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UNITED STATES
SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended September 29, 2002

Commission file number 1-5837

THE NEW YORK TIMES COMPANY
(Exact name of registrant as specified in its charter)

        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 ý    No o

        Number of shares of each class of the registrant's common stock outstanding as of November 1, 2002 (exclusive of treasury shares):

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars and shares in thousands, except per share data)

See Notes to Condensed Consolidated Financial Statements.

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THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

See Notes to Condensed Consolidated Financial Statements.

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THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(Dollars in thousands)

SUPPLEMENTAL CASH FLOW INFORMATION

OTHER

Capital expenditures attributable to the Company's development partner's interest in the Company's proposed new headquarters are included in Investing Activities—Other-net ($7.8 million). Cash received from the development partner for capital expenditures is included in Financing Activities—Other financing proceeds ($12.1 million).

See Notes to Condensed Consolidated Financial Statements.

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THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.  General

        The accompanying Notes to the Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 30, 2001, for The New York Times Company (the "Company") filed with the Securities and Exchange Commission (the "SEC"). In the opinion of management, all normal recurring adjustments necessary for a fair presentation of the financial position and results of operations, as of and for the interim periods ended, have been included. Due to the seasonal nature of the Company's business, results for the interim periods are not necessarily indicative of a full year's operations. The fiscal periods included herein comprise 13 weeks for the three-month periods and 39 weeks for the nine-month periods.

        As of September 29, 2002, the Company's significant accounting policies and estimates, which are detailed in the Company's Annual Report on Form 10-K, have not changed from December 30, 2001, except for the adoption of Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets.

2.    Stock Option and Employee Stock Purchase Plans

        The Company applies Accounting Principles Board Opinion ("APB") No. 25, Accounting for Stock Issued to Employees, and related interpretations to account for shares issued under its employee stock purchase plan ("ESPP") and stock options granted. APB 25 does not require compensation expense to be recorded if certain conditions are met. The Company satisfies the conditions for non-recognition of compensation expense under APB 25, and therefore no compensation expense for shares issued under the ESPP or stock options granted is reflected in the Company's Condensed Consolidated Financial Statements.

        Had compensation expense been recorded over the vesting period based on the fair value at the date the shares were issued under the ESPP and at the grant date of stock options, the Company's net income and diluted earnings per share would have been reduced by $12.4 million and $.08 per share in the third quarter of 2002, and $37.2 million and $.24 per share for the first nine months of 2002. The Company's net income and diluted earnings per share would have been reduced by $11.8 million and $.08 per share in the third quarter of 2001, and $35.4 million and $.22 per share for the first nine months of 2001.

3.    Goodwill and Other Intangible Assets—Adoption of SFAS 142

        At the beginning of the Company's 2002 fiscal year, the Company adopted SFAS 142. SFAS 142 eliminated the amortization of goodwill and certain other intangibles and requires an impairment test of their carrying value. An initial impairment test of goodwill and certain other intangibles must be completed in the year of adoption with at least an annual impairment test thereafter. The Company completed the initial impairment tests in the first quarter of 2002, which did not result in an impairment of goodwill or certain other intangibles. The Company's annual impairment tests will be completed before the end of the fourth quarter. The provisions of SFAS 142 are effective for periods after adoption and retroactive application is not permitted. Therefore, the historical results of periods prior to 2002 in the Company's Condensed Consolidated Statements of Income do not reflect the effect of SFAS 142 and, accordingly, the third quarter of 2001 includes amortization expense of $10.6 million in "Selling, general and administrative ('SGA') expenses" and $0.1 million in "Net (loss)/income from joint ventures" ($9.2 million after tax or $.05 per diluted share, collectively). The first nine months of

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2001 include amortization expense of $31.8 million in SGA expenses and $0.3 million in "Net (loss)/income from joint ventures" ($27.7 million after tax or $.17 per diluted share, collectively).

        The following information represents pro forma net income and earnings per share assuming the adoption of SFAS 142 at the beginning of the Company's 2001 fiscal year:

        Included in "Other intangible assets acquired" in the Company's Condensed Consolidated Balance Sheets are other intangible assets, that are subject to amortization as well as those that are no longer subject to amortization in accordance with the adoption of SFAS 142.

        Other intangible assets as of September 29, 2002, and December 30, 2001, were as follows:

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        Amortization expense for the first nine months of 2002 was $12.9 million and is expected to be $17.2 million for the full-year 2002. Estimated annual amortization expense for the next five years related to other intangible assets subject to amortization is expected to be as follows:

4.    Investments/Dispositions

        Investments:

        In April 2002, the Company and Discovery Communications, Inc. ("DCI") formed a joint venture in Discovery Civilization, a digital cable television channel ("DC"). The Company invested approximately $100 million for a 50% interest in DC. The operations of DC are managed by DCI.

        In February 2002, New England Sports Ventures, LLC ("NESV"), in which the Company is an investor, purchased the Boston Red Sox baseball club (including Fenway Park and approximately 80% of New England Sports Network, a regional cable sports network). The Company invested approximately $75 million for an interest of approximately 15% in NESV.

        The Company's investments in DC and NESV are accounted for under the equity method, and are recorded in "Investments in joint ventures" in the Company's Condensed Consolidated Balance Sheet. The Company's proportionate shares of the operating results of DC and NESV are recorded in "Net (loss)/income from joint ventures" in the Company's Condensed Consolidated Statement of Income and in "Investments in joint ventures" in the Company's Condensed Consolidated Balance Sheet. The final allocations of the purchase prices of DC and NESV among the net assets acquired is in the process of being completed.

        Magazine Sale—Discontinued Operations:

        On April 2, 2001, the Company sold Golf Digest, Golf Digest Woman, Golf World, Golf World Business ("Magazine Group") and GolfDigest.com, for $435.0 million. The Company recorded a gain from the sale of approximately $412.0 million ($241.3 million after tax or $1.49 per diluted share) for the first nine months of 2001.

        The results of operations of the Magazine Group in 2001 are reported as discontinued operations. In 2001, revenues, operating profit and EBITDA (earnings before interest, taxes, depreciation and amortization) for the Magazine Group were $26.5 million, $2.0 million and $2.3 million, respectively.

5.    Income Taxes

        "Accrued income taxes" in the Company's Condensed Consolidated Balance Sheets decreased as of September 29, 2002, from December 30, 2001, because income taxes payable, which were primarily related to the gain on the sale of the Magazine Group and GolfDigest.com, were paid on January 15, 2002. The Internal Revenue Service granted all companies in the five boroughs of New York City an extension on income taxes payable after September 11, 2001, until January 15, 2002.

        The Company's effective income tax rate in the third quarter of 2002 was 39.0% compared with 37.1% in the 2001 third quarter, assuming the adoption of SFAS 142 in 2001. On the same basis, the effective income tax rate for the first nine months of 2002 was 39.0% compared with 37.0% for the first nine months of 2001. The Company expects its effective income tax rate in 2002 will be 39.0% compared with 37.5% in 2001, assuming SFAS 142 was adopted in 2001.

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6.    Staff Reductions

        The Company recorded work force reduction expenses of $12.6 million in the first nine months of 2002. There were no work force reduction expenses recorded in the third quarter of 2002. Total work force reduction expenses of $5.4 million and $84.5 million were recorded in the third quarter and first nine months of 2001. These charges are included in SGA expenses in the Company's Condensed Consolidated Statements of Income. Accruals for these work force reduction expenses are primarily included in "Accrued expenses" in the Company's Condensed Consolidated Balance Sheets and amounted to $5.4 million as of September 29, 2002, and $20.6 million as of December 30, 2001. Most of the accruals outstanding as of September 29, 2002, will be paid within one year.

7.    Debt Obligations

        In June 2002, the Company increased the amount available to borrow under its revolving credit agreements to $600.0 million from $540.0 million to provide additional credit flexibility. The Company's one-year credit agreement was renewed and increased to $330.0 million from $270.0 million and will now mature in June 2003. The Company's multi-year credit agreement remained at $270.0 million and will mature in June 2006. These revolving credit agreements require, among other provisions, specified levels of stockholders' equity. Under these agreements, $462.8 million of stockholders' equity was unrestricted as of September 29, 2002, and $349.7 million was unrestricted as of December 30, 2001.

        The Company had commercial paper outstanding of $144.7 million with an annual weighted average interest rate of 1.8% as of September 29, 2002, and $158.3 million with an annual weighted average interest rate of 2.0% as of December 30, 2001. These commercial paper obligations are supported by the revolving credit agreements, which had no amounts outstanding as of September 29, 2002, or December 30, 2001. The amount available under the commercial paper facility was $455.3 million as of September 29, 2002.

        In June and April 2002, the Company issued $52.0 million and $50.0 million in notes under its medium-term note program. The medium-term notes issued in June 2002 pay interest semi-annually at 4.625% and mature on June 25, 2007, and the medium-term notes issued in April 2002 pay interest semi-annually at 5.350% and mature on April 16, 2007. The total issuance of $102.0 million in the second quarter of 2002 was the remaining amount available under the Company's 1998 shelf Registration Statement.

        On July 26, 2002, the Company filed a $300.0 million shelf Registration Statement on Form S-3 with the SEC for unsecured debt securities that may be issued by the Company from time to time. This registration statement became effective on August 6, 2002. On September 17, 2002, the Company filed a prospectus supplement to allow the issuance of up to $300.0 million in medium-term notes. On September 26, 2002, the Company issued $75.0 million of medium-term notes. These notes mature on September 26, 2012, and pay interest semi-annually at a rate of 4.610%.

        The Company's total debt, including commercial paper and capital leases, was $924.8 million as of September 29, 2002, and $759.5 million as of December 30, 2001. The proceeds from the issuance of debt were utilized to pay income taxes on January 15, 2002 (see Note 5), to finance the Company's investments in DC and NESV, and to fund the Company's pension plans (see Note 10).

8.    Common Stock

        On February 21, 2002, the Board of Directors authorized an additional $300.0 million of repurchase expenditures under the Company's stock repurchase program. During the first nine months of 2002, the Company repurchased 2.3 million shares of Class A Common Stock at a cost of $100.7 million. The average price of these repurchases was $43.53 per share. From September 30, 2002, through November 1, 2002, the Company repurchased 0.3 million shares at a cost of $11.7 million.

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As of November 1, 2002, the remaining amount of the aggregate repurchase authorizations from the Company's Board of Directors was $319.4 million.

        On April 16, 2002, the Board of Directors authorized a $.01 per share increase in the quarterly dividend on the Company's Class A and Class B Common Stock from $.125 per share to $.135 per share, effective with the June 2002 dividend.

9.    Comprehensive Income

        Comprehensive income for the Company includes foreign currency translation adjustments, unrealized gains/(losses) on available-for-sale securities, unrealized gains/(losses) on cash-flow hedges, as well as net income reported in the Company's Condensed Consolidated Statements of Income.

        Comprehensive income for 2002 and 2001 was as follows:

        The "Accumulated other comprehensive loss" in the Company's Condensed Consolidated Balance Sheets was net of a deferred income tax asset of $5.6 million as of September 29, 2002, and $6.5 million as of December 30, 2001.

10.  Pension Plans

        The Company sponsors several pension plans and makes contributions to several others in connection with collective bargaining agreements. The plans cover substantially all employees.

        During the first nine months of 2002, the Company made tax-deductible contributions of approximately $71 million to its sponsored pension plans. The contributions were made because the Company's pension plan assets have decreased in market value in connection with the recent decline in the stock market's performance.

        The Company received approval from its Board of Directors to contribute an additional $76.0 million to its sponsored pension plans and intends to make this contribution before the end of 2002. Therefore, $76.0 million was reclassed from "Other Liabilities-Other" to "Current Liabilities-Accrued expenses" in the Company's Condensed Consolidated Balance Sheet as of September 29, 2002.

        The Company uses independent actuaries to help determine pension plan obligations, expenses and funding requirements. During this analysis process, the Company reviews with its independent actuaries and auditors the assumptions underlying the valuation. The Company will complete its next valuation at the end of December and any change to the pension plan assumptions will be reflected in its year-end financial statements.

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11.  Segment Statements of Income

        The Company's reportable segments consist of its Newspaper, Broadcast and New York Times Digital Groups. These segments are evaluated regularly by key management in assessing performance and allocating resources. The results of operations of the Magazine Group, which was sold in April 2001, are classified as discontinued operations for all periods presented.

        See Management's Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q for more information on the Company's reportable segments.

        (A) Intersegment eliminations primarily include license fees between New York Times Digital and other segments.

12.  Contingent Liabilities

New Headquarters Building

        The Company has guaranteed payment of 100% of the site acquisition costs for the Company's proposed new headquarters. For its share of these site acquisition costs, the Company has posted a letter of credit in the amount of approximately $61 million, of which approximately $52 million remained available as of November 8, 2002. The Company's exposure on the remaining portion of the 100% guaranty is mitigated by a letter of credit that its development partner has posted for its share of the site acquisition costs. As of November 8, 2002, approximately $38 million remained available under the development partner's letter of credit.

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Other

        The Company has various other guarantees which include a guarantee of a credit facility and leases of a third-party service provider and a guarantee of leases of three third-party printing and distribution facilities for The New York Times national edition. These guarantees total approximately $45 million as of September 29, 2002.

        The Company also has letters of credit of approximately $28 million, required by insurance companies, to provide support for the Company's workers' compensation liability that is included in the Company's Condensed Consolidated Balance Sheet as of September 29, 2002.

        There are various legal actions that have arisen in the ordinary course of business and are now pending against the Company. These actions are generally for amounts greatly in excess of the payments, if any, that may be required to be made. It is the opinion of management after reviewing these actions with legal counsel to the Company that the ultimate liability that might result from these actions would not have a material adverse effect on the Company's Condensed Consolidated Financial Statements.

13.  Subsequent Event

        On October 22, 2002, the Company and The Washington Post Company (the "Post Company") signed a letter of intent for the Company, a 50% owner of the International Herald Tribune newspaper (the "IHT"), to purchase the Post Company's 50% share in the IHT. The purchase is expected to be completed, subject to a definitive agreement and regulatory approval, in the fourth quarter of 2002 or first quarter of 2003.

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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

        Advertising revenues accounted for approximately 66% and circulation revenues accounted for 28% of the Company's total revenues for the first nine months of 2002. For the first nine months of 2002, the Company experienced a decline in its advertising revenue compared with the first nine months of 2001, primarily as a result of lower advertising volume. However, year-over-year advertising revenue comparisons continued to improve throughout 2002, resulting in an increase of 3.6% in the third quarter of 2002 compared with the third quarter of last year. Circulation revenue increased for the first nine months of 2002 compared with the first nine months of 2001, primarily due to higher subscription prices at The New York Times ("The Times") and The Boston Globe (the "Globe"). For 2002, the Company now expects circulation revenue growth in the range of 7% to 8%.

        For the first nine months of 2002, total costs were flat compared with the first nine months of 2001, excluding special items and the effect of SFAS 142 (see below). This resulted from a decrease in newsprint expense, primarily offset by higher bonus accruals linked to improved performance and higher benefits costs. Newsprint is the major component of the Company's cost of raw materials. Newsprint market prices, on average, were lower for the first nine months of 2002 than for the first nine months of 2001 and are expected to be below 2001 levels for the remainder of the year. For 2002, the Company expects an increase in total costs and expenses of 1% to 2%, excluding work force reduction expenses and the effect of SFAS 142. The Company expects newsprint market prices to be higher in 2003 than 2002 given the historical low price for newsprint in 2002.

        Given the stock market's recent performance, the Company's pension plan assets, along with those of many other corporations, have decreased in market value. Therefore, the Company made tax-deductible contributions of approximately $71 million to its pension plans during the first nine months of 2002. An additional $76.0 million tax-deductible contribution is expected to be made before year-end. The poor stock market performance has resulted in higher pension expense, which has been factored into the Company's guidance of total costs and expenses increasing 1% to 2% in 2002.

        For the remainder of 2002, the Company expects companywide advertising revenue to improve, along with continued growth in circulation revenue. Therefore, the Company still expects to have full-year 2002 diluted earnings per share of $1.90 to $2.00, excluding special items.

        At the beginning of the Company's 2002 fiscal year, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets. SFAS 142 eliminated the amortization of goodwill and certain other intangibles and requires an impairment test of their carrying value. An initial impairment test of goodwill and certain other intangibles must be completed in the year of adoption with at least an annual impairment test thereafter. The Company completed the initial impairment tests in the first quarter of 2002, which did not result in an impairment of goodwill or certain other intangibles. The Company's annual impairment tests will be completed before the end of the fourth quarter. The provisions of SFAS 142 are effective for periods after adoption and retroactive application is not permitted. Therefore, the historical results of periods prior to 2002 in the Company's Condensed Consolidated Statements of Income do not reflect the effect of SFAS 142 and, accordingly, the third quarter of 2001 includes amortization expense of $10.6 million in "Selling, general and administrative ('SGA') expenses" and $0.1 million in "Net (loss)/income from joint ventures" ($9.2 million after tax or $.05 per diluted share, collectively). The first nine months of 2001 includes amortization expenses of $31.8 million in SGA expenses and $0.3 million in "Net (loss)/income from joint ventures" ($27.7 million after tax or $.17 per diluted share, collectively).

        Management believes a more meaningful comparison of the results of operations for 2002 and 2001 is achieved by using the 2001 results of operations adjusted as if SFAS 142 had been adopted retroactively. Therefore, the historical results for 2001 included in this Management's Discussion and Analysis of Financial Condition and Results of Operations have been adjusted as if SFAS 142 had been adopted retroactively.

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Seasonality

        Advertising revenues cause the Company's quarterly consolidated results to vary by season. Second-quarter and fourth-quarter advertising volume is traditionally higher than first-quarter and third-quarter volume since economic activity tends to be lower after the holidays and in the summer.

Investments

        In April 2002, the Company and Discovery Communications, Inc. ("DCI") formed a joint venture in Discovery Civilization, a digital cable television channel ("DC"). The Company invested approximately $100 million for a 50% interest in DC. The operations of DC are managed by DCI.

        In February 2002, New England Sports Ventures, LLC ("NESV"), in which the Company is an investor, purchased the Boston Red Sox baseball club (including Fenway Park and approximately 80% of New England Sports Network, a regional cable sports network). The Company invested approximately $75 million for an interest of approximately 15% in NESV.

Discontinued Operations

        On April 2, 2001, the Company sold Golf Digest, Golf Digest Woman, Golf World, Golf World Business ("Magazine Group") and GolfDigest.com, for $435.0 million. The Company recorded a gain from the sale of approximately $412.0 million ($241.3 million after tax or $1.49 per diluted share) for the first nine months of 2001.

        The results of operations of the Magazine Group in 2001 are reported as discontinued operations. In 2001, revenues, operating profit and EBITDA (earnings before interest, taxes, depreciation and amortization) for the Magazine Group were $26.5 million, $2.0 million and $2.3 million, respectively.

Special Items

        Total special items amounted to $1.3 million in income on a pre-tax basis ($0.8 million after tax or less than $.01 per diluted share) in the third quarter of 2002 and a net $8.8 million pre-tax charge ($5.4 million after tax or $.04 per diluted share) for the first nine months of 2002.

        Special items in the third quarter and first nine months of 2002 included the following:

•

A $12.6 million pre-tax charge ($7.7 million after tax or $.05 per diluted share) for the first nine months of 2002 related to work force reduction expenses. There were no work force reduction expenses in the third quarter of 2002.



•

$1.3 million in income on a pre-tax basis ($0.8 million after tax or less than $.01 per diluted share) in the third quarter and $3.8 million in income on a pre-tax basis ($2.3 million after tax or $.01 per diluted share) for the first nine months of 2002 related to a non-compete agreement.

        Total special items amounted to a net $4.2 million pre-tax charge ($2.5 million after tax or $.02 per diluted share) in the third quarter of 2001 and a net $331.3 million in income on a pre-tax basis ($193.2 million after tax or $1.19 per diluted share) for the first nine months of 2001.

        Special items in the third quarter and first nine months of 2001 included the following:

•

A $5.4 million pre-tax charge ($3.2 million after tax or $.02 per diluted share) in the third quarter and a $84.5 million pre-tax charge ($50.3 million after tax or $.31 per diluted share) for the first nine months of 2001 related to work force reduction expenses.



•

$1.3 million in income on a pre-tax basis ($0.7 million after tax or less than $.01 per diluted share) in the third quarter and $3.8 million in income on a pre-tax basis ($2.2 million after tax or $.01 per diluted share) for the first nine months of 2001 related to a non-compete agreement.

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•

A $412.0 million pre-tax gain ($241.3 million after tax or $1.49 per diluted share) for the first nine months of 2001 resulting from the sale of the Magazine Group.

Operating Results

        The Company's consolidated financial results for the quarter and nine months ended September 29, 2002, compared with the adjusted quarter and nine months ended September 30, 2001, were as follows:

*

Represents percentages greater than or equal to 100%.

        Total revenues for the Company increased 4.7% to $729.5 million in the third quarter of 2002 from $696.9 million in the third quarter of 2001. Advertising revenue increased 3.6% and circulation revenue increased 8.5% in the third quarter of 2002 compared with the third quarter of 2001. For the first nine months of 2002, total revenues for the Company increased 0.2% to $2,238.8 million from $2,235.3 million for the first nine months of 2001. Advertising revenue decreased 3.1% and circulation revenue increased 10.0% for the first nine months of 2002 compared with the first nine months of 2001. Advertising revenue increased in the third quarter of 2002 mainly as a result of higher advertising rates and volume and decreased for the first nine months of 2002 primarily due to lower advertising volume. Circulation revenue increased in the third quarter and first nine months of 2002, primarily due to higher subscription prices at The Times and the Globe.

        Operating profit in the third quarter of 2002 increased 15.5% to $112.4 million from an adjusted $97.3 million in the third quarter of 2001, excluding special items. On the same basis, operating profit for the first nine months of 2002 increased 1.4% to $365.2 million from an adjusted $360.3 million for the first nine months of 2001. Including special items, operating profit in the third quarter of 2002 increased 22.3% to $112.4 million from an adjusted $91.9 million in the corresponding period of 2001. On the same basis, operating profit for the first nine months of 2002 increased 27.9% to $352.6 million from an adjusted $275.7 million for the first nine months of 2001.

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        The increase in operating profit in the third quarter of 2002, excluding special items, was primarily due to an increase in advertising and circulation revenue and a decrease in newsprint expense, partially offset by an increase in other costs and expenses. On the same basis, operating profit for the first nine months of 2002 increased primarily from higher circulation revenue and a decrease in newsprint expense, partially offset by a decrease in advertising revenue and an increase in other costs and expenses.

        The 2002 third-quarter net income of $58.3 million increased 4.9% from an adjusted $55.6 million in the third quarter of 2001, excluding special items. On the same basis, net income for the first nine months of 2002 decreased 3.6% to $197.6 million from an adjusted $205.1 million for the first nine months of 2001. Including special items, net income in the third quarter of 2002 increased 11.2% to $59.0 million from an adjusted $53.1 million in the third quarter of 2001. On the same basis, net income for the first nine months of 2002 decreased 51.7% to $192.2 million from an adjusted $398.3 million for the first nine months of 2001, primarily due to the gain from the sale of the Magazine Group in 2001.

EBITDA

        EBITDA in the third quarter of 2002 increased 5.7% to $145.4 million from $137.5 million in the third quarter of 2001, excluding special items. On the same basis, EBITDA for the first nine months of 2002 decreased 1.6% to $472.9 million from $480.3 million for the first nine months of 2001. Including special items, EBITDA in the third quarter of 2002 increased 10.1% to $145.4 million from $132.1 million in the third quarter of 2001. On the same basis, EBITDA for the first nine months of 2002 decreased 43.0% to $460.3 million from $807.8 million for the first nine months of 2001, primarily due to the gain from the sale of the Magazine Group in 2001.

        EBITDA is presented since it is a widely accepted indicator of funds available to service debt, although it is not a measure of liquidity or of financial performance under accounting principles generally accepted in the United States of America ("GAAP"). The EBITDA presented may not be comparable to similarly titled measures reported by other companies. The Company believes that EBITDA, while providing useful information, should not be considered in isolation or as an alternative to net income or cash flows as determined under GAAP.

Consolidated Costs and Expenses

        Consolidated costs and expenses in the third quarter and first nine months of 2002 and an adjusted third quarter and first nine months of 2001 were as follows:

        Total production costs decreased 1.0% in the third quarter and 4.0% for the first nine months of 2002, primarily due to lower newsprint expense, partially offset by an increase in compensation and benefits costs. In the third quarter of 2002, the Company's newsprint expense decreased 21.1% compared with the 2001 third quarter. This resulted from a decrease in the Company's average cost per ton of newsprint of 19.9% and a decrease in consumption of 1.2%. For the first nine months of 2002 compared with the first nine months of 2001, the Company's newsprint expense decreased 22.1% due to a decrease in the Company's average cost per ton of newsprint of 21.7% and a decrease in consumption of 0.4%.

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        SGA expenses increased 7.6% and 4.5% in the third quarter and first nine months of 2002 compared with the corresponding adjusted periods in 2001, excluding special items. These increases resulted primarily from higher bonus accruals linked to improved performance and an increase in benefits costs. Including special items, SGA expenses increased 5.5% in the third quarter and decreased 3.5% in the first nine months of 2002 compared with the corresponding adjusted periods in 2001.

Other

        The Company recorded a loss from joint ventures of $5.1 million in the third quarter of 2002 and $7.3 million for the first nine months of 2002 compared with income from joint ventures of $2.4 million and $4.1 million in the same periods last year. This decrease resulted from losses, primarily related to noncash amortization expense, at both DC and NESV, two investments made earlier this year. In addition, the paper mills in which the Company has an equity investment had decreased earnings primarily due to lower paper prices. For 2002, the Company now expects losses from joint ventures to be in the range of $12 to $15 million. This range includes the estimated impact of how the purchase prices of DC and NESV will be allocated among the net assets acquired.

        Interest expense-net increased to $11.7 million in the 2002 third quarter and decreased to $33.9 million for the first nine months of 2002 compared with $11.2 million and $36.4 million in the comparable 2001 periods. The increase in the third quarter of 2002 was mainly due to higher levels of debt outstanding, partially offset by lower interest rates, and the decrease for the first nine months of 2002 was primarily due to lower interest rates, partially offset by higher levels of debt outstanding. For 2002, the Company now expects interest expense to be in the range of $45 to $50 million.

        The effective income tax rate in the third quarter of 2002 was 39.0% compared with an adjusted 37.1% in the 2001 third quarter. For the first nine months of 2002, the effective income tax rate was 39.0% compared with an adjusted 37.0% for the first nine months of 2001. The Company expects its effective income tax rate in 2002 will be 39.0% compared with an adjusted 37.5% in 2001.

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        Consolidated revenues, EBITDA, depreciation and amortization and operating profit from continuing operations, in the third quarter and first nine months of 2002 and the adjusted third quarter and first nine months of 2001, by business segment were as follows: