assessment is that our cash from operations will be negatively impacted by approximately $50 million in 2022 and our net deferred tax assets will increase by a similar amount. The actual impact on fiscal 2022 cash from operations will depend on the amount of research and development costs we incur, on whether Congress modifies or repeals this provision, and on whether new guidance and interpretive rules are issued by the U.S. Treasury, among other factors.
Capital Resources
Sources and Uses of Cash
Cash flows provided by/(used in) by category were as follows:
| | | For the Six Months Ended | | | For the Nine Months Ended | |
(In thousands) | (In thousands) | | September 26, 2021 | | September 27, 2020 | | % Change | (In thousands) | | September 25, 2022 | | September 26, 2021 | | % Change |
Operating activities | Operating activities | | $ | 209,557 | | | $ | 206,683 | | | 1.4 | % | Operating activities | | $ | 85,024 | | | $ | 209,557 | | | (59.4) | % |
Investing activities | Investing activities | | $ | (129,685) | | | $ | (187,264) | | | (30.7) | % | Investing activities | | $ | (79,299) | | | $ | (129,685) | | | (38.9) | % |
Financing activities | Financing activities | | $ | (42,954) | | | $ | (35,671) | | | 20.4 | % | Financing activities | | $ | (133,239) | | | $ | (42,954) | | | 210.2 | % |
Operating Activities
Cash from operating activities is generated by cash receipts from subscriptions, advertising sales and other revenue. Operating cash outflows include payments for employee compensation, pension and other benefits, raw materials, marketing expenses and income taxes.
Net cash provided by operating activities increaseddecreased in the first nine months of 20212022 compared with the same prior-year period primarily due to higher net income adjusted for non-cash items and lower cash payments madefor incentive compensation, higher cash tax payments due to settle accounts payable, accrued payrolla provision in the Tax Cuts and other liabilities, partially offset byJobs Act of 2017 deferring the deduction for research and development expenditures, a payment related to the acceleration of Athletic stock options in connection with the acquisition, lower cash collections from accounts receivable, an increase in other assetsnet income and lower cash payments received from prepaid subscriptions.subscriptions, partially offset by higher cash collections from accounts receivable.
Investing Activities
Cash from investing activities generally includes proceeds from marketable securities that have matured and the sale of assets, investments or a business. Cash used in investing activities generally includes purchases of marketable securities, payments for capital projects and acquisitions of new businesses and investments.
Net cash used in investing activities in the first nine months of 20212022 was primarily related to $129.0$515.3 million in consideration paid for acquisitions, net purchases of marketable securitiescash acquired, and $23.8$27.8 million in capital expenditures payments, partially offset by $20.6$463.2 million related to a non-marketable equity investment transaction.net maturities of marketable securities.
Financing Activities
Cash from financing activities generally includes borrowings under third-party financing arrangements, the issuance of long-term debt and funds from stock option exercises. Cash used in financing activities generally includes the repayment of amounts outstanding under third-party financing arrangements, the payment of dividends, the payment of long-term debt and finance lease obligations and share-based compensation tax withholding.
Net cash used in financing activities in the first nine months of 20212022 was primarily related to share repurchases of $79.8 million (excluding commissions), dividend payments of $33.6$41.9 million and share-based compensation tax withholding payments of $10.9$9.8 million.
Restricted Cash
We were required to maintain $14.3$13.7 million of restricted cash as of September 26, 2021,25, 2022, and $15.9$14.3 million as of December 27, 2020,26, 2021, substantially all of which is set aside to collateralize workers’ compensation obligations.
Capital Expenditures
Capital expenditures totaled approximately $26$29 million and $25$26 million in the first nine months of 20212022 and 2020,2021, respectively. The increase in capital expenditures in 2022 was primarily driven by improvements at ourin the Company Headquarters and newsroom bureaus, partially offset by lower expenditures related to improvements at our College Point, New York, printing and distribution facility and lower expenditures on computer hardware. The improvements in our Company Headquarterswhich are intended to address growth in the number of employees and to enhance technologies that support our transition to hybrid work with employees working both from the office and remotely. The cash payments related to capital expenditures totaled approximately $24$28 million and $29$24 million in the first nine months of 20212022 and 2020,2021, respectively.
Third-Party Financing
In September 2019, we entered into a $250 million five-year unsecured credit facility (the “ 2019 Credit Facility”). On July 27, 2022, the Company entered into an amendment and restatement of the 2019 Credit Facility that, among other changes, increased the committed amount to $350.0 million and extended the maturity date to July 27, 2027 (as amended and restated, the “Credit Facility”). Certain of our domestic subsidiaries have guaranteed our obligations under the Credit Facility. As of September 26, 2021,25, 2022, there was approximately $0.6 million in outstanding letters of credit and the remaining committed amount remains available. As of September 25, 2022, there were no outstanding borrowings under the Credit Facility and the Company was in compliance with the financial covenants contained in the Credit Facility. See Note 7 of the Notes to the Condensed Consolidated Financial Statements for information regarding the Credit Facility.
CRITICAL ACCOUNTING ESTIMATES AND POLICIES
Our critical accounting policies are detailed in our Annual Report on Form 10-K for the year ended December 27, 2020.26, 2021. Other than as described in Note 2 of the Notes to the Condensed Consolidated Financial Statements, as of September 26, 2021,25, 2022, our critical accounting policies have not changed from December 27, 2020.
CONTRACTUAL OBLIGATIONS & OFF-BALANCE SHEET ARRANGEMENTS
Our contractual obligations and off-balance sheet arrangements are detailed in our Annual Report on Form 10-K for the year ended December 27, 2020. As of September 26, 2021, our contractual obligations and off-balance sheet arrangements have not changed materially from December 27, 2020.2021.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Terms such as “aim,” “anticipate,” “believe,” “confidence,” “contemplate,” “continue,” “conviction,” “could,” “drive,” “estimate,” “expect,” “forecast,” “future,” “goal,” “guidance,” “intend,” “likely,” “may,” “might,” “objective,” “opportunity,” “optimistic,” “outlook,” “plan,” “position,” “potential,” “predict,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “would” or similar statements or variations of such words and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. Forward-looking statements are based upon our current expectations, estimates and assumptions and involve risks and uncertainties that change over time; actual results could differ materially from those predicted by such forward-looking statements. These risks and uncertainties include, but are not limited to: the impact of the Covid-19 pandemic; significant competition in all aspects of our business; our ability to grow the size and profitability of our subscriber base; our dependence on metrics that are subject to inherent challenges in measurement; our ability to improve and scale our technical and data infrastructure and respond and adapt to changes in technology and consumer behavior; our ability to continue to retain and grow our subscriber base; numerous factors that affect our advertising revenues, including economic conditions, market dynamics, audience fragmentation, evolving digital advertising trends and the evolution of our strategy; damage to our brand or reputation; the impact of the Covid-19 pandemic; economic, geopolitical and other risks associated with the international scope of our business and foreign operations; our ability to attract and maintain a highly skilledtalented and diverse workforce; the impact of labor negotiations and agreements; adverse results from litigation or governmental investigations; risks associated with the acquisition of The Athletic, including, among others, those related to our ability to
realize the anticipated benefits of the acquisition, our ability to meet our publicly announced guidance about the impact of the acquisition, and the risks associated with The Athletic’s business and operations; the risks and challenges associated with investments we make in new and existing products and services;services, including The Athletic; risks associated with other acquisitions, divestitures, investments and other transactions; thepotential effects on our operating flexibility as a result of the fixed cost nature of significant portions of our expenses; the effects of the size and volatility of our pension plan obligations; liabilities that may result from our participation in multiemployer pension plans; the impact of labor negotiations and agreements; increases in the price of newsprint or significant disruptions in our newsprint supply chain or newspaper printing and distribution channels;channels or a significant increase in the costs to print and distribute our newspaper; security breaches and other network and information systems disruptions; our ability to comply with laws and regulations, including with respect to privacy, data protection and consumer marketing practices; payment processing risk; defects, delays or interruptions in the cloud-based hosting services we utilize; our ability to protect our intellectual property; claims of intellectual property infringement that we have been, and may be in the future, be subject to; the effects of restrictions on our operations as a result of the terms of our credit facility; our future access to capital markets and other financing options; and the concentration of control of our company due to our dual-class capital structure.
More information regarding these risks and uncertainties and other important factors that could cause actual results to differ materially from those in the forward-looking statements is set forth in “Item 1A — Risk Factors” in our Annual Report on Form 10-K for the year ended December 27, 2020,26, 2021, and “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our Annual Report on Form 10-K for the year ended December 27, 2020,26, 2021, details our disclosures about market risk. As of September 26, 2021,25, 2022, there were no material changes in our market risks from December 27, 2020.26, 2021.
Item 4. Controls and Procedures
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Our management, with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934)1934, as amended) as of September 26, 2021.25, 2022. Based upon such evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
During the third quarter of 2021, we completed the implementation of a new cloud-based system for print advertising billing. In connection with this system implementation, we updated our internal control over financial reporting to accommodate the resulting changes to our existing controls, systems and procedures.
There were no other changes in our internal control over financial reporting during the quarter ended September 26, 2021,25, 2022, other than as described in the following paragraph, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
On February 1, 2022, we acquired The Athletic. We are currently integrating The Athletic into our operations and internal control processes and, pursuant to the SEC’s guidance that an assessment of a recently acquired business may be omitted from the scope of an assessment in the year of acquisition, the scope of our assessment of the effectiveness of our internal control over financial reporting at December 31, 2022, will not include The Athletic.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are involved in various legal actions incidental to our business that are now pending against us. These actions generally have damage claims that are greatly in excess of the payments, if any, that we would be required to pay if we lost or settled the cases. Although the Company cannot predict the outcome of these matters, it is possible that an unfavorable outcome in one or more matters could be material to the Company’s consolidated results of operations or cash flows for an individual reporting period. However, based on currently available information, management does not believe that the ultimate resolution of these matters, individually or in the aggregate, is likely to have a material effect on the Company’s financial position.
Item 1A. Risk Factors
There have been no material changes to our risk factors as set forth in “Item 1A—Risk Factors” in our Annual Report on Form 10-K for the year ended December 27, 2020.26, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) Unregistered Sales of Equity Securities
On July 7, 2022, we issued 1,000 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.
(c) Issuer Purchases of Equity Securities
In 2015,February 2022, the Board of Directors authorized up to $101.1approved a $150.0 million of repurchases of shares of the Company’s Class A Common Stock. As of September 26, 2021, repurchases under thisStock repurchase program. The authorization totaled $84.9 million (excluding commissions) and $16.2 million remained. Our Board of Directors has authorized us to purchaseprovides that Class A shares may be purchased from time to time as market conditions warrant, through open market purchases, privately negotiated transactions or other means, including Rule 10b5-1 trading plans. We expect to repurchase shares primarily to offset the impact of dilution from our equity compensation program, but subject to market conditions and other factors.factors, we may also make opportunistic repurchases to reduce share count. There is no expiration date with respect to this authorization. There have been no purchasesAs of September 25, 2022, repurchases under this authorization since 2016.totaled approximately $79.8 million (excluding commissions) and approximately $70.2 million remained.
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Period | | Total numbers of shares of Class A Common Stock purchased | | Average price paid per share of Class A Common Stock | | Total number of shares of Class A Common Stock purchased as part of publicly announced plans or programs | | Maximum number (or approximate dollar value) of shares of Class A Common Stock that may yet be purchased under the plans or programs |
June 27, 2022 - July 31, 2022 | | 460,378 | | | $ | 28.98 | | | 460,378 | | | $ | 82,226,000 | |
August 1, 2022 - August 28, 2022 | | 60,000 | | | $ | 31.89 | | | 60,000 | | | $ | 80,312,000 | |
August 29, 2022 - September 25, 2022 | | 330,000 | | | $ | 30.63 | | | 330,000 | | | $ | 70,244,000 | |
Total for the third quarter of 2022 | | 850,378 | | | $ | 29.79 | | | 850,378 | | | $ | 70,244,000 | |
Item 6. Exhibits
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Exhibit No. | | |
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10.1 | | Credit Agreement, dated as of July 27, 2022, among The New York Times Company, as borrower, the financial institutions party thereto as Lenders, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, J.P. Morgan Chase Bank, National Association and Wells Fargo Bank, National Association, as Co-Syndication Agents, U.S. Bank National Association and Truist Bank, as Co-Documentation Agents and BOFA Securities, Inc., JPMorgan Chase Bank, National Association and Wells Fargo Securities, LLC, as Joint Lead Arrangers and Joint Bookrunners (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed July 28, 2022)* |
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31.1 | | |
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31.2 | | |
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32.1 | | |
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32.2 | | |
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101.INS | | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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101.SCH | | Inline XBRL Taxonomy Extension Schema Document. |
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101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
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101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
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101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document. |
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101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
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104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
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*Schedules to this Exhibit have been omitted in accordance with Regulation S-K Items 601(a)(5). The Registrant agrees to furnish supplementally a copy of all omitted schedules to the Securities and Exchange Commission on a confidential basis upon request. |
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.
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| | THE NEW YORK TIMES COMPANY |
| | (Registrant) |
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Date: | November 3, 20212, 2022 | /s/ Roland A. Caputo |
| | Roland A. Caputo Executive Vice President and Chief Financial Officer (Principal Financial Officer) |