FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For Quarter Ended March 31, 1995
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Commission file number 1-5837
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THE NEW YORK TIMES COMPANY
--------------------------
(Exact name of registrant as specified in its charter)
NEW YORK 13-1102020
- ------------------ ------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
229 WEST 43RD STREET, NEW YORK, NEW YORK
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(Address of principal executive offices)
10036
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(Zip Code)
Registrant's telephone number, including area code 212-556-1234
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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, and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
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Number of shares of each class of the registrant's common stock outstanding
as of April 30, 1995 (exclusive of treasury shares):
Class A Common Stock 96,577,496 shares
Class B Common Stock 430,178 shares
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THE NEW YORK TIMES COMPANY
Form 10-Q
March 31, 1995
INDEX
PART I. FINANCIAL INFORMATION (Unaudited) Page
----
Item 1. Financial Statements:
Condensed Consolidated Financial Statements
Condensed Consolidated Statements of Income for the Three
Months Ended March 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Balance Sheets as of March 31, 1995
and December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . 6
Notes to Condensed Consolidated Financial Statements . . . . . . . . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations:
Segment Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Results of Operations - First Quarter of 1995
Compared with First Quarter of 1994 . . . . . . . . . . . . . . . . . . . . . . . . 13
Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders . . . . . . . . . . . . . . . . . . 18
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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THE NEW YORK TIMES COMPANY
Form 10-Q
March 31, 1995
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
1995 1994
------- -------
(Dollars and shares in thousands
except per share data)
Revenues
Advertising . . . . . . . . . . . . . . . . . . . . . . . . . $401,151 $411,623
Circulation . . . . . . . . . . . . . . . . . . . . . . . . . 129,741 144,296
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,273 33,593
------------- -------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 571,165 589,512
------------- -------------
Production Costs
Raw Materials . . . . . . . . . . . . . . . . . . . . . . . . 79,991 78,419
Wages and Benefits . . . . . . . . . . . . . . . . . . . . . . 131,379 132,032
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96,188 112,930
------------- -------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 307,558 323,381
Selling, General and Administrative Expenses . . . . . . . . . . 206,090 222,979
------------- -------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 513,648 546,360
------------- -------------
Operating Profit . . . . . . . . . . . . . . . . . . . . . . . . 57,517 43,152
Interest Expense, Net of Interest Income . . . . . . . . . . . . 7,344 8,666
------------- -------------
Income Before Income Taxes and Equity in
Operations of Forest Products Group . . . . . . . . . . . . . . 50,173 34,486
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 24,484 16,721
------------- -------------
Income Before Equity in Operations of Forest
Products Group . . . . . . . . . . . . . . . . . . . . . . . . 25,689 17,765
Equity in Operations of Forest Products Group . . . . . . . . . . 1,670 (30)
------------- -------------
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,359 $ 17,735
============= =============
Average Number of Common Shares Outstanding . . . . . . . . . . . 97,826 106,856
Per Share of Common Stock
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . $.28 $.17
Cash Dividends . . . . . . . . . . . . . . . . . . . . . . . . .14 .14
See notes to condensed consolidated financial statements.
-4-
THE NEW YORK TIMES COMPANY
Form 10-Q
March 31, 1995
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1995 1994
-------- ------
(Dollars in thousands)
ASSETS
Current Assets
Cash and short-term investments . . . . . . . . . . . . $ 174,780 $ 41,419
---------------- -----------------
Marketable securities . . . . . . . . . . . . . . . . . 39,370 -
---------------- -----------------
Accounts receivable-net . . . . . . . . . . . . . . . . 241,299 247,750
---------------- -----------------
Inventories
Newsprint and magazine paper . . . . . . . . . . . . 26,514 24,783
Work-in-process, etc. . . . . . . . . . . . . . . . 6,275 5,762
---------------- -----------------
Total inventories . . . . . . . . . . . . . . . . 32,789 30,545
---------------- -----------------
Other current assets . . . . . . . . . . . . . . . . . 85,511 92,060
---------------- -----------------
Total current assets . . . . . . . . . . . . . . 573,749 411,774
Other Assets
Investment in forest products group . . . . . . . . . . 87,026 85,433
Property, plant and equipment (less accumulated
depreciation of $675,246,000 in 1995 and
$660,017,000 in 1994) . . . . . . . . . . . . . . . 1,163,944 1,158,751
Intangible assets acquired
Cost in excess of net assets acquired (less
accumulated amortization of $169,408,000
in 1995 and $166,045,000 in 1994) . . . . . . . . . 1,207,392 1,225,205
Other intangible assets acquired (less
accumulated amortization of $7,786,000
in 1995 and $6,486,000 in 1994) . . . . . . . . . . 152,961 154,261
Miscellaneous assets . . . . . . . . . . . . . . . . . 102,869 102,207
---------------- -----------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . $ 3,287,941 $ 3,137,631
================ =================
See notes to condensed consolidated financial statements.
(Continued) - 1
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THE NEW YORK TIMES COMPANY
Form 10-Q
March 31, 1995
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS - (Continued)
(Unaudited)
March 31, December 31,
1995 1994
-------- --------
(Dollars in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts and notes payable . . . . . . . . . . . . $ 101,360 $ 121,504
Payrolls . . . . . . . . . . . . . . . . . . . . . 66,958 67,012
Accrued expenses . . . . . . . . . . . . . . . . . 180,475 182,338
Unexpired subscriptions . . . . . . . . . . . . . . 83,478 77,697
Current portion of long-term debt . . . . . . . . . 64,329 2,681
---------------- ----------------
Total current liabilities . . . . . . . . . . . 496,600 451,232
---------------- ----------------
Other Liabilities
Long-term debt . . . . . . . . . . . . . . . . . . 588,842 473,530
Capital lease obligations . . . . . . . . . . . . . 49,178 49,666
Deferred income taxes . . . . . . . . . . . . . . . 172,401 176,588
Other . . . . . . . . . . . . . . . . . . . . . . . 438,849 441,323
---------------- ----------------
Total other liabilities . . . . . . . . . . . . 1,249,270 1,141,107
---------------- ----------------
Stockholders' Equity
Capital shares . . . . . . . . . . . . . . . . . . 12,620 12,615
Additional capital . . . . . . . . . . . . . . . . 600,557 597,860
Earnings reinvested in the business . . . . . . . . 1,193,440 1,179,715
Common stock held in treasury, at cost . . . . . . (264,546) (244,898)
---------------- ----------------
Total stockholders' equity . . . . . . . . . . . 1,542,071 1,545,292
---------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY. . . . . . . $ 3,287,941 $ 3,137,631
================ ================
See notes to condensed consolidated financial statements.
(Concluded) - 2
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THE NEW YORK TIMES COMPANY
Form 10-Q
March 31, 1995
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) Three Months Ended
March 31,
CASH PROVIDED (USED): 1995 1994
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(Dollars in thousands)
OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,359 $ 17,735
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . 36,402 38,896
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . (5,602) 1,325
Equity in operations of forest products group-net . . . . . . . . . . (2,192) 195
Other-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,406 28,669
---------- ----------
Net cash provided by operating activities . . . . . . . . . . . . . . . . 69,373 86,820
---------- ----------
INVESTING ACTIVITIES
Net proceeds from sale of BPI Communications, L.P. . . . . . . . . . . . - 52,992
Purchases of marketable securities . . . . . . . . . . . . . . . . . . . (39,370) -
Additions to property, plant and equipment . . . . . . . . . . . . . . . (35,713) (29,302)
Other-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,439) (3,584)
---------- ----------
Net cash (used in) provided by investing activities . . . . . . . . . . . (79,522) 20,106
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FINANCING ACTIVITIES
Short-term borrowings-net . . . . . . . . . . . . . . . . . . . . . . . . (49,472) (62,340)
Long-term obligations
Increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388,842 -
Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (163,768) (1,436)
Capital Shares
Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185 239
Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18,569) (5,510)
Dividends paid to stockholders . . . . . . . . . . . . . . . . . . . . . (13,690) (14,990)
Other-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18) 98
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Net cash (used in) provided by financing activities . . . . . . . . . . . 143,510 (83,939)
---------- ----------
Increase in Cash and short-term investments . . . . . . . . . . . . . . . 133,361 22,987
Cash and short-term investments at the beginning of the year . . . . . . 41,419 42,058
---------- ----------
Cash and short-term investments at the end of the quarter . . . . . . . . $174,780 $ 65,045
========== ==========
See notes to condensed consolidated financial statements.
-7-
THE NEW YORK TIMES COMPANY
Form 10-Q
March 31, 1995
PART I. FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. General
a. Results for the interim periods should not be considered as
indicative of results for a full year.
b. The information furnished, in the opinion of management,
reflects all adjustments (which consist of normal recurring
accruals) necessary for a fair presentation of results for the
interim periods presented.
c. The 1995 amounts are subject to year-end audit.
2. Income Taxes
For the three months ended March 31, 1995 and 1994, income tax expense
includes the reversal of deferred income taxes of $5,724,000 and
$5,221,000, respectively. The principal reasons for the variance between
the effective tax rate on income before income taxes and equity in
operations of Forest Products Group and the federal statutory rate
(exclusive of the effects of the Company's interest in Madison Paper
Industries ("Madison"), a partnership) are state and local taxes and the
amortization of certain intangible assets acquired.
Equity in operations of Forest Products Group includes the income tax
effects of the Company's interest in Madison and its equity in the
operations of Canadian forest products companies. For the three months
ended March 31, 1995 and 1994, income tax expense (benefit) included in
equity in operations was $452,000 and $(36,000), respectively. The
Company's consolidated federal income tax return includes the Company's
interest in Madison.
3. Earnings Per Share
The computation of earnings per share data is not separately disclosed
as such computation can be clearly determined from the Condensed
Consolidated Statements of Income.
4. Cash and Short-Term Investments
For purposes of the Condensed Consolidated Statements of Cash Flows,
the Company considers all highly-liquid debt instruments purchased with
maturities of three months or less to be cash equivalents. The Company has
overdraft positions at certain banks caused by outstanding checks. These
overdrafts, including $1,015,000 as of March 31, 1995 related to
repurchases of the Company's stock (see Note 10), have been reclassified to
accounts payable.
For the three-month period ended March 31, 1995 and 1994, the Company
made cash payments for interest (net of amounts capitalized) totaling
$8,392,000 and $13,847,000, respectively. Cash payments for income taxes
for the three-month period ended March 31, 1995 and 1994 totaled $7,405,000
and $5,295,000, respectively.
-8-
THE NEW YORK TIMES COMPANY
Form 10-Q
March 31, 1995
PART I. FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
5. Marketable Securities
The Company determines the appropriate classification of its
investments in debt and equity securities at the time of purchase and
reevaluates such determination at each balance sheet date. The Company has
classified the marketable securities as held-to-maturity, since the Company
has the intent and ability to hold them to maturity. Held-to-maturity
investments are carried at amortized cost.
6. Capital Investment Projects
In December 1993, the Company and the City of New York executed a 25-
year lease and related agreements, under which the Company is leasing 31
acres of City-owned land in College Point, New York, on which The New York
Times ("The Times") is building a state-of-the-art production and
distribution facility. Conditions stipulated under the lease were met in
June 1994 and, accordingly, a capital lease of $5,000,000 was recorded at
such time.
In July 1994, the Company's Board of Directors approved the
construction of the new facility, which will allow for later news deadlines
and provide color and inserting capability for the daily newspaper. The
cost of the new facility, excluding capitalized interest currently
projected to be $45,000,000, is estimated to be $315,000,000.
Construction of the facility began in August 1994 with completion
anticipated in the second half of 1997. While the new facility will
replace The Times's Manhattan production and distribution facility,
business and news operations will remain at the Manhattan building. No
write-down is anticipated as a result of the discontinuance of production
at the Manhattan facility.
7. Staff Reductions and Union Negotiations
In 1994, the Company completed its negotiations of long-term labor
agreements with all of its unions at The Times and they extend to the year
2000. These agreements encompass wages, payments to the unions' benefits
and pension funds, job security and financial incentives. These agreements
apply to all of The Times's current and new production and distribution
facilities.
In connection with these union agreements and additional white-collar
staff reductions for non-union employees, the Company recorded pre-tax
charges ($35,400,000, or $.23 per share, in 1993; $28,000,000, or $.20 per
share, in 1992; $20,000,000, or $.15 per share, in 1991; and $30,000,000,
or $.22 per share, in 1989) for severance and related costs for staff
reductions at The Times.
At March 31, 1995 and December 31, 1994, approximately $15,800,000 and
$23,700,000, respectively, were included in accrued expenses on the
accompanying Condensed Consolidated Balance Sheets, which represent the
unpaid balance of these pre-tax charges. The Company has committed the
remaining funds. The remaining cash outflow associated with these charges are
expected to occur over the next two years due to the timing of certain
union pension and welfare fund contributions.
-9-
THE NEW YORK TIMES COMPANY
Form 10-Q
March 31, 1995
PART I. FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
8. Acquisition/Dispositions
In February 1995, the Company announced an agreement for the purchase
of WTKR-TV in Norfolk, Virginia from Narragansett Television, Inc. The
closing, currently expected in early summer, is subject to regulatory
approval. In March 1995, the Company announced that it is in discussions
for the possible sale of seven of its small regional newspapers. The net
assets of $17,205,000 related to these properties are included in other
current assets on the accompanying March 31, 1995 Condensed Consolidated
Balance Sheet. On May 5, 1995, the Company signed a letter of intent to
sell The Daily Commercial (Leesburg, Fla.). The closing is expected to
occur in the second quarter. The disposition will not have a material
effect on the Company's consolidated financial statements. The potential
dispositions and acquisition will not have a material impact on the future
operations of the Company.
In July and August 1994, the Company completed the sales of its
Women's Magazines Division and U.K. golf publications, respectively. These
transactions resulted in a pre-tax gain of approximately $204,000,000
($1.01 per share). In connection with the sale of the Women's Magazines
Division, the Company entered into a four-year non-compete agreement, for
which it received $40,000,000. This amount is being recognized as
operating income, on a straight-line basis, over a four-year period
commencing with the closing of the sale on July 26, 1994.
Pro forma operating results for the three months ended March 31, 1994,
had the sales of the U.K. golf publications and Women's Magazines Division
occurred at the beginning of that period are as follows: revenues of
$530,533,000; net income of $23,243,000; and net income per share of $.22.
The above pro forma results are not necessarily indicative of the
results of operations that might have occurred had the sales taken place at
the beginning of the period, nor necessarily indicative of the results that
may be obtained in the future. The gain on the sales is not included in
the above pro forma operating results.
9. Debt
On March 29, 1995, the Company completed a public offering of
$400,000,000 in unsecured notes and debentures. Ten-year notes maturing
March 15, 2005, totaling $250,000,000 were issued at a rate of 7.625
percent; the remaining $150,000,000 were issued as 30-year debentures
maturing March 15, 2025, at a rate of 8.25 percent and are callable after
10 years. For both issuances interest is payable semi-annually on March 15
and September 15.
The net proceeds from the offering were used to repay notes of
$162,300,000 due March 31, 1995, with an effective interest rate of 11.85
percent related to the 1985 acquisition of three newspapers; and
$50,000,000 will be used to repay 9.34 percent notes due July 15, 1995
assumed in connection with the October 1993 acquisition of The Boston
Globe. The remaining net proceeds will be used for general corporate
purposes, including the repayment at maturity of additional indebtedness
from the Company's commercial paper program.
-10-
THE NEW YORK TIMES COMPANY
Form 10-Q
March 31, 1995
PART I. FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Concluded)
10. Stock Repurchase Program
During the first quarter of 1995, the remainder of an October 1994
$100,000,000 authorization was spent to repurchase approximately 600,000
shares of Class A Common Stock at an average price of $22.09. In February
1995, the Company's Board of Directors authorized additional expenditures
of up to $50,000,000. To date, the Company has repurchased approximately
900,000 shares of its Class A Common Stock at an average price of $22.90
per share under this program. Under the program, purchases may be made
from time to time either in the open market or through private
transactions. The number of shares that may be purchased in market
transactions may be limited as a result of The Globe transaction.
Purchases may be suspended from time to time or discontinued.
11. Equity Put Options
In addition to the Company's stock repurchase program (see Note 9),
the Company sold put options in a series of private placements that entitle
the holder, upon exercise, to sell one share of Class A Common Stock to the
Company at a specified price. At March 31, 1995, and December 31, 1994,
approximately $230,000 and $2,660,000, respectively, were included in other
liabilities on the accompanying Condensed Consolidated Balance Sheets,
which represents the amount that the Company would be obligated to pay if
all the options were exercised. The proceeds from the sale of put options
are accounted for as additional paid-in capital.
-11-
THE NEW YORK TIMES COMPANY
Form 10-Q
March 31, 1995
PART I. FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS (Unaudited)
- ------------------------------------------------
Segment Information
- -------------------
Three Months Ended
March 31,
1995 1994
------- -------
(Dollars in thousands)
REVENUES
Newspapers . . . . . . . . . . . . . . . . . . . . . . . . . . $513,094 $478,518
Magazines . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,902 96,466
Broadcasting . . . . . . . . . . . . . . . . . . . . . . . . . 17,169 14,528
---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $571,165 $589,512
========== ==========
OPERATING PROFIT (LOSS)
Newspapers . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,810 $ 48,079
Magazines . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,199 166
Broadcasting . . . . . . . . . . . . . . . . . . . . . . . . . 2,744 1,064
Unallocated Corporate Expenses . . . . . . . . . . . . . . . . (6,236) (6,157)
---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,517 43,152
INTEREST EXPENSE, NET OF INTEREST INCOME . . . . . . . . . . . 7,344 8,666
---------- ----------
INCOME BEFORE INCOME TAXES AND EQUITY IN
OPERATIONS OF FOREST PRODUCTS GROUP . . . . . . . . . . . . 50,173 34,486
INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 24,484 16,721
---------- ----------
INCOME BEFORE EQUITY IN OPERATIONS
OF FOREST PRODUCTS GROUP . . . . . . . . . . . . . . . . . . 25,689 17,765
EQUITY IN OPERATIONS OF FOREST PRODUCTS GROUP . . . . . . . . . 1,670 (30)
---------- ----------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,359 $ 17,735
========== ==========
-12-
THE NEW YORK TIMES COMPANY
Form 10-Q
March 31, 1995
PART I. FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS - (Continued)
- --------------------------------------------------
Segment Information
- -------------------
Three Months Ended
March 31,
1995 1994
------- ------
(Dollars in thousands)
DEPRECIATION AND AMORTIZATION
Newspapers. . . . . . . . . . . . . . . . . . . . . . . . . . . $33,447 $33,012
Magazines . . . . . . . . . . . . . . . . . . . . . . . . . . . 585 3,265
Broadcasting . . . . . . . . . . . . . . . . . . . . . . . . . 2,173 2,464
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . 197 155
---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $36,402 $38,896
========== ==========
-13-
THE NEW YORK TIMES COMPANY
Form 10-Q
March 31, 1995
PART I. FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
- ------------------------------------------------
The Company's largest source of revenues is advertising, which
influences the pattern of the Company's quarterly consolidated revenues and
is seasonal in nature. Traditionally, second-quarter and fourth-quarter
advertising volume is higher than that which occurs in the first quarter.
Advertising volume tends to be lower in the third quarter primarily because
of the summer slow-down in many areas of economic activity. In addition,
quarterly trends are affected by the overall economy and economic
conditions that may exist in specific markets served by each of the
Company's business segments.
Results of Operations - First Quarter of 1995
- ----------------------------------------------
Compared with First Quarter of 1994
- -----------------------------------
The 1995 first-quarter net income was $27.4 million, or $.28 per
share, compared with net income of $17.7 million, or $.17 per share, in
1994. The higher 1995 net income was principally due to improvements
throughout all of the Company's operating groups, as well as higher equity
in operations of the Forest Products Group.
Revenues for the 1995 first quarter were $571.2 million compared with
$589.5 million in the 1994 quarter. The lower revenues were due to the
absence of the Women's Magazines and U.K. golf publications, which were
sold in the 1994 third quarter offset, in part, by increased revenues in
the Newspaper and Broadcasting Groups and the Sports/Leisure Magazines. On
a comparable basis, excluding the revenues attributable to the magazines
sold, 1995 first-quarter revenues increased by approximately 8 percent over
1994.
For the first quarter of 1995, as a result of a strong operating
performance, earnings before depreciation, amortization, interest and
income taxes rose to $93.9 million from $82.0 million in the 1994 quarter.
The Company currently anticipates that depreciation and amortization will
approximate $150 million for the year 1995 as compared with $154 million in
1994.
The quarterly per-share amounts were affected by the repurchase of the
Company's Class A Common Stock throughout 1994 as well as in the 1995 first
quarter. During 1994, approximately $235.2 million was expended to
repurchase approximately 10.0 million shares. In the first quarter of
1995, an additional $19.5 million was expended to repurchase approximately
0.9 million shares.
Interest expense, net of interest income, declined to $7.3 million in
the first quarter of 1995 from $8.7 million last year. The decline was due
principally to a higher level of capitalized interest in connection with
facilities under construction.
The 1995 and 1994 first-quarter effective tax rates, were 48.8 and
48.5 percent, respectively. The Company currently estimates that its
annual effective income tax rate for 1995 will be 48.8 percent compared
with 41.7 percent in 1994. The lower 1994 rate was due principally to the
utilization of capital loss carryforwards in the fourth quarter of 1994.
-14-
THE NEW YORK TIMES COMPANY
Form 10-Q
March 31, 1995
PART I. FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
- ------------------------------------------------
A discussion of the operating results of the Company's segments and
equity interests follows:
Beginning with the 1995 first quarter, the Information Services
Division, formerly included with the Broadcasting Division, has been
reclassified to the Newspaper Group Segment. The Information Services
operations are closely aligned with the Newspaper Segment since they
distribute The New York Times's related materials in a variety of
electronic forms. The Information Services Division consists primarily of a
news service, a features syndicate, TimesFax, NYT Custom Publishing and the
licensing operations of The New York Times databases, CD-ROM and microfilm.
The 1994 amounts have also been reclassified to conform with this
presentation.
The Newspaper Group consists of The New York Times ("The Times"), The
Boston Globe ("The Globe"), 28 Regional Newspapers, newspaper wholesalers,
Information Services and a 50 percent interest in the International Herald
Tribune.
First-quarter 1995 operating profit rose to $50.8 million from $48.1
million in the 1994 first quarter. Revenues were $513.1 million in the
1995 first quarter, compared with $478.5 million in 1994. The 7 percent
increase in the Group's revenues was due primarily to higher advertising
and circulation revenues. The increase in advertising revenues was due to
a combination of higher advertising volume and rates. The circulation
revenue increase was primarily due to higher rates, offset by the softness
in circulation copies. The operating performance improved despite higher
newsprint prices, which were 22 percent greater in the 1995 first quarter
compared with the 1994 first quarter. Royalties from database licensing
contributed to the improved performance. Higher newsprint prices are
expected for the remainder of the year as a result of increased demand in
the market. Management has begun to implement measures which are currently
expected to minimize the impact of these price increases on the Groups'
operating results for the year.
At The Times, advertising volume for the first quarter of 1995 was
918,200 inches, up 7.2 percent from the 1994 first quarter. The zoned,
classified and national advertising categories showed gains, but the retail
advertising category was slightly down. Average circulation for the six
months ended March 31, 1995, as reported to the Audit Bureau of
Circulations ("ABC"), was 1,170,900 copies weekdays, down 17,100 copies
from 1994, and 1,770,500 copies Sundays, up 2,700 copies.
At The Globe, advertising volume was 684,600 inches for the 1995 first
quarter, up 4.2 percent over the 1994 first quarter. Advertising was up in
all categories except retail and preprint distribution was up 9.3 percent.
Average circulation for the six months ended March 31, 1995, as reported to
ABC, was 500,600 copies weekdays, up 300 copies, and 785,900 copies
Sundays, down 29,400 copies.
For the Regional Newspapers, advertising volume for the first quarter
increased to 4.1 million inches, up 4.0 percent. Strong advertising in the
classified and retail categories accounted for the improved results.
Preprint distribution was down 4.3 percent. For the six months ended March
31, 1995, average circulation as reported to
-15-
THE NEW YORK TIMES COMPANY
Form 10-Q
March 31, 1995
PART I. FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
- ------------------------------------------------
ABC, was 868,100 copies on weekdays, down 6,300 copies and 879,900 copies
on Sunday, up 1,700 copies. Circulation was 54,900 copies for the nondailies,
down 100 copies.
The Magazine Group's first-quarter operating profit was $10.2 million
in 1995 compared with $0.2 million in 1994 on revenues of $40.9 million and
$96.5 million, respectively. The change in revenues for the quarter was
due to the lack of revenues attributable to the Women's Magazines and U.K.
golf publications which were sold in the 1994 third quarter.
Excluding the 1994 first-quarter operations of the magazines sold and
the 1995 first-quarter non-compete income of $2.5 million arising from the
Women's Magazines sale (see Note 8), 1995 first-quarter operating profit
for the Sports/Leisure Magazines was $7.7 million compared with $4.9
million in the 1994 quarter. Revenues for the Sports/Leisure Magazines for
the first quarter of 1995 were $38.4 million compared with $34.6 million in
the comparable 1994 period. The increases were primarily due to higher
advertising revenues at Golf Digest and lower subscription promotion costs.
The Broadcasting Group's first-quarter profit more than doubled as
compared with the 1994 first quarter. Operating profit rose to $2.7
million in the 1995 first quarter from $1.1 million in the comparable 1994
quarter. First-quarter revenues were $17.2 million compared with $14.5
million in the 1994 quarter, an increase of 19 percent. Higher local
advertising revenues and network compensation at the television stations,
as well as higher revenues at the radio stations, accounted for the
improved results.
The Forest Products Group's equity in earnings (an after-tax amount)
was $1.7 million for the first quarter of 1995, compared with break-even
results in 1994. The 1995 improvement resulted from higher sales prices.
This favorable trend is expected to continue throughout 1995.
Liquidity and Capital Resources
- -------------------------------
Net cash provided by operating activities was $69.4 million in the
1995 first quarter compared with $86.8 million in 1994. Such cash was used
primarily to modernize facilities and equipment, to pay dividends to
stockholders and to repurchase shares of the Company's Class A Common
Stock. The ratio of current assets to current liabilities was 1.16 at
March 31, 1995, and .91 at December 31, 1994, and long-term debt and
capital lease obligations as a percentage of total capitalization was 29
percent at March 31, 1995, compared with 25 percent at December 31, 1994.
In March 1995 the Company completed a public offering of $400.0
million in unsecured notes and debentures (see Note 9). Ten-year notes
totaling $250.0 million maturing March 15, 2005 were issued at a rate of
7.625 percent, and the remaining $150 million were issued as 30-year
debentures maturing March 15, 2025 at a rate of 8.25 percent.
-16-
THE NEW YORK TIMES COMPANY
Form 10-Q
March 31, 1995
PART I. FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
- ------------------------------------------------
The net proceeds from the offering were used to repay $162.3 million
of notes due March 1995, and will be used to repay $50.0 million of notes
due July 1995 and to repay indebtedness from the Company's commercial paper
program. The remaining proceeds will be used for general corporate
purposes.
During the first quarter of 1995, the remainder of an October 1994
$100.0 million authorization was spent to repurchase approximately 0.6
million shares of Class A Common Stock at an average price of $22.09. In
February 1995, the Company's Board of Directors authorized additional
expenditures of up to $50.0 million. To date, the Company has repurchased
approximately 0.9 million shares of its Class A Common Stock at an average
price of $22.90 per share under this program. Under the program,
purchases may be made from time to time either in the open market or
through private transactions. The number of shares that may be purchased
in market transactions may be limited as a result of The Globe transaction.
Purchases may be suspended from time to time or discontinued.
The Company currently anticipates that depreciation and amortization
will approximate $150.0 million for the year in 1995 as compared with
$154.0 million in 1994.
In July 1994, the Company's Board of Directors approved the
construction of a new production and distribution facility in College
Point, New York, for production of The Times (see Note 6). The cost of the
new facility is estimated to be $315.0 million, exclusive of capitalized
interest currently projected to be $45.0 million. Construction began in
August 1994, with completion expected in the second half of 1997. While
the new facility will replace The Times's Manhattan production and
distribution facility, business and news operations will remain at the
Manhattan building. No write-down is anticipated as a result of the
discontinuance of production at the Manhattan facility.
The Company currently anticipates that, inclusive of the College Point
facility, capital expenditures for 1995 will range from $250.0 million to
$300.0 million.
In connection with a commitment related to the 1991 divestiture of a
jointly-owned newsprint affiliate, Spruce Falls Power and Paper Company,
Limited, the Company has fulfilled its commitment to lend $26.5 million
(C$30.0 million) to the new owners of the mill. To date, the mill has been
operating profitably and all interest payments related to the loan have
been received by the Company. Under the terms of the loan, the five-year
repayment period is not scheduled to commence until December 1997. The
Company expects the former affiliate to fulfill its contractual obligation
as stipulated in the loan agreement.
-17-
THE NEW YORK TIMES COMPANY
Form 10-Q
March 31, 1995
PART I. FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS (Concluded)
- ------------------------------------------------
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121 - Accounting for
Impairment of Long-Lived Assets ("SFAS 121"). SFAS 121 will require a
review for impairment of long-lived assets and certain identifiable
intangible assets to be held and used, whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The statement shall be effective for financial statements for
fiscal years beginning after December 15, 1995. The Company does not
believe operations will be affected by the adoption of SFAS 121.
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. The Company is
currently not engaged in interest rate swaps or hedging activity of a
material nature. The Company has one interest rate swap agreement with a
major financial institution to manage interest costs on $50.0 million of
notes due in July 1995 (see Note 9). The swap agreement converted a 9.34
percent fixed interest rate to an effective interest rate of 10.3 percent
for the 1995 first quarter.
In connection with the 1993 charges totaling $35.4 million for staff
reductions (see Note 7), approximately $23.8 million has been disbursed.
The Company has committed the remaining funds. As a result of the timing
of certain union pension and welfare fund contributions, the remaining cash
outflow associated with these charges are expected to occur over the next two
years. The Company does not anticipate that its ongoing business
operations will be affected by this reduction of staff and expects to fund
the amounts through internally-generated funds.
In addition to cash provided from operating activities, the Company
has several established sources for future liquidity purposes, including
several revolving credit and term loan agreements. Currently, $170.0
million is available for borrowing by the Company under these agreements.
The Company anticipates that during 1995, cash for operating, investing and
financing activities will continue to come from a combination of
internally-generated funds and external financing.
-18-
THE NEW YORK TIMES COMPANY
Form 10-Q
March 31, 1995
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders
---------------------------------------------------
(a) The Company's annual meeting of stockholders was held on April
18,1995.
(c) The following matters were voted on at the annual meeting:
1. The stockholders (with Class A and Class B stockholders voting
separately) elected all of management's nominees for election as Class A
Directors and Class B Directors. The results of the vote taken was as
follows:
For Withheld
--- --------
Class A Directors:
Louis V. Gerstner, Jr. 85,591,845 703,525
A. Leon Higginbotham, Jr. 85,537,609 757,761
Robert A. Lawrence 85,596,511 698,859
Charles H. Price II 85,612,219 683,151
Donald M. Stewart 85,602,338 693,032
Class B Directors:
John F. Akers 411,383 0
Richard L. Gelb 411,383 0
Marian S. Heiskell 411,383 0
Ruth S. Holmberg 411,383 0
George B. Munroe 411,383 0
George L. Shinn 411,383 0
Arthur Ochs Sulzberger 411,383 0
Judith P. Sulzberger 411,383 0
William O. Taylor 411,383 0
Cyrus R. Vance 411,383 0
2. The stockholders (with Class A and Class B stockholders voting
together) approved the amendment of the Company's 1991 Executive Cash Bonus
Plan and the 1991 Executive Stock Incentive Plan. The result of the vote
taken was as follows:
For 75,870,880
Against 8,737,292
Abstain 2,098,581
Total Against and Abstain* 10,835,873
- --------------------
* An abstention vote had the same effect as a vote against this matter.
-19-
THE NEW YORK TIMES COMPANY
Form 10-Q
March 31, 1995
PART II. OTHER INFORMATION
3. The stockholders (with Class A and Class B stockholders voting
together) ratified the selection, by the Audit Committee of the Board of
Directors, of Deloitte & Touche LLP, independent certified public
accountants, as auditors of the Company for the year ending December 31,
1995. The result of the vote taken was as follows:
For 86,280,639
Against 217,109
Abstain 209,005
Total Against and Abstain* 426,114
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
--------
3(ii) By-laws
27. Financial Data Schedule
(b) Reports on Form 8-K
-------------------
As reported in the Company's Annual Report on Form 10-K for the year
ended December 31, 1994, on January 6, 1995, the Company filed a report on
Form 8-K, dated December 12, 1994, relating to the disposition of the
Company's interest in Gaspesia Pulp & Paper Company Ltd., a Canadian
newsprint mill; and on March 1, 1995, the Company filed a report on Form 8-
K, dated February 24, 1995, relating to the Company's announcement of an
agreement with Narragansett Television, Inc. to purchase WTKR-TV, Norfolk,
Virginia.
- --------------------
* An abstention vote had the same effect as a vote against this matter.
-20-
THE NEW YORK TIMES COMPANY
Form 10-Q
March 31, 1995
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
THE NEW YORK TIMES COMPANY
--------------------------
(Registrant)
Date: May 11, 1995 /S/ D.L. Gorham
------------ ---------------------------------
(signature)
David L. Gorham
Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
3(ii) By-laws
27. Financial Data Schedule